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Medium Profitability

Circling The Drain

#Healthcare
ProHub Comment

This case requires candidates to diagnose a profitability problem despite stable patient volume by analyzing revenue per patient across insurance types. The core insight is that reimbursement rates—not operational efficiency—are the primary driver of margin compression, with public insurance rates falling dramatically while costs increase.

Estimated Time 15 minutes
Difficulty Medium
Source Wharton
50 / 100
Princeton-Plainsboro Hospital is a large single-site hospital in New Jersey serving a wide range of patients. The hospital’s board is concerned because they have noticed a decline in the hospital’s earnings from medical services even though the number of patients has remained static. The hospital has hired you to help them figure out what the problem is and to come up with a strategy for increasing earnings.

Clarifying Information

  1. Patients have a variety of insurance - from private insurance, to public (government) insurance (Medicare/Medicaid) to being uninsured
  2. The hospital provides outpatient services, and inpatient surgeries which include hips and joints replacement, cosmetic surgery and elective procedures for weight loss. Additionally, it has a state of the art emergency room, ICU and Neonatal ICU (for babies)