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Write a minimum of 2 pages for the Introduction and Situation Overview portions for your Marketing Plan to address the situation in the case study.Cite at least 3 reputable references to support your assignment (e.g., trade or industry publications, government or agency websites, scholarly works, or other sources of similar quality).


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Case Study: East Chestnut Regional Health System
MHA/506 Version 2
Within the last 10 years, East Chestnut Regional Health System (ECRH) was formed from the merger of
three organizations: the East River Medical Center, the Northern Mountain Hospital Consortium, and the
Archway Hospital.
East River Medical Center (ERMC)
ERMC is the anchor hospital for the system. The medical center resides along the east side of the
Chestnut River. Historically, ERMC was recognized as the location of choice for medical care. However,
this reputation has deteriorated over the last 3 to 5 years. As the city of Chestnut has grown, ERMC has
found itself on the edge of an urban blight. Safety has been a concern for patients, visitors, and
physicians who use and serve the medical center. The technology offered at the medical center has been
maintained at an excellent level of proficiency. At the same time, the medical staff is aging with the
average age of the physicians being 57. There are younger primary care physicians who serve the
specialists, but the specialists are aging as well. ERMC boasts a Level 1 Trauma Center with an air
service. The total number of licensed beds for ERMC is 550. On any given day, the occupancy rate is 300
heads on the beds.
Northern Mountain Hospital Consortium (NMHC)
NMHC was originally formed in response to the migration of patients to Chestnut. Due to the rather
aggressive strategies carried out by the hospitals in Chestnut, these rural hospitals decided to create a
consortium of rural hospitals so that they could gain economies of scale in a number of areas, which
include group purchasing, benefit administration, and physician and staff recruitment. Additionally, they
worked together to stem any further deterioration of their market share. Patients were selecting to go to
the larger community for services and leaving the smaller communities that collared the Chestnut
metropolitan area. NMHC represented individual hospitals in four counties that circled Chestnut County:
Walnut, Butternut, Oak, and Maple. Walnut and Butternut Counties had good employment with Oak and
Maple Counties being mostly rural. In each county, the inpatient facilities averaged about 20 years of age.
The upkeep of these facilities has been sketchy. No facility needs any major upgrades, but modernization
is needed. The state does not have a Certificate of Need (CON) process. The medical staff makeup
varies each location. The hospitals in Oak and Maple Counties are critical access hospitals. Further
details will be provided regarding these organizations later in the case study.
Archway Hospital (AH)
AH is located directly in the community of Chestnut. It fully resides in the urban area of the community.
The hospital has 200 registered beds, but on any given day there are only 50 to 75 patients in this facility.
This hospital was a Doctor of Osteopathy (DO) hospital; therefore, most of the physicians that worked out
of this facility were DOs. The payer mix for this hospital was heavily burdened with Medicare and
Medicaid. This payer mix composed nearly 85% of the reimbursement. The facility is aging and needs
considerable repairs. It is questionable if it will be worth the investment in this facility.
Leadership and Organizational Culture
The original merger that created the East Chestnut Regional Health System (ECRH) occurred 10 years
ago. This merger was between ERMC and AH. AH had a rather dynamic leader who was about 57 years
old at the time of the merger. The AH CEO became the new President and Chief Executive Officer of
Copyright © 2018 by University of Phoenix. All rights reserved.
Case Study: East Chestnut Regional Health System
MHA/506 Version 2
ECRH after the merger. Since this CEO had only worked in a smaller organization, he had not
experienced the cultural changes and demands that occur after the merging of a large organization.
Additionally, he began to change the culture of the organization such that decisions were made on a
decentralized basis. He trusted the management team at AH to do the right things and make the right
decisions with low supervision. However, the Chief Operating Officer (COO) who was put in charge was
originally from AH but left 2 years after the merger with a new COO being put in place. This COO
developed a rather poor reputation and was known to want to build his own empire at AH and to be
dishonest at times. This reputation created a culture within the traditional AH that lacked a cohesive team
effort to create a system. This positioning of the COO was left unattended by the President and CEO of
ECRH since he was actively pursuing the acquisition of NMHC. The hospitals of NMHC were doing okay,
but those in the consortium realized that their ability to stand alone was becoming difficult in today’s
market. When the leadership of the consortium assessed the market as to a partnership, they decided
that ECRH would be the best choice. The other option was to develop a for-profit hospital that also
resided in Chestnut. The leadership was attracted to what they saw happen with AH. They liked that the
central leadership of the system allowed AH to continue on as their own entity without a lot of centralized
By the time all of this was put together, the President and CEO of ECRH was near retirement. He retired
about three years after all of the merger activity was complete. During those three years, he became lax
in his leadership role. ECRH deteriorated in market share and profitability during this time. Upon his
retirement, the Board of ECRH performed a national search for a replacement. They employed Hunter
Brown as the new President and CEO. Mr. Brown was the CEO of a smaller health system and had been
in that position for nearly 10 years. Therefore, he had limited experience from other markets in the art of
strategic implementation. However, he was also well trained, bright, and articulate in expressing his
knowledge. He has now been the President/CEO of ECRH for nine months.
As for the remainder of the leadership team for ECRH, there is a newly hired corporate counsel. She has
