The facts in this situation are that a hospital is in an unsustainable financial position due to its surgeons’ insistence on sourcing their knee and hip implants from different vendors which raise the cost of operation. Despite the finance executive’s vision and goodwill to make sound financial decisions to subsidize the expenditure, the surgeons oppose. Therefore, the hospital is stuck in a stalemate on how to adapt its new financial regulation at the expense of losing its productive surgeons.
Three organizational issues come out in this situation, these are general management, financial management, and ethical practice in healthcare. The discovery that three of the surgeons have relationships with three companies, Alpha, Beta, and Gamma, is evidence of a universal and common problem in managing healthcare today. It is manifested in the form of fraud, wastage, and abuse caused by healthcare providers (Buchbinder et al., 2014). Today its commonplace to find cases whereby medical practitioners and healthcare institutions receive financial incentives from pharmaceutical companies to administer certain drugs or medical procedures to their patients. The impact of this malpractice inflates the cost of medical care transferring the burden to patients due to the unnecessary procedures that have to be created for practitioners to receive certain incentives. In this case, the surgeons were under contract to exclusively source products from those companies for financial kickbacks.
Financial management is also a critical facet of running a sustainable healthcare institution. The foremost financial concern for managers is how to provide healthcare services affordably to patients despite ever-rising costs. Fluctuating costs are partly caused by rising costs of pharmaceuticals, insurance services, and general healthcare expenditure. At Sleepy Hollow, the financial executive has explored ways to cut down on the general healthcare expenditure which includes sourcing their implants from one company instead of five (Buchbinder et al., 2014).
Consequently, the hospital would lower its implant costs by 40%, and potentially have a net savings of 2.8 million USD annually. It is evident by the amount of money the company projects to save, that the surgeon’s preferences were serious hindrances for the company to operate sustainably and offer affordable healthcare (Buchbinder et al., 2014). As is the norm, it is patients and insurance companies who bear the brunt of such unsound financial plans.
The third organizational issue is an unethical practice by healthcare providers and practitioners. It reflects poorly on ethical practice for a medical professional to demand an incentive, as is the case with one of the surgeons, as a condition to adopt a proposed company policy meant to reduce operating costs. It also raises a question of trust, perhaps, the surgeon suspected the finance executive was also going to receive a loyalty incentive for selecting one company. Medical practitioners have the liberty to participate in programs that impact the quality of healthcare positively by offering their expertise to create better solutions. However, they should not do so for personal gain as the prime motives as is the case of the surgeons.
The industry relations at the hospital are highly inappropriate and so is the choice of products by the surgeons because the primary motive is personal. There is a serious conflict of interest that has put the organization in a chokehold. The fact that a medical practitioner is allowed to have patent rights for products and still practice in the same field creates a serious conflict of interest. There is a possibility, however, that the surgeons are insistent on certain products because they are certain of their quality since they took part in their formulation. However, this fact is relative and unproven which calls for the hospital management to conduct a thorough quality test to ascertain their claims. I strongly believe that the surgeons are receiving kickbacks and the reasons they offer are smokescreens because they cannot admit to receiving incentives.
If it was my private business, I would not entertain the demands of the surgeons because I think it creates a dangerous precedent where employees think they are bigger than the organization. However, for the best interest of the hospital, I propose a workable solution that would standardize the implants and at the same time keep the surgeons satisfied. The proposal includes a 20% increase on the basic salaries of the surgeons if they agree to adopt the company’s standardized implant. This new financial commitment would potentially reduce the cost of implants by 18% and save the hospital 1.2 million USD annually. It is less than the initial expectation of 2 million USD but I hope it will help retain the services of the surgeons rather than losing them to a competitor.
To avoid such a situation from recurring requires the hospital to state their conditions assertively such as the use of standardized products as one of the requirements when recruiting new employees. This way the hospital will find itself with a team of professionals who know what kind of contract they are entering into and reduces the room for selfish initiatives. However, the organization should arrive at such decisions after a thorough consultation to avoid putting its employees on uncomfortable working terms. I believe the organization asserting its power from the beginning reduces the possibility of individuals accumulating or wielding a lot of influence against the objectives of the hospital as is the case with the orthopedic surgeons.
References
Buchbinder, S., Shanks, N., & Buchbinder, D. (2014). Cases in health care management (1st ed.). Jones & Bartlett Learning.
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