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 CEOout.
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 inBozeman is neither loved nor hated in the community, and thislukewarm response is also troublesome. You know that your biggestadvantage is that Bozeman Health is the only hospital in thecounty, essentially giving the organization a monopoly. But Bozemanhas a relatively high percentage of commercial payers and a growingpopulation. You recognize that eventually there may be anotherhospital in your primary market. Billings Clinic, which operates awomen’s health clinic, has an interest in the market. It hadpreviously expressed plans to build a hospital in the resort townof Big Sky, 45 miles from Bozeman. Bozeman Health viewed this as athreat and fast-tracked its own plans to build a hospital in thetown. Because BH already owned the land, it was easy to turn thefirst shovel of dirt and keep the Billings Clinic from entering themarket. The four-bed hospital opened in December 2015 and waslargely a defensive move.
The Big Sky Medical Center is unlikely to break even for thenext eight years. The main campus in Bozeman is a sprawling web ofvarious construction projects intended to meet the services demandsin the growing community. The original hospital building wasconstructed in 1986. A $10 million addition to the emergencydepartment was completed in 2012; an additional office tower wascompleted 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 a multitude of challenges and a very uncertain future.If you are unable to implement an effective strategy, it is highlylikely that the organization will struggle and you will lose yourjob. Estimate that you have two to three years to get BozemanHealth on a path to success, but you want to take a few months toget to know the organization better before you lay out a detailedplan. However, time is not your friend. Four months before youstarted, the Billings Clinic announced the following in the BozemanDaily Chronicle. Billings Clinic Buys 54 acres in Bozeman By LewisKendall, Staff Writer, Jan 6, 2016 Billings Clinic announcedWednesday that it has purchased 54 acres of land as it prepares toexpand its medical services in Bozeman. The lot, purchased for anundisclosed amount, is located west of Costco near the North 19thAvenue interchange. Clinic officials will now meet to decide whattype of facility to develop, said Julie Burton, the clinic’sdirector of communications. “We will have that conversation andmake decisions when the time is right,” said Burton. “It will haveto run its course.” For comparison, the lot size of the adjacentCostco is about 13 acres, while Bozeman Health Deaconess Hospitalsits on approximately 34 acres, according to state tax records. Theclinic has long been looking to grow its offerings in Bozeman,Burton added. “This was an opportunity that came up and thelocation of the land was ideal,” she said. “We thought this was theperfect place to look forward.” The clinic already operates anOB-GYN facility on Highland Boulevard, which has been around formore than a decade. Founded in 1911, the nonprofit employs around4,000 people in Montana, Wyoming and North and South Dakota. TheBillings Clinic is a formidable foe. It has been aggressive in theregion but had done relatively little in Bozeman. You have spokenwith Billings 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
What should your public position be regarding the possible entryof the Billings Clinic into Bozeman? What would your internal,strategic positioning toward Billings be?
