The Beth Israel Deaconess Medical Center (BIDMC) was formed in 1996 through the merger of Beth Israel Hospital and New England Deaconess Hospital. The merger proved disastrous, with the organization losing $50-70 million annually and accumulating $611 million in debt over six years due to a lack of communication and an improperly formed business strategy. Paul Levy has now been chosen as the new CEO to address BIDMC's critical issues and guide it to a successful future as a center of excellence in patient care and innovation.
2014 Jim Chelius Preliminary Round Executive Summary Team Audentius
1. 2014 Jim Chelius HR Case Competition
Paul Levy: Taking Charge of the Beth Israel
Deaconess Medical Center
Executive Summary
Team: Audentius
Leanne Caspe
Anastasiya Loukienko
Anthony Prudente
Vidhi Shah
2. Executive Summary
The Beth Israel Deaconess Medical Center (BIDMC) was formed in 1996, as a result of the
merger of the Beth Israel Hospital with the New England Deaconess Hospital. BIDMC became a part
of CareGroup due to rising healthcare costs and to compete with the Partners Health initiative that had
taken up a significant portion of the market share. The 1996 merger proved to be disastrous with the
company logging losses of $50-$70 million each year and falling into a debt of $611 million over 6
years (Anderson, 2002). The two hospitals, though founded on the same, broad principle of serving the
community of Boston, were locking horns over the basic day to day functioning of the newly formed
hospital. A lack of due diligence pre-merger led to an improperly formed business strategy that was
more like an acquisition strategy. The resulting emergence of several critical business and HR issues at
BIDMC eventually spiraled the hospital out of control. After careful analysis, we have identified
strategies that address the shortcomings that have already occurred post-merger. These strategies will
also support newly-developed long-term and short-term goals that ensure the organization’s future as a
center of learning that continuously strives to achieve a level of excellence in patient care and
innovation.
We first identified critical business issues that BIDMC faces and must be addressed by Paul
Levy upon taking office. First, there needs to be a communication strategy overhaul, which has been
the primary driver of the problems the organization has faced thus far. A lack of communication has
led to general mistrust among the employees, the proliferation of rumours, a very divided and partisan
culture, and a lack of understanding and urgency about BIDMC’s current problems. The hospital is
also functioning in an economically inefficient way, losing close to $100 million during the 2001 fiscal
year, with $58.8 million lost due to ineffective operations. The board of BIDMC, comprising of 45
members, is very large and not an accurate representation of the major stakeholders in the hospital,
making it very difficult to get expert opinion from individuals who can greatly benefit the operations at
BIDMC. Instead, BIDMC should pursue former personnel or retired Harvard faculty who would be
willing to provide advisory services and actionable recommendations, to create a lean, balanced board
that helps further the goals set by BIDMC to effectively recover. BIDMC also entered into hasty
insurance agreements that are below standard, leading to the loss of money in the already financially
crumbling medical facility. This must be remedied as soon as possible in order to prevent further
damage and be able to turn the hospital around while it’s still possible.
With any merger and acquisition, Human Resources is a vital component to the success of any
organization. During the merger of the Beth Israel and Deaconess Hospitals, Human Resources had a
plethora of issues to resolve. With the lack of guidance and management from the board, Human
Resources was at a loss. Employees were experiencing a drastic drop in morale, which resulted in an
increase in the turnover rate. Staff that stayed were either overwhelmed with the added responsibilities
of those who left, or were new recruits who were not given new standardized training. The Human
Resources department had to deal with the relationships of the employees that were being affected by
the board’s lack of strategic planning and management.
3. The central issue that Human Resources faced was the lack of a cohesive company culture for
employees and staff to identify with. When the merger between Beth Israel and Deaconess occurred,
management positions were dominated by Beth Israel personnel. The neglect of Deaconess caused
turmoil within the new hospital. An “organization’s culture comprises an interlocking set of goals,
roles, processes, values, communications practices, attitudes and assumptions,” and is imperative for
its success (Denning, 2011). BIDMC failed to create an official and strategic plan with the guidance of
Human Resources, in order to properly foster a new culture and vision for the newly integrated
hospitals.
To solve this issue, Paul Levy has been chosen to become the new CEO and pioneer of Beth
Israel Deaconess Medical Center. Paul Levy’s past experiences and credentials exemplify
characteristics necessary to lead this hospital into a new and bright future. His extensive background in
senior level positions of authority have positioned him to be an excellent choice to guide the
dysfunctional management practices of BIDMC in the right direction. We have identified Paul as the
pivotal element in the initiation of our open-communication strategy, which is the also the first step in
our organization’s cultural overhaul strategy. Shortly after assuming his new position, we encourage
Paul to send out a candid e-mail to the entire organization, outlining the current and future state of
BIDMC. The e-mail will be an overview of the strategy that BIDMC will be carrying out going
forward. His first priority will be to explain the hospital’s new mission statement: “Our mission is to
be a center of learning that continuously strives to achieve a level of excellence in patient care and
innovation.” The mission aligns the principles that both Beth Israel and Deaconess used to operate on,
signifying a unification of the two.
The three core components of the mission: a center of learning, excellence in patient care, and
innovation, have now become the three long-term goals of the hospital, based on careful industry
review, consultation, and analysis. Establishing BIDMC as a center of learning prepares the hospital to
compete in the “knowledge age” by providing employees with resources to “use knowledge tools and
technology to continue learning and developing talents throughout life” (Trilling & Fadel, 2012, pp.
14-15). Also, placing an emphasis on patient care and innovation reinvigorates the competitive
strategies that made both Beth Israel and Deaconess successful, respectively.
