Policy Research and Organizational Analysis Case of North Shore Medical Center

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PolicyResearch and Organizational Analysis: Case of North Shore MedicalCenter


NorthShore Medical Center-An Introduction

Thereare numerous health organizations in the United States, and they canbe termed as either short-term or extended-term stay, and that isevaluated by the period of time that a patient takes before release. Similarly, the hospital can also be differentiated by the mode ofownership, nature of service rendered and whether they are teachinghospitals with academic affiliations. Therefore, the primary focus ofthe research paper is in hospitals that are operated as proprietary(for-profit) businesses that are either owned by individuals orcorporations.

OrganizationFocused On the Report

Thereport concentrates on the North Shore Medical Center which is afor-profit organization, and it is located in Miami Florida. NorthShore Medical Center has been functioning for the past 61 years, andtheir primary focus is taking care of people and that form the mostimportant part of what they do(Healthcare, 2017).The objective of the organization is to provide patients with thebest medical care and to improve on the area of specialization.Similarly, physicians are provided with necessary tools that enablethem to perform their task adequately. Since the field is highlycompetitive, the organization ensures that they hire staffs that areexperienced and can provide required care to the patients(Healthcare,2017).

Sub-Industryand financial background of the Organization

Withinthe field of health, North Shore Medical Center fall under specificsub-industry and that is a hospital. Many of the people residing inFlorid consider this organization as their local hospital. Theorganization has a bed capacity of about 357 and about 400 medicalstaff and a total of 700 employees (Healthcare,2017).The organization is a hospital since it is a medical treatment centerand a healthcare organization. Additionally, the organization admitspeople with various diseases and who are involved in accidents.Similarly, the staffs are experts, and they use sophisticatedequipment, and they attend to patients who require acute medicalservices. By 2015, the hospital is estimated to have made a loss ofabout 30 million in a year. That loss was attributed to patients whoreceived treatment, but they are on Medicare or Medicaid (Healthcare,2017).


Northshore medical center is for-profit organization since it has about 6%higher annual expenses that it is expected to account foradministrative pay and bonuses (Gandhi,2012).Additionally, as a for-profit organization, the hospital is permittedand required to treat uninsured patients(Scalesse, 2013).Additionally, North Shore Medical Center is considered as afor-profit organization since the cost of treating the patient isvery high as compared to non-profit hospitals. Similarly, North ShoreMedical Center is for-profit since they are required by the law topay taxes, and they are demanded to distribute earnings (Gandhi,2012).

EconomicImpact of Sub-Industry

Accordingto the North Show Medical Center Press releases of 2ndAugust 2016, for the fifth time in a row, the US.S News and Worldreport ranked the North Show medical facility as one of the besthealth centers in the Massachusetts and Boston Metro Area. Despitethe ranking, the hospital facility has been performing poorly interms of demand for its services. One certain fact is that there ismore demand from Medicaid patients, who pay less for services thanfrom private insurers who pay high. As a result, the center has beenstruggling for years to meet its operating costs as McCluskey (2017)notes. For example, on operations cost, the Center lost 36 milliondollars on the 2015 fiscal year and 48 million dollars in the 2016fiscal year (McCluskey, 2017). Due to this poor financialperformance, the hospital will be cutting 200 jobs this year to saveon costs by 45 million dollars by the year 2019. The hospital hasalso been reducing the number of services it provides. For instancein 2016, the hospital stopped performing heart surgeries in itscampus in Salem due to costs. These actions have been prompted byloses particularly on the costs of operations due to the high demandfor services and little gain from patients’ money to cater for theservices provided (McCluskey, 2017).


Manycompanies across the world apply microeconomic and macroeconomicprinciples to realize their objectives. The health care organizationsare not left out among those that apply the concepts. Healtheconomics is a part of economics that is involved with issues thatare related to quality, effectiveness, value and behavior in theproduction and consumption of health and healthcare. The principlesof making rationale choices, understanding costs and opportunitycosts, marginal analysis, and laws of demand and supply arefundamental when a health facility wants to realize its goals. NorthShore Medical Center is a for-profit organization that is located inMiami, Florida. The 61- year- old medical center focuses on providinga quality healthcare as a way of realizing high profits, which istheir principal objective. This paper discusses the principles ofeconomics that the health center applies in its daily operation. Italso explains the impact of the principles and economic policies tothe health markets, healthcare, and organizations.

