Castlemont_Health_Services - Castlemont Health Services I...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Castlemont Health Services I became a doctor to heal people, not run a business. But, with health care costs heading out of control, the only way we can survive is to apply some of the tools of cost management to the practice. I wish I could focus on new drugs and medical proce- dures, but right now the best thing I can do for our patients is continue to find ways to take costs out of the system. Gianni Schicci, MD President & CEO Organization Castlemont Health Services (CHS) is an independent, for-profit, health care firm located in Oakland, California. The firm is organized in two groups— General Administration and Clinic Services (see Exhibit 1). General Admin- istration includes Accounting and Legal Services (A&LS), Information Tech- nology (IT), and Billing Services. Clinic Services consists of two clinics, which provide different services. The Fruitvale Clinic provides kidney dialysis ser- vices. The Fremont Clinic provides walk-in emergency services. (See below for more complete descriptions.) Clinic Services Clinic Services oversees the operation of the two clinics. The clinics (and Clinic Services) have been organized as profit centers and the clinic man- agers are evaluated on return-on-investment (ROI). ROI is computed as after- tax accounting income divided by net clinic assets measured at the begin- ning of the year. The managers are paid a bonus for exceeding the estimated after-tax cost-of-capital (8%). The bonus paid cannot exceed 30% of the base salary and no bonus is paid for an ROI below 6%. The Fruitvale Clinic is designed to provide renal dialysis treatments to kidney patients. There are two types of treatments. Hemodialysis (HD) This case was prepared the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. All data in the case are fictitious. ©William N. Lanen, February 2003, University of Michigan Business School. Permission is hereby granted to reproduce and distribute this case for classroom instruction provided this copyright statement is included on the first page of any such reproduction
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Castlemont Health Services 2 treatments require patients to visit the clinic three (3) times per week. At the clinic, they receive the treatment using expensive, specialized equipment. Peritoneal dialysis (PD) patients can administer their own (daily) treatment at home. The clinic monitors PD patients and assists in obtaining the sup- plies required. The Fremont Clinic offers emergency and non-emergency medical ser- vices and is open 24 hours every day. Although they treat many types of medical problems, they classify their services into two (2) offerings: basic procedures and complex procedures. The differences between the two af- fect the amount of physician time required for each visit as well as the type of equipment needed for treatment.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern