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Case J Where The Rubber Hits The Road

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Phelps possesses several inpatient services that include medicine, surgery, psychiatry, obstetrics, pediatrics, and physical therapy and rehabilitation. This paper gives insight into the different financial issues that the healthcare system is currently facing, along with proposing solutions to help resolve these financial problems. Physicians both older and younger present recommendations to fix these problems and their ideas are compared and contrasted. Strategies that acknowledge the physicians’ recommendations to keep them involved in the issues are provided.

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Physician – Phelps Hospital Relationships

With the passing of national health reform by congress, Phelps Memorial Hospital Center is projected to lose $3.5 million per year for the next ten years. A major cause of this is due to Medicare and Medicaid’s reimbursement to Phelps existing at a rate lower than the costs of operations. A major contribution to Phelps is that they raise around two to three million through philanthropy per year. Despite projections to lose money each year, specialists are requesting more benefits by being on call for the ED, and extra pay for lower-income and Medicaid patients. As time progresses, hospital reimbursement is lowering, costs are increasing, and employees have made their way towards Phelps because of the guaranteed income and health benefits being paid for. These benefits have become a factor that contributes to the loss in revenue at Phelps. Through the approval of health reform by congress, services like Medicare prevent hospitals from making advancements due to the financial burdens that they bring.

In order to address the issue of Phelps losing $3.5 million per year and the contributing issues that lead to the potential debt, Phelps needs to implement strategies to help make the healthcare system as profitable as possible. Doctor Robert Seebacher, the director of Joint Replacement Services, is responsible for assisting in Medicare and worker’s compensation services. Medicare is only capable of paying a fraction of third-party insurance companies can pay and since Phelps’ profit margin is extremely minimized due to this, Seebacher is required to meet one-hundred joint replacements just to fund his malpractice insurance. Medicare’s reimbursement pays $1,200 for a knee operation while an out-of-network insurance would reimburse $22,000 of the resources (Kovner & McAlearney, 2013). With reimbursement being ineffective in covering the resources used for operations, a strategy that could help Phelps with their finances has become vital. Unnecessary surgeries and overtreatment occurring at Phelps is a factor that hinders financial growth.

A strategy that looks into stopping these poor practice patterns that result in waste of resources can play a role in financial advancement for Phelps. Doctors that participate in wasteful actions will need to face discipline by being reminded of their conscious effort or by being cut; it will be the CMO’s responsibility to do so. By consciously working towards financial efficiency, Phelps will be able to use their resources in the most frugal way possible resulting in money being saved. As money is saved from a conscious effort to cut wastes throughout Phelps, funds can be relocated to employees that stand out. Employees that provide high quality care and efficiently carry out their jobs should be compensated through benefits like stipends or increases in their pay. Along with the conscious effort of saving Phelps money, employees should work hastily to cycle through patients that need care as it could contribute to an increase in profit. Doctor Arthur Fass, the chief of cardiology, presented the idea that what is important to payers is not quality or thoroughness but high volume, rushing through as many patients as possible (Kovner & McAlearney, 2013, p. 275). This method to generate more profit will be beneficial to Phelps and can be effective while simultaneously having a conscious effort to not be wasteful when using medical resources. The incentive for physicians to carry out this strategy could be a compensation for the extra work that they provide.

Differences Between Older and Younger Physicians

Older physicians that have been practicing medicine for several years have grown to embody their profession as a lifestyle that seeks to improve the health of others’ lives. The younger physicians tend to be on the opposite end of the spectrum as they are fresh out of their schools or residencies and ready to generate income. Chief Medical Officer, Lawrence Faltz, states that there is not enough money coming towards Phelps and the wants of younger physicians are hard to meet. Younger physicians’ recommendations will result in a well-compensated staff that expends extra resources through incentives.

Through taking on extra services like providing for the ED, younger physicians seek to be compensated with more benefits with money that Phelps does not have. Older physicians’ recommendations include cycling through a high volume of patients as quickly as possible in order to generate more income, however through a rushed effort this may result in a poorer quality of care. A strategy that combines both older and younger physicians’ recommendations can result with a well-rounded staff, attempting to care for all employees’ needs. Phelps should aim to make a conscious effort to use only medical resources that are required and prevent operations that are unnecessary from occurring. Employees that take part in preventing unnecessary operations along with volunteering for ED services should be compensated with the money that is saved. Along with making a conscious effort to save money, Phelps should attempt to increase the quantity of patients that cycle through their healthcare system.

While simultaneously using a conscious effort to save money, cycling through more patients can increase the profits of Phelps. This strategy aims to tend to both younger and older physicians’ recommendations while minimizing negative factors.


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Keith Safian, CEO of Phelps, is responsible for managing resources, operations, and making major decisions that directly affect Phelps (Investopedia, n.d.). He was responsible for estimating that the newly implemented national health reform would result in a negative $3.5 million each year over a ten-year period. Safian looks into potential options that can allow for Phelps to adapt to providing for patients and employees so that both parties benefit.Lawrence Faltz, CMO of Phelps, is responsible for the quality, credentialing, physician discipline at Phelps, networks, and academic affiliations (Kovner & McAlearney, 2013). Faltz looks into the physicians’ roles and how they directly affect Phelps. He is a firm believer in the fact that physicians need to understand their obligations as a staff member of Phelps and should carry out the actions that they are asked to. Safian has more responsibility over Phelps’ business-related actions while Faltz is responsible for Phelps’ medical-related actions.

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Case J Where The Rubber Hits The Road. (2019, August 27). GradesFixer. Retrieved June 5, 2023, from
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