Imagine that it is January 2021, and you have just accepted the chief financial officer (CFO) position at Hays County In

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Imagine that it is January 2021, and you have just accepted the
chief financial officer (CFO) position at Hays County Integrated
Delivery System (IDS), hereafter referred to as County. You will be
reporting to Mr. Salter, County’s chief executive officer, a
retired schoolteacher who was hired last year. When announcing your
appointment, Mr. Salter stated that your primary objective in the
coming year would be to reverse the ominous financial trend that
began in 2019 with an operating loss and continued in 2020.
Previous operating losses were funded with investment income.
However, your board recently passed a resolution discontinuing that
practice and restricting investment income to capital expenditures
in 2021.
County
is a non-for-profit, county-owned urban hospital and includes an
acute care hospital, a skilled nursing facility (SNF), a rehab
facility, a home health care agency, and an outpatient clinic. The
hospital, Hays County Hospital (HCH), is one of two hospitals in
the county (population is 175,000) and the only hospital in San
Marcos, Texas, with a population of 50,000. St. Teresa’s, a
not-for-profit Catholic-owned hospital, is the only other hospital
in Hays County. St. Teresa’s is about 25 miles from Hays County
IDS.
To
acquire background information on the primary challenges and
opportunities facing County, you meet with Mr. Salter, who
states:
“I
just don’t understand why we are losing money. I spent a
considerable amount of time recruiting new doctors while keeping
the existing doctors happy. Everyone seems happy—everyone except
Mr. Finance Myway, whom you’ll be replacing. He and I both started
in January 2019 and he seemed increasingly frustrated with the way
I do things here—he just didn’t fit in. I tried to accommodate him
by implementing some of his recommendations, even though they were
against my better judgement. And when I announced that I was
bringing in more business to the hospital by entering into a
two-year capitated managed care agreement with the city (it expires
this month)—we get $425 per month per family for taking care of the
300 city employees and their families, whether they’re sick or
not—Mr. Myway threw a fit at an executive team meeting. He claimed
that my decisions were driving County deeper into the red, and as a
result, I had to show Mr. Myway the highway for insubordination.
That happened last month.
(2). Mr. Salter informs you that County’s radiology department
is in violation of antitrust statutes because it produced charges
using relative value units developed by another organization. You
must establish new relative value units and use them to calculate
the costs for each radiology service using activity-based costing.
The departmental direct and indirect costs are $5,124,840 while the
indirect costs from outside departments that have been allocated to
radiology are $1,708,208. Use the duration of each procedure,
measured with completion time, to allocate the outside department
indirect costs. After calculating the cost per procedure, adjust
each cost estimate upward by 5% so that the department generates
the desired profit.

Imagine That It Is January 2021 And You Have Just Accepted The Chief Financial Officer Cfo Position At Hays County In 1 (103.08 KiB) Viewed 37 times

Imagine That It Is January 2021 And You Have Just Accepted The Chief Financial Officer Cfo Position At Hays County In 2 (104.2 KiB) Viewed 37 times

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