Analysis of the mergers with Women’s Hospital & Faulkner Hospital Harvard Case Solution & Analysis

Analysis of the mergers with Women’s Hospital & Faulkner Hospital Case Study Solution

Economic Rationales

The BWH was facing the resource-management issues. It was under constant pressure to cut the cost by the contract it made with the Harvard Vanguard Medical Associates (HVMA). Because the BWH underestimated thecost. Thus, it was receiving less reimbursement as compared to its expenses on the patient’s treatment. Meanwhile, the Faulkner was also suffering from the issue of rising cost, and declining admissions and underutilized resources that were increasing. Hence, it was very beneficial for the BWH to merge with the Faulkner, and take advantage of their low-cost structure, that would enable BWH to meet the contract obligations, because, it would transfer it's most of thecases that are low cost. Because the BWH was occurring more cost on those patients, and in return, the Hospital was not getting reimbursement over the cost occurred on patient’s treatment. Meanwhile, the Faulkner would able to increase the revenues, and utilize the underutilized equipment’s, and meet withits obligations.

Challenges in migration of services

Peoples has concerns over the strengths of the Faulkner as compared to the BWH, because, the Faulkner has been a community healthcarecenter and has limited resources, but as compared to the BWH, it has alow-cost structure that would have lowered the cost of orthopedic patients at Faulkner than at BWH. Moreover, the quality of the services was the reason that peoples wanted to be treated at BWH, and there were some other cultural issues between the both institutions. Hence, the Foot and Ankle center performed only 3.5% surgeries about 222 out of 6,377 at the Faulkner in its first year of operations. Consequently, the podiatry program was also added, along with the one-year training program for the specialists at the Faulkner. On the other hand, quality at the Faulkner hospital was very important part to ensure the safety of patients, and that they recover fast. To achieve that the professionals were necessary to be placed at Faulkner to ensure the patients build trust.

Migration & Its Impact

If the orthopedic services shifted to the Faulkner (FH), then FH would be able to start to generate positive revenues from the operations, because of the economy of scale, and all the patients belonging to the BWH would transfer to the FH. The rising cost would be reduced by a large number of patients. Similarly, the operating cost would be divided over all patients visit the hospital. Hence, thehospital would be able to come out of operating deficit. Meanwhile, a single Carpal Tunnel Release surgery at the FH hospital has anet loss of -$179, and Knee surgery of -$271, and Bunion Removal surgery at the FH hospital also given net loss of -$227. See Exhibit 1

It clearly explains how much deficit would the hospital have if it conducts the surgery. On other the hand, BHW hospital has anet profit over all three category surgeries except Knee surgery that has anet loss of -$454. Furthermore, the BHW has anet margin on carpal Tunnel Release surgery, Bunion Removal $145 and $1,556 respectively. So, the by analyzing the data, it is identified that BHW has low patients of the Knee surgery, that it has only 40 surgeries throughout the year 2006. But, the FH has 521 patients of the Knee surgery, so the FH has high operating cost, but on the other hand, the BHW has a low number of patients and high cost. Similarly, the cost of the Knee surgery at FH hospital is low as compared to the BHW. Moreover, the BHW would be able to benefit from the low cost of caring surgeries at the FH hospital, if the BHW shifts to the Faulkner Hospital. On the other hand, if the BWH transfer its Orthopedic services to the FH, then it would be able to save the cost (see Exhibit 2) and utilize the underutilized capacity of the hospital. Similarly, the BWH would also be able to take an improvement initiative in other departments.

Analysis of the mergers with Women’s Hospital & Faulkner Hospital Harvard Case Solution & Analysis


Hip Fracture services

BWH and FH have combined 240 patients with the hip fracture in 2006, and this number was only 9%. But, in this current system has many potential weaknesses that raise costs for both hospitals. Like all hip fracture patients were treated as the standard emergency admission, and surgeons were given full schedules to the patients, and the almost 50% of the hip fracture patients surgeries were performed at the night or weekends, that had increased the cost for the hospitals. So, migrating the hip fracture services to the FH hospital would increase the rehabilitation rate, and bring the efficiency in operations, and would also increase the profitability as well. However, from afinancial perspective, if the hip fracture services transferred to the FH, then the hospital would be able to save thecost of $13,304 on per case. Because, if the Patients of the BWH transferred to the FH, then the revenues from the patients would remain same as in BWH, but the cost would be FH’s because the services would be offered there.Similarly, there would be efficiency, due to the specialized team would be handling the department from the both hospitals. See Exhibit 3..................

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