[SOLVED] MHAFP 5040 Capella Health Administration Change Leadership Case Study Analysis – Business Finance

Assessment 2- Case Study Analysis- Part 1
Complete Part 1 of an in-depth analysis of the case study “Case Study 5: Ellen Zane—Leading change at Tufts/NEMC.” Your 6–8-page analysis will focus on the problems facing Tufts/NEMC and the approach(es) the organization used to position itself for the necessary changes.
Note: The assessments in this course build upon the work you have completed in the previous assessments. Therefore, complete the assessments in the order in which they are presented.
A clear understanding of the need for change and the nature and extent of the change is necessary to communicating and heightening awareness within the organization and gaining the support of all internal and external stakeholders. Health care leaders must demonstrate that change is necessary to ensure the future success of the organization and its mission, and must begin the change management process with an analysis of complex, dynamic processes and organizational components.
This assessment provides an opportunity for you to examine the internal and external factors driving change in an organization, how the organization responds to the need for change, and how it heightens awareness of that need.
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

Competency 1: Analytical Thinking: Develop complex plans or analyses.

Analyze the multiple elements of a problem.

Competency 2: Change Leadership: Challenge the status quo.

Analyze approaches used to heighten awareness of the need for change in an organization.
Explain how effectively an organization challenges the status quo with respect to an ideal or to a vision of change.
Assess an organization’s efforts at creating a realistic sense of crisis or a disequilibrium to prepare for change.

Competency 5: Performance Measurement: Use evidence-based approaches to support community wellness.

Assess the needs of a community as they relate to a health care organization.

Competency 6: Communicate effectively with diverse audiences, in an appropriate form and style, consistent with applicable organizational, professional, and scholarly standards.

Write clearly and concisely, using correct grammar and mechanics.
Support main points, claims, and conclusions with relevant and credible evidence, correctly formatting citations and references using APA style.

Templates
Use this template for your case study analysis.

APA Style Paper Template [DOCX].

Required Resources
The following resource is required to complete the assessment.

Ingols, C. & Brem, L. (2016). Case study 5: Ellen Zane—Leading change at Tufts/NEMC [PDF]. In Cawsey, T. F., Deszca, G., & Ingols, C. Organizational change: An action-oriented toolkit (3rd ed.), (pp. 448–479).

Resources 
Suggested Resources
The resources provided here are optional. You may use other resources of your choice to prepare for this assessment; however, you will need to ensure that they are appropriate, credible, and valid. The MHA-FP5040 Health Administration Change Leadership Library Guide can help direct your research, and the Supplemental Resources and Research Resources, both linked from the left navigation menu in your courseroom, provide additional resources to help support you.
Organizational Change
The following resources may be of use to you in your analysis of the problems facing Tufts/NEMC and the approach(es) the organization used to position itself for the necessary changes.

Kotter, J. P. (2008). Developing a change-friendly culture. Leader to Leader, 48, 33–38.
Latham, J. R. (2013). A framework for leading the transformation to performance excellence part I: CEO perspectives on forces, facilitators, and strategic leadership systems. The Quality Management Journal, 20(2), 12–33.

Presents a study based on in-depth interviews of CEOs who led successful organization transformations, that describes a framework for leading the transformation to performance excellence (LTPE). Part 1 explores two of the five categories of concepts within this LTPE framework.

Latham, J. R. (2013). A framework for leading the transformation to performance excellence part II: CEO perspectives on leadership behaviors, individual leader characteristics, and organizational culture. The Quality Management Journal, 20(3), 19–40.

Part 2 explores three of the five categories of concepts within the LTPE framework.

Nelson, K. E., & Pilon, B. (2015). Managing organizational transitions: The chief nurse perspective. Nurse Leader, 13(3), 71–76.

Presents the results of a survey to determine how chief nurse officers and chief nurse executives manage change and transitions in their organizations.

Challenges at Tufts/NEMC | Transcript.
Timeline of Events at Tufts/NEMC | Transcript.
Rating the Organization’s Readiness to Change | Transcript.

Writing Resources
You are encouraged to explore the following writing resources. You can use them to improve your writing skills and as source materials for seeking answers to specific questions.

APA Module.
Academic Honesty & APA Style and Formatting.
APA Style Paper Tutorial [DOCX].

Additional Resources for Further Exploration

Cawsey, T. F., Deszca, G., & Ingols, C. (2016). Organizational change: An action-oriented toolkit (3rd ed.). Thousand Oaks, CA: Sage. Available from the bookstore.

Chapter 3, “Frameworks for Diagnosing Organizations: What to Change in an Organization,” pages 64–93.
Chapter 4, “Building and Energizing the Need for Change,” pages 94–140.

