By browsing on the brief history of the Barclay Memorial Hospital, one will notice one thing that would immediately be blamed for its bankruptcy- bad leadership. BMH was beforehand performing excellent on the aspects of financial, managerial and services including the morale of the employees. As has been mentioned, BMH has been in the business for fifty years and it is to be stressed that those years has been spent for excellent services rendered to its clients (p. 95). Being a district hospital, it should have pretty good edge on other private hospitals especially on matters of legal affairs.
It does have the edge in lower service fees over private hospitals because it operates as government owned business and therefore is supported by tax revenues from the district. It is also an advantage for BMH to be a district hospital because it could have a better service appeal or service loyalty on the part of the district residents having the sense of ownership the district hospital.
BMH has an established edge in the market because of the fact that it is the most desirable choice of maternity hospital (p. 96).
Its attentive nurses and newly renovated private rooms are enough to make their services more appealing. The annual number of patients that has availed of its services is an evidence of its financial health. With 325,000 patients every year, we can estimate that it has about 900 patients everyday which means that its 300 bed-capacity is fully utilized assuming that part of the 900 patients are out-patients or has stayed just about two days at BMH.
With $120 million gross annual revenues, one will understand that it is generating $10 million monthly or around $350,000 everyday.
With 600 full time employees, BMH must have been financially stable to pay for their salaries and benefits. Although it was not clearly stated what percentage of this gross revenues were spent in operating expenses, we can say that the hospital is financially healthy. The first major bad decision that BMH management did was to merge with Valley Physician Group (VPG) and the Physician Hospital Organization (PHO). What was obviously wrong here is that they know that VPG and PHO’s first requirement is to have BMH be privatized.
This means that BMH would have to lose its benefits when it was just operating as a district hospital. Another thing is that there would obviously be changes in its management strategies and at least the board of directors, the key management personnel and of course the implementation of its bylaws. With privatization and merging with VPG, BMH can no longer decide on its own because it has already allowed other people to intervene in its business affairs. The result then was its bankruptcy.
There was no clear explanation as why BMH management decided to join VPG and PHO when its operations are said to be at a healthy stage. In my opinion there was no sound basis for deciding to do so because there seems to be no need of joining VPG or PHO as a marketing strategy or as part of survival catch up. Because there are already more people involved in the running the hospital, there were already more people who have their own vested interests intertwined in the affairs of BMH and that what was bad here is the reality of conflicting interests over BMH operations.
BMH had elected an abusive CEO who was so irresponsible of letting his patients wait long enough that high-paid staff were made idle. With the CEO’s conduct, it had spent utilities and operating expenses including the excessive use of supplies so irresponsibly that it took just sometime to let BMH lose almost all of its capacity to generate income. Obviously, BMH was not able to control the poor management style of its key management personnel and that the board of directors just let that thing happen until BMH crashed down.
It was of BMH’s luck to have Schilling who was able to have the courage and the will to save what was left of BMH. Schilling at first was a good choice because of his ability to eliminate the hospital’s deficit, he was able to bring back the benefits of the employees and even increased their salaries, reduced the percentage of expenses versus their revenues and most importantly, he was able to bring back BMH into a district hospital. Schilling however had a problem with delegation of authority.
It may not seem to be an indication of irresponsibility for letting Porter, the COO to make the most of management affairs. However he must have placed too much confidence on the COO who does not seem to be a good leadership pick. It is not clear whether Schilling was aware of the authoritarian style of Porter’s leadership or that Schilling just ignore the situation. Whatever is the case, Schilling cannot be excused for leaving almost everything in the hands of Porter.
Another major bad decision made by the CEO was that of keeping the strategic plan confidential from the rest of the board members. First, I would say that this decision was highly unethical based on the fact that business ethics require that management affairs should be kept transparent to the members of the board as the major decision makers of the business. Secondly, it is improper to keep the board member wondering what was going on with the plans. In fact, planning should involve the members of the board since they are the major stakeholders of the business.
Lastly it was improper that Schilling made the strategic plan a surprise for all. The bad side of this step is that it the said plan has not been reviewed by the members of the board and in that case, whatever the loophole contained therein has not been corrected nor was being noticed. This was what happened to Schilling’s strategic plan which later turned out to be faulty for having his financial projection resulted to $24 million loss (p. 101). The most immediate result was that Schilling lost support from the members of the board including the management.
