Assignment:
Johnson City Medical Group
The Strategic Challenge
The Johnson City Medical Group began in 1932 as a solo specialty, two-person cardiology practice by Timothy and Robert Johnson, two brothers who were born in Johnson City. Over the years, the practice had grown to be one of the largest group practices in the region. Exhibit 1 shows a brief history of the practice.
|
|
|
Exhibit 1
History of Johnson City Medical Group
1932 Founding of the Group
1938 Group adds first partner
1948 Group expands into second city
1956 Group grows to fifteen cardiologists and adds a professional administrator
1965 Group has six satellite offices and 40 staff
1977 Group adds two cardiovascular surgeons and associated support staff
|
|
In 2012, the group had grown to over 45 partners and was one of the largest in their specialty of cardiology and cardiovascular surgery. Their mission statement, which the group had developed, was to be "premier heart services for the tri-state region." Over the past 5 years, however, the group had begun to see referrals shift or be constrained with the increasing growth of multi-specialty practices in their secondary and tertiary services areas. These larger groups had begun to not refer to Johnson City, but rather have kept their cardiology and cardiovascular surgery referrals in-house. The challenge to the group was a long-term issue as the partners entered their annual strategic planning retreat.
Donna Harris was the senior administrator of the medical group. A well-respected person, Donna had worked for these physicians and had helped them grow significantly for the past 15 years. She was seen not only as a strong individual operationally and fiscally, but as having good strategic sense. Two years ago, Donna had hired a Director of Marketing. Some partners in the group were not enamored with this hire, believing it was unnecessary. As the meeting got underway, Donna reviewed the group's financials. The end-of-the-year partnership distribution was 1 percent less than the preceding fiscal year because of a decline in referrals and a slight change in reimbursement in Medicare. "We need to address the referral issue," Donna said, "reimbursement changes are less in our control. I have asked Michael, our marketing person, to discuss strategic options for you to consider."
Michael had been with the group for 2 years. Until this point in time he had primarily been calling on physician offices with the goal of trying to build referrals. He was aware of the fact that some of the physicians in the group questioned the value of his role and the function of marketing. "The drop in referrals is disconcerting," said Michael. "The trend suggests that the formation of multi-specialty practices on the fringes is eating into our referral business and may only continue. We need to dramatically change our strategy.
"I disagree," said Dr. Vinod, a cardiovascular surgeon who had been trained at Mayo and was well respected in the group; it possibly just speaks to your ineffectiveness. We are good at what we do, and there is no reason to change anything. We have been and always should be the premier group for heart care."
"Should we and can we?" said Dr. Carrolton. She was a young cardiologist that had recently received partnership level. She also had received her MBA from a well-known business school.
"Will staying the same course change the market trends?" What are your thoughts?