Southern Indiana Case

Case 1 Analysis: Medical Center of Southern Indiana

Introduction The Medical Center of Southern Indiana (MCSI) has had a turbulent tenure as a hospital since its inception in 1973. Unprofitable from the very beginning, MCSI has gone through multiple ownership changes, creating a distrusting atmosphere between Clark County, IN residents, the local medical community, and MCSI. The city of Charlestown purchased the hospital at the end of 1991 in the hopes of turning the facility into a profitable medical center offering key services to the community. An aggressive expansion strategy was developed by management contractor American MedTrust in 1992 and this led to an operating profit in 1998 of $480,545. This marked a turning point for MCSI,
Clark County is a rural area with the majority of its population living in the southern half of the county, near the Indiana and Kentucky border. While Clark County does enjoy a low 2.7% unemployment rate, the average county household income was a middling $36, 726 in 1997. Only 11% of Clark County residents had earned a bachelor’s degree as of 1998, thus the probability of the average household income increasing by any great degree was small. 65% of the MCSI patient base in 1998 was a Medicare patient. MCSI is located in the north central section of Clark County. Its closest competitor is Clark Memorial Hospital in the southern half of the county. Clark Memorial has about 3 times the number of beds as MCSI and the majority of the county’s population lives closer to Clark Memorial. Louisville, KY is about 15 miles from MCSI. Any future expansion plans must include a close analysis of the population growth trends in the area and an analysis of the service mix offered by both competitors, Clark Memorial and the Louisville-area health systems. Both of these competitors are better positioned to capitalize on any growth trends in the area and have the financial resources to aggressively expand to meet these trends. Even though MCSI has posted an operating profit for the first time in many years, the majority of MCSI’s assets are tied up in
MCSI choose to analyze physician partnership, its top service lines, expansion of market campaign, and expansion of the Ivy Tech population in order to decide whether or not it should continue its aggressive expansion campaign. Major criteria areas taken into account included market position, competition, potential profitability, and alignment with MCSI's mission. As shown in Figure 1, it was recommended for MCSI to continue building physician partnership and enhancing its top three service lines (home health agency, skilled nursing facility, and geropsychiatric services). There was the recommendation to possibly pursue expansion of its marketing campaign and Ivy Tech population. MCSI should slow down its aggressive expansion strategy of adding new services and consolidate gains from those presently in place. In doing so, MCSI would shift from a prospector to an