Assume you are the marketing manager for East Chestnut Regional Health System. Upper management has requested you propose ways to maintain and improve the

MHA/506 v4

Marketing Review Case Study

MHA/506 v4

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Marketing Review Case Study

As a marketing manager at the East Chestnut Regional Health System (ECRHS), you are crafting a proposal for an updated marketing strategy. You are reviewing elements of the organization from the perspective of their ethical and financial impact on the organization.

Mission and Vision

ECRHS Mission: To be the trusted leader in patient-centered care, advancing health and well-being for all in the 5-county area.

ECRHS Vision: To become the premier health care destination in the 5-county area, recognized for excellence in women’s health, oncology, orthopedics, and trauma.

Core Values

· Patient-centered care: Placing the needs and well-being of patients at the forefront of all decisions and actions.

· Compassion and respect: Treating patients, families, and colleagues with dignity, empathy, and understanding.

· Collaboration and teamwork: Fostering a spirit of cooperation and shared responsibility across all levels of the organization.

· Innovation and continuous improvement: Striving for excellence through the exploration and implementation of new technologies, practices, and ideas.

· Integrity and ethical conduct: Acting with honesty, transparency, and accountability in all interactions.

· Diversity and inclusion: Valuing and embracing the unique perspectives and experiences of all individuals.

· Community engagement: Partnering with communities to address their health care needs and promote well-being.

· Stewardship and sustainability: Responsible management of resources and commitment to environmental responsibility.

Organizational Structure and Culture

· The organization is currently decentralized but is moving toward a more centralized management structure. The current decentralized structure has resulted in empire building and dishonesty as well as a lack of cohesive teamwork. These issues led to deteriorating market share and profitability for ECRHS.

· The current cultures at ECRHS are a bit disjointed. Because each hospital has been working as a decentralized unit, they have adopted individual cultures. As centralization moves forward, a new system-wide culture will develop.

Current Marketing Strategies (4 Ps)

· Product: Because these are full-service hospitals, all hospital-based services are offered. The organization also offers behavioral health, a burn unit, an orthopedic hospital, women’s health, a Level I trauma center, and air ambulance services.

· Price: ECRHS has a payer mix of 55% Medicare, 15% Medicaid, and 30% commercial. Medicare prices are set by the federal government, Medicaid prices are set by the state government, and the organization negotiates with commercial payers for 30% of commercial markets.

· Place: The ECRHS offers services at each of the hospitals and physician offices.

· Promotion: ECRHS is currently promoting services on local TV stations, billboards, and social media platforms.

Current Financial Analysis

· Current profit margin:

· The current margin is 20%.

· Cardiology has been a traditionally strong service for ECRHS, but 50% of the cardiologists are retiring in the next 3–5 years.

· ECRHS has a top 100 orthopedic hospital with margins of 30%.

· What share of the market does the organization currently hold?

· Women’s health services deteriorated significantly since the syndication by competitor Banford Medical Center (BMC) to a 25% market share. Obstetrical deliveries are down 20% across the system. BMC has done an excellent job of creating an attractive facility and providing services for women. This includes nurse navigation, women’s breast center, and a series of other amenities. BMC has also started a neonatal intensive care unit, which rivals the services of ECRHS.

· The orthopedic volumes are down 7% from a high marketing share of 55%. ECRHS jointly operates an orthopedic hospital with an independent orthopedic group located in the community. There have been some internal problems within the orthopedic group because some of the seasoned orthopedic surgeons have created an environment that has led to a low retention rate for younger, and to some degree better trained, surgeons. Retention is becoming a growing concern for ECRHS hiring its own surgeons. The joint venture hospital does not exclude other surgeons from working in this hospital.

· Emergency department (ED) volumes are down 5% from a high of 34%. The hospital uses an emergency physician group to supply physicians to cover all of the EDs within ERCH. These physicians are known for poor customer service and making rude comments to patients who are self-pay or Medicaid.

· The ambulatory visits and services are up 3% from 28%. This volume increase is from the younger primary care physicians who have been employed by ECRHS. This young group of physicians has become great support for ECRHS and refer patients loyally to the organization.

· General surgery cases are down 4% from 41%. The aging surgeons are starting to retire, and it is difficult to recruit new surgeons to replace past demand. Some of this work is going to Greenbranch Medical Center (another local competitor) because they have good general surgeons.

· The oncology services for ECRHS have increased in volume and revenue by 4% from 28%. ECRHS’s development of the new oncology center has created a magnet for referrals to oncologists. The oncologists are very enthusiastic about the development of this new center and have begun to shift work to ECRHS.

