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Montefiore Medical Center (MMC): A Case Study
This study reviews a Harvard Business School case on Montefoire Care Centers. The Balanced Scorecard is chosen for the strategic management initiative at Montefoire and the reasons and results of such a choice is reviewed in this case study.
The objective of this study is to answer the question of what were the underlying reasons for the development of a new strategy at Montefiore Medical centre (MMC)? Secondly this study will answer as to how could the strategic direction chosen by MMC be described and what factors likely influenced the chosen direction? This study will compare and contrast the old and the new organizational structures. With reference to the notions of synergy and responsiveness, this study will analyze the advantages and disadvantages or each of these and will explain what is meant by the term causal ambiguity. This work will take the Heart Center Value Map in Exhibit 4 under consideration and explain which relationships appear to be more or less problematic. Finally, in regards to the MMC case this study will compare and contrast the activity system view of the organization as recently proposed by Michael Porter, with the resource-based view (RBV) and will answer as to which appears more appropriate to the performance management process.
I. The Underlying Reasons for the Development of A New Strategy
In 1996, the newly-appointed vice president of operations for the Acute Care Division of Montefiore Medical Center, Elaine Brennan acknowledged the many challenges she faced as the Center had been the result of a large urban teaching hospital and a small university hospital merger with a large budget deficit.
This facility provided care to 1.2 million residents in the Bronx. Approximately 65% of recipients of medical care at the Center were either Hispanic or African-American comprising the largest group of Medicare patients in any institution in the United States. The area this Center served was characterized by slumlords, low rates of employment, high rates of addiction, disease and overwhelming poverty.
Montefiore also had a Home for Chronic Invalids that provided care for patients that other facilities could not help such as those with TB, syphilis, opium addiction, chronic kidney disease and arthritis. Separate from this institution, Yeshiva University's sponsored program, The Albert Einstein College of Medicine came under the operation of Montefiore in 1963 and while both remained separate they still were joined. The institutions were separated by a large stretch of urban streets and combined the two institutions formed one of the country's largest and most respected of all medical centers.
Bases for New Strategic Direction
Both management and financial problems plagued Montefiore by the mid- to later-1980s and the new president, Spencer Foreman, who was board appointed envisioned the Montefiore mission as being "patient care, teaching, community service, and research" while the majority of the faculty held that the institutions priorities were in a different order with teaching and research coming before care of patients. Foreman brought Robert Conaty as his executive vice president of operations with the duties of establishment of physician relationships that were effective and aligning the physician community with the new vision and strategy of Montefiore. As well, Conaty was charged with managing the clinical operations of Montefiore across the continuum of care in a profitable manner.
Conaty worked with Montefiore's 24 academic chairpersons responsible for overseeing 800 full time medical center faculty and 750 residents. Conaty reported that the chairpersons were making decisions that benefited their clinical department while simultaneously negative impacting the operation as a whole. Financial problems plagued Montefiore again in the mid 1990s and Elaine Brenna was promoted to the head of the Hospital charged with taking on the operational and financial problems of the hospital and finding a resolution to these problems.
Division into Two Sectors
The hospital was divided into two sectors:
(1) operations; and (2) corporate services. (Harvard Business School, 2001)
Brennan is reported to have standardized functions including purchasing and information services and 150 management positions were eliminated through mergers of administrative departments and layers of management being eliminated resulting in $15 million being saved annually. However, there were less people left to accomplish what had to be done and stress increased and turnover of personnel grew. It was at this time that a strategic management team was formed and comprised by all levels of management. The task was the development of a new business strategy. Therefore, the reason for the formulation of a new business strategy was that of necessity and the need to focus on high quality, patient care that was cost-effective rather than focusing on cost reduction alone.
II. Description of the Strategic Direction Chosen by MMC
The strategic management team at MMC is reported to have made a choice of two strategies that were both 'high-level' and 'easy-to-understand' strategies including the following stated two strategies:
(1) Be 'all things to some people': develop a population-based approach focused on providing a full spectrum of health care services to specific populations including children, women and seniors;
(2) Be 'some things to all people': Develop specialty centers, such as cancer and cardiology, to attract patients from outside the Bronx, and maternal/child services to attract patients from lower Westchester County. (Harvard Business School, 2001)
These two strategic choices became known as GRIP representative of:
(1) Grow volume and market share
(2) Rebalance academic and clinical staff;
(3) Infrastructure: upgrade facilities, information systems and technology; and (4) Performance: set targets and achieve them. (Harvard Business School, 2001)
Objective of New Strategy
The objective of this new strategy was focused on finding a balance between "providing population-based healthcare and developing centers of excellence in five areas:
(3) children's health;
(4) women's health; and (5) HIV. (Harvard Business School, 2001)
According to the report a full-service delivery system across the continuum of care that was cost effective service and competent in managed care was required for population-based healthcare. In order to be designated as a center of excellence there was the requirement of "high-reputation, high-quality, specialty services for targeted patient segments that could attract a large customer base for Montefiore's hospital and its medical school faculty." (Harvard Business School, 2001)
III. Comparison of Old and New Organizational Structures
There is a remarkable difference in the old and new structure of the hospital and specifically, the operatio of Montefiore was with separate functional organizations for nursing, clinical care and operations for many years. Physicians were required to gain assistance and supported needed from somewhere between three and give separate groups that were centralized.
Following the reorganization and decentralization of Brennan's management team of the Acute Care Division into three centers for support and five clinical care centers all of these would be focused on a specific patient population's needs. The result was as follows:
Clinical Care Centers Support Centers
Medicine and cancer Clinical
Surgical Care Business
Women and children
Source: Harvard Business School, 2001
Since these changes the Heart Care Center makes provision of all services that are cardiac-related and while each clinical care center was previously multi-disciplinary and brought the nurses, physicians and management personnel under the heading of one organization that a three person executive team of manager, physician and nurse the care center would exert control over most services that inpatient ad ambulatory patients received and would purchase services it did not provide from other institutions.
It was the belief of Brennan that the care center structure would represent a framework for market share expansion and development of more capacity however, the broader clinical focus was the objective of Conaty who held that "Care centers provide a vehicle to get physicians from different specialties to work together on patient issues. Left on their own, they might focus on their specialty and live within their own clinical academic world." (Harvard Business School, 2001)
Vice President for clinical services in the new Women's and Children's Care Center, Peter Semczuk is reported to have agreed. Lines of authority would be changed by the care center organization and this compared to the previous method of physicians asking Conaty or Foreman for resources. The physicians would initially work with the executives of the care center and then partner with them in making requests for resources. This is reported to involve a "new power-sharing arrangement" and the results of this initiative is that there was not a complete physician 'buy-in' to the new structure of the organization. (Harvard Business School, 2001)
The performance measurement system of Montefiore was reliant nearly 100% of on measurement relating to finance and this system was held by Brennan to be inadequate in terms of motivation and measurement of performance for care leaving the support centers with the responsibility for outcomes of various types including services, quality, work environment, employees and revenues and cost. (Harvard Business School, 2001, paraphrased)
The Balanced Scorecard was part of the executive program at Harvard Business School attended by Brennan in 1998 and this strategy implementation…[continue]
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Montefiore Medical Center Reasons for Developing New Strategy Designing the new strategy involved several meetings by the Medical Center's employees to assist in the development of a balanced scorecard and initiating nation-level measures. In this regard, the firm developed a new strategy to represent the cause-and-effect linkages among the environment, strategy, and operating plan that could deliver the required financial results. The new system proposed by the strategy was initiated to ensure