Bozeman Health’s Competitive Dilemma By Eric Connell BozemanHealth is a not-for-profit health system that operates in southwestMontana. The main hospital in Bozeman has 86 beds, a Level 3 traumacenter designation, and a medical staff of over 200. It has patientrevenue of approximately $350 million. Bozeman is home to MontanaState University (approximately 15,000 students) and is a haven foroutdoor recreation because of its proximity to mountains, rivers,and Yellowstone National Park. The population of Bozeman is 40,000.Bozeman Health is the primary healthcare provider for GallatinCounty, which has a population of 100,000. The community continuesto be one of the fastest growing micropolitan areas in the UnitedStates. You are the new CEO of Bozeman Health (BH) and haveinherited an organization that has its share of challenges.Following a long-tenured CEO, at BH for over 20 years, the last twoCEOs have been unable to stay long. One CEO resigned after ninemonths, stating differences with the board of directors. Rumor wasthat the CEO was pushing for productivity increases and staffreductions, upsetting certain doctors, who used their personalrelationships with the board to force the CEO out.
The next executive was fired for ethical issues. He had failedto disclose a criminal conviction during the hiring process.Although the offense occurred over 30 years before his hiring, theboard’s public explanation was the CEO had failed to be completelyhonest and lied on his application that he had never had a felonycriminal conviction. Although this was the board’s public position,rumors spread that the ethical consideration was only an excuse.Stories surfaced that the CEO was actively engaged in trying tomerge the hospital with Sanford Health, a large health system inthe Dakotas—and being paid under the table by Sanford. In a shorttime, the CEO pushed the organization to implement an electronichealth record system hosted by Sanford, despite contraryrecommendations from BH’s information technology department. Theimplementation was a failure. The CEO also made a unilateraldecision to join Sanford’s group purchasing organization (GPO) andchange the name of the organization from Bozeman Deaconess HealthServices to Bozeman Health, which was too similar for many toSanford Health. You know that the BH culture is very stable, andits leaders are deeply entrenched in the way the organizationoperates. You are worried that it could be a serious threat to BH’slong-term viability. During the interview process, you recognizedthat most of the senior leaders at Bozeman Health are closer to theend of their careers than the beginning and estimate that most willbe retiring within the next five years.
The main hospital in Bozeman is neither loved nor hated in thecommunity, and this lukewarm response is also troublesome. You knowthat your biggest advantage is that Bozeman Health is the onlyhospital in the county, essentially giving the organization amonopoly. But Bozeman has a relatively high percentage ofcommercial payers and a growing population. You recognize thateventually there may be another hospital in your primary market.Billings Clinic, which operates a women’s health clinic, has aninterest in the market. It had previously expressed plans to builda hospital in the resort town of Big Sky, 45 miles from Bozeman.Bozeman Health viewed this as a threat and fast-tracked its ownplans to build a hospital in the town. Because BH already owned theland, it was easy to turn the first shovel of dirt and keep theBillings Clinic from entering the market. The four-bed hospitalopened in December 2015 and was largely a defensive move. The BigSky Medical Center is unlikely to break even for the next eightyears. The main campus in Bozeman is a sprawling web of variousconstruction projects intended to meet the services demands in thegrowing community. The original hospital building was constructedin 1986. A $10 million addition to the emergency department wascompleted in 2012; an additional office tower was completed in2015; and in 2016, BH opened a $10 million, 37,000-square-footoutpatient clinic in a bedroom community nine miles from Bozeman.It seems as though every department is asking for additional space.Your family birth center, for example, had 1,300 births in the lastyear and was frequently required to divert patients to otherhospitals because of a lack of space.
Nurses struggle to operate in tiny ICU rooms that were designedin the 1980s and are now filled with life-sustaining equipment.Operating in spaces that are not optimized for workflows createsadditional work and stress for providers and staff members.Patients rightly complain of limited parking. Fortunately, theorganization owns hundreds of acres of land adjacent to the campusthat were doanted to the organization and has yet to determine howto use the space. After speaking with key physicians, boardmembers, and department heads, you wonder what you have gottenyourself into. You face a multitude of challenges and a veryuncertain future. If you are unable to implement an effectivestrategy, it is highly likely that the organization will struggleand you will lose your job. Estimate that you have two to threeyears to get Bozeman Health on a path to success, but you want totake a few months to get to know the organization better before youlay out a detailed plan. However, time is not your friend.
Four months before you started, the Billings Clinic announcedthe following in the Bozeman Daily Chronicle. Billings Clinic Buys54 acres in Bozeman By Lewis Kendall, Staff Writer, Jan 6, 2016Billings Clinic announced Wednesday that it has purchased 54 acresof land as it prepares to expand its medical services in Bozeman.The lot, purchased for an undisclosed amount, is located west ofCostco near the North 19th Avenue interchange. Clinic officialswill now meet to decide what type of facility to develop, saidJulie Burton, the clinic’s director of communications. “We willhave that conversation and make decisions when the time is right,”said Burton. “It will have to run its course.” For comparison, thelot size of the adjacent Costco is about 13 acres, while BozemanHealth Deaconess Hospital sits on approximately 34 acres, accordingto state tax records. The clinic has long been looking to grow itsofferings in Bozeman, Burton added. “This was an opportunity thatcame up and the location of the land was ideal,” she said. “Wethought this was the perfect place to look forward.” The clinicalready operates an OB-GYN facility on Highland Boulevard, whichhas been around for more than a decade. Founded in 1911, thenonprofit employs around 4,000 people in Montana, Wyoming and Northand South Dakota. The Billings Clinic is a formidable foe. It hasbeen aggressive in the region but had done relatively little inBozeman. You have spoken with Billings Clinic providers, and theysuggest that the Billings Clinic might move slowly, but this pacecannot be guaranteed. You are concerned that the clinic might seeka capital partner should it 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
Given the challenges, how would you structure a strategicplanning process?