15 years of experience and is extremely competent in the work that she does.
The CEO also hired a new Chief Financial Officer. He has taken good strides in managing the accounts
receivable throughout the system as well as extracting exceptional dollars from high quality supply chain
The Chief Operating Officer (COO) is new and has three years of previous experience from the same
organization where the CEO departed.
The Chief Medical Officer (CMO) has been retained from the old leadership team. His reputation is
excellent, and he works well with other physicians, including the medical staff and the employed
The Chief Nursing Officer (CNO) is three years away from retirement. She is known for not getting along
with the medical staff and will always defend nursing when at times this is not appropriate.
The Senior Vice President for Human Resources is competent and respected by management and staff
throughout the organization.
The remainder of the leadership team was retained from the old regime. This included information
technology, employed physician group leadership, marketing, human resources, and other vice
presidents or directors responsible for varying service lines. It should be noted that the IT leadership is
just completing the implementation of the EPIC system. The future for this team depends on how well the
overall implementation of the system goes. Likewise those in the marketing department will need to be
stellar in senior leadership advisement regarding the marketing of complex issues that will be
encountered ahead. They have been told if marketing misses the target, then replacements will occur
within this department.
The new CEO inherited the management team of AH and NMHC. For NMHC the organizational structure
Copyright © 2018 by University of Phoenix. All rights reserved.
Case Study: East Chestnut Regional Health System
MHA/506 Version 2
was left intact with the COOs for each of the individual hospitals being retained. It was agreed that this
traditional structure would be left intact for at least five years. This agreement was near its end and the
new CEO had plans to change the existing structure as well as management. This change was being
considered for this year’s strategic plan development. Even if the structure of NMHC was going to be
changed to a more direct relationship with corporate leadership, all of the existing COO’s would be
retained as they have performed well since the merger. As for the COO of AH, he had been recently
terminated. An interim COO is now in place pending the board approved closure of this hospital.
Competitive Assessment
ECRH was not the only provider of care in the community. There was a for-profit hospital, Banford
Medical Center (BMC), that had been purchased by a large publicly traded for-profit health system about
10 years ago. The for-profit health system was the largest in the country. The CEO of this hospital was
good at optimizing performance as a result of the weaknesses of ECRH and its leadership. He was an
effective opportunist.
BMC has 400 registered beds with a current occupancy rate of 85%. They have been effective at taking
market share away from ECRH. For each loss of service line market share by ECRH, BMC has shown
proportional gains. After the acquisition of BMC, the for-profit immediately moved to build a new facility.
This new facility is located on the growing wealthy edge of the community. Additionally, at the time that
this new facility was developed, the for-profit syndicated ownership to the physicians. The highest level of
syndication occurred with the obstetrics and gynecology physicians in the community. Therefore,
women’s services deteriorated at ECRH. It should be noted that this physician syndication occurred
before the Affordable Care Act was passed, which precluded hospital ownership by physicians.
It is important that additional information is provided regarding ECRH. ECRH recently purchased 100
acres of land across the interstate from BMC. This land is located northwest of Chester. The intention is
to eventually build a new medical center on this location. The initial planning of this land has occurred and
it has been approved to build a regional oncology center on this site. The construction of the project is
already underway with an anticipated completion in 6 months.
In addition, ECRH has an orthopedic hospital attached to the current ERMC site and a behavioral health
hospital at this same location. ECRH also has two ambulatory surgical centers that are conveniently
located on the growing northwest and southwest side in the community. The one surgical center is
located on the 100 acre development site. The orthopedic hospital has done well and has been listed in
the top 100 orthopedic hospitals. However, the behavioral health hospital is losing significant dollars, so
the Board of Directors for ECRH has decided to close down this hospital. ECRH has also developed a
joint venture imaging center with the radiologists. This center resides across from a major shopping area
in the community. It is conveniently located near heavily populated neighborhoods and shopping. The
only downside is the location is not close to physician offices that would refer to this center. However, if a
new facility is built on the 100 acres, which would include physician offices, the imaging center will be in
an ideal location. Leadership is developing a free standing emergency center on the 100 acre site, which
is on the northwest side of Chestnut.
The last competitive issue is the location of a medical school and hospital in the city of Chestnut. The
facility resides in a downtown location. This medical school had been established by the state nearly 45
years ago and is associated with Greenbranch University. It mostly serves the indigent community in
Chestnut and the surrounding area. This academic center has a rather negative reputation in the
surrounding area. There are four other medical academic centers in the state as well as a medical center
with a world renowned reputation. There have been ongoing rumors that this world renowned
organization was planning on assuming the responsibility of the Chestnut academic center. This change
would substantially alter the complexion of the local medical community if it were to occur. Speed in
ECRH dealing with some of its market issues is an imperative.
Copyright © 2018 by University of Phoenix. All rights reserved.
Case Study: East Chestnut Regional Health System
MHA/506 Version 2
Additional Market Information: Population Demographics
Chestnut County