Assessment Instructions 
Note: This assessment must be completed prior to Assessments 3 and 4. Therefore, complete the assessments in this course in the order in which they are presented.
Preparation
Read the case study, “Case Study 5: Ellen Zane—Leading change at Tufts/NEMC,” linked in the resources.
Note: Remember that you can submit all—or a portion of—your draft analysis to Smarthinking for feedback, before you submit the final version for this assessment. If you plan on using this free service, be mindful of the turnaround time of 24–48 hours for receiving feedback.
Requirements
Analyze the problems facing Tufts/NEMC and the approach(es) the organization used to position itself for the necessary changes.Assessment 2- Case Study Analysis- Part 1
Complete Part 1 of an in-depth analysis of the case study “Case Study 5:
Ellen Zane—Leading change at Tufts/NEMC.” Your 6–8-page analysis will
focus on the problems facing Tufts/NEMC and the approach(es) the
organization used to position itself for the necessary changes.
Note: The assessments in this course build upon the work you have completed in
the previous assessments. Therefore, complete the assessments in the order in
which they are presented.
A clear understanding of the need for change and the nature and extent of the
change is necessary to communicating and heightening awareness within the
organization and gaining the support of all internal and external stakeholders.
Health care leaders must demonstrate that change is necessary to ensure the future
success of the organization and its mission, and must begin the change management
process with an analysis of complex, dynamic processes and organizational
components.
This assessment provides an opportunity for you to examine the internal and
external factors driving change in an organization, how the organization responds to
the need for change, and how it heightens awareness of that need.
By successfully completing this assessment, you will demonstrate your proficiency
in the following course competencies and assessment criteria:
•
o
•
o
o
o
•
o
•
o
Competency 1: Analytical Thinking: Develop complex plans or analyses.
Analyze the multiple elements of a problem.
Competency 2: Change Leadership: Challenge the status quo.
Analyze approaches used to heighten awareness of the need for change in an
organization.
Explain how effectively an organization challenges the status quo with respect to an
ideal or to a vision of change.
Assess an organization’s efforts at creating a realistic sense of crisis or a
disequilibrium to prepare for change.
Competency 5: Performance Measurement: Use evidence-based approaches to
support community wellness.
Assess the needs of a community as they relate to a health care organization.
Competency 6: Communicate effectively with diverse audiences, in an appropriate
form and style, consistent with applicable organizational, professional, and scholarly
standards.
Write clearly and concisely, using correct grammar and mechanics.
o
Support main points, claims, and conclusions with relevant and credible evidence,
correctly formatting citations and references using APA style.
Templates
Use this template for your case study analysis.
•
APA Style Paper Template [DOCX].
Required Resources
The following resource is required to complete the assessment.
•
o
Ingols, C. & Brem, L. (2016). Case study 5: Ellen Zane—Leading change at
Tufts/NEMC [PDF]. In Cawsey, T. F., Deszca, G., & Ingols, C. Organizational change:
An action-oriented toolkit (3rd ed.), (pp. 448–479).
This case study is the basis for this assessment.
Resources
Suggested Resources
The resources provided here are optional. You may use other resources of your
choice to prepare for this assessment; however, you will need to ensure that they
are appropriate, credible, and valid. The MHA-FP5040 Health Administration
Change Leadership Library Guide can help direct your research, and the
Supplemental Resources and Research Resources, both linked from the left
navigation menu in your courseroom, provide additional resources to help support
you.
Organizational Change
The following resources may be of use to you in your analysis of the problems facing
Tufts/NEMC and the approach(es) the organization used to position itself for the
necessary changes.
•
o
•
Kotter, J. P. (2008). Developing a change-friendly culture. Leader to Leader, 48, 33–
38.
An interview with John P. Kotter, a thought leader on organizational leadership and
change management. This article offers useful insights into Kotter’s perspective on
leading change in organizations.
Latham, J. R. (2013). A framework for leading the transformation to performance
excellence part I: CEO perspectives on forces, facilitators, and strategic leadership
systems. The Quality Management Journal, 20(2), 12–33.
o
•
o
•
o
•
•
•
Presents a study based on in-depth interviews of CEOs who led successful
organization transformations, that describes a framework for leading the
transformation to performance excellence (LTPE). Part 1 explores two of the five
categories of concepts within this LTPE framework.
Latham, J. R. (2013). A framework for leading the transformation to performance
excellence part II: CEO perspectives on leadership behaviors, individual leader
characteristics, and organizational culture. The Quality Management Journal, 20(3),
19–40.
Part 2 explores three of the five categories of concepts within the LTPE framework.
Nelson, K. E., & Pilon, B. (2015). Managing organizational transitions: The chief
nurse perspective. Nurse Leader, 13(3), 71–76.
Presents the results of a survey to determine how chief nurse officers and chief
nurse executives manage change and transitions in their organizations.
Challenges at Tufts/NEMC | Transcript.
Timeline of Events at Tufts/NEMC | Transcript.
Rating the Organization’s Readiness to Change | Transcript.
Writing Resources
You are encouraged to explore the following writing resources. You can use them to
improve your writing skills and as source materials for seeking answers to specific
questions.
•
•
•
APA Module.
Academic Honesty & APA Style and Formatting.
APA Style Paper Tutorial [DOCX].
Additional Resources for Further Exploration
•
o
o
Cawsey, T. F., Deszca, G., & Ingols, C. (2016). Organizational change: An actionoriented toolkit (3rd ed.). Thousand Oaks, CA: Sage. Available from the bookstore.
Chapter 3, “Frameworks for Diagnosing Organizations: What to Change in an
Organization,” pages 64–93.
Chapter 4, “Building and Energizing the Need for Change,” pages 94–140.
Assessment Instructions
Note: This assessment must be completed prior to Assessments 3 and 4.
Therefore, complete the assessments in this course in the order in which they
are presented.
Preparation
Read the case study, “Case Study 5: Ellen Zane—Leading change at
Tufts/NEMC,” linked in the resources.
Note: Remember that you can submit all—or a portion of—your draft analysis to
Smarthinking for feedback, before you submit the final version for this
assessment. If you plan on using this free service, be mindful of the turnaround
time of 24–48 hours for receiving feedback.
Requirements
Analyze the problems facing Tufts/NEMC and the approach(es) the organization
used to position itself for the necessary changes.
Document Format and Length
Format your analysis using APA style.
•
o
o
o
•
Use the APA Style Paper Template, linked in the Required Resources. An APA
Style Paper Tutorial is also provided (linked in the Suggested Resources) to help you
in writing and formatting your analysis. Be sure to include:
A title page and references page. An abstract is not required.
A running head on all pages.
Appropriate section headings.
Your analysis should be 6–8 pages in length, not including the title page and
references page.
Supporting Evidence
Cite 3–5 sources of credible, scholarly evidence to support your analysis.
Case Study Analysis
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Note: The requirements outlined below correspond to the grading criteria in the
scoring guide. Be sure that your analysis addresses each point, at a minimum.
You may also want to read the Case Study Analysis—Part 1 Scoring Guide to
better understand how each criterion will be assessed. Be sure to note the
requirements in the Distinguished column.
Analyze the multiple elements of the problem.
Break down the problem into its fundamental components, showing causal
relationships.
Separate the layers of the problem (for example, contracting issues, insufficient cash
on hand, high accounts receivable, et cetera) into smaller, manageable components.
Consider the effects of each aspect of the problem on the organization.
Assess the needs of the community as they relate to the organization.
How do those needs affect the organization?
How can the organization respond to those needs to improve outcomes within the
community?
Analyze five approaches used to heighten awareness of the need for change in an
organization.
Apply your understanding of these approaches to the case study.
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Compare the effectiveness of these approaches in heightening awareness.
Explain how effectively the organization challenged the status quo with respect to
an ideal or to a vision of change.
How would you describe the status quo and the ideal state or vision of change?
What did these challenges hope to achieve? Were they successful?
What evidence supports your conclusions?
Assess the organization’s efforts at creating a realistic sense of crisis or a
disequilibrium to prepare for change.
How did the organization energize and motivate people to agree to the change?
Were the organization’s efforts successful? Why, or why not?
What evidence supports your conclusions?
Write clearly and concisely, using correct grammar and mechanics.
Express your main points and conclusions coherently.
Proofread your writing to minimize errors that could distract readers and make it
more difficult for them to focus on the substance of your evaluation.
Support main points, claims, and conclusions with relevant and credible evidence,
correctly formatting citations and references using APA style.
How or why does particular evidence support your main points, claims, or
conclusions?
Is your supporting evidence clear and explicit?
Will your audience see the connection?
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Copyright © 2016 by SAGE Publications, Inc.
Case Study 5
Ellen Zane—Leading Change at Tufts/NEMC
Cynthia Ingols
Lisa Brem
Simmons College School of Management
Boston
It was a difficult decision to take
this job. But there was something
about the history of Tufts-NEMC
and its importance to so many
stakeholders that really grabbed
me as the epitome of what one
could do in one’s career. I’d also
learned not to be adverse to risks.
You have to take risks, not stupid
risks, but you have to take risks.
— Ellen Zane, CEO, Tufts-NEMC
E
llen Zane brought a cup of coffee into her
home office. It was 4:30 a.m. and she was,
as usual, starting the day early. She fired
off a few e-mails to her senior staff and looked
over the Women’s Business magazine on her
desk. Her photograph was on the cover, highlighting the article on the turnaround she was
attempting to execute at Tufts-New England
Medical Center (Tufts-NEMC). It was the summer of 2006 and it had been an incredibly rough
two-and-a-half years since she accepted the
CEO position at the ailing Boston hospital. Since
then the hospital had survived the worst of its
financial troubles—they were meeting efficiency
goals and for the first time in years, more doctors joined the hospital than left it. Tufts-NEMC
posted an $18 million gain in 2005, after losing
nearly $60 million since 2001 (see Exhibit 1 for
financial statements). People were smiling and
thanking Zane in the corridors.
But that was a piece of the problem. This was
