Case 6: Tulsa Memorial Hospital49doors. Furthermore a review of several years of financial data revealed that TMH’s urgent ‘care center does not have a pronounced seasonal utilization pattern. Next, Nicole met several times with the center’s administrative director. The primary purposevetobo the meetings was to estimate the addi-tional costs that would have tefflumedrose alp currentFuary/February average level of 45 per Any incre-mental usage would require additional ex endlitiusres for administrative and medical supplies, estimated to be $4.00 per patient visit for medical supplies, such as tongue blades and rubber gloves, and $1.00 per patient visit for administrative supplies, such as file folders p rs and clinical record sheets. Because of the relatively low volume level, the urgent care cen-ter has purposely been staffed at the bare minimum. In fact, some center employees have started to grumble about not being able to do their jobs well because of overwork. Thus, any increase in the number of patient visits would require immediate administrative and medical staffing increases. Furthermore, as the number of visits increase, the center would have to hire additional staff members. The incremental costs associated with increased volume are summarized in Exhibit 6.2. The urgent care center’s building is leased on a long-term basis. TMH could cancel the lease, but the lease contract calls for a can-celation penalty of three months’ rent, or $37,500 at the current lease rate. In addition, Nicole was startled to read in the newspaper that Baptist Hospital, TMH’s major competitor, had just bought the city’s largest primary care practice, and Baptist’s CEO was quoted as say-ing that more group practice acquisitions are planned as the hospital moved to embrace healthcare reform. Nicole wondered whether Bap-tist’s actions would influence the decision regarding the urgent care center’s fate. , Finally, Nicole met with Amanda to learn more about the proposed marketing program. The primary focus of the new marketing program would be on occupational health services (OHS). OHS involves provid-ing medical care to local businesses, including physical examinations for managers and employees; treatment of illnesses that occur during working hours; and treatment of work-related injuries, especially those covered by workers’ compensation. Although some of the clinic’s cur-rent business is OHS related, Amanda believes that a strong market-ing effort, coupled with specialized OHS record keeping, could bring additional patients to the clinic. The proposed marketing expansion
