XXXXXXXXXX R E V : D E C E M B E R 1 2 , XXXXXXXXXX ________________________________________________________________________________________________________________ Professor Laura Morgan Roberts and...

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Overview :DHA 801 (DOCTORATE HEALTHCARE ADMINISTRATION) COURSE
CASE STUDY
Case Report: Jeanette Clough at Mount Auburn Hospital
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9-406-068 R E V : D E C E M B E R 1 2 , 2 0 0 6 ________________________________________________________________________________________________________________ Professor Laura Morgan Roberts and Research Associate Ayesha Kanji prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2005 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School. L A U R A M O R G A N R O B E R T S A Y E S H A K A N J I Jeanette Clough at Mount Auburn Hospital Sitting in her office overlooking the Charles River, Jeanette Clough reflected on her career. She had been a hospital CEO in Massachusetts for 10 years now, starting with her elevation to CEO at the Waltham Hospital in 1995 and proceeding to her current leadership of Mount Auburn Hospital in Cambridge. The health-care landscape had changed significantly over the last 20 years, and the hospitals that had not been able to keep up with the changes had closed. In the greater Boston area alone, 21 hospitals had shut down since 1980. Mount Auburn’s management had tried to adapt to a rapidly changing health-care industry in which managed care organizations were pushing for greater efficiency and lower costs in the provision of health care. In the context of the evolving health-care marketplace, hospitals, physician groups, insurance companies, the state and federal governments, employers, medical technology and device companies, and patients were facing new incentives and pressures. When Clough first entered as CEO of Mount Auburn in 1998, the Hospital was faltering, laden with financial troubles and internal tensions. There were executives in Mount Auburn’s parent organization, CareGroup, who thought that the Hospital could not sustain itself for much longer. Some predicted that the Hospital would go bankrupt within 36 months. The physical plant was aging and areas of the Hospital had become dilapidated, creating the impression that Mount Auburn was a poor stepsister to the illustrious Harvard teaching hospitals across the river. Skeptics questioned whether Clough was the right person to turn around the situation at Mount Auburn. Her background was unusual—she was a nurse by training who had become a CEO by chance. Over the course of four years, Clough successfully turned around the Hospital. Mount Auburn rebounded from an operating loss of $10 million in 1998, to three consecutive years of multi-million dollar operating margins. Clough had revitalized the organization, repairing and building new relationships between the administration and physicians, and forming strategic alliances with organizations outside the Hospital. She now had to focus on bringing Mount Auburn to the next level as a first-rate teaching hospital, including a challenging campus development plan and an intense capital campaign to fund Hospital renovation and expansion. There were many challenges for Clough to overcome to make the changes she envisioned. To name a few: capital constraints, the state’s regulatory roadblocks, and local neighborhood opposition. Relative to other industries, hospitals were steeped in regulatory oversight by the state, and revenues were derived from a complex system of payments for hospital and physician services, including multiple payors and payment schemes. Moreover, Mount Auburn was landlocked on all sides in a For the exclusive use of A. MOHAM, 2021. This document is authorized for use only by ALYCIA MOHAM in DHA 801 Fall 2021 taught by ATUL GUPTA, Lynchburg College from Aug 2021 to Feb 2022. 406-068 Jeanette Clough at Mount Auburn Hospital 2 residential neighborhood with strict zoning bylaws and permitting processes. How would Clough push through the expansion? Historical Context: Mount Auburn Hospital1 Founded in 1886, Mount Auburn, originally named the Cambridge Hospital, started out as a charitable medical facility where Cambridge’s working class and poor could seek health care, funded by the donations of the city’s wealthy. Those who could afford to pay for care received doctors and treatment in the comfort of their homes. Mount Auburn was situated on the westernmost edge of Cambridge, beyond which were small, county and community hospitals that catered to the primary care needs of the population. Typically, these hospitals would admit routine cases and would refer the complicated cases to the academic teaching hospitals across the river. The latter had an affiliation with a medical school, and were responsible for training doctors in residency programs, as well as being on the forefront of new medical technology and cutting-edge clinical research. Mount Auburn was a hybrid hospital—on the one hand it served the primary care needs of its population, but it also had an affiliation with Harvard Medical School that enabled it to train specialists and interns in residency programs across many medical specialties. (See Exhibit 1 for an overview of Mount Auburn Hospital.) By the mid-1900s, the role of hospitals, and consequently physicians, was changing in the United States. Mount Auburn, like many hospitals, became the epicenter for delivering health care to a broad spectrum of people, benefited by advances in medical technology and close ties to Harvard Medical School. Monies were being channeled into the Hospital from charities, private donations, and mostly from the patients themselves. Doctors would bill the patients for their services, and this created the groundwork for the “fee for service” payment scheme. With the emergence of insurance, patients bought insurance coverage and subscribed to health plans, usually through their employers, and the insurers became responsible for paying the majority of doctor and hospital fees for their enrollees (See Exhibit 2 for an overview of major changes in the U.S. health-care industry between 1970–2000.) 1990s: Mount Auburn Hospital and Managed Care Frank Lynch had been CEO of Mount Auburn since 1980, and had been early in positioning the Hospital in the managed care market. Lynch had been a high school biology teacher before his career in hospital management. In 1985, Mount Auburn had signed with the managed care organization (MCO) Harvard Community Health Plan, which gave the Hospital exclusive-provider privileges for the medical and surgical care it provided to the company’s enrollees in Cambridge, and several outlying Boston suburbs. Lynch also developed Mount Auburn’s base of primary care physicians (PCPs), spending $20 million over 10 years to buy PCP practices in its primary service areas including Cambridge, Belmont, Watertown, Somerville, and Lexington. In 1993, Mount Auburn had remained the leading Hospital in its primary service area, capturing 23% of patient discharges. Despite Lynch’s foresight, the 1990s brought increasing pressures from managed care. Massachusetts had a dense concentration of academic teaching hospitals, which was correlated with higher numbers of specialists and steeper costs for their services. The state had one of the highest 1 F. Warren McFarlan, “Mt. Auburn Hospital,” HBS No. 397-083 (Boston: Harvard Business School Publishing, 1997). For the exclusive use of A. MOHAM, 2021. This document is authorized for use only by ALYCIA MOHAM in DHA 801 Fall 2021 taught by ATUL GUPTA, Lynchburg College from Aug 2021 to Feb 2022. Jeanette Clough at Mount Auburn Hospital 406-068 3 hospital utilization rates in the U.S., three times the national average for the ratio of specialists to PCPs, and an excess capacity of beds. Boston had four medical schools with many associated teaching hospitals, training 5% of the country’s residents. As a result, MCO premiums were significantly higher in the state and there was an incentive to further reduce costs. Merger & Acquisition Activity in Boston Hospitals In early 1994, two of Boston’s premier Harvard Medical School teaching hospitals—Massachusetts General Hospital (MGH) and Brigham and Women’s Hospital—had surprised the local health-care community and merged to form the Partners HealthCare organization, a vertically integrated provider network of PCPs, hospitals, and outpatient clinics. A trend of hospital mergers was occurring across the country. Hospitals merged to form extensive networks over large geographic areas, attracting MCO contracts with their primary care focus, and open-access networks. Overnight, Mount Auburn started to consider its options for joining a hospital network. After several years of considering its best options with 11 possible alliances, Mount Auburn joined the CareGroup organization, the result of a 1996 merger between the Pathway Health Network, Beth Israel Hospital, and New England Deaconess Hospital. CareGroup would have over 1,200 physicians; the Harvard Medical School teaching affiliates Beth Israel Deaconess Medical Center and Mount Auburn Hospital; and a host of community hospitals in the suburbs of Boston, generating about $1 billion in revenue (See Exhibit 3 for maps of the Boston hospital market.) Warren McFarlan, a Mount Auburn Board member, recounted: Mount Auburn was caught in a terrible position both geographically and in the health-care climate. There were almost twice as many hospital beds in Eastern Massachusetts as were needed. At the time of the merger, we didn’t actually want to merge at all. But it was pretty clear to us that if we didn’t have stronger bargaining power with the HMOs, we were going to be killed. You look around Mount Auburn today and our closest competitors are all gone— three miles away Sancta Maria is now a nursing home; Waltham Hospital, Choate in Woburn, and Symmes in Arlington—are all closed. The Mount
Answered Same DayNov 08, 2021

