H 'CARE PROFESSIONALS

CASE

STUDY:

Conflicts

in

Governance

$($This case study was contributed by Hildy Aquinaldo, JD$,$ MPH$.)$

Approximately $10$ years ago, South Bridge Health System $($SBHS$)$ allocated Noble Regional Medical Center $($NRMC$)$ a capital budget that was commensurate with its poor financial performance. The medical staff at NRMC believed that if the hospital became more profitable, SBHS would likewise make more funding available. Accordingly, the medical staff worked in concert with NRMC$\text{'}$s leadership to improve the hospital's financial situation and, in the meantime, got by with what they had.

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Today, NRMC is one of the strongest cogs in the SBHS wheel. However, SBHS has not lived up to its end of the bargain. In fact, total capital expenditures at NRMC rose only $2\%$ between $2002$ and $2012.$ On the ground, this meant that many of the medical staff's requests for the purchase of new or replacement medical equipment had been deferred to "next year." The medical staff commented that it felt unappreciated and dis$-$incentivized from future improvement.

In light of this sentiment$,$ the medical staff drafted a letter to SBHS$,$ but wisely sought the advice of NRMC$\text{'}$s president and CEO, Raymond Collins, before sending it off to the powers that be$.$ Mr$.$ Collins suggested that because the medical staff reported to the hospital's Community Board, that they should seek the latter's support, and indeed they did. As a result of their efforts, the chair

TH CARE PROFESSIONALS

of the Community Board, Bridget Andrade, drafted a letter to Ethan Christiansen, SBHS$\text{'}$s chief operating officer. Her letter detailed the medical staff's concern over capital budget allocations and invited Mr$.$ Christiansen to meet with the Board the following month.

Prior to that meeting with the Board, however, Mr$.$ Christiansen took an unusual step by meeting with the medical staff. Following their frank discussions, Mr$.$ Christiansen volunteered to dip into his own reserves to grant the hospital $$200,000,$ with consideration for additional funds. He also agreed to revisit the issue of SBHS$\text{'}$s distribution formula so that the system's high performers would be encouraged to continue their progress. By the time the board meeting came around, the fire had been extinguished.

Case Study Discussion Questions

When hospitals are part of a larger system that must allocate its capital equitably among its other entities, what would be considered a "fair" formula for allocation? What criteria might be included?

Why might the medical staff of a hospital organization feel that they have some say in the distribution of capital?

What is the responsibility of the Board in this case? Whose interests must they be concerned about and why?