the tricky part, she thought, in one of her rare
moments of quiet as the predawn light slowly
infused the room. Zane realized that she was still
deeply worried about the future:
This place was just so fragile and I still
consider it fragile. It’s one month forward
and one month back. This market is
unforgiving and tough—I swim with the
Source: From Linda E. Swayne, W. Jack Duncan & Peter M. Ginter. Strategic Management of Health Care Organizations.
Jossey-Bass. 2008.
449
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Copyright © 2016 by SAGE Publications, Inc.
450   ORGANIZATIONAL CHANGE
sharks and nobody glad-hands us. I tell
the staff all the time—not a minute do we
take our foot off the gas.
Zane struggled with how to maintain the
solidarity that the financial crisis had created
among Tufts-NEMC’s 5,000 employees.1 She
knew from her 30 years of experience in hospital
management that sustaining change in Boston’s
cutthroat medical industry was the hardest part
of any turnaround. She had been successful
before with Quincy Hospital, but Quincy had
been a much smaller player. Tufts-NEMC was
a 450-bed Academic Medical Center (AMC)
that was the primary teaching site for Tufts
University School of Medicine, and conducted
over $50 million in research each year. It had
17,000 admissions in 2005 and generated $600
million in revenue. Unfortunately, while
Boston’s other AMCs merged, built networks,
and grew stronger, Tufts-NEMC had for years
floundered directionless in Boston’s rough seas.
As Zane headed to her office overlooking
Boston’s Chinatown she wondered: How could
she create and sustain true and lasting change
for Tufts-NEMC?
The Health Care
Industry in Boston
“Health care, together with education and
computer technology, is what Massachusetts
is known for throughout the world.”2
Home to several high-profile Academic
Medical Centers, the Boston area was a worldrenowned destination for health care services.
Massachusetts General Hospital (MGH),
Brigham and Women’s Hospital (BWH), and
Beth Israel/Deaconess Medical Center were
affiliated with Harvard Medical School, Boston
University Medical Center with Boston
University, and Tufts-New England Medical
Center with Tufts. These large AMCs led the
way in capturing $2.3 billion in National
Institutes of Health (NIH) research grant money,
second only to California. Massachusetts hospitals employed 12.2% of the total labor pool, and
accounted for a whopping 11.7% of the gross
state product. Health care expenditures per
capita were between 27% and 29% higher than
the national average from 1990 to 2000
(see Exhibits 2–9 for Massachusetts health care
statistics). Consumers, health plans, and
governing bodies tended to accept that heath
care in Boston costs more in accordance with
the high quality and cutting-edge services
the region provided.
Nationally, however, years of underfunding
by federal and state governments and rising
enrollment left Medicare and Medicaid payments lagging behind surging medical costs.
Hospitals in Massachusetts and the rest of the
nation amassed significant debt in the 1970s and
1980s as they refurbished older facilities,
expanded services, and purchased expensive
new technologies. While reimbursements fell
behind rising costs, hospital discharges declined
sharply in the 1980s, as did the average length of
stay. In Massachusetts, a decrease in hospital
births and nonresident discharges3 led to an
overall decline of 24% in total hospital discharges from 1991 to 1996. The increase in outpatient surgeries also affected hospitalizations.4
Throughout the 1990s, Massachusetts health
care insurance plans followed nationwide trends
when they merged into three large competitors:
Harvard Pilgrim Health Care, Blue Cross/Blue
Shield of Massachusetts, and Tufts Health Plan.
These “big three” plans wielded increasing
power in the marketplace, and their movement
to managed health (HMO) plans resulted in
lower payments to providers5 and more oversight on costs and medical services. All three
expanded regionally, to entice large regional and
national companies to offer their plans to
employees. HMOs used capitated payments,
meaning they reimbursed providers based on
the number of “covered lives” in the provider
system. Thus, providers of health care services
such as hospitals and doctors believed volume
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Case Study 5   451
and efficiency of services to be the most important factors in future financial success.
In 1991 Massachusetts deregulated hospitals
for the first time in ten years. These conditions
succeeded in making an impact—threatening
the financial viability of hospitals and moving
them toward more efficient and cost effective
management practices. Boston’s health care
leaders struggled for a strategy to survive in the
new environment. Mergers, closures, and conversions loomed.
The leaders of MGH and BWH made the
first decisive move. Managers at both hospitals
believed they needed additional leverage to
hold their own in negotiations with the ever
more powerful health insurance plans. They
also envisioned building a network of community primary care and specialist providers who
would refer tertiary6 patients to the member
hospitals, thus bolstering volume. In 1994,
when the news of the merger of these two behemoths—forming Partner’s Healthcare System,
Inc. (Partner’s)—became public, it was a seismic change in the landscape of the New England
medical industry. Others quickly followed suit.
From 1990 to 2000, there were 47 acquisitions
and mergers and 19 acute care hospital closures,
not including the formation of 10 major hospital systems in Massachusetts.7
Following the market consolidations in the
1990s, the turn of the twenty-first century years
were difficult ones for Boston’s hospitals and
insurers. Both Harvard Pilgrim and Tufts Health
Plans were hindered by regional over-expansion.
In 1999, Harvard Pilgrim went into receivership
after posting a $226 million loss, while Tufts
Health Plan lost $42 million. Community hospitals also continued to struggle from high debt,
inadequate reimbursements, high labor and
pharmaceutical costs, and failed merger or network integration attempts. In Massachusetts
particularly, consumers began to migrate to the
more expensive AMCs from the smaller regional
or community hospitals, seeking what they
perceived to be higher quality of care. Cuts
in payments from Medicaid, Medicare, and pri-
vate insurance plans continued to plague many
providers. To encourage more efficient management and cost containment practices among its
providers, HMOs started to move away from
capitated care and toward pay-for-performance
plans.
Even some AMCs felt the pressure on their
organizations. CareGroup— another Massachusettsbased hospital umbrella organization—posted a
loss of $215 million over 1999 and 2000 and lost
market share and network physicians. Partners,
however, grew and remained strong, reaching
5,600 doctors in its Partner’s Healthcare System,
Inc. (PCHI) network. In a seminal flexing of its
market strength, Partner’s negotiated up to 30%
increases from all three major health plans, at one
point refusing to continue a contract with Tufts
Health Plan until it agreed to higher payments.8
By 2005, the provider market was dominated
by four major hospital systems: Partners,
reporting a surplus of $30 million; Caritas
Christi; CareGroup (which had decentralized
most of its operations back to its member
hospitals); and Boston Medical Center. See
Exhibit 10 for provider descriptions. When the
dust settled on the consolidation activity, there
were approximately 25 acute care, five psychiatric, and five rehabilitation hospitals in the metropolitan Boston area, with Partners leading in
market share.9 On the insurer’s side, the major
health plans recovered, with Blue Cross/Blue
Shield of Massachusetts coming out on top,
Harvard Pilgrim regaining strength, and Tufts
maintaining a third position.
According to one survey of the Boston health
care industry, trends through 2005 were:
•• AMCs faced lack of capacity from years of
merging and downsizing, while admissions moved to AMCs from community
hospitals;
•• pay-for-performance (quality incentive)
programs were gaining in popularity,
using measures such as cost, efficiency, IT
capacity, admission rates, and patient satisfaction to bolster reimbursements;
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452   ORGANIZATIONAL CHANGE
•• hospitals struggled to recruit new doctors
and nurses, with AMCs poaching from
each other;
•• nationally, the growing number of uninsured and underinsured people increased
the amount of bad debt hospitals carried.
Although mitigated in Massachusetts by
strong safety net programs, collections
were still a rising concern.10
History of Tufts-NEMC11
New England Medical Center, originally the
Boston Dispensary, was one of the oldest hospitals in the United States. Started in 1796 by the
philanthropic activities of historical Boston
figures Samuel Adams and Paul Revere, the
Boston Dispensary was the first permanent
medical facility in New England. First envisioned as a community medical service for the
poor, the hospital quickly gained a reputation
for innovation. It was the first U.S. hospital to
assign nurses to patients, to form a visiting
nurse association, and establish dental, rehabilitation, venereal disease, lung, food and
nutrition, and evening pay clinics. It pioneered
employer-paid clinic treatment, well-child services, and moving x-rays. The first modern test
for syphilis, the first group psychotherapy
experiment, the first human growth hormone,
and immuno-suppression therapies were developed at the Boston Dispensary. In 1929 New
England Medical Center was formed by the
merger of the Dispensary and Tufts College
Medical and Dental Schools. By 1965, it added
the Floating Hospital and the Pratt Diagnostic
Clinic–New England Center Hospital.12
In recent years, the tradition of innovation
continued, with strong programs in cancer treatment, transplants, and neurosurgery. In 1992,
with the addition of a maternity service, TuftsNEMC became the first full-service, private
teaching hospital in Boston. The Neely House,
opened in 1997, was a unique bed and breakfast
style home located within the hospital for cancer
patients and their families. And in 2001, TuftsNEMC opened a transplant exchange program,
the first of its kind in the U.S. which allowed
family members of transplant patients to donate
kidneys to patients on the global waiting list,
thus increasing the number of organs available
for transplant.
Financially, however, Tufts-NEMC was struggling. Although in the 1990s the hospital had
posted gains, it was largely due to a write-down
in assets, and not improved efficiency or an
enhanced revenue cycle. The hospital had fallen
prey to the same negative market forces that had
taken their toll on other non-affiliated hospitals
in the 1990s. By 1996, it was $240 million in debt
(up from $130 million in 1990) and was losing
physicians, market share, and hospital acquisitions to Partners and CareGroup. Like many
AMCs, Tufts-NEMC was slow to react to market
pressures, and ineffective in improving processes and cash flow. In a particularly devastating blow to the hospital, Harvard Pilgrim Health
Care discontinued coverage to Tufts-NEMC in
1995, citing high costs. As Zane explained:
Harvard Pilgrim HC had taken TuftsNEMC out of their network and it had
almost killed the place. A doctor in Hyannis wants to send a patient to Boston. He
or she has to ask “does this patient have
Harvard Pilgrim?” The situation caused
doctors to have to think too much about
insurance. It was just easier to send everybody to the Brigham. So, for Tufts-NEMC,
not being in that contract was incredibly
hurtful.
The Lifespan Merger
