Last Chance Hospital Case study
Order Instructions:
Last Chance Hospital- Case Study
Read the Case Study below. Answer the following questions:
- What are some of the planning strategies that Russ might have used that would possibly have positively affected the outcome of the strategic plan execution?
- Discuss some things Marvelous Marvin could have done differently as CEO in order avoid the current situation?
- What political factors created bias and clouded judgments in this situation?
- Who’s to blame for the bad outcomes of this strategic plan?
- If you were one of the OR Director’s direct reports/managers, what should your involvement in the organization’s strategy have been?
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Last Chance Hospital – Case Study
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?”
SAMPLE ANSWER
Case study: Last Chance Hospital
Strategic management in health care institution is crucial in determining long-term and short-term performance. In most cases, effective measures are the ones that bring in short-term success and sustain it in the long-term. However, there are situations where strategies may offer varied outcomes for both short-term and long-term. For instance, they could result in unfavorable short-term outcomes but end up being fruitful in the long-term. Likewise, strategies may at first appear to yield much, only for them to end up being faulty in the long-run. This paper considers the case of Last Chance Hospital (LCH). The hospital has been running a physician-centered system for long. In the earlier days, the hospital had secured a desirable position in the market. In a bid to increase the efficiency in operating rooms (OR), the hospital enhanced its physician-centered system. Contrary to the expectations of the hospital, the move did not attract as much surgeons, and to make it worse, it resulted in decreased number of customers.
Effective Planning on the Part of Russ
Russ stood an appropriate chance to direct planning strategies at LCH. There are some strategies that he could have employed so as to land the hospital to prosperity. First, he could have utilized his knowledge of the emerging patient-centered trends. On his part, Russ had made a mistake by assuming that the senior management was right before questioning their awareness of the recent trends. The strategic planner should have explored the trends further, collected sufficient evidence either approving or disapproving the approach, presented it to the board and advocated for its consideration. By so doing, Russ would have ensured that the organization deeply understood patient-centeredness. According to Rhodes, informing an entire organization about alternative strategies is a basic step for effective strategic planning (2010). Second, Russ should have advised fellow planners at LCH to make their plans flexible. Such an approach could have enabled the organization to shift timely and effectively so as to overcome the presenting challenges. Russ could also have advised the organization to consider equally the views of all parties rather than just those of a few leaders. This would have presented a better position for contrary views that could have possibly been accepted by the organization. Again, when conducting a SWOT analysis for the organization’s strategy, the planner should have adequately considered the impending threats. Russ knew that other hospitals were focusing their care on the patient. On the other hand, LCH was heading to the opposite directions. It was almost unquestionable that the threats that the hospital was to face would have been severe. Lastly, the planner should have used his position to protect the competitive advantage of the organization. Shifting too much to physician-centeredness was definitely a deviation from competitiveness, more so from the perspective of the patients.
Possible Effective Strategies that Marvin could have Applied
Hospital CEOs have the primary role to make strategies (Higginbotham & Church, 2012, p. 295). Marvin’s plans to have LCH stick to its physician-centeredness did not yield to his expectations. The executive made several mistakes in his projections. The greatest was an obsession with the institution’s cultural strategies. The obsession with the old ways blinded him so that he could not explore new approaches. The executive failed to notice the emerging trends of patient-centeredness. It is for this reason that he passionately advocated for the enhancement of physician-centeredness without any considerations for patient-centeredness. His obsession with old culture and ignorance about the new strategies placed him at the risk of making uninformed decisions. The other critical mistake that Marvin made was focusing on change rather than a sound plan. The executive purposed to institute change in the organization without necessarily fitting it to an efficient plan. For instance, Marvin pushed Graveyard to increase efficiency in the OR but did not necessarily establish how effective increasing the number of surgeons would have been in generating revenues for the institution. Considering that Marvin did not have efficient plans, it was not surprising that the organization did not manage to increase its surgeon staffing. Lastly, Marvin focused on short-term but did not address long-term problems. She addressed the problem of having many patients by thinking about increasing the number of surgeons. Definitely, sufficient surgery staffing meant facilitated service delivery to the institution’s large number of customers. However, centering too much on physicians at the expense of patients had certain long-term implications for the organization. First, the approach would barely be in the favor of patients, and therefore, it would have compromised their loyalty to the hospital. Again, the approach was contrary to that of neighboring hospitals. This meant that the institution competitors would have used the cons of the strategy in securing a larger market share. While advocating for the strategy, Marvin should have considered its impact on other competitors.
