East River Medical Center
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East River Medical Center
East River Medical Center
East Chestnut Regional Health System (ECRH) was founded ten years ago by the amalgamation of three organizations: East River Medical Center, Northern Mountain Hospital Consortium, and Archway Hospital.
East River Medical Center (ERMC) (ERMC)
The system’s anchor hospital is ERMC.
The medical center is located on the east bank of the Chestnut River.
Historically, ERMC was regarded as the preferred venue for medical care.
However, in the recent 3 to 5 years, this reputation has deteriorated.
ERMC has found itself on the verge of an urban blight as the city of Chestnut has expanded.
Patients, visitors, and physicians who use and serve at the medical center have expressed concern about their safety.
The medical center’s technology has been kept at an exceptionally high degree of competency.
At the same time, the medical staff is aging, with physicians on average being 57 years old.
Although there are younger primary care physicians who service the specialists, the specialists themselves are aging.
ERMC has a Level 1 Trauma Center as well as an air service.
The ERMC has a total of 550 licensed beds.
On any given day, there are 300 people on the beds.
Northern Mountain Hospital Group (NMHC)
NMHC was founded in response to the influx of patients to Chestnut.
Because of the aggressive techniques employed by the hospitals in Chestnut, these rural hospitals chose to form a consortium of rural hospitals in order to reap economies of scale in a variety of areas, including group purchasing, benefit administration, and physician and staff recruitment.
They also collaborated to prevent future deterioration of their market share.
Patients were choosing to seek services in larger areas rather than the smaller communities that surrounded the Chestnut metropolitan region.
Individual hospitals were represented by NMHC in the four counties that surrounded Chestnut County: Walnut, Butternut, Oak, and Maple.
Walnut and Butternut Counties had a lot of jobs, whereas Oak and Maple Counties were primarily rural.
The inpatient facilities in each county were on average roughly 20 years old.
These facilities’ upkeep has been shaky.
No major upgrades are required, but modernisation is required.
The state lacks a Certificate of Need (CON) procedure.
Each location’s medical personnel is unique.
Oak and Maple Counties’ hospitals are critical access hospitals.
More information about these organizations will be supplied later in the case study.
Archway Medical Center (AH)
AH is located in the Chestnut neighborhood.
It is entirely located in the community’s urban area.
The hospital has 200 registered beds, however on any given day, only 50 to 75 patients are present.
This hospital was a Doctor of Osteopathy (DO) hospital, hence the majority of the physicians that worked there were DOs.
This hospital’s payer mix was strongly influenced by Medicare and Medicaid.
This payer mix accounted for roughly 85 percent of total compensation.
The facility is in need of extensive repairs due to its age.
It is debatable whether the investment in this facility will be worthwhile.
Organizational Culture and Leadership
The first merger that resulted in the formation of the East Chestnut Regional Health System (ECRH) occurred ten years ago.
This was a merger between ERMC and AH.
At the time of the merger, AH had a pretty energetic boss who was roughly 57 years old.
Following the merger, the AH CEO was named President and Chief Executive Officer of ECRH.
Because this CEO had only worked in a smaller firm, he had not seen the cultural changes and expectations that occur after a huge organization merges.
In addition, he began to modify the organization’s culture so that choices were made on a decentralized basis.
He trusted the AH management team to do the right thing and make the correct judgments with little oversight.
However, the Chief Operating Officer (COO) appointed was originally from AH and left two years after the merger, with a new COO appointed.
This COO earned a bad reputation for wanting to construct his own empire at AH and for being dishonest at times.
This notoriety fostered a culture within traditional AH that lacked a unified team effort to develop a system.
The President and CEO of ECRH ignored the COO’s positioning since he was actively seeking the purchase of NMHC.
The NMHC hospitals were performing well, but those in the consortium recognized that their capacity to stand alone in today’s market was becoming increasingly difficult.
When the consortium’s leadership analyzed the market for a collaboration, they determined that ECRH would be the best choice.
The other alternative was to establish a for-profit hospital in Chestnut.
The leadership was drawn to what they witnessed with AH.
They liked how the system’s central leadership allowed AH to continue as its own entity without a lot of centralized oversight.
By the time all of this was put together, ECRH’s President and CEO was on the verge of retirement.
He left the company around three years after the transaction was completed.
During those three years, he slacked off as a leader.
During this time, ECRH’s market share and profitability declined.
Following his retirement, the ECRH Board of Directors conducted a national search for a replacement.
Hunter Brown was hired as the new President and CEO.
Mr. Brown was the CEO of a smaller health institution, a job he had held for nearly ten years.
As a result, he had minimal experience in the art of strategy execution in other markets.
He was, nevertheless, well-educated, clever, and fluent in conveying his knowledge.
For the past nine months, he has served as President/CEO of ECRH.
There is a freshly hired corporate counsel on the rest of ECRH’s leadership team.
She has 15 years of experience and is incredibly knowledgeable about her field.
In addition, the CEO hired a new Chief Financial Officer.
He has made significant progress in controlling accounts receivable across the system and deriving outstanding revenues from high-quality supply chain management.
The new Chief Operating Officer (COO) comes from the same organization as the CEO left and has three years of expertise.