In the mid-1990s, Tufts-NEMC began to actively
look for a partner to remedy its fiscal dilemmas.
It needed more clout against the health plans,
more referrals from community hospitals, and a
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Copyright © 2016 by SAGE Publications, Inc.
Case Study 5   453
partner with deep enough pockets to help pay
for growth to compete with Partners, CareGroup, and the other Boston systems. It was in
talks with Columbia/HCA, a for-profit hospital
chain from Tennessee that wanted to expand its
presence in New England. If the merger went
through, it would be the first AMC owned by a
for-profit company in New England. This did
not sit well with some of the board members,
faculty, and community, who strongly wanted to
preserve Tufts-NEMC’s non-profit nature.
In late 1996, the hospital was treating a highranking official from the Lifespan Corporation, a
regional non-profit hospital system formed in
1994 with a merger of the Miriam and Rhode
Island hospitals.13 One of Tufts-NEMC’s physicians explained the hospital’s dilemma and talks
began between Lifespan and Tufts-NEMC to
merge. Tufts-NEMC leadership saw benefits to
joining with Lifespan, such as needed capital, a
chance to gain back the Harvard Pilgrim Health
Care contract, and the potential referrals from the
Rhode Island system. On Lifespan’s side, TuftsNEMC was enticing for its status as an AMC, its
base in Boston, and its expertise in high-level
care. The merger would create, as one journal
wrote, “a $1.5 billion, 14,500-employee health
care giant with the ability to serve 70 percent of
the entire New England market” and would rival
the $1.8 billion Partners system and $1.1 billion
CareGroup.14 In January 1997, Tufts-NEMC and
Lifespan officially announced the merger, which
became effective in November of that year. Ed
Schottland, Senior Vice President–System Integration at Lifespan and appointed COO at TuftsNEMC at the time of the merger, explained:
Lifespan was interested in Tufts-NEMC
because it gave them instant access into
Boston and made them the regional system they wanted to be. The plan was to
create Lifespan of Rhode Island and Lifespan of Massachusetts—of which TuftsNEMC would be the hub—both overseen
by an overarching corporation.
Tufts-NEMC is a tertiary and quaternary15
medical center, we do bone marrow, solid
organ transplants, and we have a neonatal
intensive care unit. They didn’t do any of
those things in Rhode Island. The only
BMT16 program allowed in Rhode Island
was at Roger Williams Hospital. So Lifespan got instant access to highest levels of
care. The merger filled out the service
complement with a high class, well
respected organization with great outcomes and great medical care. Everyone
assumed that we would be able to direct
our patients here from Rhode Island. We
would have a system of care, just as Partners was trying to do with their North
Shore hospitals.
The marriage was not a happy one however—
the hoped-for synergies never materialized.
Rhode Island regulators objected to large
amounts of capital migrating to Boston and
required Lifespan to reduce the amount TuftsNEMC was to receive to $8.7 million a year for
10 years, down from 30 years as originally
planned. Although Harvard Pilgrim did eventually re-contract with Tufts-NEMC, some in the
industry believed that legislation or litigation
would have forced that outcome regardless. The
referrals also did not pan out. As Schottland
explained:
Physicians make their own decisions
about where they refer. Physicians like to
refer primarily based on personal and professional relationships. A secondary reason they didn’t refer to Tufts-NEMC was
they felt that if they started to support a
program here they might never get
approval within the Lifespan system to get
that program down in Rhode Island.
This was a unique system since there were
two medical schools—Brown and Tufts.
The Brown faculty wanted to have the
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454   ORGANIZATIONAL CHANGE
programs, like bone marrow transplants, in
Rhode Island. So there was a certain reluctance to cooperate at times.
Another problem with the merger was the
“brain drain”. Lifespan took many of the administrative and support functions out of TuftsNEMC and centralized them in Rhode Island.
Tufts-NEMC lost their human resource, finance,
purchasing/supply chain, and IT, an area where
Tufts-NEMC had been groundbreaking in the
past. The anticipated growth in acquisitions also
failed to take place. Hospitals that had previously affiliated with Tufts-NEMC, such as
Faulkner, another Tufts Medical School teaching
site, joined Partners instead, while Tufts-NEMC
was busy finalizing its merger with Lifespan. In
2000, Lifespan/Tufts-NEMC also lost Hallmark
Health System in Malden. As one industry journal wrote:
Every time a decision had to be made,
Tufts-NEMC President and Chief Executive Officer Tom O’Donnell, M.D.,
traveled 55 miles across the state line to
Providence, R.I. There he conferred with
the 21-member board of his parent
system, Lifespan Corp. He would return to
meet with his own 21-member board,
then respond to Hallmark. […] The extra
corporate layer proved to be too much.
Hallmark, at the time a four-hospital
system, walked away from the deal.17
Adding insult to injury, Quincy (Mass.) Medical Center and MetroWest Medical Center
spurned Tufts-NEMC, citing that the “local
hospitals did not think of Tufts-NEMC as a
Massachusetts hospital.”18
But perhaps the worst thing about the
merger was that insurance contracting was
done in Rhode Island. Lifespan did not understand the cost of doing business in the Boston
market and therefore settled for reimbursement rates far below the average for an AMC
in Boston. Lifespan, struggling to keep control
of five acute-care hospitals, suffered an operational loss of $34.1 million on total revenue of
$1.3 billion ending fiscal year 2001. Zane
explained her take on the Lifespan merger:
When Partners came together it freaked
out the whole market and everybody was
looking for a partner. Long story short,
Tufts-NEMC hooked up with the Lifespan
system in Rhode Island. I could not
understand why they did it. It was an ill
fated, ill conceived, ill constructed, and
ill-implemented merger and it had no
meat on the bone. The health care market in
Rhode Island might as well have been Siberia it was so different from eastern Mass.
In the summer of 2002, five years after they
merged, both Lifespan and Tufts-NEMC
agreed to separate at a cost of $30 million to
Tufts-NEMC. Financial results for TuftsNEMC for fiscal year 2002 were dismal—a loss
of $12.3 million on revenue of $476 million;
and 2003 was looking worse—a loss of $38.5
million on revenue of $582 million. The Massachusetts Attorney General’s office stepped in
to ensure that the hospital would meet bond
covenants. O’Donnell and the chairman of
Tufts-NEMC’s board called Ed Schottland and
enticed him to come back as COO. Schottland
took the job and set about recreating the
administrative departments lost in the merger.
He also started initiatives to stem the
millions of dollars that Tufts-NEMC was losing monthly. Schottland targeted improvements of $30 million in cost savings in the
supply chain and human resources. He began a
year of initiatives designed to improve the bottom line. In the first nine months of 2003,
Tufts-NEMC reduced staffing levels by 200
FTEs through attrition and consolidation and
made improvements in supplier contracts. The
hospital also began to look at selling some of
its 1.5 million square feet of prime real estate
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Case Study 5   455
to gain needed capital. The Board, meanwhile,
set about looking for a leader who could take
Tufts-NEMC out of the shadow of Lifespan
and orchestrate a true turnaround.
Ellen Zane
Ellen Zane was educated at Waltham Public
Schools, and later graduated from George Washington University and Catholic University in
Washington, DC with masters in both audiology and speech language pathology. She spent
her entire career in health care, starting in 1975
as a speech language pathologist at Lawrence
(Massachusetts) General Hospital. In 1979 she
took a job as director of speech and language
pathology and audiology at Morton Hospital in
Taunton. Under the mentorship of the COO of
Morton, Zane worked her way up to vice president of professional services until taking the
COO job at Quincy (Mass.) Hospital in 1987.
When Quincy’s CEO left in 1990, both Quincy’s
board and the city’s mayor convinced Zane to
take on the task of turning around the hospital,
which was on the brink of closure. Like many
community hospitals, Quincy had taken out
bonds to renovate its ailing facilities. When the
Medicaid/Medicare and HMO reimbursement
rates lowered drastically, Quincy found it almost
impossible to meet payroll and other expenses.
Hampered by years of nepotistic and political
hiring practices and high competition in the
surrounding area, the hospital was in danger of
defaulting on its bonds. Zane recalled her decision to take the job at Quincy as the most difficult in her career:
It was the hardest decision I ever had to
make, since I really felt that failure was
not an option. Closing a hospital as the
result of my first CEO job would have
been awful. However, at the same time,
women weren’t getting CEO jobs. I
needed an underdog job to try to prove
myself, since it wasn’t likely that a woman
was going to get a job at what I called a
“Bloomingdale hospital”—Mt. Auburn,
Newton, Wellesley, Beverly, or South
Shore. Those weren’t coming to women
in those days. But the main reason I took
the job was that I could see the steps it
would take to fix it. When I had a very
quiet, private conversation with myself, I
knew that if I could figure out the road
map of what to do, then I would just need
the grit to do it. And I could see the way.
So I jumped off a cliff and took the job. It
was the best decision I ever made.
From a grass roots point of view the
opportunity I got at Quincy was the bedrock foundation to my management prowess. And it was really hard. It taught me
not only the value of risk, but it taught me
that if you took a job that no one else
wanted to do because it was too hard, then
all the benefits accrue back to you. If you
are successful at it, you are only better
because it was harder. All these good old
boys with the cushy jobs around me at
richer hospitals, I believe, aren’t as good at
managing simply because they didn’t have
to be.
Quincy was unique in that it was managed by
HCA, a for-profit hospital management chain
that owned and managed hospitals across the
U.S. In addition, Quincy had a strong union and
civil service workforce. Working for HCA honed
her business acumen and decision-making
abilities. Working with unions helped Zane
understand the need for clear, open, and honest
communication and financial transparency. As
Zane recalled:
I sat down with stewards of all the unions
and showed them the financial statements
and highlighted all the things I wanted
them to learn, like days cash on hand and
cash reserves. I taught them the meanings
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456   ORGANIZATIONAL CHANGE
of those things and explained that we had
no money and that I was worried about
meeting payroll. One of the biggest joys of
my career came when I left Quincy hospital and met with the stewards for the last
time and one union steward said to me:
“How many days cash on hand do we
have?” The fact that they had learned that
and appreciated it taught me the value of
transparency, the value of admitting that I
needed help and I couldn’t do it alone.
She also learned the importance of reaching
out to the community. As Zane explained:
I got in my car and drove out to community doctors who weren’t referring many
