hospital impact

Continuing from my previous post, I'm doing a series on "hospital strategy." Just like any other organization that operates in a competitive environment, hospitals need to nail down their strategy in order to survive and thrive.

One healthcare system has been grappling with hospital strategy quite a bit recently. Baptist Health System in Alabama is undergoing one of the most dramatic turnarounds in the country. They improved their financial performance in fiscal year 2005 by $40MM and expect a similar improvement for FY2006.

Unlike many of the hospital turnarounds that I've blogged about previously, this turnaround isn't a "operational improvement" turnaround, this is truly a strategic turnaround.

Bleeding $56MM in 2004, Baptist really did some soul-searching. They looked at all of the things that they were involved in and made some tough decisions about what they really needed to focus in on. In some sense, they really had to think about 5-10 years down the line, what would their health system look like? What would be their core competency?

I can't say for sure, but I'd be willing to bet that Baptist realized that their core, their greatest strength, their best source of competitive advantage is their concentrated presence in Birmingham. That's why they essentially sold off everything except their core 4 hospitals in Birmingham area. That is strategy 101: to know your organization well enough to realize what the "core," the best source of advantage of the organization really is. Is it a technology? a hold of a particular market (in strat terms, an "established base") some economies of scale factor? a valuable brand? What is your hospital's greatest source of strength?

Interesting that whether we see it or not, strategy (even hospital strategy) is actually all over the news and all around us. We just don't normally think of it that way.