Answer To: XXXXXXXXXX R E V : D E C E M B E R 1 2 , XXXXXXXXXX...

Deblina answered on Nov 09 2021
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Mount Auburn Hospital         1
MOUNT AUBURN HOSPITAL
Table of Contents
Main Problems    3
Solutions to the Problems    3
Recommended Solu
tion    4
Expected Outcome    4
References    4
Main Problems
· Mount Auburn had been facing management issues because of the changed aspects of medical technology and was effectively faltering with financial troubles and internal tensions. The problem was ascertained because of redundant physical structure and the medical technologies used by the organization.
· The other associated challenges that were faced by the organizations were capital constraints, states regulatory roadblocks and opposition from the local neighborhood. So the problems were mainly concerned with financial aspects, legal compliances and location of the hospital.
· Change in the role of hospitals in the early years of 1900s and the significant financial loss of $10 million of the organization in 1998 strained the financial health of the organization.
Solutions to the Problems
It is effective to note that hospital usually faces a strict regulatory oversight by the government authorities and the adjusted revenue is derived from the complex systems. The structural aspects within the hospital had to be potentially addressed in order to revive the internal operations within the organization. These needs to be strongly address by the management of the organization and it should be effectively led by a strong leader for addressing the complicated issues within the hospital. In order to encourage a revived aspect of the improved medical technology duties effective to organize, repair and build new relationships between the administration and the physicians (Chow, 2018).
It is also effective to form new strategic alliances with the organization outside the hospitals for effectively updating the operations of the organization. This particular hospital was located in a small county and hence it was needed to serve the primary care needs of the population. Usually most of the hospitals had to counter some of the routine cases and often referred to other hospitals when you cases were complicated. Therefore, an effective...
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