The Case of the Unhealthy Hospital: Blake Memorial Hospital
The Case of the Unhealthy Hospital
Anthony R. Kovner
Harvard Business Review
No. 91506
SEPTEMBER–OCTOBER 1991
HBR
Anthony R. Kovner
The Case of the Unhealthy Hospital
Bruce Reid, Blake Memorial Hospital’s new CEO, rubbed his eyes and looked again at the 1992 budget worksheet. The more he played with the figures, the more pessimistic he became. Blake Memorial’s financial health was not good; it suffered from rising costs, static revenue, and declining quality of care. When the board hired Reid six months ago, the mandate had been clear: improve the quality of care and set the financial house in order. Reid had less than a week to finalize his $70 million budget for approval by the hospital’s board. As he considered his choices, one issue, the future of six off-site clinics, commanded special attention. Reid’s predecessor had set up the clinics five years earlier to provide primary health care to residents of Marksville’s poorer neighborhoods; they were generally considered a model of community-based care. But while providing a valuable service for the city’s poor, the clinics also diverted funds away from Blake Memorial’s in-house services, many of which were underfunded. As he worked on the budget, Reid’s thoughts
Anthony R. Kovner is professor of health policy and management at the Robert F. Wagner Graduate School of Public Service at New York University. He is the author of numerous books and articles on health care management, including Really Managing: The Work of Effective CEOs in Large Health Organizations (American College of Health Care Administrators, 1988). HBR’s cases are derived from the experiences of real companies and real people. As written, they are hypothetical, and the names used are fictitious.
drifted back to his first visit to the Lorris housing project in early March, just two weeks into his tenure as CEO. The clinic was not much to look at. A small graffiti-covered sign in the courtyard pointed the way to the
Anthony R. Kovner
Harvard Business Review
No. 91506
SEPTEMBER–OCTOBER 1991
HBR
Anthony R. Kovner
The Case of the Unhealthy Hospital
Bruce Reid, Blake Memorial Hospital’s new CEO, rubbed his eyes and looked again at the 1992 budget worksheet. The more he played with the figures, the more pessimistic he became. Blake Memorial’s financial health was not good; it suffered from rising costs, static revenue, and declining quality of care. When the board hired Reid six months ago, the mandate had been clear: improve the quality of care and set the financial house in order. Reid had less than a week to finalize his $70 million budget for approval by the hospital’s board. As he considered his choices, one issue, the future of six off-site clinics, commanded special attention. Reid’s predecessor had set up the clinics five years earlier to provide primary health care to residents of Marksville’s poorer neighborhoods; they were generally considered a model of community-based care. But while providing a valuable service for the city’s poor, the clinics also diverted funds away from Blake Memorial’s in-house services, many of which were underfunded. As he worked on the budget, Reid’s thoughts
Anthony R. Kovner is professor of health policy and management at the Robert F. Wagner Graduate School of Public Service at New York University. He is the author of numerous books and articles on health care management, including Really Managing: The Work of Effective CEOs in Large Health Organizations (American College of Health Care Administrators, 1988). HBR’s cases are derived from the experiences of real companies and real people. As written, they are hypothetical, and the names used are fictitious.
drifted back to his first visit to the Lorris housing project in early March, just two weeks into his tenure as CEO. The clinic was not much to look at. A small graffiti-covered sign in the courtyard pointed the way to the