EconomicTheories and Principles

EconomicDisparities: Therelationship between financial stability and quality of servicesstands out in many services providing companies. Many people believethat a financially stable firm must provide services that meet thedemand of the consumers. This is, however, not the case with NorthShore Medical Center (NSMC). The health center charges high medicalfees before they offer their services. Many clients complain of thehigh consultation fee of $40, a fee that is remarkably higher thanmost of the community hospital (Healthcare,2017).As a community hospital, people expect the facility to provide acheap and quality health care to the low-income group. The disparityappears where the manager concentrates much on the money rather thanthe quality of treatment. Many patients report of the slow and poorservice by the health professionals. At NSMC, a patient would wait atthe emergency doors for over 30 minutes due to inadequate doctors. The premises have spacious wards, but hygiene remains an issue in thehospital. The quality of services at NSMC is in question, and thishas made many patients to give it a one-star rating. In 2016,patients reported that they did not receive a quality healthcare andonly 56 percent of the patients would recommend the hospital toothers. The disparity in the hospital of providing services of lowquality at high fees reduces the rating of the hospital.

EconomicTheories: Hospitals,like any other organization, apply appropriate theories of economicto realize their primary goals, which include the provision ofquality healthcare and maximum profit generation among others. Due tothe poor performance of North Shore Medical Center as reported bymany patients, some economic theories may be incorporated to bring itup. These theories include supply and demand theory, marginalisttheory, monetarism, and institutionalism (Olsen,&nbsp2014).The poor performance of the medical center is highly attributed tofew staffs and lack of adequate pieces of machinery for commondisease. This cuts across all hospitals making the theory of supplyand demand to be best suited for the health care industry in general.It is the same theory that would significantly suite the North ShoreMedical Center in realizing its objectives.

Thetheory of demand and supply is divided into two basic theories, thatis, the theory of demand and that of supply. The theory of demandstates that the demand or necessity of a product increases with thedecrease in prices (Olsen,&nbsp2014).No customer will opt for an expensive product at a company if it ischeap at another company. In hospitals, the customers wouldpositively respond when the prices of healthcare are down. The costof doctor visits, medicine, and hospital bills have been very high atNSMC (Healthcare,2017).The quality of healthcare, however, does not correspond to the highcost. The consultation fees at NSMC have been quite high, a factorthat keeps patients away. If the hospital was not insured, then it islikely that it could have been under receivership. The demands forsome of the equipment at the hospital are quite low not because oftheir cost but because they are used for rare diseases (Olsen,&nbsp2014).It is of no value installing a machine that diagnoses a rare illnessand leaving out the one for common diseases such malaria and typhoid.The number of medical practitioners at NSMC lowers the demand for thehospital because they are few. Dealing with emergencies is a bigproblem at the medical facility because of inadequate personnel. As,the management ventures into employing more qualified personnel, theymust also ensure there are adequate drugs and reduced fees to attractmany clients. The theory of institutionalism would also be importancewhen correctly applied to govern the way the management comes up withchanges in the hospital. Any immature decision made by the managementmay result in a continuous failure of the premises.

Useof Economic Principles: Amajority of organizations utilize economic principles to guide themin making short-term and long-term decisions. The principle ofopportunity cost is the first principle that helps a company todetermine the alternative that will be sacrificed when a decision ismade. The health centers, for instance, must determine the amount ofprofit that they will gain when they invest their capital indifferent medical equipment or certain practitioners and determinethe best option. The principle of time perspective is important inmaintaining the balance between the short run and long runconsiderations (Olsen,&nbsp2014).The management must weigh out the gains in both short-term andlong-term investment to avoid future losses. The organizations thatapply equi-marginal principle find it easy to allocate the availableresources among the alternative activities. Proper allocation offunds into various adequately discussed projects leads to theproduction of quality results by the organizations.

