Reference no: EM132222471

Background Information

Lakeland Medical Center is a 210-bed public hospital located in the Southeast. It is governed by a politically appointed nine-member board and serves a market of approxi- mately 100,000 people. The hospital has been financially successful, but in recent years several capital investments have not brought high returns. As a result, project investment decisions became more conservative and oriented toward financial returns. Competitive forces have continued to grow in the market, and significant internal expense items (such as the organization’s pension program, paid leave bank, and health insurance program) have put strains on Lakeland’s financial resources.

Revenue continues to grow at an average rate of about 10 percent each year, but controlling expenses remains a challenge. Bad debt has grown from $5 million last year to a budgeted amount of $14 million this year. The hospital continues to accomplish high patient and employee satisfaction scores, high quality scores, and an A+ credit rating. Debt is approximately $55 million, and cash reserves are approximately $95 million. Total operating revenues are approximately $130 million. The hospital employs 940 staff members. The average length of stay is 4.3 days. Annual capital expenditure is $4 million.

Information Systems Challenge

In 2005, the installation of computed radiography (CR) components to build a picture archiving and communication system (PACS) began, at an estimated total cost of $1 million. In 2006, $400,000 was spent for additional CR components. But in 2007, the board of directors (with three new members) did not approve the request of $1.9 million for completion of the PACS, saying that it represented far too large a percentage of the organization’s annual capital budget. A year later Lakeland is still in need of completing the PACS program, with a board that is unlikely to approve the expenditure.

A number of factors are contributing to the board’s decision not to authorize the additional $1.9 million for completion of the PACS, including

Leadership’s inability to guarantee to the board’s satisfaction a financial return on the proposed investment.

The board’s perception that the radiologists are not committed to the hospital and to the community because none of the radiologists live in the community.

The board’s perception that the cardiologists are not committed to the hospital or to the community. The five cardiologists on staff are considered to be uncooperative among themselves and not supportive of the hospital’s goals.

Poor leadership within the IT department for providing the proper guidance on acquisition and implementation.

The board’s philosophy that Lakeland Medical Center should be more high-touchand less high-tech, and thus there is a philosophical difference over the need for a PACS.

Jealousy among the medical staff that the diagnostic imaging department continues to obtain capital approvals for large items representing a major percentage of the annual capital budget. Thus, many influential members of the medical staff, such as surgeons, are not supportive of the expenditure.

A few vocal employees speaking directly to board members expressing their concern that the PACS implementation will result in job loss for them.

Leadership’s inability to make a connection between this capital project and the strategic goals of the organization.

The chief of staff, Dr. Mary White, firmly believes that a PACS will increase patient and physician satisfaction because waiting times for results will decrease, enhance patient education, improve staff and physician productivity, improve clinical outcomes, improve patient safety, eliminate lost films, reduce medical liability, assist in reducing patient length of stay, and increase revenue potential. She believes it is management’s challenge to understand the key issues of the board and to present the necessary sup- portive information for ultimate approval of the PACS program.

Discussion Question

Develop a strategy for addressing the board’s concerns and winning their buy-in and approval for the PACS project. Include in your description the who, what, where, when, and how.