Professional Documents
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MMH 2nd Case Final
MMH 2nd Case Final
Mendiola, Manila
A.Y. 2018-2019, 1st Semester
PLANNING A FUTURE FOR METRO MERCY HOSPITAL (MMH): Choosing the Best
Business Strategy Support System for Secured Profit
(A CASE STUDY)
Submitted to:
Dr. Margarita E. Peros
Professor
Submitted by:
Arillo, Marie Jana M.
Muli, Ramanne Aryl C.
Pagurayan, Gabriela P.
(Strategic Management with SRGG - TTH 11:30-1:00)
Metro Mercy Hospital (MMH) has been in a downward spiral, resulting in losses in the
past few years and a tenuous cash position. Although a new management team has recently
been put in place and a turnaround begun, the board of directors is unclear as to whether the
hospital can and should remain independent now and in the future
MMH faces very stiff competition due in part to the number of competitors in and
around its service area and the general “overbeddedness” in the region. Its main competitors
include St. Luke’s Hospital, the 600-bed flagship of a very successful multihospital system,
located a few miles west of MMH in an affluent suburban area; a nationally recognized teaching
hospital located within five miles of MMH; a number of other tertiary teaching hospitals located
in and around the downtown area of the city; and one large for-profit community hospital and
two large system-affiliated community hospitals all located within three to five miles of MMH.
MMH has experienced downward trends in utilization and financial performance since
2004. In 2006, the hospital had an operating loss of $10.9 million (total loss of $10.6 million)
after an operating loss of $10 million (total loss of $10.2 million) in 2005. The financial situation
led to the resignation of the previous CEO and an interim management arrangement for about
12 months until a new CEO was named and who began work in early 2007. The board was also
reorganized, and a new board chair and other board members with strong business skills were
added in 2006–07.
The new management team’s first priority was to restore the organization to financial
health. By fall 2007, operating losses had been trimmed substantially to $6 million, and the
organization was on target to be at break-even on a monthly basis by the end of fiscal year
2008.
As the turnaround proceeds, the new CEO and board leadership believe it is imperative
that the hospital develop a new strategic plan. Although much of the financial improvement
that is occurring is a result of internal operating changes and managed care contract revisions,
and leadership believes that tighter operations and financial management can bring the hospital
to break even, the hospital needs to make significant improvements on the market and revenue
side if it is to become truly viable. Therefore, while management continues its operational
changes, a strategic planning effort needs to commence to help position MMH for long-term
success. A key question to be answered in the strategic planning process is whether MMH
should remain freestanding, become an affiliate, or join a system.
I. Time Context
2004
Management Consultant
VISION
MISSION
VALUES
· Excellence
· Compassion
· Competence
· Integrity
· Teamwork
· Transformational Leadership
Management
There is a hierarchy that is followed mostly based on the tenurity or seniority.
Marketing
Client-eccentric company where the firm puts patients’ interests before their own.
Operations
The doctors and nurses are ranged as Head doctors, resident doctors, head nurses, and
more.
Finance
Financial matters are handled by financial managers and accountants as same as most
companies.
Human Resource
Recruitment and handling of employees are handled by the human resource
department.
· Provides medical awareness and health seminars to chosen areas in the city.
· Has the advocacy and resource generating program Men Caring for Women,
spearheaded by the male officers of the hospital, focusing on three major women-
related issues - Human Trafficking, violence against women and children, and cervical
cancer.
What business strategy support system does the hospital need to implement in order to
secure profit?
Short-Term:
To restore the organization's financial health, break even, and eventually gain profit.
Long Term:
Strengths:
· Strong history
Weaknesses:
Opportunities:
Threats:
· Payer Mix
X. Analysis of ACA
Advantages:
o The hospital will have the chance of growing more with the help of
another management.
Disadvantages:
o This may only be a short-term solution for it may lead to merging with
other companies.
o The hospital will lose its independence and will be under the affiliating
entity.
ACA #2: Remain as a freestanding company
Advantages:
o In 2007, the operating loss of the company was trimmed down in more
than 30%. Therefore, it has a chance to continue to do so.
o The emergency room is an extremely busy area which suffice the fact that
they continue to have patients.
Disadvantages:
o The competition is strong and the hospital cannot cope yet because they
are facing operating losses that has to be solved immediately.
o There will be no room for expansion for they will be solely focused on the
financial health of the hospital.
Advantages:
Disadvantages:
o Equity in capital might be an issue since MMH has operating losses and
debts which will lead to a smaller share in the said capital.
Upon careful and critical analyzation of the given alternative courses of action, we have decided
to implement the 3rd ACA which is to enter into merger. Entering into a merger will produce
better outcome and competitive services and the merger hospitals would still be able to
compete as a stand-alone provider.
The purpose of a merger is of an economic/industrial nature. The merger of the two or more
allows for the generation of cost synergies, as well as greater geographical coverage with a
positive impact on revenues and the possibility of further growth.
XII. Implementation Program
Short Term: MMH must minimize time and cost, retain customers and Retain Key employees.
The Merger will capture and integrate the best products and systems of the merging companies.
Long Term:
1st: Select set of industries which meet strategic conditions outlined by the company for
mergers.
2nd: Choose a merger, Potential companies are carefully looked at with respect to competitive
environment in which they operate.
3rd: consider the financial obligations associated with mergers and assess the suitability of the
merger.
4th: merge in the right time where they can afford to spare out time for caring out all the
processes properly.
5th: Negotiation
6th: Approval
7th: Implement and execute integration plans, including the enrolment of the merger deed in
the Company Register.
Finance Financial matters are handled by financial Still, financial matters are handled by
managers and accountants as same as financial managers and accountants as
most companies same as most companies.
The top management particularly the CEO, has been changed, and the board has been
reorganized and some has just been recently added. Although they are chosen for that
particular position because they have strong business skills, they should still know the hospital's
history and operations and align themselves with its values. Also, they are not familiar with the
employees yet and it is specially important that they become aware of the rank and file because
they are the one that are hands on to the business.
They should conduct a meeting to introduce the new members of the institution and
inform the employees of the current position of the company and their goals and eventually,
have a team building so strong relationship among all can be established.