Type: Analysis
Pages: 4 | Words: 1158
Reading Time: 5 Minutes

This paper critically analyses the case study on open-heart surgery at Cabarrus Memorial Hospital written by Swayne, Duncan, and Ginter (2009). The main issue discussed here relates to the complex decision about strategic management in the healthcare field and analysis of the implementation of the chosen strategy based on the in-depth marketing research and financial prognosis.

The first aspect to mention is that the Cabarrus Memorial Hospital was established in 1937 with its core specialization covering the fields of diagnosing and providing therapeutic cardiovascular services to its patients. It should be underlined that the program of open-heart surgery proposed to the trustee committee is a complicated but justified decision from the strategic management point of view. It is explained below in regard with the mission of the Cabarrus Memorial Hospital. It is providing patients with the highest quality of healthcare services, employing professionals with the best practical skills, guaranteeing the safest and the most riskless treatment to its patients.

First, it is necessary to explain that the main reason for open-heart surgery strategic plan development was the fact that patients had to go to other hospitals for similar services. Such transfers were extremely dangerous for their health, and they needed an immediate reaction to an acute state.  As it is stated by Swayne, Duncan, and Ginter (2009), the “continuity of care for the cardiology patient was critical”. The top management aimed to minimize patient transfers and provide stability in choosing the staff, technology and equipment. Establishing a full-service hospital was the main idea of the further logical development of the Cabarrus Memorial Hospital. Therefore, its mission complies with the program of open-heart surgery.

It is necessary to point out that the healthcare environment is highly competitive and constantly changing. With the aim to be equal to such competitors as the Duke University Medical Center or Carolinas Medical Center, the Cabarrus Memorial Hospital cannot lose its patients putting at risk their lives. Last year, 292 patients were directed from it to other hospitals for open-heart surgery, because it did not provide a full range of cardiac services to its patients. The strategy of the provision of the latter will benefit people in getting continuous treatment and avoiding risks of delayed healthcare services caused by the necessity to be transported to the nearest medical centers.

It is projected that an average fee of the open-heart surgery procedure will amount to almost $41,000. If this figure is multiplied by the projected number of procedures for the first year, namely 53 cases, the Cabarrus Memorial Hospital will receive $2,173,000 of revenues. The sum of direct and indirect costs accounts for $2,867,864, and the volume of the capital expenditure needed for the renovation of the existing hospital premises and additional equipment purchase amounts to $3,273,180. It should be recognized that the Cabarrus Memorial Hospital has sufficient reserve funds to cover all required expenditures without taking a loan.

Regarding the hospital’s infrastructure as one of the most important factors influencing the guaranteeing of the best service quality, it should be underlined that the Cabarrus Memorial Hospital is a well-equipped modern medical center. It has an appropriately equipped emergency room, coronary care unit with eight beds, cardiac catheterization and rehabilitation.

However, it will be needed to purchase additional ten acute care beds and equip one suite for open-heart surgery. It is projected to buy “three dedicated cardiac surgical ICU beds and seven telemetry beds” by the end of the third year with the aim to support the new program of open-heart surgical operations expansion.

New Open-Heart Surgery Program

It is also worthwhile noting that the decision on the launching of the new open-heart surgery program and changes in service procedures will require hiring additional 23 employees for projected 53 procedures for the first year. This number will be increased to 39 workers at the end of the third year with projected 211 procedures. It should be also emphasized that the hospital should not postpone making a decision on this issue, whereas Dr. Christy, its first potential cardiovascular surgeon, waits for a notice to make his career choice.

Besides, the board of trustees should consider the aspects pointed out below before making the final decision whether to apply for the Certificate of Need or not. Factors that will influence this decision include the research of the primary and secondary service areas, trends in demographics, including such characteristics as total population and at-risk population growth. Moreover, it is crucial to analyze the existing competitive situation in the market. It means to investigate which of the nearest medical centers offer similar services. The issue of population growth should be regarded with respect to trends in the demand for the open-heart surgery program.

Considering the competition analysis, it is worthwhile pointing out that there is no opportunity to obtain qualified services of open-heart surgery in the defined primary area of the Cabarrus Memorial Hospital (CMH), including patients from Concord and Kannapolis (Cabarrus County). Only three medical centers in Charlotte located 25 miles from the CMH are participants of the North Carolina open-heart surgery programs. There is also an opportunity to direct patients to Winston-Salem or Greensboro, which are found farther.   

Regarding the question of possible alternatives for the Cabarrus Memorial Hospital, it should be underlined that this issue should be solved from the strategic point of view. As Campbell (2008) points out, a strategic analysis in the form of the correlation between the finance soundness of new strategy implementation, positive market trends, including SWOT analysis and an increase in demand, provide the organization with the in-depth awareness of the existing background and areas for growth. Strategic planning is also an essential part of strategic management. With the aim to be at the forefront of the market, healthcare organizations should try to provide a full range of services in the chosen specialization to their patients. Interests, safety, and a decrease in unnecessary risks for patients should be drivers for the implementation of the change strategy in the healthcare field.

Taking into account the above mentioned, it is important to recognize that the conducted market analysis, in particular primary and second service data, as well as demographics characteristics, indicates that there will be a high demand for open-heart surgery procedures, because patients feel uncomfortable travelling to other medical centers located far from their home county.  It is supported by the fact that statistical data indicate that Cabarrus County has the highest rates of the at-risk population. Moreover, the level of open-heart surgery usage had the same tendency. 

Therefore, the board of trustees should not analyze any alternatives to this new strategy, whereas there is clear evidence that continuous treatment that will be provided by the Cabarrus Memorial Hospital being a full-service one will benefit patients. It will become a more influential competitor for the existing medical centers. The Cabarrus Memorial Hospital has all chances to obtain the Certificate of Need, because the existing primary and secondary services  provide more than 80 percent of the utilization rate required by the Department of Facilities Services.

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