Case study

Southeast Medical Center Case Study Review


Southeast Medical Center, commonly known as SMC, was started in 1920 as a publicly owned hospital. At the beginning it had a capacity of 250 beds. However, it has been on continued expansion process since its establishment increasing not only in the bed capacity but also in the range of activities that it deals with. In fact, by the end of the 6th decade of the 20th century, the hospital had more than doubled its bed capacity. In addition, SMC undertook a variety of missions including research, patient care as well as teaching. Other activities undertaken by the Southeast Medical Center include furnishing transplant, neonatal and burn care in the South east.

Governance responsibility for the Southeast Medical Center

The governance of the medical center has been changing as time goes by. When it was set up, it was under the governance of the hospital board. Later on, the governance of the medical institution was given to the city. Later on, an authority for public hospitals took over the governance in 1980 but was replaced in the 1990’s with the privatization of the institution. The privatization put the management of the hospital in the hands of a board which incorporated 15 members.

Operations of the Southeast Medical Center

The importance of the southeast Medical Center in the region cannot be gainsaid. To start with, the facility undertakes referral services both in the region as well as internationally. With not less than 800 beds for acute care as well as having community centers at many places, the institution has enhanced access. The southern Medical Center also engages in provision of programs, information as well as educational resources in an effort to enable the residents maintain their health and fitness. Statistics show that forty percent of patients served by the facility are not from the county.

The southeast medical Center is also used by the university in the locality as its main teaching hospital. In addition, the hospital is used by community colleges and the university in their graduate, baccalaureate as well as associate programs as a clinical site.

Southeast Medical Center incorporates a medical plan which enables the poor to access healthcare. In this case, the medical center is refunded all the expenses for the medical services while costs and rates are reduced in such instances. However, this program has been substantially dropping in the recent times with the state freezing the plan in 1996.

Privatization of the Southeast Medical Center and its implications

In the late 1990s, the medical center underwent privatization. In this endeavor, there were some predictions pertaining to the benefits. The privatization was meant to reduce the impact of political pressure on the operations of the center, lower the tax as well as the regulatory burden, increase the institution’s capacity to obtain funds from donors as well as prop its ability to create joint ventures. As much as these are desirable benefits, it is important to acknowledge that there was a downside too. To start with, the mission of the medical center would change along with a reduction of the charity care and public scrutiny. All these loop sides had implications on the future of the institution.

Results of the Southeast Medical Center Privatization

According to predictions, the medical center was supposed to make enormous profits once it was privatized. However, this was not to happen as the institution had big losses. Officials attributed this to the laws relating to the federal budget and the increase in patients who received managed care services.

However, it is noted that the main cause of the losses was the privatized entity’s inability to handle lien authority. Note that the hospital did not automatically get lien authority once it was privatized. A red flag had been raised on this issue but had been dismissed as a non-issue by the management as well as consultants. In addition, the privatization resulted in loss of financial protection enjoyed by government agencies. In this case, the institutions can be taken to courts of law. Plans have been underway to grant the lien authority to the Southern Medical Center though it has been a bit difficult.


There was clearly a change in the medical center’s mission as testified by the presiding chief executive officer. Provision of medical services to the poor at subsidized rates had ceased to be the institution’s mission. As much as there may have been justifications for this action, county officials acknowledged that there was an element of laxity in considering other pertinent issues. They solely depended on the calculations of the new chief executive officer as to the profits that would be reaped from the privatization. The officials also rue the absence of effective methods of ensuring that the hospital does not renege on its obligation to offer treatment to the poor. In addition, the county had overlooked the fact that the privatization would result to an added burden as there was not a clear mechanism to punish the center if it did not commit to the contractual lease agreement.

It is from these observations that the following recommendations are made.

Incorporation of flexibility in all the structure of the organization

Executives in healthcare systems should give way to more flexibility in the medical institutions to enable them to be more responsive to the particular markets. In this endeavor the vision of the institution should be well understood as well as laid out clearly to allow for more understanding of the implications as well as the benefits by not only the staff but also the clients o r customers.

Flexibility should be exhibited in the flow of information, the structure of the organization as well as process of making decision. This would definitely result to better as well as effective utilization of the resources at the hospital’s disposal. It is acknowledged that after the privatization, employee layoffs were experienced not to mention sale of their property (Raymond, Bruce, 1993). In this endeavor, the medical center should have focused its energies on the organizational resources and not the resources themselves. It is evident that the new CEO of Southeast Medical Center was more concerned about the resources that were being used in the provision of the free or discounted medical plans for the poor rather than the organizational structures of the hospital. This is one aspect that the officials of the county overlooked when they considered the proposal of the CEO without ensuring there was the right infrastructure to safeguard SMCs part of the agreement.

Incorporating flexibility in the handling of information produces more validity as the models can be restructured to suit the situations.

Strategic planning and its proper consultations within the institutions of the organization.

The formal development of a strategic plan was a necessity in the system. This also underscores high interaction between all the institutions concerned. The utility of incorporating a well thought out strategic plan cannot be gainsaid. It results in better decisions, enhanced capacity and energy as pertaining to rallying all behind the cause as well as more customer satisfaction. (Robert, 1994). Obviously, this was not the case with the medical institution’s strategies. A strategic plan provides a sense of direction to the organization while allowing for adherence to the mission. When the team appointed to reverse the situation set camp, it succeeded due to the collaboration with community and political groups in generating more revenue from the state to cater for indigent care. Good strategic planning involves a lot of communication in an effort to make decisions based on understanding of the consequences. This is something that was overlooked by the privatization advocates. They definitely did not consider the process of transferring the lien authority and any delays.

Looking into the customer satisfaction infrastructures

The system should come up with a simple, responsive, lean, customer driven, focused as well as flat organizational structure.

One thing that you will acknowledge is that the hospital had foregone its original mission. In 1999, a new team of officials were appointed with the mandate to turn around the fortunes of the institution. One of its areas of focus was the patients as well as the physician’s needs. Incorporating the physicians in the teams of leadership had the effect of shifting the focus to provision of clinical care of high quality. The shift was no longer on the issues pertaining to organizational structures or legal matters. The new officials incorporated the key mission in the vision thus contributed to the organization’s turnaround.


The importance of sharing information between all the arms concerned cannot be gainsaid. The Southeastern Medical Center underwent a lot of transformation and incurred heavy losses due to the incorporation of a strategic plan that was not well thought out as well as moving away from the time tested mission of the institution. It is evident that the management had lost touch with the aspect of customer satisfaction.

All the stakeholders have to be vigilant and incorporate the appropriate measures to ensure that the interests of the public are taken into consideration and safeguarded.


Raymond, Bruce1993. Industrial Management. London, UK.

John, E. 1999. The importance of strategic planning,

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