With 433,689 people, Chestnut County is the 6th most populated county in the state.
The largest Chestnut County racial/ethnic groups are Caucasian (70.1%), African American
(18.5%), and Hispanic (6.5%).
In 2015, the median household income of Chestnut County residents was $41,777. However,
21.1% of Chestnut County residents live in poverty.
The median age for Chestnut County residents is 37.7 years old.
Employment is strong in Chestnut County. Unemployment resides at 4.5%. Employer diversity is
strong since the community is not dependent on singular large employers. Employment includes
some high-tech jobs, general manufacturing to support the automobile industry, and there is a
large university, Greenbranch University, located in the community. The university has 25,000
students and offers most majors, which includes engineering and nursing.
Walnut County

With 42,537 people, Walnut County is the 57th most populated county in the state.
The largest Walnut County racial/ethnic groups are Caucasian (89.8%), followed by Hispanic
(7.2%) and African American (3%).
In 2015, the median household income of Walnut County residents was $55,120. However,
10.8% of Walnut County residents live in poverty.
The median age for Walnut County residents is 39.8 years old.
Butternut County

With 38,352 people, Butternut County is the 65th most populated county in the state.
The largest Butternut County racial/ethnic groups are White (87.0%), Hispanic (9.5%), and
African American (1.7%).
In 2015, the median household income of Butternut County residents was $50,663. However,
13.4% of Butternut County residents live in poverty.
The median age for Butternut County residents is 39.7 years old.
Oak County

With 37,120 people, Oak County is the 66th most populated county in the state.
The largest Oak County racial/ethnic groups are Caucasian (93.3%), Hispanic (4.0%), and
African American (1.1%).
In 2015, the median household income of Oak County residents was $42,492. However, 14.9% of
Oak County residents live in poverty.
The median age for Oak County residents is 46.6 years old.
Maple County

