Your client is the CEO of the Sugar Magnolia Hospital. The hospital is a large hospital providing a full range of services, in a large, urban area. In the last five years, the hospital’s profitability has decreased to the point that they are almost out of money and will not be able to meet their financial and social mission.
The revenue scheme of the hospital’s different services falls into the following three categories:
- Fixed fee for service (e.g. broken leg = $150 to fix)
- Cost plus (cost of providing the product/service plus a percentage)
- Per diem fees (fee per day of hospital stay)
The hospital gains patients through physician referral. In other words, the physicians within the hospital see patients and after diagnosing those patients will refer the patients for care, treatment, surgery, testing, etc. to other places within the hospital.
The CEO comes to you to ask the following:
- Why has profitability gone down?
- How should they turn it around?
Profitability consulting cases ask you to look at a profitability problem (usually a decline in profits). This specific case involves a hospital that has been running out of money for 5 years, and is at a point where it is almost out of money altogether. Your job is to diagnose the issue, find the causes, and present a strategy to reverse the decline.
Build a structure for the case – you can start with the Profitability Framework. Consulting cases are best solved with custom frameworks you build utilizing your prior business and case experience. Can you build an effective structure that will help you solve the problem?
This case is like a case you would expect in a final round interview at ClearView Healthcare Partners.
ClearView Interview Tips
Crush your ClearView interview by becoming a structure pro.
You must know how to blend the frameworks, and know how to use them to build creative, custom structures in your cases.
In this case, focus on timing yourself as you walk through the case (2min for structure, 5min for math, 2min for brainstorming, 2min for conclusion).
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