patients to us. I asked them: “What would
it take for you to use Quincy Hospital?”
They said simple things like parking. All
the construction had closed the parking
lots. It was not that intellectually complex.
The doctors also complained that
employee work ethic was dismal. The
employees didn’t smile or pick up a candy
wrapper off the floor. They treated the
hospital as though it existed solely for
them and their paychecks. They didn’t
believe the day of reckoning was coming.
Hearing that from the community doctors
was incredibly valuable for me.
After a successful run at Quincy, she was
tapped in late 1993 for a groundbreaking job
with the nascent Partners organization. As Zane
recalled:
I got a call from Dr. H. Richard Nessen.
He was the CEO of the Brigham and
Women’s Hospital. He told me they had
just gotten permission from the Attorney
General to merge the General [MGH] and
the Brigham [BWH]. This was huge, giant,
gargantuan news. He told me they wanted
to build a vast network of physicians
throughout eastern Massachusetts and
that he wanted me to come run it.
I told him I had no idea how to do that
job, but he said that no one did, it was
completely new. He said he needed a
leader. He told me that he had academic
physicians who were lining up at his door
to do this job, but that he didn’t want to
give it to any of them. He felt that academics wouldn’t understand community doctors or community hospitals, and would
turn them off. He was right about that.
Zane was successful at building what came to
be called PCHI,19 Partners Community Heathcare, Inc. At Partners, she gained expertise at
negotiating affiliation agreements with physicians and contracts with health plans, and with
building consensus with disparate groups. Zane
recalled her time at PCHI:
I went from this incredibly resource poor
environment at Quincy, where I was plugging holes and trying to meet payroll, to
this environment that was so resource
rich. There were so many smart people
around, but there was no trust between
the Brigham [BWH] and the General
[MGH] people, they were fierce competitors for years. So each committee had to
have counterparts from each organization. Trying to develop a strategy in that
environment was a challenge. The committees were made up of type A personalities who wanted me to build a network
overnight. I felt this intense need to get
the strategy going very, very quickly. So
we spent the summer of 1994 building the
strategy. The most incredible thing for me
is, when I go and talk to investment bankers or health plans now, PCHI is all they
talk about. PCHI was the most formidable
market transforming activity other than
the [MGH/BWH] merger itself. PCHI is
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Case Study 5   457
the 800-pound gorilla in this market. And
I knew it and started it before it even had
a name. It was very rewarding, and very
hard.
As Partners grew, so did their clout in the
marketplace. Zane was the lead negotiator in
the famous clash between Partners and Tufts
Health Plan, which culminated when Partners
decided to no longer accept Tufts subscribers
due to the plan’s low reimbursement rates. Her
bargaining skills and strategic planning won
the day for Partners. In the end Tufts agreed to
substantial rate increases. After that encounter,
Zane’s reputation as a tough and savvy negotiator became legendary.
Zane Moves to Tufts-NEMC
In late 2003, after 10 years with Partners, Zane
was thinking of slowing down. Her husband
had sold his successful business and had retired
and Zane was hoping to do the same. She was
getting ready to give her notice at Partners
when she received a call from Lawrence Bacow,
the President of Tufts University. Bacow was on
the board of Tufts-NEMC, which had recently
decided to dissolve the merger with Lifespan.
He was looking for a new leader for TuftsNEMC, and felt that Zane had the right mix of
skills to build and implement a successful strategy for the hospital. Met by her initial reluctance, Bacow reminded Zane of the hospital’s
historical significance, its importance for its
5,000 employees, Tufts University, and Chinatown’s economy. Zane recalled her reaction
after the meeting with Bacow:
There were two enormous feelings that
came over me. One was on the positive
side: wow this could really be important.
To help this ailing organization means
to really help a lot of people in their
careers, their lives, the economy, and the
University. The other feeling was: this is so
daunting—I’m frozen. It was so scary.
In July 2003, O’Donnell announced his
resignation, clearing the way for Zane, the first
non-physician and female permanent CEO in
Tufts-NEMC’s history. Reaction from both
industry pundits and employees at Tufts-NEMC
was uniformly positive. As one expert wrote:
At this time and in this place, there is no
one better for the top job than Ellen Zane.
The first non-physician chief executive,
she comes onboard at a time when tough
decisions need to be made. Yes, she has the
necessary management skills, but she also
has demonstrated a passionate commitment to preserving the relationship that
exists between physicians and patients and
between this hospital and the community
it serves.20
John Greenwood, VP of Finance, explained
some of the things he felt Zane brought to TuftsNEMC:
We lost our identity during the Lifespan
merger. We also lost touch with the Mayor’s office and Beacon Hill,21 and making
sure our concerns were being heard. So
when Ellen came on board, for the first
few months we spent a lot of time on Beacon Hill. She brought visibility and a very
recognizable name in the market.
Accountability was also a big leadership
trait that came on board with Ellen. She
and the consultants she brought in assisted
the leadership in diagnosing what the issues
and root causes were, as well as prioritizing
them. Then she held someone accountable
for fixing it. We’d done a lot of diagnosis
before, so we had an idea of what the problems were, but Ellen provided the leadership to drive the projects to completion.
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458   ORGANIZATIONAL CHANGE
She also provided unity to the physicians
throughout the hospital. There used to be
two autonomous physician corporations
with faculty/staff physicians. Both groups
were completely separate. The first year
she came, Ellen pursued merging the two
boards into one entity and eventually
made it happen. So now there is input and
a synergy between the faculty at the hospital. They speak with one voice.
Michael Burke, senior vice president and
CFO added:
Ellen is so acutely aware of what’s going on
in the market—she’s been in this market
her whole life, she built PCHI. She knows
all the players. She knows whom to call
and she has the personal relationships so
that people are willing to work with her.
Ellen is also the kind of person who takes
action. She gets 80–90% of the information
she needs and then she does something.
Most academic medical centers have what I
call “analysis paralysis.” You can accept the
status quo, but the reality is things never
stay the same—they either get better or
they get worse. And if you are not actively
working to improve them, they will get
worse. This place was constantly assessing
what to do, but not doing anything. And
things got worse, year after year after year.
Now what we’re doing is assessing the data,
assessing the market, and acting, and doing,
and getting things done.
Diagnosis: Critical (2004)
When Zane came on board, she brought in a
consulting group called BDC Advisors, Inc.
They gathered data to determine why TuftsNEMC was losing an estimated $3 million a
month. Zane sat down with Schottland who
gave her the bad news: Tufts-NEMC was not
losing $3 million a month; since the split with
Lifespan the number was closer to $6 million.
Zane recalled how the new reality changed her
priorities:
Although I had done a fair bit of due diligence before taking the job, I was still
shocked to find out that we didn’t have
two years of cash on hand: we had 10
months. So it changed everything overnight. Because strategy was the last thing I
could worry about—I had to worry about
payroll. This place was hemorrhaging millions every month. It was incredibly
important to begin to think about how to
stabilize.
Zane and BDC conducted what she called a
“rapid diagnostic” to quickly determine how to
stem the losses. BDC concluded that, although
Tufts-NEMC was on the right path with
Schottland’s initiatives, they were still behind
industry benchmarks for many areas, such as
days in accounts receivable, accounts payable,
average length of stay, operating margin, and
days cash on hand. There was also more savings
to be had in the supply chain (see Exhibit 11 for
BDC analysis). After reviewing the managed
care contracts, Zane also realized that TuftsNEMC was woefully underpaid.
Another challenge for Tufts-NEMC was its
size. In any other market, Tufts-NEMC would be
considered one of the biggest players. But in Boston, it was dwarfed by Partners, CareGroup, and
Caritas. Tufts-NEMC fundraised $10 million in
2005, up from $5 million the year before but
impossibly behind the $200 million Partners
raised. Tufts-NEMC was the smallest teaching
hospital in the Boston area, but it was the primary teaching site for Tufts Medical School and
was the 11th highest paid in NIH research funding. Underwriting that research cost TuftsNEMC $15 million a year. Maintaining the level
of services and research required for a major
medical center was extremely difficult for an
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Case Study 5   459
organization without the volume of cases or
endowments enjoyed by its competitors. Zane
realized early on that however difficult it may be,
it was absolutely crucial for Tufts-NEMC to
remain an AMC:
We made a conscious decision to keep
funding research because we are an AMC
with a tripartite mission, which includes
clinical excellence, research and teaching.
If you take one of the legs off that stool we
are no longer an AMC and I would venture
to say that no fewer than 80% of the doctors who practice here would leave. They
are here because they want to work in an
AMC.
recruited from Partners; and the vice president
of fundraising and development with Deb Taft,
who had been extremely successful at the Dana
Farber/Jimmy Fund. In all, she replaced seven
members—half of the senior management
team. Zane shared her thoughts on the senior
staff turnover:
One of the people I fired was a favorite of
one of the board members. I spent a lot of
time listening to that board member telling
me that I had no right to fire his guy. But in
the end he supported me. There was no
question that I had to do it.
Zane set to work on building her management
team and reopening the managed care contracts. Along with Schottland and BDC, she
pushed hard on cost-cutting and efficiency
initiatives to bring Tufts-NEMC in line with
industry best practices. Zane continued plans
to sell real estate in order to get the hospital on
some solid financial footing while giving these
initiatives time to take hold. She also felt the
need to re-establish Tufts-NEMC’s brand in the
Boston marketplace, to set about rebuilding
affiliations and networks, to reverse the trend
of hospitals’ poaching Tufts-NEMC’s physicians, and to retain the talent it had.
If you ask most people about me they will
tell you I’m very good at picking people. I
really do believe that is a skill I have—it’s
gut level for me. I’d like to get credit for
picking good people, not for a brilliant
turnaround, strategies, or anything like
that. I’m only as good as the people around
me, and I do pick great people. I have a
sixth sense. I can tell when I go into the
waiting room for interviews whether they
have a shot. For most of these characters
here I knew it wasn’t going to happen.