· ECRHS has the only regional burn center. ECRHS works with Greenbranch Medical Center for training residents in the burn setting. This includes the plastic and general surgeons. The downside of this service is that while it has an 88% market share, it is losing money. A decision has been made to close this service with Greenbranch starting its burn center.

· ECRHS is the only Level I trauma center, and this designation has been a historical positive for the system. The helicopter service is well recognized by the community and first responder professionals in the region. They historically haven’t been the top choice for major trauma cases. The usage of this service is down 5% from 63% since the for-profit has established a similar service. BMC, however, has a Level 2 trauma center. It has worked diligently to acquire ambulance services in some of the outlying communities. This has helped feed patients to BMC.

Physical and Technological Resources

· Northern Mountain Hospital Consortium (NMHC), which is now part of the ECRHS, represented individual hospitals in four counties that circled Chestnut County: Walnut, Butternut, Oak, and Maple. Walnut and Butternut counties had good employment, with Oak and Maple counties being mostly rural. In each county, the inpatient facilities were about 20 years old. The upkeep of these facilities has been sketchy. No facility needs any major upgrades, but modernization is needed. The state does not have a certificate of need (CON) process. The medical staff makeup varies for each location. The hospitals in Oak and Maple counties are critical access hospitals.

· East River Medical Center (ERMC), which is part of the ECRHS, was recognized as the location of choice for medical care. However, this reputation has deteriorated over the last 3–5 years. As the city of Chestnut has grown, ERMC has found itself on the edge of urban blight. Safety has been a concern for patients, visitors, and physicians who use and serve the medical center. This causes patients to seek care at other facilities that are newer and in parts of town that are considered safer.

· ECRHS recently purchased 100 acres of land across the interstate from BMC. This land is located northwest of Chester. The intention is to eventually build a new medical center on this location. The initial planning of this land has occurred, and it has been approved to build a regional oncology center on this site. The construction of the project is already underway with anticipated completion in 6 months.

· In addition, ECRHS has an orthopedic hospital attached to the current ERMC site and a behavioral health hospital at this same location. ECRHS also has two ambulatory surgical centers that are conveniently located on the growing northwest and southwest side in the community. The one surgical center is located on the 100-acre development site. The orthopedic hospital has done well and has been listed in the top 100 orthopedic hospitals. However, the behavioral health hospital is losing significant dollars, so the board of directors for ECRHS has decided to close this hospital. ECRHS has also developed a joint venture imaging center with the radiologists. This center is located across from a major shopping area in the heavily populated community. The only downside is the location is not close to physician offices that would refer to this center. However, if a new facility is built on the 100 acres, which would include physician offices, the imaging center will be in an ideal location. Leadership is developing a free-standing emergency center on the 100-acre site, which is on the northwest side of Chestnut.

· The IT leadership is just completing the implementation of the EPIC system, which should increase the accuracy and speed of billing and collection.

Legal Actions Pending for ECRHS

· Federal Trade Commission investigation

· With the merger and acquisition of NMHC, questions of antitrust have been raised. In the service lines of cardiology and oncology, it has been found that ECRHS controls 60% of the cardiology market and 52% of the oncology market. Chestnut Care in some markets has been strong in steering patient volumes to ERMC. Union leaders for the varying trades were instrumental in precipitating this investigation. At the time that this issue was raised, the president and executive branch of the federal government were very pro-labor, thus, there was a strong interest in pursuing this matter.

As to the projected disposition of this case, it is anticipated that a negative determination will be made due to the market share control in oncology and cardiology. This could force ECRHS to divest their ownership in the Chestnut Care insurance venture. Another option might be that certain hospitals of NMHC be divested. It is not anticipated that both determinations would occur. This case has cost ECRHS considerable money to stave off investigation of this allegation.

· Predatory collections and the loss of not-for-profit tax status for NMHC

· NMHC negotiated that it would continue to act independently. The consortium leadership set policies that included predatory collections for the patients served in the NMHC hospitals. In a recent evening news report, an investigative reporter interviewed an elderly patient who had her home taken from her to pay for her medical bills. This home had been in her family for more than 100 years. This story prompted the state’s attorney general’s office to investigate the predatory collection policies of ECRHS and NMHC.

The state has already taken an aggressive stance to investigate the status of not-for-profits not fulfilling requirements (e.g., charity care, research, and education). The state is in economic trouble and is seeking revenue from wherever they can find it. The outlook is dim regarding the anticipated final decision of the attorney general’s office. If NMHC is required to pay taxes, this would wipe out the bottom line for these hospitals, and many of the needed services supplied to the indigent population by ECRHS would be reduced or eliminated.

Copyright 2024 by University of Phoenix. All rights reserved.

Copyright 2024 by University of Phoenix. All rights reserved.

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