Case study- Bozeman Health's Competitive Dilemma By Eric Connell

Bozeman Health is a not-for-profit health system that operates in southwest Montana. The main hospital in Bozeman has 86 beds, a Level 3 trauma center designation, and a medical staff of over 200. It has patient revenue of approximately $350 million. Bozeman is home to Montana State University (approximately 15,000 students) and is a haven for outdoor recreation because of its proximity to mountains, rivers, and Yellowstone National Park. The population of Bozeman is 40,000. Bozeman Health is the primary healthcare provider for Gallatin County, which has a population of 100,000. The community continues to be one of the fastest growing micropolitan areas in the United States. You are the new CEO of Bozeman Health (BH) and have inherited an organization that has its share of challenges. Following a long-tenured CEO, at BH for over 20 years, the last two CEOs have been unable to stay long. One CEO resigned after nine months, stating differences with the board of directors. Rumor was that the CEO was pushing for productivity increases and staff reductions, upsetting certain doctors, who used their personal relationships with the board to force the CEO out. The next executive was fired for ethical issues. He had failed to disclose a criminal conviction during the hiring process. Although the offense occurred over 30 years before his hiring, the board's public explanation was the CEO 398 Case Studies had failed to be completely honest and lied on his application that he had never had a felony criminal conviction. Although this was the board's public position, rumors spread that the ethical consideration was only an excuse. Stories surfaced that the CEO was actively engaged in trying to merge the hospital with Sanford Health, a large health system in the Dakotasand being paid under the table by Sanford. In a short time, the CEO pushed the organization to implement an electronic health record system hosted by Sanford, despite contrary recommendations from BH's information technology department. The implementation was a failure. The CEO also made a unilateral decision to join Sanford's group purchasing organization (GPO) and change the name of the organization from Bozeman Deaconess Health Services to Bozeman Health, which was too similar for many to Sanford Health. You know that the BH culture is very stable, and its leaders are deeply entrenched in the way the organization operates. You are worried that it could be a serious threat to BH's long-term viability. During the interview process, you recognized that most of the senior leaders at Bozeman Health are closer to the end of their careers than the beginning and estimate that most will be retiring within the next five years. The main hospital in Bozeman is neither loved nor hated in the community, and this lukewarm response is also troublesome. You know that your biggest advantage is that Bozeman Health is the only hospital in the county, essentially giving the organization a monopoly. But Bozeman has a relatively high percentage of commercial payers and a growing population. You recognize that eventually there may be another hospital in your primary market. Billings Clinic, which operates a women's health clinic, has an interest in the market. It had previously expressed plans to build a hospital in the resort town of Big Sky, 45 miles from Bozeman. Bozeman Health viewed this as a threat and fast-tracked its own plans to build a hospital in the town. Because BH already owned the land, it was easy to turn the first shovel of dirt and keep the Billings Clinic from entering the market. The four-bed hospital opened in December 2015 and was largely a defensive move. The Big Sky Medical Center is unlikely to break even for the next eight years. The main campus in Bozeman is a sprawling web of various construction projects intended to meet the services demands in the growing community. The original hospital building was constructed in 1986. A $10 million addition to the emergency department was completed in 2012; an additional office tower was completed in 2015; and in 2016, BH opened a $10 million, 37,000-squarefoot outpatient clinic in a bedroom community nine miles from Bozeman. It seems as though every department is asking for additional space. Your family birth center, for example, had 1,300 births in the last year and was frequently required to divert patients to other hospitals because of a lack of space. Nurses struggle to operate in tiny ICU rooms that were designed Case Studies 399 in the 1980s and are now filled with life-sustaining equipment. Operating in spaces that are not optimized for workflows creates additional work and stress for providers and staff members. Patients rightly complain of limited parking. Fortunately, the organization owns hundreds of acres of land adjacent to the campus that were donated to the organization and has yet to determine how to use the space. After speaking with key physicians, board members, and department heads, you wonder what you have gotten yourself into. You face a multitude of challenges and a very uncertain future. If you are unable to implement an effective strategy, it is highly likely that the organization will struggle and you will lose your job. Estimate that you have two to three years to get Bozeman Health on a path to success, but you want to take a few months to get to know the organization better before you lay out a detailed plan. However, time is not your friend. Four months before you started, the Billings Clinic announced the following in the Bozeman Daily Chronicle. Billings Clinic Buys 54 acres in Bozeman By Lewis Kendall, Staff Writer, Jan 6, 2016 Billings Clinic announced Wednesday that it has purchased 54 acres of land as it prepares to expand its medical services in Bozeman. The lot, purchased for an undisclosed amount, is located west of Costco near the North 19th Avenue interchange. Clinic officials will now meet to decide what type of facility to develop, said Julie Burton, the clinic's director of communications. "We will have that conversation and make decisions when the time is right," said Burton. "It will have to run its course." For comparison, the lot size of the adjacent Costco is about 13 acres, while Bozeman Health Deaconess Hospital sits on approximately 34 acres, according to state tax records. The clinic has long been looking to grow its offerings in Bozeman, Burton added. "This was an opportunity that came up and the location of the land was ideal," she said. "We thought this was the perfect place to look forward." The clinic already operates an OB-GYN facility on Highland Boulevard, which has been around for more than a decade. Founded in 1911, the nonprofit employs around 4,000 people in Montana, Wyoming and North and South Dakota. The Billings Clinic is a formidable foe. It has been aggressive in the region but had done relatively little in Bozeman. You have spoken with Billings Clinic providers, and they suggest that the Billings Clinic might move slowly, 400 Case Studies but this pace cannot be guaranteed. You are concerned that the clinic might seek a capital partner should it decide to move quickly in Bozeman. Today you arrive at BH at 7 am for a brainstorming session to outline key issues with your vice presidents. You know that you just do not have the necessary time to construct a thorough and vetted strategic planning process. In fact, you may only have months to develop a strategic direction. You need to formulate an agenda and desired outcomes for your upcoming meeting now.

Question:

Given the challenges, how would you structure a strategic planning process?