There were a couple of other positions in
the administrative round that I changed
pretty fast. The COO Ed Schottland was
very solid. He was only here about 9
months. He came from Lifespan and I am
very grateful to this day that he was here
and that he stayed. I would be toast without
him.
Staff Changes
Schottland added:
Treatment (2004–2006)
Once Zane assessed the mission, she set about
evaluating the senior staff. She greatly appreciated the experience and expertise of people like
Shottland and Deeb Salem, Tufts-NEMC’s chief
physician. But others she felt needed to be
replaced. Within two weeks she replaced the
senior vice president of strategy with Deborah
Joelson, a network-building expert who Zane
It was chaos here before. I think it’s easy to
disrupt the COO’s role, especially in an
organization this size. People used to go
around the COO to the CEO—it doesn’t
take long before you are neutralized.
Ellen has been very supportive of my role.
She’ll either say: “you really have to talk to
Ed about that” or she’ll just have me in the
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460   ORGANIZATIONAL CHANGE
room when they talk to her. Now, most
people in the organization don’t attempt
to go around me. I appreciate that . . . that’s
important to me. Ellen’s let me continue to
run the operations in an appropriate way.
We understand our roles and we know
when to ask each other for help and
advice.
various times throughout the day and night, to
ensure that everyone had a chance to attend. The
meetings worked so well to disseminate information that Zane continued to do them twice per
year on all shifts. She also augmented them with
regular e-mails updating the staff and physicians
on finances and other topics. As Deeb Salem,
Tufts-NEMC’s chief physician explained:
Deb Taft, the new vice president for fundraising and development, talked about why she
joined Tufts-NEMC:
The things that she and Ed do are quite
remarkable. Periodically they have town
meetings for the entire staff. They go out
of their way to talk to everybody, even the
housekeeping staff. They have sessions in
the middle of the night so they can talk to
the night shift.
If I could be a part of creating a fundraising department that was vibrant and
strong, this would be a career moment for
me. I had people stopping me in the street
saying, “I can’t believe you are taking this
job”. But what greater thing could there be
than helping this place survive? It deserves
to be here. Keeping this place alive was
important enough for Ellen Zane not to
retire. Ellen recognized that I had what
she called fire in the belly. That was her
number one criteria in bringing me in.
Communication and Outreach
Ellen is a remarkable communicator of
good news and bad news. She was somehow able to be fully transparent about
what was going on and have people appreciate that she was being honest with them
about the situation. And no one felt that
they had to bail out of here because the
place was going down the tubes. I don’t
know how she did that. —Deborah
Joelson, senior vice president for market
development and planning
Very early on, Zane led a series of “town
meetings” where she presented financial facts,
specifics on new initiatives, and areas targeted
for growth. Because the hospital worked around
the clock, Zane scheduled a series of meetings at
Taft agreed:
Ellen does the town meetings in every
shift, and she wants the senior staff and
VPs there because every shift matters. I’ve
been at employee parties and holiday
parties helping her serve dessert from
midnight to two a.m., and we’ve brought
desserts to the emergency department
when they are so busy they can’t get there.
Ellen greets people and introduces herself
and says “thanks for coming.” That is a big
thing for an employee who’s never met
the CEO. So the staff starts to feel like she
belongs to them. She laughs and says she
gets more e-mails from the staff than
anybody. But the fact is, she does.
Zane explained what she saw as the benefits
of the town meeting format:
I did a lot of town meetings. I was new. I had
to get to know employees and I had to tell
them what was going on. I put up this chart,
which turned out to be a wonderful chart. It
had all the losses this place experienced during the Lifespan era. The $40 million loss in
96, the $20 million loss in 97. Loss after loss
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Case Study 5   461
after loss after loss. That adds up to $250
million. I threw the chart up at my first
board meeting. I threw it up at the Board.
And I said a lot of people have got egg on
their face. That’s what I said to my Board. I
used the same chart with the employees.
Then after those town meetings—to my
utter shock—I would come back to my
office and I would have 20 e-mails from
employees who had been sitting in the
audience and they were saying thank you.
It was so incredible. People would say: “I
want to help. I knew something was wrong
but no one was ever honest enough.” It
was really encouraging. And that was the
pearl I learned—that you can tell people
bad news. But you have to do it in such a
way that you are viewed as being honest,
open, credible, and consistent.
Zane explained that the culture of TuftsNEMC made it easier for her to effect change:
The one thing about this place that is so
fabulous—that I can take no credit for—is
that it has a different, better, unique culture. I had been used to the Harvard culture where there was all this bravado and
testiness. This culture is much warmer,
much more collegial, much more cooperative. And I call it an “Avis—we try harder
culture.” I tell them: “Guys, we have to go
left,” and they say “ok.” At Partners you’d
need a committee and two years to get a
decision. Maybe it’s because this place is
smaller, I don’t know.
I’ve never, ever worked in a place, where
employees who’ve been there for decades,
physicians who’ve been here a long time,
will spontaneously, unsolicited, come up
to me and say “I love this place. And I’m
sorry to see what’s happened.” Even physicians who have left—and it hemorrhaged
doctors in the tough days—felt that way. I
called up a lot of them and asked them to
have a cup of coffee with me and tell me
why they left. All of them—to a person
said—I didn’t want to leave.
Zane used a variety of mediums to get the
word out and to manage the turnaround effort.
She held weekly senior staff meetings with
Schottland, the general counsel, the CFO, the
vice president of external affairs, the vice
president of development, and the senior vice
president for market development and planning.
The focus of the meetings was mostly external,
with Schottland providing updates on internal
operations from his weekly meetings with
the operational vice presidents, the CIO, the vice
presidents of clinical services, and the vice
president of human resources. Zane also met
regularly with the board of trustees.
She reached out to physicians in an attempt
to both spread her message for change and to
retain them in the face of active poaching from
other AMCs. She worked hard on both retention
and recruitment. In 2005 she convinced three
neurosurgeons to move from Beth Israel Deaconess Medical Center to expand Tufts-NEMC’s
minimally invasive neurosurgery department.
Schottland described the outreach that he and
Zane conducted to physicians:
When Ellen came, she came with the reputation, credibility, and ability to deliver a
hopeful message that prompted people to
change and gave them more hope.
One thing we’ve done since she came here
that I’ve never done anywhere else, is
spend an incredible amount of time talking to physicians, both recruiting and
retaining them. Ellen leads that charge,
although I spend a lot of time with her
on it. It’s one of our challenges being in
Boston—it’s so hard to recruit from out
of town—and everyone is stealing from
everyone else.
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462   ORGANIZATIONAL CHANGE
The neurosurgery department was a great
example of an Ellen coup. She led the negotiations on recruiting those new doctors.
Our group, which was split between Beth
Israel and Tufts-NEMC, announced that
they wanted to consolidate to a single hospital. We gave them a better deal and they
are doing a great job here. They are young
and aggressive—great surgeons. Ellen is
very good at recruitment and retention.
She knows it’s important. You can’t run a
hospital without physicians and they are
very expensive to replace. A lot of hospitals
have recruitment and retention programs,
but most times the doctors don’t get to talk
to the CEO. This is a smaller and friendlier
place in a lot of ways. It’s not hard to get to
Ellen or me. For physicians, that’s a big
deal. To have access to Ellen in particular is
enticing for them, and she’s very good at
talking to them.
Not only did Zane work with physician
groups, she began a monthly tour of different
wards in the hospital to get in touch with
patients and nurses. Salem explained:
Once a month Ellen and I tour a ward
together and she speaks to patients. She’ll
ask them: “How’s Tufts-NEMC treating
you? Why did you come here? What can
we do better?” The patients who understand it are shocked that the CEO is talking to them. She also learns from the
patients and the floor nurses. They see
that she really cares because she’ll walk
around their floor. When she’s done touring, she’ll talk to the head nurse and say,
“You guys are doing a great job.”
When you talk to the patients yourself,
you get a whole new feel for things. We
found that a lot of people liked the intimacy at Tufts-NEMC as opposed to one of
the larger hospitals like Children’s. We’re
thinking about how to use that fact in our
marketing. Another thing we learned was
that a lot of people didn’t like the food
here. So now the food service is working
to change the whole menu.
Agenda for Change
In 2004, Zane, Shottland, and BDC initiated a
second round of cost-cutting and efficiency
plans designed to improve Tufts-NEMC’s processes. It was called the Agenda for Change.
Along with improving the reimbursements, it
included restructuring, and basic “blocking and
tackling” as Zane called it:
Blocking and tackling means the day-today gritty operations. The eight areas we
wanted to improve were: length of stay,
managed care contracts, accounts receivable, FTEs, supply chain, real estate, ambulatory clinics, and research costs. We focused
really hard on those things. I think a lot of
people in my job like the limelight—they
want to give speeches. But the fact is if your
house isn’t in order, the limelight is fleeting.
My first year here I resigned from most of
my boards, backed off from a lot of things.
I had to stick to my knitting. At the very
beginning, I really hunkered down, and
then I slowly started to come up for air.
The latter half of 2004 Joelson and
Schottland, along with the vice president of
human resources, and the director of business
planning, developed a restructuring plan. The
plan created eight product lines that were
essentially business lines: cardiac, cancer, surgery, general medicine, transplant, OB/GYN,
pediatrics, psychiatry, and neurosciences.
Every service in the hospital was included in
one of these product lines. This was different
from the past, when some services were left out
of the product lines. As Schottland explained:
It’s very hard to be all things to all people.
That is one of our greatest challenges
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Case Study 5   463
programmatically and financially. But,
because we are committed to doing that,
we really can’t afford to have key constituents feeling they are unimportant. We
can’t deliver care in transplants, for example, without infectious disease or internal
medicine. The product lines here give
everyone an opportunity to have a forum
