Bozeman Health is a not-for-profit health system that operatesin southwest Montana. The main hospital in Bozeman has 86 beds, aLevel 3 trauma center designation, and a medical staff of over 200.It has patient revenue of approximately $350 million. Bozeman ishome to Montana State University (approximately 15,000 students)and is a haven for outdoor recreation because of its proximity tomountains, rivers, and Yellowstone National Park. The population ofBozeman is 40,000. Bozeman Health is the primary healthcareprovider for Gallatin County, which has a population of 100,000.The community continues to be one of the fastest-growingmicropolitan areas in the United States. You are the new CEO ofBozeman Health (BH) and have inherited an organization that has itsshare of challenges. Following a long-tenured CEO, at BH for over20 years, the last two CEOs have been unable to stay long. One CEOresigned after nine months, stating differences with the board ofdirectors. Rumor was that the CEO was pushing for productivityincreases and staff reductions, upsetting certain doctors, who usedtheir personal relationships with the board to force the CEO out.The next executive was fired for ethical issues. He had failed todisclose a criminal conviction during the hiring process. Althoughthe offense occurred over 30 years before his hiring, the board’spublic explanation was the CEO had failed to be completely honestand lied on his application that he had never had a felony criminalconviction.
Although this was the board’s public position, rumors spreadthat the ethical consideration was only an excuse. Stories surfacedthat the CEO was actively engaged in trying to merge the hospitalwith Sanford Health, a large health system in the Dakotas—and beingpaid under the table by Sanford. In a short time, the CEO pushedthe organization to implement an electronic health record systemhosted by Sanford, despite contrary recommendations from BH’sinformation technology department. The implementation was afailure. The CEO also made a unilateral decision to join Sanford’sgroup purchasing organization (GPO) and change the name of theorganization from Bozeman Deaconess Health Services to BozemanHealth, which was too similar for many to Sanford Health. You knowthat the BH culture is very stable, and its leaders are deeplyentrenched in the way the organization operates. You are worriedthat it could be a serious threat to BH’s long-term viability.During the interview process, you recognized that most of thesenior leaders at Bozeman Health are closer to the end of theircareers than the beginning and estimate that most will be retiringwithin the next five years. The main hospital in Bozeman is neitherloved nor hated in the community, and this lukewarm response isalso troublesome.
You know that your biggest advantage is that Bozeman Health isthe only hospital in the county, essentially giving theorganization a monopoly. But Bozeman has a relatively highpercentage of commercial payers and a growing population. Yourecognize that eventually there may be another hospital in yourprimary market. Billings Clinic, which operates a women’s healthclinic, has an interest in the market. It had previously expressedplans to build a hospital in the resort town of Big Sky, 45 milesfrom Bozeman. Bozeman Health viewed this as a threat andfast-tracked its own plans to build a hospital in the town. BecauseBH already owned the land, it was easy to turn the first shovel ofdirt and keep the Billings Clinic from entering the market. Thefour-bed hospital opened in December 2015 and was largely adefensive move. The Big Sky Medical Center is unlikely to breakeven for the next eight years. The main campus in Bozeman is asprawling web of various construction projects intended to meet theservices demands in the growing community. The original hospitalbuilding was constructed in 1986. A $10 million addition to theemergency department was completed in 2012; an additional officetower was completed in 2015; and in 2016, BH opened a $10 million,37,000-square-foot outpatient clinic in a bedroom community ninemiles from Bozeman. It seems as though every department is askingfor additional space. Your family birth center, for example, had1,300 births in the last year and was frequently required to divertpatients to other hospitals because of a lack of space. Nursesstruggle to operate in tiny ICU rooms that were designed in the1980s and are now filled with life-sustaining equipment. Operatingin spaces that are not optimized for workflows creates additionalwork and stress for providers and staff members. Patients rightlycomplain of limited parking. Fortunately, the organization ownshundreds of acres of land adjacent to the campus that were doantedto the organization and has yet to determine how to use the space.After speaking with key physicians, board members, and departmentheads, you wonder what you have gotten yourself into. You face amultitude of challenges and a very uncertain future. If you areunable to implement an effective strategy, it is highly likely thatthe organization will struggle and you will lose your job. Estimatethat you have two to three years to get Bozeman Health on a path tosuccess, but you want to take a few months to get to know theorganization better before you lay out a detailed plan. However,time is not your friend. Four months before you started, theBillings Clinic announced the following in the Bozeman DailyChronicle.
Billings Clinic Buys 54 acres in Bozeman By Lewis Kendall, StaffWriter, Jan 6, 2016 Billings Clinic announced Wednesday that it haspurchased 54 acres of land as it prepares to expand its medicalservices in Bozeman. The lot, purchased for an undisclosed amount,is located west of Costco near the North 19th Avenue interchange.Clinic officials will now meet to decide what type of facility todevelop, said Julie Burton, the clinic’s director ofcommunications. “We will have that conversation and make decisionswhen the time is right,” said Burton. “It will have to run itscourse.” For comparison, the lot size of the adjacent Costco isabout 13 acres, while Bozeman Health Deaconess Hospital sits onapproximately 34 acres, according to state tax records. The clinichas long been looking to grow its offerings in Bozeman, Burtonadded. “This was an opportunity that came up and the location ofthe land was ideal,” she said. “We thought this was the perfectplace to look forward.” The clinic already operates an OB-GYNfacility on Highland Boulevard, which has been around for more thana decade. Founded in 1911, the nonprofit employs around 4,000people in Montana, Wyoming and North and South Dakota. The BillingsClinic is a formidable foe. It has been aggressive in the regionbut had done relatively little in Bozeman. You have spoken withBillings Clinic providers, and they suggest that the BillingsClinic might move slowly, but this pace cannot be guaranteed. Youare concerned that the clinic might seek a capital partner shouldit decide to move quickly in Bozeman.
Today you arrive at BH at 7 am for a brainstorming session tooutline key issues with your vice presidents. You know that youjust do not have the necessary time to construct a thorough andvetted strategic planning process. In fact, you may only havemonths to develop a strategic direction. You need to formulate anagenda and desired outcomes for your upcoming meeting now.
Question
In your competition with Billings Clinic, who are the keystakeholders? What alliances and partnerships could you considerimproving BH’s competitive position?