For-profitand Nonprofit Organizations

Thereare several financial parities between for-profit and nonprofitorganizations. The for-profit organization exists main to generateprofit and therefore requires a lot of money from the shareholdersbefore commencing (Gandhi,2012).Nonprofit organizations, on the other hand, are started to serve thehumanitarian or environmental needs. They channel all their incomeinto the programs that meet the necessities of people in thecommunity. They nonetheless depend on the revenues earned from theconsumers who use the services. But the difference is that for profitorganizations raise capital from the shareholders in the market whilenon-profit hospitals are not allowed to raise capital that way butreceive donations, or reinvest their profits into operations.

For-profit hospitals provide their services at a high cost to bothinsured and uninsured customers who can meet the payments. Theyensure that the quality of services is commendable so that manycustomers would prefer them. They pay their staffs and tax from thesame income they generate from patients, and therefore, they workhard to attract many patients (Scalesse,2013).The nonprofit hospitals provide services at very low or no cost tocustomers. Most of their workers are paid through donations orgovernment incentives and are, therefore, exempted from paying tax.

Basedon economic policies and legislations, the for-profit healthorganizations have policies that are profit oriented (Scalesse,2013).The managers work extremely hard to ensure they generate some profitto the organizations. In the United States, the for-profit healthorganizations fall under the jurisdiction of the Corporate Tax Act2009 and are, therefore, considered active for tax purposes. NSMC isan example of for- profit organization, and the law requires it topay tax. The nonprofit organizations, on the other hand, work on thepolicy to meet the demands of the people, and not for profit gain.The legislations in many countries require that nonprofit companiesmust be registered as public organizations so that they can evadetaxation and receive incentives from the government.

Policy,Changes, and Disparities

Thereis a deep relationship between economic policy and disparities inhealth care. The Patient Protection and Affordable Act 2010 providethat hospitals and technicians should transform their practicesfinancially, technologically and clinically. These transformationsare meant to lower the cost of healthcare, improve its quality andaccessibility. The disparity comes in when hospitals such as NSMCovercharge their client with an excuse of lack of capital tomodernize the premises (Healthcare,2017).The patients are treated depending on their financial stability. Thedisparities in health centers also occur due to racial differences,and this make some diseases to be common among distinct races, forexample, the blacks are likely to die of diabetes than the whites.

Therecent legislative changes have brought some changes in the healtheconomic policy. Almost all hospital in the US reduced theconsultation fees from $30 to $20 (Healthcare,2017).However, the specialist raised their fees from $60 to $120 withclaims that the new policies subject them to excessive work. Inrespect to the economic policy, NSMC employed 229 specialists andincreased their beds from 357 to 441 (Healthcare,2017).These, they claimed, would raise the quality of healthcare at thepremises and provide ample space for the inpatient, although in realsense it could be perceived as a strategy to exploit specialists’raised fees since increment in volume of service provision does notnecessary translate high quality healthcare provision.

Disparitiesin healthcare need to be considered during healthcare strategicplanning as they fundamentally distinguish between poor and highquality service. They therefore enlighten the issues that need to beaddressed in order to improve the quality of healthcare provision. Ifnot considered during planning and amending policies, the healthcenters will continue to perform poorly and this may lead to healthcomplications among the patients.

OrganizationalAnalysis – North Shore Medical

OrganizationalImpact and Recommendations

NorthShore Medical Center is a business property organization based inMiami Florida related to the dispensation of health care provision.It has been in the health care market for sixty-one years and boastsof extreme experience over the years. It has and still is in serviceof the locals of Miami. Its most profound objectives are providingpatients with ultimate best medical care and enhancing the broadsector of specialization. It provides its highly experiencedpersonnel with extensive medical equipment to provide quality medicalcare to ensure its stay in the medical market.