to talk about their programs. It is also a
way to drive decision making down to the
physicians and give people who deliver the
service control of that service.
The chief of cardiology was the clinical head of
the cardiac product line, for example. He
partnered with a clinical vice president—an
administrator. Together, they were responsible for
developing and implementing annual business
plans, with goals, objectives, and budgets for the
product line. The CFO and COO approved the
budgets every year and reviewed the business
plans monthly. The business plans were the
venues by which decisions were made on investments in staff, facilities, infrastructure, and technology. The plans directed decisions regarding
whether, and how much, to grow and how to
accomplish that growth. Some of the areas TuftsNEMC hoped to grow were core services, such as
cardiac and cancer programs, pediatrics and
maternal health, psychiatry, bariatric/obesity
surgery, and organ and bone marrow transplants.
Support services such as pharmacy, nursing
units, and radiology, however, were outside the
management structure of product lines. Schottland explained why:
A lot of hospitals have tried product lines in
different ways. One way is the matrix structure that we have and the other way is a
purer structure. We weren’t big enough to
be pure. We can’t have a free-standing heart
hospital or cancer center. We can’t afford to
never put a medical patient on the cardiac
unit. If we don’t have a cardiac patient we
need that bed to put someone else in. We
have to have the flexibility. So that’s why the
product lines can’t control the nursing
units. The head of cardiac would want to
keep those beds just for cardiac patients
and we can’t afford to do that.
Length of Stay
On the operations side, one of the most important cost-saving initiatives was to reduce length
of stay (LOS). The consultants that Zane brought
in identified that Tufts-NEMC was keeping
patients a day and a half too long, compared to
other AMCs. David Fairchild, Tufts-NEMC’s
new chief of general medicine, chaired the
30-person Care Management Committee, which
was charged with reducing LOS. Fairchild and
his committee set about educating the staff
about the importance of reducing LOS, changing attitudes about patient care, and attacking
and identifying procedural failures called
“unnecessary delays” in various ways:
•• The team set up a special internal e-mail
address—LOS delays—where staff could
send a complaint or description of an
unnecessary delay that impacted length of
stay. This delivered useful information
directly to hospital leadership regarding
causes of delays.
•• The BDC consultants identified areas
where Tufts-NEMC could improve, such
as use of tracheotomies and blood transfusions.
•• Use of data, which drilled down to individual physicians’ LOS statistics year over
year, and presenting that feedback to physicians frequently.
One major issue that the e-mail address
identified was the use of “PICC lines”. PICC
lines were more durable IV lines that allowed
patients to continue their medication at home.
Specially trained nurses had to insert the PICC
lines, and many times the doctor discharged
the patient too late in the day, and these nurses
were not available. Another problem with
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464   ORGANIZATIONAL CHANGE
PICC lines arose when the nurse was unable to
insert the line and needed fluoroscopy to aid
the insertion. In the old system, the nurse
informed the doctor that the PICC line was
unsuccessful, then the doctor arranged for the
patient to go to the fluoroscopy suite. Doctors
conducted teaching rounds between 10:30
a.m. and 1 p.m., so if the nurse was unable to
insert the PICC line, the patient often had to
wait until the next day for the fluoroscopy
suite to become available.
Fairchild and his committee came up with
new procedures to remedy the situation. They
required doctors to make decisions on discharges before they went on teaching rounds
and they gave the nurses who inserted PICC
lines the authorization to send patients directly
to fluoroscopy if the PICC line could not be
inserted by the nurse. Within a year of raising
awareness and using more efficient procedures, the committee was able to reduce LOS
by a full day, saving Tufts-NEMC $2 million
per year. Fairchild explained how Zane’s leadership helped with the LOS project:
Ellen brought a sense of urgency. She and
the consultants identified a few key initiatives. One was the contracting initiative that she was heading, and another
was reduction in length of stay for hospitalized patients. Ellen brought a compelling vision supported by compelling data
for where we needed to go. One of the
most compelling pieces of data was a
graph showing our LOS compared to all
our competitor hospitals. We were an
outlier, above the line by a day and half!
A one-day reduction in the average
length of stay across our hospital is worth
millions of dollars. I took that graph
around to every department meeting I
attended. After that it was just a matter of
identifying what was causing the delays.
There was almost no resistance to changing procedures, since everyone understood that length of stay was crucial to
financial turn-around, and that financial
improvement was the first step toward
fulfilling the vision for the future of
NEMC. That is where good leadership
came in.
Contract Negotiations
The hospital had just completed a round of
contract negotiations with insurers when
Zane joined Tufts-NEMC. She realized how
critical it would be to immediately increase
rates, so she went to the major health plans
and asked them to reopen negotiations.
Zane discussed her talks with the insurance
companies:
Because I went toe-to-toe with the insurance companies when I was at Partners, I
was afraid they would think “it’s payback
time” since I no longer had the same leverage. To my utter delight none of them did
that. They all had the attitude that it wasn’t
personal, it was a business decision. My
argument to them about why Tufts-NEMC
should get higher rates was simple. I said
to them, “look if you guys want the strong
to get stronger and the weak to get weaker,
then don’t open these contracts. But if you
want competition in this market, you need
to open these contracts.” And they did. It
wasn’t a cakewalk, they didn’t just write
me a check. We fought about it. But the
truth is they all stepped up to the plate and
I will always be grateful to Blue Cross,
Harvard Pilgrim, and Tufts.
The improvements in the contracts were
absolutely critical to the financial bottom line.
As Shottland explained:
After Ellen arrived, we discovered that we
were getting paid really poorly. We
improved our reimbursement by $20–$25
million. That was the missing piece. That’s
what brought us from where we were,
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Case Study 5   465
which was a $10 million loss, to actually
making some money last year. That was
Ellen’s guidance and leadership that did
that.
Network Building
Zane went to work bringing back the affiliations and networks Tufts-NEMC had lost in the
past. By October of 2004 the hospital announced
plans to affiliate with Children’s Hospital in
order to augment the services of the Floating
Hospital for Children, which was fragile and
had lost sufficient scale over many years of
neglect and poor management. Zane was able
to move quickly on affiliation agreements, not
allowing deals to get bogged down in red tape.
Deborah Joelson, senior vice president for market development and planning, related one
example of this:
One of the first things I had on my desk
when I arrived here was an affiliation
agreement with a community hospital. I
finished negotiating the deal and went to
Ellen and said, “Ok we have an agreement.” She said “Great, let’s do it.” I said,
“What, just sign it? No committees? No …
nothing?” At Partners, an agreement like
that would take months, if not years, if it
were ever to get done, because of all the
internal constituencies that needed to
approve everything. It was just a lot more
complicated. So I always laugh when I
think that she said “just do it, trust your
instincts and just go ahead.” With the
sense of urgency and lack of resources that
we have here, we don’t have the time to
spend noodling over every little decision.
A year later, Tufts-NEMC won a major coup
when they affiliated with Primary Care, LLC
(PCLLC)22 one of the state’s oldest and largest
primary care independent networks. The new
network became part of Tufts-NEMC and was
called New England Quality Care Alliance
(NEQCA). Zane recruited Jeffrey Lasker, the
former chairman of the Partners physician
network to run it. PCLLC had for nine years
negotiated contracts (a large percentage of
which were Medicare risk products, such as
Secure Horizons) for its 164 physicians, which
served 500,000 patients. The group felt that
they needed to become affiliated with an AMC
and sent out a proposal request to systems in
the Boston area. Joelson recalled how TuftsNEMC closed that deal, when every other
hospital was vying for the practice:
We had almost no network, and few people to manage the network we had. We
didn’t have the infrastructure here to deal
with payer contracts. That had been done
at Lifespan. The PCLLC physicians wanted
a seat at the table—that was most important to them. We saw an opportunity to
integrate PCLLCs infrastructure into
Tufts-NEMC, and not only give them a
place at the table, but make them a table.
We created an organization, NEQCA, that
they ran, that provided something to
Tufts-NEMC that we didn’t have.
This is also an example of where Ellen is
so good. If you need her at a meeting she
goes. We literally met every week for two
months with PCLLC and Ellen was there
every week to meet with them. Quite
frankly I don’t think many CEOs would
have sat down once a week to make this
happen. She is willing to get her hands
dirty, but she’s a leader when she does. She
doesn’t micro manage the process, but she
makes herself available and it’s clear to
everyone that this is important and that it
matters to her.
Working With Tufts University
Zane cultivated a close working relationship
with Bacow and Michael Rosenblatt, the new
dean of Tufts Medical School. She recognized
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466   ORGANIZATIONAL CHANGE
the importance of the hospital and the University to each other. She sat on the board of overseers for the medical school and worked to build
joint initiatives in research and fundraising. As
Zane described:
It is very famous in AMC cultures that
Deans and hospital CEOs don’t get along.
There is usually a tremendous amount of
tension. One of the things I’m proudest
of—and I think the Dean would say this
too—is that we get along extremely well.
He started his job three weeks before I
started mine, neither of us own a lot of the
problems here or at the medical school so
we started with a clean slate. The relationship is so strong between us. We have now
developed a joint fundraising plan. We’re
better together than apart. That gives
Larry Bacow a great deal of pleasure. He
really is vested in Mike’s success and mine.
Taft explained the disconnect that TuftsNEMC had with Tufts University in the past:
Some years ago, Tufts-NEMC actually took
the Tufts name off of its signs and logos.
That was a big mistake. They were not
building the Tufts name, or building that
relationship. In a Harvard medical town,
Tufts-NEMC was not leveraging one of the
top trump cards they had: the terrific and
growing reputation of Tufts University,
their nutrition school, medical, dental, veterinary schools. So they had all of that at
Tufts-NEMC, and it wasn’t being leveraged.
In the real estate arena, Tufts-NEMC held
many buildings on and around the Tufts University campus on Kneeland Street in Chinatown.
