Community Health Systems Incorporation

CommunityHealth Systems Incorporation

CommunityHealth Systems Incorporation

SectionI: Research methods

Thevalidity as well reliability of the findings of any research ishighly influenced by the methodology used to conduct the research.The present study will be based on a qualitative research designwhere hardcopy, electronic data bases, and suitable internet sites.The hard copy journals will be obtained from the library, but theircontent should be relevant to the topic in question. The rest of thedata will be obtained from the data base and internet sources. Thiswill be accomplished using the key words and phrases, such as “databreach in health care”, “settlements in health care industry”,“failed marketing strategies in health”, and “non-profitacquisitions in the health care” among others.

SectionII: Literature review

Databreach trends and major targets

Technologicaladvances have helped the health care organizations in many ways,including the enhancement of efficiency in health care delivery andreduction in the cost of care. However, the adopted of technology inthe health care industry has come with its share of challenges, suchas the rampart breach of data stored in the form of electronic healthrecords. Research has shown that personal identification and healthcare information are pieces of information that at the highest riskof breach, where about 78 % of the information breached in 2014 wasaccessed by outsiders (Weiss &amp Miller, S. (2015). Preventing adata breach is an expensive exercise that costs players in the healthcare sector about $ 304 per record. These costs are incurred throughrecord monitoring, charges for outside experts, and call centers.

Negligenceand data breach

Manyhealth care organizations avoid some of the protective measures in anattempt to reduce the cost of adopting and using the moderntechnology, which culminates in serious incidents of data breaches.This means that the majority of the affected health care facilitiesare aware of the risks, but they overlook the protective measures. Aninvestigation conducted by the U.S. Department of Health and HumanService (2015) indicated that the 2010 case of the data breach thataffected the New York Presbyterian Hospital was caused by four majorfactors. First, the impermissibility of the hospital disclosed thehealth care records of about 6,800 clients to the internet searchengines (such as Google) because its system was errantly configured(U.S. Department of Health and Human Service, 2015). Secondly, themanagement of the hospital has failed to conduct adequate analysis onIt equipment, data system, and other IT applications. Third, themanagement failed to adopt he processes for monitoring and assessingdata systems that were connected to patients’ data base. Lastly,the hospital failed to adopt suitable policies for approving accessto client data base. This investigation confirmed that thevulnerability of the client data bases was increased by the failureof the management to take adequate protective measures in spite ofthe fact that the hospital has been using the latest technology.

Customerservice and communication problems

Thelack of appropriate relationship and effective communication betweenthe health care facilities and their clients intensified the impactof data breach, leading to heavy losses. The America MedicalAssociation provides that patients should be notified about theincident of data breach by telling them about the information thatwas stolen and potential consequences of the breach (Sade, 2010).Failure to inform patients and the relevant authorities in time isone of the key types of negligence that have increased privacyconcerns in the health care industry. The Advocate Medical Group lostsignificant patient information in 2013, when password protectedlaptops was stolen from its premises (Vogel, 2014). However, thecompany took a whole month to inform patients about the breach ofabout 4.9 million records. Many patients suffered from identity theftsince their social security numbers had been stolen. This indicatesthat hospitals’ negligence increases the magnitude of loss in theevent of the data breach, while the lack of standard encryptionmeasures increase the vulnerability of electronic medical records.

Impactof industry wide settlements on profitability

Thehealth care is among the most sensitive industries since even minorcases of negligence and unethical practices cost players a lot in theform of settlements. In addition, failure by the health careorganizations to observe any of the large number of rules that guidethe industry leads to heavy fines, and their settlements affects theprofitability of the affected health care facilities. For example,fraudulent billing of Medicare for unnecessary uses of ambulance bythe Hospital Corporation of America (HCA), Jacksonville, and the UFHealth resulted in a $ 7.5 million settlement in a case that wasconcluded in 2015 (Ellison, 2015). This was just one of the hugesettlements that HCA has made in the last one decade. A 38 % profitsdecline in 2011 and subsequent years can be attributed to hugesettlements that HCA has been making over the years (Ellison, 2015).Apart from affecting the profits, the industry-wide settlementsaffect the image of the health care facilities, especially when thesettlements are caused by fraudulent activities or the negligencethat in turn leads to data breach.

Importanceof effective marketing strategies to counter stiff competition

Thehealth care industry is currently more competitive than in any othertime in the history of America. According to Chakraborty &ampMajumdar (2011) the liberalized and globalized business environmenthas forced players in the health care sector as well as other servicesectors to look for strategies that an help them counter the stiffcompetition and maintain their profitability. Health careorganizations have been competing on the basis of a range of servicesand quality of care. Lack of effective strategies to develop thebrand image and convince the target consumes to accept the servicesoffered by individual health care facilities have threatened theirgoing concern and profitability (Chakraborty &amp Majumdar, 2011).The brand image can be enhanced in a competitive market througheffective marketing strategies that designed to inform and convincethe potential clients. The stiff competition coupled with the lack ofadequate marketing strategies has resulted in decline in theprofitability of several health care facilities in the U.S. Forexample, AdCare Health System Incorporation recorded a $ 2.36 millionloss from continuing operations in the first quarter of the financialyear 2015 (Bloomberg, 2015). The heavy financial losses sustained byAdCare and other health care facilities are attributed to a declinein the attractiveness of their acquisitions, stiff competition, andfailure by facilities to meet their obligations to clients.Therefore, the lack of effective marketing and retention ofunprofitable assets and acquisitions has contributed towards adecline in the profitability of health care organizations.

SectionIII: Thesis statement

Althoughthe has managed to grow overthe years through acquisition, the retention of unprofitableacquisitions, industry-wide settlements, and significant databreaches will reduce its profitability and damage its brand image.


Bloomberg(2015). AdCare Health Systems Inc. Bloomberg.Retrieved June 15, 2015, from

Chakraborty,R. &amp Majumdar, A. (2011). Measuring consumer satisfaction inhealth care sector: The applicability of servqual. Journalof Arts, Science, and Commerce,2 (4), 1-12.

Ellison,A. (2015, May 1). HCA hospitals settle fraud case that could havenational implications. Becker’sHealth Care.Retrieved June 15, 2015, from

Sade,M. (2010). Breach of health information: Are electronic recordsdifferent from paper records? TheJournal of Clinical Ethics,21 (1), 39-41.

U.S.Department of Health and Human Service (2015). Healthinformation privacy: Data breach results in $ 4.8 million HIPAAsettlements.Washington, DC: U.S. Department of Health and Human Service.

Vogel,D. (2014). Top ten HIPAA breaches of 2013. DataPipe Incorporation.Retrieved June 15, from

Weiss,N. &amp Miller, S. (2015). Thetarget and other financial data breaches: Frequently asked questions.Washington, DC: Congressional Research Service.