Stephanie Short, CEO of Halburt Hospital, just got a promotion. She previously worked in a consulting firm that had done turnaround consulting at struggling hospitals. Her work was recognized in many journals, and when Halburt Hospital’s board of trustees needed a new CEO to bring about radical change, it offered the job to Stephanie.

Halburt Hospital is a 500-bed acute care hospital in the southeastern region of the United States. Its mission is to provide care for the poor and underprivileged. However, in the past two decades, the hospital constructed a new facility and feeder clinics around one of its affluent suburban areas. The hospital had been run by an ex–military officer for the past 15 years, and decisions were highly centralized. He authorized all new hires and replacements and nonroutine purchases of more than $10,000. The centralization of decisions slowed actions and inhibited innovation. However, until recently, the hospital prospered and consistently earned high returns.

In the past few years, new organizations entering Halburt’s market have been eroding the hospital’s profits. Physician specialty hospitals, national physician clinics, surgery centers, and other new services have attracted many of Halburt’s patients. The hospital’s operating margin dropped to just 1.8 percent in the year before the previous CEO retired.

The board of trustees is concerned about the future of the hospital. In recent years, state legislators have discussed taxing not-for-profit hospitals that earn too much money. The board also is questioning whether Halburt is meeting its mission, given its location in one of the most affluent areas in the region. Recent staff surveys suggest that many employees are not satisfied with their jobs, which may have contributed to recent high turnover. As one employee wrote at the end of the survey, “I thought I was getting out of a dysfunctional culture when I left the Army. Little did I know that yelling, haranguing, and extreme bureaucracies exist outside of the military. Halburt’s culture needs an extreme overhaul.”

Into this situation walked Stephanie Short. After three months of mostly observing and noting problems, she believes that she is ready to develop a plan of action.

Questions

1. What are the main issues Stephanie is facing?

2. What actions could she take to improve strategic thinking and strategic management at the hospital?

3. What stakeholder issues should she immediately address?

4. What changes could she make over the short term to refocus the organization and achieve quick wins?