Question

Jason Michaels has just been hired as CEO of Redstone Memorial Hospital, a 200 bed community hospital in an affluent suburban location. Redstone has an excellent reputation in its community, but the hospital has not changed its business strategy or strategic focus or services in 20 years. As a result, although the hospital excels at “bread and butter” inpatient care (e.g., normal deliveries, appendectomies), it has not developed the medical staff, technology etc. necessary to provide state-of-the-art service for “big ticket” items such as cancer and cardiac care. With the continuing trend to outpatient care for less serious conditions, and increased severity of illness for those that do enter the hospital, over time Redstone’s ambulatory surgery unit has prospered but its inpatient occupancy rates have deteriorated severely. In fact, Redstone has lost much of its high severity inpatient business to University Hospital located in the inner city because of University’s expertise with complicated medical disorders. It is clear to Mr. Michaels that Redstone has to change its business strategy.

a) name and describe the four conditions that require decision making. what problem do you think Redstone Memorial Hospital is facing and describe how should the new CEO make his decision.

(b) Outline a strategy for Redstone that you think makes sense given the circumstances described above. Justify the strategy.

(c) What major issues does Redstone have to address from an organizational change perspective in order to implement the strategy?

(d) How would you go about addressing these issues?

Answer 1

(a) The four major problems that Redstone Memorial Hospital is facing are

1. No change in business strategy, strategic focus or services for over 20 years
2. Under-developed medical staff and technology
3. Inpatient occupancy rates have decreased
4. Lost much of its high severity patients to its competition

(b) As the CEO, one would need to start re-looking at the current business model and think of re-visiting the market realities and align the functioning of the hospital accordingly.

With the onset of the digital age, the hospital should look at this particular domain to connect with its customers. First and foremost, it should look to make a dynamic and a user friendly website. With the kind of popularity it has, the website should contain testimonials of previous patients and how they have benefited from the facility.

It should also host a blog page that can give out regular and updated health practices for general well being of individuals.

There should be ways and means through which website visitors can subscribe for monthly newsletters, updating prospective customers of health camps and discounts on tests and diagnostics.

The hospital should also invest heavily on implementing SEO so that the links can come up for relevant Google searches.

It should look to have a strong social media presence with differentiated content for platforms such as Facebook and Twitter etc.

In terms of hospital infrastructure and upgrading medical staff, the hospital needs to invest heavily on both the counts. As a strategy, whilst hiring young doctors, the hospital should offer residencies and internships. Residencies usually last for 2 years and that is enough a time to decide whether the new recruit is a good fit.

Hospital management should not shy away from investing in medical equipments as well. High end treatment normally has a higher margin making way for better profits.

(c) The biggest challenge in implementing the above strategies are funding for these initiatives. Whilst all these initiatives will require heavy investing, the return on investment will justify every penny spent. Often, convincing board members of the same is the toughest job for a CEO.