With 27,816 people, Maple County is the 79th most populated county in the state.
The largest Maple County racial/ethnic groups are Caucasian (90.8%), Hispanic (7.1%), and
African American (1.0%).
In 2015, the median household income of Maple County residents was $39,353. However, 15.4%
of Maple County residents live in poverty.
The median age for Maple County residents is 48.2 years old.
Both Oak and Maple Counties are rural with an older population. Many patients have Medicare
and Medicaid that come from these two counties. Likewise the hospitals located in each of these
counties have been designated as critical access. Like many rural counties, Oak and Maple have
Copyright © 2018 by University of Phoenix. All rights reserved.
Case Study: East Chestnut Regional Health System
MHA/506 Version 2
been blighted with younger people using drugs, including methamphetamine.
Employed Physicians
ECRH employs 400 physicians throughout its system. The breakdown for each location is as follows:
Chestnut County

135 primary care
100 specialists
Walnut County

40 primary care
10 specialists
Butternut County

30 primary care
12 specialists
Oak County

27 primary care
10 specialists
Maple County

25 primary care
11 specialists
There have been ongoing complaints from the newly recruited physicians that their practices have not
been marketed well; thus, their patient volumes have been slow to grow.
Service Line Performance Information
The following is a list of bullet points regarding service line performance by ECRH and issues of
operational concern.
1. Women’s health services deteriorated significantly since the syndication by Banford Medical
Center. Obstetrical deliveries are down 20% across the system. BMC has done an excellent job
of creating attractive facility and services for women. This includes nurse navigation, women’s
breast center, and a series of other amenities. BMC has also started a neonatal intensive care
unit, which rivals the services of ECRH.
2. The cardiologists at ECRH are aging. This has been a traditionally strong service for ECRH, but
50% of the cardiologists will be retiring within the next 3 to 5 years. All cardiologists who serve
ERCH are employed by the health system. Cardiology is a service that is gaining strength within
the Greenbranch Medical Center, particularly since they brought in a renowned cardiologist to
rebuild their program.
3. The orthopedic volumes are down 7%. ECRH does jointly operate an orthopedic hospital with an
independent orthopedic group located in the community. There have been some internal
problems within the orthopedic group where the old guard of orthopedic surgeons has forced a
low retention with younger, and to some degree better trained, surgeons. Retention is becoming a
growing concern regarding the status of this group with consideration of ECRH hiring their own
surgeons. The joint venture hospital does not exclude other surgeons from working in this
Copyright © 2018 by University of Phoenix. All rights reserved.
Case Study: East Chestnut Regional Health System
MHA/506 Version 2
4. Emergency department (ED) volumes are down 5%. The hospital uses an emergency physician
group to supply physicians to cover all of the EDs within ERCH. These physicians are known for
poor customer service and making rude comments to patients who are self-pay or Medicaid.
5. The ambulatory visits and services are up 3%. This volume increase is from the younger primary
care physicians who have been employed by ECRH. This young group of physicians has become
great support for ECRH and refer patients loyally to the organization.
6. General surgery cases are down 4%. The aging surgeons are starting to retire and it is difficult to
recruit new surgeons to replace past demand. Some of this work is going to Greenbranch since
they have good general surgeons.
7. The oncology services for ECRH have increased in volume and revenue by 4%. ECRH’s
development of the new oncology center has created a magnet for referrals to the oncologists.
The oncologists are very enthusiastic about the development of this new center and have begun
to shift work to ECRH.
8. ECRH has the regional burn center. ECRH works with Greenbranch Medical Center for training
residence in the burn setting. This includes the plastic and general surgeons. The downside of
this service is that it is losing money. A decision has been made to close down this service with
Greenbranch starting their burn center.
9. ECRH is a Level 1 Trauma Center, and this designation has been a historical positive for the
system. The helicopter service is well recognized by the community as well as first responder
professionals found in the region. They historically have been top of mind for major trauma cases.
The usage of this service is down 5% since the for-profit has established a similar service. BMC
however only has a Level 2 Trauma Center. They have work …
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