Justlike any other entity, it belongs to a sub-industry that is thehospital sub-industry. Behind its justification of being a hospital,the organization is that it simply renders medical services to thelocals. It has a huge staff capacity of approximate four hundredmedical personnel and seven hundred employees. It also boasts of ahuge inpatient capacity of over three hundred beds and responds tovictims of diseases and different forms of accidents. The North ShoreMedical Center only receives payments in the form of checks andcredit cards refraining from cash to uphold their patients` security.The hospital also provides for financial counseling services. Overthe years the hospital organization has had tremendous profits as inthe case of the period between 2010 and 2014 financial years where itmade one million nine hundred dollars` worth of profits. It has alsohad its fair share of challenges with regards to loss. In the 2015financial year, it is stated to have had a loss of thirty-six milliondollars making it the biggest losers among the American privatehospitals. This loss was attributed to the patients under the medicalcover of Medicaid and Medicare insurances. Accordingto Leighton (2016), the facility has been operating on losses ofapproximately 30 million dollars on annual basis for the past severalyears. It has however managed to survive the financial hit becausethe 7 other hospitals which are part of Partner’s Health Care as isNorth Shore Medical Center has been making profits. For instance,except the North Shore, the 7 others combined made a profit of 289million dollars in the 2015 fiscal year (Leighton, 2017).

Thehospital organization is a for-profit organization with aims ofmaximizing on it profits while rendering medical services. Itdisplays higher administration expenses and financial bonuses(Scalesse,2013).The organization nonetheless treats the uninsured American patientsapart from the Medicaid and Medicare insured patients since Stateand Federal health care reforms requires health care providers toprovide care across the continuum and overtime (Partners Health Care,2015). To compensate for the losses incurred on treating theuninsured, theCenter charges high rates costs for its medical services compared totheir non-profit making counterparts. Since it is more inclined toprofit making rather than humanitarian and environmental Aid, it isaccustomed to taxes. Under the Jurisdiction of the Corporate Tax Actof 2009, they are mandated to remit taxes to the government tocontribute to the government revenue. Lastly, they are required todistribute earnings and salaries to their employees, not under thegovernment`s payroll. The North Shore Medical Center uses theprinciple of demand and supply to ensure that it is operating on fairgrounds in alignment with its profit-making prospect.

Financials,Market, and Demand

TheDemand theory states that demand will always increase with a decreasein cost. Everyone loves affordable prices for services. It is forthis reason that the managerial team of the hospital works around theclock to ensure that their medical products and services areaffordable. This, in turn, triggers a positive response among themedical consumers towards the organization. The consumers will optfor North Shore Medical Center rather than other private medicalentities. The major challenge arises when it comes to insurancecoverage. The aged and the low-income Americans change the odds ofdemand completely when it comes to medical coverage. The aged arefragile and are more susceptible to chronic ailments and accidents.The members of the low-income families are prone to diseases such astyphoid due to low standards of living. The two parties will alwayshave frequent visits to the hospital and stakes are high that theywill always deplete the financial strength bound in their medicalcovers. The hospital will have to dig dipper into its account tocater for their medical provisions to maintain this type of demand.This sometimes proves dangerous as the hospital can fail to recoverthese deficits from other sources.

TheNorth Shore Medical Center has been awarded a one-star ranking sinceit offers high costs of doctors’ consultation fees, pharmaceuticalproducts, hospital bills and worst of all unmatched quality ofmedical services (Olsen,2014).This has lowered its demand amongst American patients. The hospitalhas equipment and machines designated for the treatment of rarediseases and lack the ones that treat common ailments such astyphoid. Since most Americans in need of medical attention sufferfrom common ailments, they opt for other medical entities and thusreducing its demand. As a result of poor demand for its services,North Show Medical Center has been operating on losses ofapproximately 30 million dollars every year for the past severalyears. This year it will be laying-off some 200 of its staff fromboth administrative and medical care departments in an effort that itdeems will cut on costs by 45 million dollars within the next 2years. The hospital has also closed down one of its heart surgeryclinics in Salem (McCluskey, 2017).

Anotherfactor reducing the demand for North Shore Medical Center`s productsand services emanates from their slow responses to emergencies. Dueto the staggering American population, the number of those in need ofquick medical attention is high. The North Shore Medical Center haslimited human and machinery resource to sustain this type ofattention. There are numerous cases of emergency patients waiting forover thirty minutes to gain access to their services. This factor hasalways reduced the demand of this hospital organization.

