Management case study

 

Last Chance Hospital By: Susan Judd Casciani

Last Chance Hospital (LCH) is a 254-bed, community hospital located in a small,

affluent suburb, just outside of San Diego, California. The hospital has historically been well received by the local community, which demographically has a higher concentration of older age groups than most other local areas. The greater San Diego area is densely populated, and over twenty-five hospitals operate in the larger geographic area. Historically, LCH had always been financially sound, and had managed to remain independent as their local competitors joined larger systems. But that was then, and this is now. About a year ago, Last Chance Hospital undertook a strategic planning process to encompass the next years. At the time, the hospital was doing okay financially, but was starting to dip into their cash reserves more often than the Board of Trustees liked; LCH was in need of an ideal strategy to bring them ahead of the market before things got out of hand. As the strategic planner for LCH, Russ Newmarket reported indirectly to the CEO, Marvelous Marvin, but his immediate boss was Courtney Graveyard – and she had a lot on her plate. LCH did not have a chief nursing officer, and as COO, Graveyard was responsible for all of the nursing departments as well as surgical services, facilities, and information technology. A nurse by background, Graveyard spent the majority of her time trying to find different ways to recruit much-needed nursing staff. During the development of the strategic plan, Russ called together the usual group of senior executives, Board members and key physician leaders. He diligently developed the SWOT using their input and applying their assumptions. During his market research, Russ became aware of some patient-centric trends emerging across the country, but he was also aware that LCH had always strategically catered more to physicians due to the notion that physicians were the ones who ultimately referred patients to the hospital. Through the strategy development process, it became clear that senior management was stuck on this physician-centric mindset. Russ, ambitious and eager to make a name for himself, found and presented valid information that concurred with management’s mindset. At the end of the planning process, Marvelous Marvin felt confident that their solo, physician-focused strategy would give them a market lead-- the plan was to attract more surgeons--and increase OR volumes. Graveyard was under intense pressure from Marvelous Marvin to make sure the operating rooms were as efficient as possible to handle the planned increase in volume as OR efficiency would be a key recruitment issue for surgeons. The LCH physician recruiter was under the gun as well. The remainder of the executive staff breathed a collective sigh of relief that their areas were not part of the strategic initiative. Russ suspected LCH needed more of a strategy than attracting new surgeons, but he convinced himself that senior management knew best. After the Board approved the strategic plan, Graveyard immediately met with her OR Director, and charged him with increasing the efficiency of the ORs. She then turned her focus back to her first love, nursing. The physician recruiter hit the ground running, developing an elaborate plan to increase surgeon recruitment. From all appearances, LCH was on a roll. Over the next several months, the OR Director was able to reduce the OR’s operating budget by 13%, a result that made Marvelous Marvin very happy. At the same time, Graveyard made great strides in increasing LCH’s exposure to and status in the nursing community, and was able to decrease the nursing vacancies by over 6%. In a time of nursing shortages, the Board was impressed with Graveyard’s results. The physician recruiter was having only moderate

 

success at recruiting surgeons however, and her targeted volume projections were noticeably under budget. Marvelous Marvin approved her request to increase her staff, adding approximately $250,000 to her budget line. Overall patient volumes were steadily decreasing at what was becoming an alarming rate, and thus the financial picture for LCH was in critical condition. Marvelous Marvin couldn’t help but wonder aloud, “Why isn’t the LCH strategic plan working?”

The ‘Real Picture’ Behind the Scenes: The OR Director accomplished the decrease in operating budget by reducing staff (both clinical and administrative), cutting back on inventory levels, and consolidating surgeon block times (the blocks of OR time reserved for each specific surgeon) such that each surgeon now had all of their block time on the same day. Surgeons were upset about their lack of flexibility for scheduling time, and began to seek OR privileges at competing hospitals. Anesthesiologists were frustrated with the lack of administrative support in scheduling and the reduction of clinical support staff, and showed their discontent by showing up late for each surgery. Patients were upset because they often had to be rescheduled or were delayed for hours due to a lack of equipment or staff. Graveyard was able to decrease nursing vacancy not due to increased recruitment and retention, but due to decreased staff positions. The OR Director’s clinical staff cuts in the OR, combined with Graveyard’s replacement of many floor RNs with lesser qualified staff, led to fewer nursing openings to fill. As a result of this change of staffing on the floors, patient complaints had increased significantly. The remainder of the senior management staff, although not ‘directly involved’ with the strategy, tried to support Marvelous Marvin’s goals by applying a physician-focused approach to their day-to-day decisions. This was achieved by turning prime patient parking spaces into physician parking. Additional key physician leadership positions were also created, costing hundreds of thousands of dollars, and physician support staff had nearly doubled requiring patient waiting areas to be reduced in size to make room for the increase in staff. Meanwhile, with the increase in information available due in part to the Internet, patients were becoming increasingly more knowledgeable and powerful in healthcare decision-making. They were no longer relying solely on physicians for their healthcare decisions, but had become accidental partners with them in things such as the choice of hospital. As such, the consumer- physician partnership had become an incredibly powerful market force -- one that LCH had not planned for.

 

CASE ANALYSIS AND WRITE-UP INSTRUCTIONS: There are 5 major categories listed below (labeled 1-5) that need to be addressed when analyzing and writing up your case. Each category can be answered in one paragraph (or two at the very most). Your write-up should be structured in a manner that follows the categories below (i.e. your write-up should begin with the background statement, then flow into the major problems and secondary issues, and go all the way to evaluation). Be sure to address each category and the specific questions and tasks underneath each category. Your analysis should flow in a logical manner from start to finish. If it helps you to number your paragraphs please do so. Found in your textbook in Chapter 17, pages 370-372

1. Background Statement a. What is going on in this case as it relates to the identified major problem?

i. What are only the key points that the read needs to know in order to understand how you will solve the case?

ii. Summarize the scenario in your own words iii. Briefly describe the organization, setting, situation, who is involved, who

decides what, and so on. 2. Major Problems and Secondary Issues

a. Specifically identify the major and secondary problems. b. What are the real issues? c. What are the differences? d. Can secondary issues become major problems? e. Present analysis of the causes and effects. f. Fully explain your reasoning.

3. Organizational Strengths and Weaknesses a. Identify the strengths and weaknesses that exist in relation to the major problem.

Your focus here should be in describing what the organization is capable of doing and not doing with respect to addressing the major problems.

4. Alternatives and Recommended Solutions a. Describe the 2 to 3 alternative solutions you came up with. b. What feasible strategies would you recommend? c. What are the pros and cons? d. State what should be done – why, how, and by whom? Be specific.

5. Evaluation a. How will you know when your recommended solutions (part 4) have moved the

organization in the right direction? b. There must be measurable goals put in place with the recommendations. Money

(revenue) is the easiest to measure; what else can be measured? c. What evaluation plan would you put in place to assess whether you are reaching

your goals?