Last Chance Hospital (LCH) is a 254-bed, community hospital located in a small,
ID: 433151 • Letter: L
Question
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 25 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 five 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 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?”
DISCUSSION QUESTIONS
1. In Russ’s role as strategic planner for LCH, what should he have done differently that would have positively affected the outcome of the strategic plan execution?
2. What should Marvelous Marvin have done differently as CEO in order to avoid the current situation?
3. What political factors created bias and clouded judgments in this situation?
4. Who’s to blame for the bad outcomes of this strategic plan?
5. If you were one of the OR Director’s direct reports/managers, what should your involvement in the organization’s strategy have been?
The purpose of this assignment is to understand Risk Exposure
Assignment Description:
Step One: Read the case study "Last Chance Hospital" located in Chapter 18 of your textbook.
Step Two: Answer the five questions at the end of the case study.
Step Three: Identify and explain 2 (two) risks that Last Change Hospital is facing.
Step Four: Identify and explain a way to minimize each risk.
Step Five: Create a 2 page APA formatted paper which contains your responses to questions, two risks, and two ways (one for each risk) to minimize the risk.
Explanation / Answer
1. During development of the strategic plan Russ was aware of the upcoming trend that showed patient-centric approach of hospitals. Instead of following that he chose to stick with physician-centric approach of LCH. This was due to the fact that he was working with the existing personnel from the hospital who were used to the physician-centric approach. This made their strategic approach completely out of sync when compared to the market forces and cause the plan to fail.
2. Marvelous Marvin chose to stick to their regular approach to problem solving through physician-centric approach. He should have asked Russ Newmarket to explore the new market without any bias.
3. The main political factor that created bias was the need of Russ Newmarket to impress his boss Marvelous Marvin and Courtney Graveyard. This in turn clouded his judgement and they chose the wrong path to the strategic solution.
4. The blame of the bad outcome needs to be borne by all three key stakeholders. Russ Newmarket was heavily influenced due to his political alignment, Marvelous Marvin had a myopic vision and did not explore new opportunities, and finally the bridge between the two, Courtney Graveyard was too involved in recruitment of nurse rather than the organization’s strategic goals.
5. As a direct report, I probably would not be in the meeting with Russ and the others. However, as a manager I would have asked question about the purpose of the strategy. The problem statement was to make the hospital financials more stable. In order to do that, following outdated and old approach may not have been a good idea. I would let this be known in the meeting.
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