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Free «The Carilion Case» Essay Sample

Analyze the extent to which cost inflation (resulting in higher costs compared to reimbursement changes over time) has impacted Carilion’s bottom line.

Cost inflation is a situation where the general prices of commodities, goods or services increases resulting from an increase in the cost of essential services and goods where no suitable alternatives are available (USDOJ, 2008). Such essential commodities include cost of wages (salaries), raw materials, expensive labour and increased externalities. A reimbursement is a compensation for money already spent or lost. Over time, the cost of operations within the Carilion facility has gone up due to cost inflation. This has prompted the administration to adjust their prices upwards causing a backlash from the community and media who view the move as monopolistic. The overall cost profile for the institution has gone up. Carilion provided $42 million in charity care in 2007 and an additional $25 million in free care, that is, bad debt that was written off (Rakich et al., 2010). Undoubtedly, these measures have changed over time. In a bid to serve the community while earning more, prices and contracts have been adjusted to accommodate changing times. Using expense data as a percentage of total revenues, the establishment adapted contractual measures to combat inflation (Williams, 2012). These resulted in the reduction of bad debts, charity and expenses.

Discuss a compensation strategy to rein in high physician costs facing Carilion clinic.

If uncontrolled, the new policies and practices adopted at the Carilion Clinic may become a monopoly. The practices and policies are likely to spread to other parts of the country thereby changing the entire medical society. It is clear that the American medicine practices stand at a crucial crossroads. The inevitable multiple economic forces are conspiring to push dramatic changes within the healthcare system and this automatically spills over to the community (American Hospital Association and Kaufman, 2012). In order to control the high physician costs facing the Carilion Clinic, a compensation strategy will have to be implemented. This can be achieved through a well balanced salary scheme that puts into consideration the physicians’ expectations and the need to compensate. A common strategy may involve basing salary and a productivity incentive together with an opportunity to earn more for quality work and goal attainment (American Hospital Association and Kaufman, 2012). However, these adjustments must be in line with the prevailing market rates in order to minimize the risk of creating a monopoly.

To make Carilion clinic a cost competitive health system to compete for customers in health exchanges, outline a strategic marketing plan for Carilion Clinic in 2014.

As part of its ongoing efforts to become a cost competitive health system, improve access to health care and compete for customers in health exchanges, Carilion Clinic should come up with a strategic marketing plan in 2014 that is a reflection of the current economic times. An effective marketing plan should begin by a change of management in order to gain goodwill in the community (Lyle and Spallina, 2006). The marketing strategy should also consider vigorous advertisement and particular interest in not only print but also social media which is a large platform in this era. Promotional events and subsidized medical care will also be an added advantage for the establishment which has a wide array of medical institutions. Aggressive marketing will help to create an existence and charisma in the community (Lyle and Spallina, 2006). This may be reached through giving high school talks, hospital talks, free emergency response and doing volunteer work.


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