By:Martha Gonzalez, Garvy Sok, Erica Guerra,

Melanie Nguyen and Manuel Redor

Introduction

Statement of the ProblemSibley Memorial

Hospital management had a lack of open-door policy

In 1960, an investment committee and finance committee was created, in addition to the already-existing executive committee.

Board Members include: Stacy Reed, John Orem, Donald Ernst.

Garvy Sok

Statement of the ProblemUnder Ernst direction,

Sibley kept large amounts of money in deposits with certain banks and savings and loan associates. Maintained most of their

liquid assets in savings and checkings rather than in U.S. treasuries or investment securities that would have capitulate higher interest.

Garvy Sok

Statement of the ProblemLack of :

CommunicationDocumentation Power KnowledgeSupervisionEthics

Garvy Sok

Analysis of the Problem

Major Factors:•Donald Ernst maintained exclusive control of hospitals investments

Identifiable Problematic Factors:•Ernst kept confidential records of accounts and balances•The board rarely objected to his requests or actions

Erica Guerra

Analysis of the Problem (continued)

• Board members lacked reading through relevant details of audits

• Investment decisions were left to Ernst

Underlying Causes:• Ineffective communication and monitoring of financial

activities

Erica Guerra

Internal Factors

-The Executive Committee: -Stacy M. Reed: (Board Chairman and

President) -John M. Orem: (Administrator)-Donald R. Ernst: (Board Treasurer)-The death of John M. Orem

Martha Gonzalez

External Factors-Members of the Board of Trustees -The Investment Committee -The Finance committee -Guidelines of the American Hospital

Association (AHA)

Martha Gonzalez

AlternativesMembers should be more active in decision-making

Members should be more involved with the hospital funds investment

Members should fire Ernts and hire a new treasurer

Melanie Nguyen

RecommendationsThe executives should hire

employees who are well qualified and not base it on personal relationships. The chairman of the board hired and executive director because she worked closely with him and he ended up performing poorly.

All the executives should have leadership skills and managerial experience.

Hiring an experienced accountant to handle finances and investments will ensure better decisions for managing the hospital’s money.

Manuel Redor

Recommendations (cont.)Instead of putting money in

checking and savings account, they should put money on investments to yield higher interest.

The executives should have weekly meetings to address problems in the hospital and come up with a suitable solution.

The hospital should pay-off their loan instead of renewing it. They had sufficient funds but elected to renew their loan. This could put them more in debt due to interest build up.

Manuel Redor

ReferencesLongest, Jr., B.B. and Darr, K. (2008).

Managing health services organizations and systems, 5th ed. Baltimore, MD: Health Professions Press.

Rakich, J.S., et al. (2004). Cases in health services management, 4th ed. Baltimore, MD: Health Professions Press.