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Perpetual Mercy Hospital

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1. How would you describe the consumer decision process for patronizing an ambulatory health care facility? (Type of service, initiator)
Based on the case, it appears that customers choose health care services based on what they can afford, the choice of doctors available, services needed, and location. The ambulatory services became popular due to the ability for Perpetual Mercy Hospital to offer services with greater mobility and efficiency than before. Also, consumers tend to choose hospitals based off their needs and the radium in which they work. For instance, some customers have employer-related doctor visits such as workers’ compensation exams and pre-employment exams. These type of exams consist of basic check-ups and fluctuate with hiring by local employers.

2. How would you characterize the DHC’s performance after being open eleven months from a financial, marketing, operations, and hospital-wide perspective?
From a financial and operational perspective, the hospital did not perform well in 1999 and 2000. Based on exhibit 5, there was a net loss each month beginning May 1999 and March 2000. On the other hand, from a marketing perspective, the hospital was successful in sending out referrals to individuals who have private-held insurance coverage. The large amount of Medicare customers prevented the hospital in meeting financial performance goals, in that this type of coverage includes subsidization.

3. What is your prognosis for the DHC next year assuming the 8% increase in average service charges and the reduction in bad debt expense occur, but nothing else?
The two percent reduction in bad debt expense really isn’t enough savings to offset the eight percent increase in service charges. The company has already demonstrated poor financial performance over the past two years and shows a strong probability of losing current customers to the new

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