What application does this case have to power and influence? One year ago, Teresa, a hospital CEO,

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What application does this case have to power and influence?

One year ago, Teresa, a hospital CEO, approached her supervisor, Kent, the health system’s regional vice president, with an idea to build a new hospital in an adjoining community. She explained the many advantages to him. For example, the hospital she operated was located in a bedroom community outside the larger metropolitan area, which did not have a hospital. Locating a hospital there would allow the parent system to better negotiate managed care contracts and attract a larger population to its services. Teresa also explained that a number of physicians located in the metropolitan area had approached her to ask why the system hadn’t already established a hospital in that community.
She recognized that planning, designing, and constructing a new hospital would require a lot of up-front work on her part, including the need to affiliate with many of the physicians in the area and other surrounding communities.
Kent responded enthusiastically and authorized seed money to begin the development. Teresa understood that final funding would depend on the financial projections and obtaining commitments from local physicians to admit to the new hospital. She spent hours and hours on the project over the next four months, refined her projections, and gathered letters of support from 25 of the 30 physicians she personally visited. In addition, many gave Teresa checks—in amounts ranging from $20,000 to $50,000—to invest in the new hospital. In total, she held almost $400,000 worth of checks in a safe deposit box, to be retained until the system made a decision and either invested the money in the project or returned it to the physicians.
After many hours spent with the strategic planner, the hospital’s chief financial officer, and regional personnel, Teresa developed the pro forma on page 127 for the hospital.
She felt confident that her estimates were conservative, as she had carefully vetted her assumptions with all key personnel. The hospital would show a loss its first year, effectively break even its second year, and then make a significant profit thereafter.

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