In an organization, I believe that the most important part of leadership is of establishing a formidable relationship with its members- from the top management to the least of the personnel at the bottom of the organizational chart. It is vital for a leader to have the support of at least the majority of its members in order that he will be able to implement his plans well enough because of the support and loyalty he gets from the members. It is vital that communication lines are kept open, in two-way, in order that vital information flow freely in that line for decision-making purposes.
Losing support from employees and other organizational members, especially the decision makers, would make a leader inefficient. I believe that it does not take a brilliant CEO to run a profitable company; rather I believe that a responsible, sensitive and lowly CEO can run a company with a healthy working environment. Schilling is good but was weak enough to tolerate the existence of Porter and Mavory in his way. The consultant should start working here. Carson as the newly hired consultant, although is expected to work independently, should first work on having the support of the members of the board and the major decision-makers at BMH.
More than Porter, Carson must be able to eliminate the kind of Mavory who was not actually a troubled physician but a troubling one inside BMH. The old strategic plan developed by Schilling should be replaced since there was already evidence that it was faulty especially on the financial projection. Carson should be able to develop a new strategic plan with the participation of the members of the board. This will be the first step Carson can do to get the support from the members of the board.
She has an actual experience with this kind of situation and I would assume that she exactly know how to have things done. However, I would suggest that Carson be able to work on the conflicts on interests among the members of the board especially that of Mavory. Carson should be able to get the support Mavory has from the other board members as starting point. Getting their support away from Mavory would be sound enough to make the implementation of the plan run smoothly. Carson should also work on making black and white statements on what specific files and information should be kept confidential and from whom.
Everything should be clear enough for everybody in order to ensure that there would be no excuse when violators are reprimanded. It is not required that Carson becomes tough and authoritarian. She just needs to clear everybody’s stand and the extent of their authorities. It is also not necessary for Carson to prevent the employees from unionizing. I would argue that unions are important part of a company. Unions can become a leader’s support team especially when these unions could feel that they are being paid enough concern and attention by the management.
They would not in any do anything to bring the company down because it would be at their lost. Unions only take steps against the management when they see that their security in the company is threatened. Carson should then focus on working with the management in preparation for the Joint Commission for the accreditation. The politics inside BMH cannot be completely eliminated but Carson can control the situation. The members of the board are assumed well-educated and with that they know what ethical considerations they should prioritize.
Meanwhile, Carson should be able to get solid support. Carson should ask for the speedy preparation of the Joint Commission accreditation requirements by eliminating the direct control of Mavory over the process. This can be done by redirecting the attention of Mavory from the accreditation process and the revision of bylaws into her participation in the deliberation of strategic plan Carson is working at. Taking Mavory out of the Joint Commission accreditation will ease up the process and then it would go smoothly without somebody bothering the employees concerned.
As with the board members, Carson should start separating their responsibilities. These leaders should be given separate set of concerns that would also keep them from direct intervention with the affairs of each division. For example, one board member should be assigned for managing the service-rendition affairs of the business and each should be given target accomplishments at certain time intervals. The other members can be assigned to direct management of the building facilities and the purchases of equipment and the maintenance of existing ones. The other can be assigned to the legal affairs of BMH.
Each should then be reporting to the consultant or referring their plans at time intervals. With this, each member is kept from direct intervention to all the affairs of BMH although as board members, everything should be held transparent to them. This is the very reason why Carson should have regular board meetings for reporting purposes. I believe that it is also beneficial for Carson to hire independent auditors who would be responsible for checking inconsistencies on each division. This would eliminate the fear of each division that the evaluation result will be biased or one is being favored over the other.
Transparency should be maintained at all times without the necessity of each member to be personally asking confidential files. As had been mentioned a while ago, when good and efficient leaders are already established, it would necessarily follow that employees’ moral would be uplifted; their loyalty will be brought back as usual to their leaders. Employees who are working with a healthy environment would be productive and thus would render better services than before. It is the excellent services rendered by BMH that enabled it to become profitable and so the quality of services should be kept high in order to gain a good market share.