Case Study – Last Chance Hospital
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. However, 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 could not help but wonder aloud, “Why isn’t the LCH strategic plan working?”
Construct a response in which you discuss the following from the case study below:
In Russ’ role as strategic planner for LCH, should he have done something differently that would have positively affected the outcome of the strategic plan execution?
What should Marvelous Marvin have done differently as CEO in order to avoid the current situation?
How can managers integrate ethics and social responsibility into marketing strategy?
What political factors might have created bias and clouded judgments in this situation?
Who is to blame for the bad outcomes of this strategic plan?