Healthcare Case Study Case Study

MMC Case Study

Major Problems and Secondary Issues

Organizational Strengths and Weaknesses

Alternatives and Recommended Solution

Evaluation

In the early 1990's a new Medicaid managed care company, MMCC, set up shop in the neighborhood right across the street from a major medical center in downtown Baltimore that served many poor patients. The company seems to have embarked on a strategy to maximize its revenues without providing a value to their patients. They are compensated when they enroll new patients and thus they have an incentive to grow their client base. However, they are expected to provide services to the patients under their care. MMCC has taken steps to create bottlenecks for the patients to receive healthcare services so that they can maximize short-term profits.

Major Problems and Secondary Issues

All companies must have a strategy that creates a return on investment for their stakeholders. Some companies focus on maximizing profits in the short-term while others attempt to create sustainable growth models. MMCC is definitely focused on short-term profitability and without consideration of their value proposition to their clients. There current strategy is ultimately unstainable and operations will likely cease at some unknown point in the future. Although the model may produce profits in the short-term, the organization is not adding value to their community and eventually it is likely that the system will be revised to address the inefficiencies that are being created relative to the broader set of stakeholders.

Your Role

In this role I would act as an external consultant to the MMCC. The advantage of being a consultant in this case would stem from the ability to put the organization's operations in a broader context of their role in their local community. This position would also allow for the recommendation of a more sustainable business strategy.

Organizational Strengths and Weaknesses

The MMCC organization presumably already has some existing capacity built to serve the community. However, as opposed to making their operations more efficient, the organization has focused on their "Medical Loss Ratio" and has implemented a series of unethical strategies to increase their margins by avoiding providing services to their patients. Some of their tactics to improve their medical loss ratio include:

Enrolling poor people at the holidays by offering free turkeys at a location in their neighborhood, then when the patients needed care, informing them they had to go across the city to another site to receive medical care;

Too few phone operators to answer calls and make appointments; too few parking places at the health care delivery site; and too few chairs in the waiting room once patients could find a parking place.

In essence the organization is basically limiting its capacity to provide services so that it does not have to pay for them. This strategy puts the organization in substantial risks of external threats. The primary source of risk stems from the fact that the organization is operating inefficiently from the perspective of the local community and the use of public funds. Therefore, the organizational strategy can, and should be, the focus of a healthcare reform to improve this situation. There are also legal risks that are present because the company undoubtedly has a contractual obligation to meet the needs of its patients. Since it purposely trying to skirt these obligations, the company could be sued for damages or even be held criminally liable for its actions.

Alternatives and Recommended Solution

This situation calls for a transformational leader to change the organizational culture and create a new vision that is based upon a sustainable strategy. The organization can be analyzed from a systems approach to create a model that provides value to the local community as well as returns to the investors. However, to implement such a strategy, it will definitely take leadership. Each organization develops a culture in which employees and stakeholders create a set of shared values and norms. Once an organizational culture is established, it can be extremely difficult to change and will require extraordinary leadership…