Political Factors that Influenced Decision-Making
The judgment developed at LCH concerning the strategy to adopt was impaired by political determinants. For instance, the influence of executives was too much and it was unbalanced with that of other stakeholders. The opinions of leaders counted more to decision-making than those of their juniors. An excellent illustration is the case of Marvin and Graveyard. Marvin was senior to Graveyard and he directed Graveyard to execute the plans of orienting service delivery to physicians. The interaction reveals that Graveyard’s opinions did not count as much as those of her senior. Another instance of political influence in the case is the position of Russ compared to that of the senior management. Though Russ had information about an alternative approach to service orientation, the weight of his opinion is compromised by the event that his seniors opted to stick to their old ways. Eventually, the strategic planner had to make a decision that impressed LCH senior staff by going by their opinion in undertaking his planning role. Al-Sawai noted that though leaders are expected to make strategic decisions for their firms, there is a need for them to do so upon considering the thoughts of their juniors (2013, p. 86).
The Blame
Different departments are charged with varied responsibilities in health care institutions (Al-Sawai, 2013, p. 85). In LCH, it could be argued that Russ and his department were charged with coming up with strategies for the hospital. However, there were other stakeholders playing within including Ms. Graveyard and her department. Russ was reporting to the hospital CEO through the COO. As such, the role of strategic planning was not placed on Russ solely, but Ms. Graveyard and Marvin counted more or less equally. On his part, Russ suggested a possible alternative that was the trend in running services in hospitals. However, the planner did not push enough to convince the management to buy his proposal. The case presents Marvin making uninformed decision, yet Russ had information concerning the patient-centeredness. It was upon Russ to gather sufficient evidence and advocate for patient-centeredness. In addition, the strategic planner should have informed the organization about the threats associated with their physician-centered approach. On her part, Ms. Graveyard was not proactive in determining the logic of implementing Marvin’s strategies. She should have evaluated the effectiveness of the approach in facilitating service delivery at the hospital as well as its possible impact on patients. Ms. Graveyard was heading service delivery and she should have been an advocate for the patients. Marvin is also to blame. As Farbrot noted, CEOs have the greatest impact on determining whether organizations would fail or not (2010). Marvin was too much obsessed with the old ways that he failed to appreciate the suggestions made by Russ. The CEO should have welcomed contradictory views and encourage their substantiation.
OR Director’s Direct Manager’s Involvement
Direct report employees are essential for efficiency of management in organizations. In the case scenario, direct report personnel to OR directors could have worked actively in helping managers implement their strategies. This would have involved giving instant feedback on adopted strategies and timely pointing out their shortcomings and strengths. This would have helped directors to learn the need to reconsider their strategies early enough and avoid heavy losses. The direct reports would also have facilitated interactions between managers by encouraging consultations. The move would have created high chances for the development of effective opinions. Direct reports would also have been involved in emphasizing the strengths of their directors. For instance, they could have pointed out strategies adopted by their managers that would most likely benefit their organization. In so doing, direct reports would have let their mangers know their strengths and how such strengths apply to specific tasks (Adkins, 2015). For the case of LCH, such strengths include advocating for patient centeredness.
References
Adkins, A. (2015). Only 35% of US managers are engaged in their jobs. Retrieved from http://www.gallup.com/businessjournal/182228/managers-engaged-jobs.aspx
Al-Sawai, A. (2013). Leadership of healthcare professionals: where do we stand? Oman Medical Journal, 28(4), 285–287.
Farbrot, A. (2015, May 7). CEOs take credit for successful mergers but blame failures on culture. http://www.bi.edu/bizreview/articles/ceos-take-credit-for-successful-mergers-but-blame-failures-on-culture/
Higginbotham, E. J., & Church, K. C. (2012). Strategic planning as a tool for achieving alignment in academic health centers. Transactions of the American Clinical and Climatological Association, 123, 292–303.
Rhodes, M. (2010). Five essentials of an effective strategy. Retrieved from http://managementhelp.org/blogs/strategic-planning/2010/06/07/five-essentials-of-an-effective-strategy/
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