Eastern Baptist Medical Center (EBMC) was a good hospital. It provided excellent care, kept up with the latest in facilities and equipment, and sported a highly organized, quality medical staff (organized as the Eastern Group). They had diversified, particularly into outpatient care, and had used the Eastern Group as the core of that operation. Unlike the other two hospitals in the service area, however, EBMC was located in the downtown area. Therefore, given the population changes over the years, EBMC had ended up treating a higher proportion of indigent and Medicaid patients than the other two hospitals. As well, the hospital served a disproportionate share of the service area’s elderly.

St. Rupert Hospital (SR) was located in the suburban part of town, in an area which exhibited the greatest amount of miIDle class and upper miIDle class growth. Like EBMC, services, facilities, and equipment were of the highest quality. The only apparent real difference between SR and EBMC was location, but it was a deciding difference. By comparison, SR had a far higher proportion of insured working persons than EBMC. As a result, rather than struggling to exist, SR had built quite a net worth, a lot of it in cash. EBMC, on the other hand, had experienced operating losses over the past few years, and the Board had been considering selling to a for-profit hospital chain.

St. Rupert had learned of the plight of Eastern via the unfailing grapevine. SR was concerned that if Eastern folded, their undesirable patients would come knocking on SR’s door. On the other hand, if the hospital was sold to a large hospital chain, Eastern would have access to aIDitional capital that would allow it to compete more effectively with SR. The administrator at SR had decided that the only definitive way to avoid either of these negative consequences, and aIDitionally enhance the prospects of long-term dominance and reduce cost through consolidation of services and human resources, was to purchase EBMC and to shut it down.

While mergers and acquisitions are always difficult and complex maneuvers, the actual decision to purchase, the lengthy negotiations, and the finalization of the merger itself would be the easy parts. Here’s why.

While both hospitals were excellent, and the merger made great sense as an economic strategy for both facilities, the similarities ended there. The differences were not just their respective locations or payer mixes. It was something that ran much deeper?their corporate cultures.

EBMC had once been a physician-owned hospital with strong physician dominance. While the physicians sold out a long time ago to the Baptist church, the atmosphere of indomitable physician control permeated every task performed at EBMC. Managers, therefore, tended to be weak in both formal and informal authority. Major hospital policy and capital decisions were nearly always deferred to the medical staff leadership. Essentially, the Board did whatever the doctors told them to do, and the doctors often considered the administrator an ineffectual nuisance. The Medical Staff viewed him as the bureaucrat who was always annoying them with nit-picky stuff, and they had learned to ignore him. While EBMC had a strong reputation, it had been forged in part from employee fear of physicians, and a weak Board and Administration. Despite its compassionate Baptist philosophy and mission, the organization was rigid and clung to the past. This explained a great deal about EBMC’s current situation.

SR also had a strong religious philosophy and mission. In its case, however, the corporate culture actually reflected the collegial relationships emphasized in the philosophy. Historically, power had always been shared among key stakeholders, including the Board, the Medical Staff, and Administration. Employees were treated with respect and employee input was sought by management in all phases of strategic planning. Most individuals working at SR felt camaraderie with one another. Work was a joy for many, a true rarity in these stressful times. SR was committed to learning new knowledge, continually improving all aspects of the organization, and promoting individual self-esteem and empowerment. (A truly enlightened entity!)

These differences in corporate culture were mostly irrelevant of course when the two hospitals operated separately. Once the merger of people and resources began, the clash of the two cultures became apparent.

1. What problems do you foresee from the integration of the two organizations in the following areas? (Cite a minimum of two (2) problems for each area, six (6) total).
a. Human resources
b. Patient care
c. The community at large

2. If you were a member of the senior management staff, what would you propose to resolve the each of the concerns you listed in question 1?