Inadequate Medicaid reimbursement rates forced a major safety-net children’s hospital system to assess its ability to continue providing primary care to low-income children.
The Background
At the time of our engagement, the hospital was operating its primary care outpatient clinics at a more than $2 million deficit. The loss of supplemental state financial support exacerbated the problem, creating an urgent need for a fiscally sound operating model. Hospital management turned to our team of seasoned professionals for help, including:
- Conducting an in-depth financial and business analysis of the current situation; and
- Developing a business plan to transition primary care outpatient clinics to a new financing and care model to significantly increase return on investment.
To execute that plan, we worked closely with hospital senior management to forge a new partnership with a major teaching hospital in the same service area that had maximized federal funding through its Federally Qualified Health Center (FQHC) license. Through the partnership, the hospital gained the opportunity to consolidate services and administration, allowing it to expand access to cost-effective outpatient care to publicly insured patients.
The Solution
The team assembled for this project consisted of experts in federal safety net funding policies and regulations, financing, project management and facilitation. We developed a full project plan to guide the effort, including:
- Financing and financial analysis;
- Regulatory and governance requirements;
- Parameters for a community development plan; and
- Organizational and management structures.
The new business plan was projected to result in a net gain of more than $4 million.
The Value Proposition for the Client
The hospital accepted our recommended plan, projected to transition the hospital from operating at a $2 million loss to a $4 million benefit.