EconomicLegislative Changes

Dueto these cases of high costs of medical provisions and the subsequentrelatively fair quality in numerous hospitals in the U.S, theCongress has come up with preliminary measures to ensure that itspeople gain access to quality medical provisions that are of lowcosts. The Congress has legislated Acts that are meant to regulatethe operations of organizations dispensing medical services withNorth Shore Medical Center included. One of the Acts is the PatientProtection and Affordable Act of 2010. This Act has mandated for thetransformation of hospital practices financially, technologically andclinically (Gandhi,2013).This is aimed at lowering cost, improving quality and ensuringaccessibility of medical services. The Health Care QualityImprovement Act states that all American hospitals should meet thecriteria of quality medical services or be subjected to the law. Thishas forced the North Shore Medical Center to work on its quality ofservices, pharmaceutical, and other products. Lastly, legislativechanges on the economic policy [ CITATION Pin15 l 1033 ].This was aimed at making hospitals reduce the consultation fees. TheNorth Shore Medical Center is speculated to have reduced its doctors`consultation fees by thirty-three percent from thirty to twentydollars. The government has also made legislations to promote theprivate provision of medical services. This is meant to forcehospital organizations to reduce cost and improve the quality oftheir services and products. Will the Mighty and golden-aged NorthShore Medical Center resort to institutional policy changes inresponse to these legislations to stay afloat?

Thehospital organization has come up with policy changes to feel thepositive impact of maximum profitability. These changes have to go inhandy with clear, comprehensive and definite principles such asinstitutionalism, opportunity cost, and time perspective. Under theopportunity cost, the organization has the liberty to make choicesconcerning procurement of resources based on their degree of profitoutcomes. Under time perspective, the organization has to carefullyconsider short-term and long-term investments when it comes to wiseinvesting to combat future losses such as the thirty-six milliondollar loss recorded in the 2015 fiscal year. The North Shore MedicalCenter has opted to raise its service fee by one hundred percent.This raise is from the previous sixty dollars, with the excuse beingexcessive work upon its task force. The policy change comes to therescue after the government forced a reduction of consultation feesby thirty-three percent. The organization has procured new modernequipment aimed at responding to common ailments to lure a largepercentage of patients who suffer from these diseases. This is aimedat raising its degree of demand. The organization has recruitedexperienced personnel to combat emergency crises and sustain itsoperations maximally. The organization has also increased the numberof beds to enable it to accommodate more inpatients thus solving theproblem of inadequate patient capacity. The organization has alsoresorted to the ingenious tactic of cost shifting to enable it torecover from losses incurred by treating uninsured patients by makingthe insured patients pay more. They also employ the &quotcreamskimming&quot tactic to ensure that American get different qualityof services based on their pay [ CITATION Che15 l 1033 ].The financial statements will depict profit gains as these tacticsemployed by the managerial team are efficient, effective and inclinedto profit making. These policy changes have resulted in the disparityof overcharging the patients with the aim of achieving maximumprofits rather than the quality of dispensed services with an excuseof lack of capital to maintain, modernize, run and operate theorganization. The other disparity is perhaps that of treatingpatients based on racial differences, as Blacks are likely to diefrom diabetes rather than Whites.


NorthShore Medical Center is for-profit organization, and the managementis focused on ensuring they maximize their profit at any cost. It,nevertheless, experiences some economic challenges on their operatingcosts, as a result of treating patients with Medicare or Medicaid whopay less than their privately insured counterparts. State and Fedaralhealthcare reforms rquire health facilities to offer medical careacroos the patient continuum and therefore hospitals such asNorthshore are obligated to offer their services to patients theynormally would not such as the uninsured.

Theprinciples and theories of economics are important during planningand implementation of policies in each health center. Application ofappropriate theories, whether in macroeconomic or microeconomicenvironments, will result in the positive output from the healthcenters. The customers will meet their expectation of high standardsof health care while the organization will realize a huge profit.Each organization must also have a target and set the strategiestowards meeting it. The economic theory of supply and demand isdeemed the best for the healthcare industry in general. Byreducing the cost of medical services and products, there is increasein the demand for the facilty’s medical services. Nonetheless, thelegislation made by the government barricades it from its sole goalof profit making. However, the Center has always resorted toingenious ways to register profit gains in its financial statements.


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