The process of establishing short-term goals that support the three long-term goals will involve
the input of the employee population. Each year, employees will be given a list of five short-term
goals, of which they will vote on and the top three will be selected and implemented for the upcoming
year. The three short-term goals for the year, therefore, will have been decided by the employees. The
process of achieving both these long and short-term goals will be through a continuous improvement
model. This model will include four components: Plan, Do, Check, and Act, which all make up a
continuous cycle. Employees will identify opportunities for change and formulate a plan, after which
they will implement on a small scale. Next, employees will analyze the outcomes of the implemented
plan to see if a difference was made and if the plan was successful. New and improved processes will
4. be rolled out on a full scale to all departments. If not, the cycle will reset to step one. The model
provides buy-in for both mistrustful employees and historically indecisive management, because it gets
rid of the fear component in change that change is “permanent.”
Change networks will also be established, as they will be an integral part of the process to help
facilitate the new continuous learning and improvement model. The “boxes and lines of formal
organizational charts mask myriad relationships in networks that crisscross the borders of functions,
hierarchies, and business units. These networks define the way work actually gets done in today’s
increasingly collaborative, knowledge-intensive companies” (Cross, Parise, Weiss, 2007). We
recommend that Levy and the hospital management leverage such networks by identifying influential
members (“brokers”) of the hospital clinical staff, and get them on board to spread the word about
BIDMC’s new mission, upcoming changes, and solicit input to solve outstanding problems faced by
the hospital. Brokers, who are highly influential, help bridge communities and provide the “most
efficient means of gathering and disseminating information in a high-touch way” (Cross, Parise, Weiss,
2007). Research also suggests that brokers who are early “adopters and proponents of change,” can
“significantly boost the odds that a big transformational effort—involving a major cultural shift, post-
merger integration, or the implementation of new technology—will succeed” (Cross, Parise, Weiss,
2007). We strongly believe that convincing a small number of influential individuals from both BI and
Deaconess that the management is committed to all employees is key. The overall success of BIDMC
will significantly help boost employee morale, and help get all hospital personnel committed to the
same mission and vision of creating a hospital that is a center of learning that continuously strives to
achieve a level of excellence in patient care and innovation.
In order to measure the success of our proposed plan, there must be an established set of
metrics. “The use of metrics in the healthcare industry is particularly interesting given that the industry
affects everyone, focuses on saving lives, the diversity of services/supplies involved, as well as the
maturity of supporting standards, tools, and comparison data” (Williford, 2011). With the results we
receive, our hospital will be able to undergo improvement by cycling through our continuous
improvement model. Our first metric will be a combination of clinical patient safety and satisfaction.
Patient safety will be measured by mortality rates and causation of fatality to help find gaps or possible
improvements in surgical procedures or other patient care methods. There will also be a patient
satisfaction metric that will assess the operations of the hospital through the viewpoint of the patient.
After each visit, there will be a patient survey conducted that will be formatted on a Likert scale model.
The results of the survey will provide a general summary of how patients feel they are being treated,
and will assist the board in determining when further improvements need to be made. Another metric
that must be constantly measured are the hospital’s finances. There must be a daily financial record
that should be compiled into weekly and monthly reports. During the first year of the proposed plan,
financial statements will be analyzed and summarized for the board to help them discover ways to cut
costs, yet still maintain high quality healthcare for the patients and satisfaction of the employees.
Employee input and satisfaction is just as important as patient satisfaction. Therefore, at the end of
each month a survey will be distributed to the staff by email to rate their satisfaction with the hospital’s
5. methods and management. This survey will also be weighed on a Likert scale, in order to form a
general opinion of how the hospital is performing according to the employees. In addition to the
survey, there will also be an anonymous hotline for employees to voice out their opinions, complaints,
and compliments, which will all be taken into account when evaluating the current state of the hospital.
Beth Israel and Deaconess bring unique strengths to the table. BI is a leader in academic
research, primary care, patient care, and innovation, while Deaconess is a hospital with a strong focus
on surgical specialties, efficiency. These differing competitive advantages provide the hospitals with a
unique opportunity to combine primary care, surgical specialization, patient care, and efficiency to
become a well-rounded provider of medical care and education. If BIDMC can overcome the threats of
a disjointed culture and financial collapse through our suggested plan, it can rise up to be one of
America’s premier medical intuitions, continuing a tradition of excellence and serving the community
of Boston.
6. Appendix
Works Cited
Anderson, C. (2002, November 22). Beth Israel Reports Upswing After Past Financial Trauma |
News | The Harvard Crimson. The Harvard Crimson. Retrieved October 12, 2014, from
http://www.thecrimson.com/article/2002/11/22/beth-israel-reports-upswing-after-past/
Cross, R., Parise, S., & Weiss, L. (2007, April). The role of networks in organizational change |
McKinsey & Company. McKinsey and Company. Retrieved October 10, 2014, from
http://www.mckinsey.com/insights/organization/the_role_of_networks_in_organizationa
l_change
Denning, S. (2011, July 23). How Do You Change An Organizational Culture? Forbes. Retrieved
October 14, 2014, from www.forbes.com/sites/stevedenning/2011/07/23/how-do-you-change-an-
organizational-culture/
Trilling, B., & Fadel, C. (2012). 21st Century Skills: Learning for Life in Our Times. Jossey-
Bass.
Williford, Robert (2011) Healthcare Metrics . Retrieved October 15, 2014 from
http://www.rwilliford.com/healthcare_metrics.html