Graduation Year

Spring 2013

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Doug McEachern

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© 2013 Steven C. Zima


This thesis explores current trends in the healthcare market as they relate to risks faced by small to medium-sized tax-exempt community hospitals and hospital systems. The topics and trends covered are divided into three overarching categories: compliance risk, reputational risk, and operational risk. Compliance risk explores electronic medical records and the meaningful use requirement, the switch to ICD-10, RN-to-patient staff ratios, and litigation under the False Claims Act. The reputational risk section involves a discussion of actions which can be leveraged to improve reputation, community outreach programs and charity care, and actions which hurt reputation, litigation arising from mal-practice and wage-an-hour lawsuits. The reputational risk section also includes a discussion of how providers can leverage quality care to build a reputation in the context of a payment for value system of reimbursement. Operational risk includes a discussion of: the Affordable Care Act specifically accountable care organizations and the Value Based Purchasing Program for Medicare reimbursements; competition to community hospitals, for-profit organizations and specialty hospitals; challenges associated with raising revenues; challenges associated with cutting costs; a discussion of the viability of stand-alone hospitals in current market conditions; and a discussion of internal controls especially as it relates to physician peer review. The market trend of healthcare payers demanding value rather than simply volume from providers is discussed in depth throughout the paper. The ultimate goal is to look at these risks and trends from the viewpoint of an auditor working under the business understanding approach, a manager, and a board member.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.