Read the attached case and conduct a Proact Analysis: 1. Define the problem 2. Come up with an objective-based on your understanding of the case 3. Identify valid alternatives that can be used to attain your objective / overcome the problem 4. Identify key advantages & disadvantages of each alternative mentioned in #3 5. Which alternative will you recommend based on your analysis and why.

Grant Newman, chief executive undercapitalized and chronically Doane continued, "If you contract officer of Regional Medical Center mismanaged. It was not clear to with my company, we will handle (RMC), expected the worst from the Newman how PDS had managed to all of the management, recruiting, meeting that was scheduled to begin survive for five years. But he did staffing, credentialing, and schedul- in less than an hour. The anesthesi- know that the company held con- ing for the anesthesia group. We will ologists were at the end of their rope, tracts to supply 15 medical facilities handle all of our own financial man- and the hospital's surgeons and ob- with anesthesia services - a fact that agement, and we will allow the hos- stetricians were pretty riled up, too. alleviated some of his concerns. pital administration and department Eighteen months earlier, Newman When Doane had approached chiefs to approve any physician that had decided to outsource RMC's anes- Newman two years earlier, the sales we decide to place here. If he or she thesia services, and he had signed pitch had been attractive. "Look," is not acceptable, we will recruit an- a contract with Physicians Devel- Doane had said, "everyone in town other physician at our own expense. opment Services (PDS), a contract knows that the anesthesia group is That will guarantee that RMC has management company. At the time, a revolving door at RMC. The sur- the highest level of physician service PDS had seemed a good fit. It had a geons and obstetricians are generally available." reputation for providing high-quality happy here, but they don't like con- Newman was sold on the idea and physicians for both permanent and stantly seeing anesthesiologists they signed an agreement granting PDS temporary assignments. Further- don't know in the operating room. exclusive management of the anes- more, Dr. Barry Doane, cofounder The obstetricians never know who thesia group according to the terms of PDS five years earlier, had been on is going to be standing next to them they had discussed. As is typical in RMC's staff for many years. While to resuscitate a newborn in a crisis." such arrangements, the anesthesiol- at the medical center, Doane had de- Newman had nodded in agreement. ogists would be independent con- veloped a reputation as a top-notch It was common knowledge that tractors with PDS, and PDS would clinician. Newman knew that his col- lifetime-care malpractice lawsuits league's reputation had helped at- were the most costly of all malprac Richard Peisch is the founder and tract hospital clients to the newly tice cases, and Doane did not have to president of Medical Data Process- formed PDS. elaborate on the myriad lawsuits ing, a medical billing service that Unfortunately, Doane and his that the obstetricians and surgeons has offices in New York City, Brook- physician partners had extremely could be drawn into as a result of line, Massachusetts, and Tampa limited business skills, and PDS was someone else's negligence. Bay, Florida.be under contract with RMC. Legal- ly, there would be no agreement of any sort between the anesthesiolo gists and the medical center. PDS then recruited and signed contracts with five anesthesiologists, include ing George Jacques as chief of anes- thesia services. For the first year, things went smoothly. But, at the beginning of the second year, PDS's paychecks to Jacques's group began arriving late and then bounced several times over a three-month period. Rumors were rampant about PDS losing several big accounts and teetering on the brink of bankruptcy. In addition, al- though the hospital had recently ex- tended its contract with PDS for another 12 months, relations be- tween Jacques's group and PDS had become extremely strained. As a re- sult, although the contract between Jacques's group and PDS had expired three months earlier, a new one had not been negotiated. Even so, the anesthesiologists were providing services without a contract. Jacques's primary point of con- tention was that the anesthesiolo gists had achieved certain agreed- your Mercedes 560SL, and be ready position. Before he left Newman's upon financial goals for the previous to give me your gold Rolex watch, office, he said, "I don't want to have year and were owed a $300,000 because I want them both!" to put you in the middle of this, but bonus. PDS had never contested that Then he stormed into Newman's my physicians will be unable to feed amount but simply did not have the office, "PDS owes us $300,000 for their families if this continues. I funds to pay them. More seriously, last year's statements," he said, want to have a meeting with you and the anesthesiologists felt that PDS barely controlling his temper. "We the rest of my group later today, and was falsifying the current year's fi- want you to break the hospital's con- I want to know how you're going to nancial statements and was in the tract with PDS, and either let us resolve this." process of cheating it out of another handle our own finances and man- Newman was in an extremely $150,000 bonus for the current year. agement, or put us on a hospital serious predicament. He knew that Jacques had confronted PDS, but the salary. If you do not resolve this, my he had no legal right to interfere company's response was that be- group and I are leaving next week. with the contract between PDS and cause the anesthesiolgists were The surgeons support us. RMC will the anesthesia group unless PDS working without a contract, PDS be left with no surgical services, and breached its contract with RMC - was under no obligation to supply I don't care who sues me!" something that Doane had managed them with any financial statements Newman asked Jacques why the to avoid thus far. RMC was relying or even to pay their salaries until a anesthesiologists had stayed on for more and more on contract manage- new contract was negotiated. so long without a contract, and ment arrangements, such as the one This morning, the already strained Jacques exploded. "Are you trying to with PDS, and taking sides with a relations between the anesthesia say that this is our fault? We stayed physicians' group could hinder fu- group and PDS had reached the on to provide medical services to the ture negotiations with companies breaking point. The most recent phy- community, hoping that this situa- like PDS. sicians' paychecks had arrived sev- tion would resolve itself. Because it Furthermore, the contract be- eral days late and then had bounced. will not resolve itself without your tween PDS and RMC specified a Jacques was furious and, demand- support, we are doing what we $120,000 recruiting fee if the hospi- ing a meeting with Doane, had been should have done months ago: We tal ever converted PDS physicians to heard shouting at him over the tele- are leaving!" hospital employees. And Doane's at- phone, "If you can't make our pay- After a pause, Jacques calmed torney had made it clear that he roll in cash today, bring the keys to down, but he refused to change his would sue the hospital if RMC inter-feted with what Deane felt was a re- solvable dispute between labor and management. Moreover, it would be a public relations disaster if the anesthesia group Walked out - even if no other group left with them. The absence of Iacques's group alone would shut down the operating rooms and the obstetrics unit. RMC was already experiencing re- duced in-patient days due to the loss of a large managedcare contract and increased competition in the mar- ketplace. Newman felt that the fu- ture viability of the hospital would be seriously compromised if he al- lowed such an exodus to occur even for a single day. In addition, New 1 man knew [acques was capable of playing hardball and had been in contact with the local news media. The anesthesia group, two sur- geons, and three obstetricians were due in his office in 45 minutes. New- man didn't have much time to figure out what to do. If you were 'Newman, what would you do