The former leadership team’s Chief Medical Officer (CMO) has been retained.
His reputation is great, and he gets along well with other doctors, including the medical staff and employed doctors.
The Chief Nursing Officer (CNO) is about to retire in three years.
She is notorious for not getting along with the medical personnel and will always protect nursing even when it is not suitable.
The Senior Vice President of Human Resources is knowledgeable and well-liked by management and employees across the firm.
The rest of the leadership team remained from the previous era.
Information technology, employed physician group leadership, marketing, personnel resources, and other vice presidents or directors in charge of various service lines were all included.
It should be emphasized that the EPIC system is still being implemented by the IT leadership.
The future of this team is dependent on how well the system is implemented overall.
Similarly, employees in the marketing department will need to be outstanding in senior leadership advice on the marketing of complicated issues that will be addressed in the future.
They have been advised that if marketing misses the mark, replacements will be made within this area.
The new CEO took over the AH and NMHC management teams.
The organizational structure of NMHC was preserved, with the COOs of each of the individual hospitals remaining in place.
This traditional structure was agreed to be preserved for at least five years.
This arrangement was coming to an end, and the new CEO intended to replace the old structure and management.
This adjustment was being considered for the formulation of this year’s strategic strategy.
Even if the NMHC structure were to be adjusted to provide for a more direct contact with corporate leadership, all of the current COOs would be kept because they have performed effectively since the merger.
The COO of AH has lately been fired.
An interim COO has been appointed in the meantime, awaiting the board’s approval of the hospital’s closure.
Competitive Analysis
ECRH was not the sole care provider in the community.
Banford Medical Center (BMC) was a for-profit hospital that had been purchased roughly ten years ago by a huge publicly traded for-profit health organization.
The for-profit health-care system was the country’s largest.
As a result of ECRH’s and its leadership’s deficiencies, the CEO of this hospital was skilled at maximizing performance.
He was a skilled opportunist.
BMC has 400 registered beds, with an occupancy rate of 85%.
They have been successful in stealing market share from ECRH.
BMC has showed proportional gains for each loss of ECRH’s service line market share.
Following the acquisition of BMC, the for-profit moved quickly to construct a new facility.
This new facility is positioned on the community’s developing rich outskirts.
Furthermore, at the time this new facility was built, the for-profit syndicated ownership was transferred to the physicians.
The community’s obstetrics and gynecology physicians had the highest degree of syndication.
As a result, ECRH’s women’s services declined.
It should be highlighted that this physician syndication occurred before to the passage of the Affordable Care Act, which prohibited physicians from owning hospitals.
It is critical that additional information about ECRH be provided.
BMC recently sold ECRH 100 acres of land across the interstate.
This property is situated northwest of Chester.
The plan is to eventually construct a new medical center on this site.
The basic planning for this land has been completed, and it has been approved for the construction of a regional oncology center on this site.
The project is already under development, with a completion date of 6 months expected.
In addition, ECRH has an orthopedic hospital linked to the current ERMC site, as well as a behavioral health hospital.
ECRH also includes two ambulatory surgical centers, which are ideally positioned on the community’s rising northwest and southwest sides.
On the 100-acre development plot, there is only one surgical center.
The orthopedic hospital has done well and is now ranked among the top 100 orthopedic hospitals in the world.
However, because the mental health hospital is losing money, the ECRH Board of Directors has decided to close it.
ECRH has also collaborated with radiologists to establish a joint venture imaging center.
This center is located across the street from a major shopping area in the community.
It is ideally positioned near densely populated areas as well as shopping.
The sole disadvantage is that the center is not adjacent to any medical offices that might send patients to it.
However, if a new building, including physician offices, is developed on the 100 acres, the imaging center will be in a perfect location.
On the 100-acre location on the northwest side of Chestnut, leadership is constructing a free-standing emergency center.
The final competitive issue is the location of a medical school and hospital in Chestnut.
The institution is located in the heart of the city.
The state established this medical school nearly 45 years ago, and it is affiliated with Greenbranch University.
It mostly serves the impoverished town of Chestnut and the surrounding area.
This academic center has a fairly bad reputation among the neighboring community.
There are four other medical academic centers in the state, as well as a world-renowned medical center.
There have been persistent allegations that this world-renowned organization was planning to take over the Chestnut academic center.
If this occurred, it would significantly alter the complexion of the local medical community.
ECRH must act quickly in order to address some of its market difficulties.
Additional Market Data: Demographics of the Population
County of Chestnut
Chestnut County is the sixth most populous county in Pennsylvania, with 433,689 residents.
Caucasian (70.1 percent), African American (18.5 percent), and Hispanic (18.5 percent) are the main racial/ethnic groupings in Chestnut County (6.5 percent ).
The median household income in Chestnut County in 2015 was $41,777.
Nonetheless, 21.1 percent of Chestnut County people are poor.
Chestnut County people have a median age of 37.7 years.
Chestnut County has a high level of employment.
The unemployment rate is 4.5 percent.
Employer variety is robust because the community is not reliant on a few large firms.
Some high-tech professions are available, as is general manufacturing to serve the automobile sector, and the region is home to a big institution, Greenbranch University.
The university has 25,000 students and provides a wide range of degrees, including engineering and nursing.
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