When Tufts-NEMC decided to sell one building
it made sense for the University to purchase it.
In one local business journal, Zane explained
her thinking:
If you drive down Huntington Avenue,
you know when you’re at Northeastern
University. When you’re at Commonwealth
Avenue, you know you’re at Boston University. But if you drive down Kneeland
Street into Chinatown, you don’t know
you’re at Tufts. You don’t get the feeling
you’re in an urban campus.23
The University and Tufts-NEMC were in the
“preliminary stage of looking at how to make the
area more like a traditional urban university
campus. The university held ‘town meetings’ to
discuss the issues and is hiring planners to
develop possible scenarios” the magazine
reported.24
Prognosis: Short- and
Long-Term Outlook
Leadership is about what’s next. A lot of
initiatives were started before Ellen got
here, but she added the extra “umph” to
make it happen. Now it’s about what is
next. What is the strategy. We’re still a
small hospital, we’re still challenged
every day because of our size to meet the
financial basics to succeed.
– Ed Schottland, COO
In 2006, with her leadership team established,
the sale of a building to Tufts University for $28
million adding needed capital, cost
savings initiatives in place and improved managed care contracts, Zane was starting to move to
the next phase, building a strategy for the future.
Zane and her team were working with the Board
in a major strategic planning initiative. In addition, Joelson was doing marketing research, the
first Tufts-NEMC had conducted in years. They
were trying to answer questions such as:
•• What scale should Tufts-NEMC be?
•• How can we best market ourselves?
•• How can we differentiate ourselves in the
marketplace?
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Case Study 5   467
•• What is the best way to work with community hospitals and physicians?
As Joelson explained:
We are trying to create an alternative.
Our goal is to be big enough to have the
scale we need to operate efficiently and to
be able to provide sufficient sub- specialties to be an academic medical center—
the principle teaching hospital of Tufts
University School of Medicine. We don’t
want to be as big or expensive as Partners. We have 3% market share; Partners
has 25% market share. We’re at best a
400-bed hospital; Partners has 2,000
beds. We see ourselves as a network of
some physicians and some community
hospitals, and as a lower cost alternative
in the market. We can be effective with
the new pay for performance contracts. It
is more efficient and less expensive
to keep the care local, so our strategy is to
try to move the care that can be moved
to community hospitals where we have
relationships.
On the marketing side, we are implementing what we call an anti-invisibility
advertising campaign. Our market
research determined we had no identity in
the market. We also learned that we
were a house of individual brands—the
doctors—rather than a brand in itself. As
a result, we are building a physician-tophysician marketing campaign, using
NEQCA as the starting point. We also
plan to grow NEQCA from 600 to 1,000
doctors by 2010.
Perhaps the biggest plan to come out of the
strategic initiative was the partnership with New
England Baptist Hospital, another Tufts Medical
School affiliated teaching hospital, to build a
new 190-bed hospital in the Boston suburbs. If
the plan came to fruition, it would be the first
hospital built in Massachusetts in 25 years.
Although the site had not yet been selected,
Zane was quoted as saying that:
In the past, hospitals have asked people in
the suburbs to come to them and pay more
for parking than the co-pay on their health
insurance. Our view is: Wouldn’t it be a
good idea to take sophisticated academic
medicine and bring it to the people?25
This type of bold planning gave the employees at Tufts-NEMC confidence about the future.
Deeb Salem gave his viewpoint on where the
hospital stood in mid-2006:
I’ve never been more optimistic. There are
still a lot of problems. But the main source
of anxiety is what happens if Ellen decides
to leave. That’s the problem having somebody that good. We’ve seen how well she
runs things. But with her in charge I do
have a lot of hope.
Zane finally saw the light at the end of the
tunnel she had entered in January 2004, but she
knew that her work had only just begun. She
needed to find a way to keep the staff on track
for the turnaround. She needed improved efficiency and cash flows to keep wind in the sails in
order to move the rudder in the right direction.
She also knew that Tufts-NEMC was far from a
safe harbor:
I have lots of friends at Partner’s—but business is business—if they could steal my best
bone marrow transplant surgeon they
would. It’s the way it is. That is the deal. I
can’t let down my guard for a minute.
I am able, now, to spend much more of my
time on strategy, on the future, on where
this place is going. That is, frankly, why I
took the job. I didn’t come here to pull
down accounts receivable, I came here to
do something to position this place for the
future.
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468   ORGANIZATIONAL CHANGE
Exhibit 1   Tufts-NEMC Income and Expense for Fiscal Years 1989–2005 (in thousands)
1989
1990
1991
1992
1993
1994
1995
1996
218,820
230,616
272,108
297,351
314,445
301,385
309,938
281,791
Direct expenditures on
grants, contracts, and other
activities
21,063
21,423
23,083
25,608
28,467
33,302
60,805
52,059
Recovery of indirect costs on
grants and contracts
5,770
7,129
5,778
7,900
8,883
9,762
12,009
14,660
18,934
23,469
28,777
6,175
Revenue:
Net patient services
revenue
Software including support
and consulting
Other revenue
22,340
23,949
16,788
14,443
14,801
13,961
13,690
17,917
267,993
283,117
329,766
359,962
385,530
381,879
413,210
357,942
5,151
698
535
817
1,104
936
12,600
11,342
11,800
Endowment earnings
contributed toward
community benefit
Net assets released from
restrictions used for
operations
Net assets released from
restrictions used for
research
Total Operating Revenue
Net Investment income
Unrestricted gifts, grants,
and awards/net assets
released from restrictions
Adjustments to prior year
estimates with third party
payors
Total Revenue
273,679
284,632
329,766
359,962
385,530
394,479
425,656
370,678
Salaries and wages
104,574
113,557
128,739
143,124
158,511
160,183
167,380
146,900
Employee benefits
15,591
18,920
21,163
23,407
26,004
26,787
31,130
24,581
Purchased services of
physician groups
23,033
24,579
29,648
31,236
35,354
32,051
39,620
37,176
Expenses:
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Case Study 5   469
1997
1998
1999
2000
2001
2002
2003
2004
2005
287,076
299,930
318,145
341,894
371,273
397,212
473,012
452,786
495,005
24,045
22,561
26,228
36,055
33,790
51,686
42,853
48,232
9,229
10,647
16,512
7,949
1,596
3,435
2,272
3,037
3,020
4,753
4,526
17,259
2,924
44,001
41,314
47,582
37,702
38,250
53,196
52,891
55,901
365,078
380,640
394,939
435,253
455,999
475,601
582,420
565,789
602,062
365,078
380,640
394,939
435,253
455,999
475,601
582,420
565,789
602,062
184,746
191,629
180,206
203,449
222,489
227,706
297,827
295,645
308,057
24,031
21,531
21,058
24,098
25,491
28,543
55,918
57,004
56,416
34,021
35,875
36,416
40,201
43,075
49,461
40,303
47,627
55,205
22,797
(Continued)
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470   ORGANIZATIONAL CHANGE
Exhibit 1  (Continued)
1989
1990
1991
1992
63,924
68,740
77,499
8,266
8,561
Depreciation and
amortization
15,687
Direct expenditures on
grants, contracts, and other
activities
Uncompensated care/
provision for bad debts
Supplies and expenses
Interest
1993
1994
1995
1996
87,684
96,660
102,688
132,843
119,242
8,048
8,165
9,194
8,996
12,115
14,230
15,382
18,914
19,188
22,548
26,065
32,033
32,996
21,063
21,423
23,083
25,608
28,467
33,302
16,433
7,911
12,171
18,878
14,087
12,796
16,187
17,175
Other expenses
Total operating expenses
Income (loss) from
operations
(6,250)
268,571
279,073
319,265
357,290
390,825
402,868
425,058
392,300
5,108
5,559
10,501
2,672
(5,295)
(8,389)
598
(21,622)
8,611
9,748
6,090
5,242
2,995
805
5,461
1,405
1,814
3,876
3,770
6,570
2,357
2,253
Nonoperating gains and
losses:
Net unrestricted investment
income
Net realized gain on sale of
investments
1,490
Gain on sale of TSI and
other property
72,958
Other nonoperating losses
Total nonoperating gains,
net
1,490
10,016
11,562
9,966
9,012
9,565
3,162
80,672
Excess (deficit) of revenues
over expenses
6,598
15,575
22,063
12,638
3,717
1,176
3,760
59,050
(11,814)
4,765
13,455
(10,638)
8,525
72,505
Total other capital items
Excess (deficit) of revenues
over expenses
Source: Company Records
6,598
15,575
22,063
12,638
3,717
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Copyright © 2016 by SAGE Publications, Inc.
Case Study 5   471
1997
1998
1999
2000
2001
2002
2003
2004
2005
115,950
95,124
109,120
119,730
135,132
140,891
158,501
141,793
140,371
14,164
13,983
13,775
13,576
13,350
13,193
12,561
12,044
11,607
32,646
14,525
15,168
16,034
18,076
18,959
21,410
23,976
23,307
18,853
18,344
19,492
21,309
17,099
15,747
15,934
21,184
12,541
(138,500)
14,638
390,390
389,157
394,694
434,612
471,838
488,114
626,250
591,949
599,926
(163,812)
(8,517)
245
641
(15,839)
(12,513)
(43,830)
(26,160)
2,136
4,561
7,974
4,421
9,226
4,040
2,277
2,102
2,041
2,838
9,711
9,100
6,083
5,506
2,691
(2,150)
3,429
4,842
11,074
19,698
2,075
(196)
188
234
(245)
50
(1,063)
(28)
14,272
16,829
10,476
14,732
6,731
127
5,335
26,769
16,221
(149,540)
8,312
10,721
15,373
(9,108)
(12,386)
(38,495)
609
18,357
18,041
5,888
2,636
(20,454)
6,497
20,993
(3,070)
(152,610)
8,312
10,721
15,373
(9,108)
(12,386)
472
$39,182
5.2%
9%
5%
Median Family
Income
Unemployment
Rate
Persons Living in
Poverty
Persons Without
Health Insurance
14%
13%
6.0%
$31,301
10%
Metropolitan
Areas
200,000+
population
Medicare-Adjusted
Average per Capita
Cost Rate, 2005
HMO Penetration
(including
Medicare/
Medicaid)c
Physicians per
1,000 Population
(2003)b
Staffed Hospital
Beds per 1,000
Population (2002)
2.2
$768
37%
$718
29%
1.9
3.1
Boston
2.8
Metropolitan
Areas
200,000+
population
Health System Characteristics
Statistics for year ending 2003.
Includes nonfederal, patient care physicians, except radiologists, pathologists, and anesthesiologists.
Markets with population greater than 250,000.
a
b
c
Source: Center for Studying Health System Change, Community Report Number 11 of 12, December 2005.
12.7%
4,579,137
Persons Age 65
or Older
Population
Boston
Demographicsa
Exhibit 2   Boston Comparative Demographic and Health Care Indicators
Privately Insured
People in Families
with Annual Out-ofPocket Costs of $500
or More
Persons Who Did Not
Get Needed Medical
Care During the Last
12 Months
Persons with Any
Doctor Visit in Past
Year
Persons with Any
Emergency Room
Visit in Past Year
Adjusted Inpatient
Admissions per 1,000
Population
78%
5.7%
44%
86%
3.6%
33%
240
18%
197
Boston
20%
Metropolitan
Areas
200,000+
population
Health Care Utilizationc
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Copyright © 2016 by SAGE Publications, Inc.
FOR THE USE OF CAPELLA UNIVERSITY STUDENTS AND FACULTY ONLY.
NOT FOR DISTRIBUTION, SALE, OR REPRINTING.
ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED.
Copyright © 2016 by SAGE Publications, Inc.
Case Study 5   473
Exhibit 3   Number of Acute Care Hospitals and Available Beds in Massachusetts
(1990–2001)
25,000
150
20,000
120
15,000
90
10,000
60
5,000
30
0
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Number Available Beds
Number Acute Care Hospitals
Source: Massachusetts Health Care Trends: 1990–2004
Exhibit 4   Total and Operating Margins for Acute Care Hospitals in
Massachusetts (1990–2001)
4
3
2
1
0
-1
-2
-3
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Total Margin
Source: Massachusetts Health Care Trends: 1990–2004
Operating Margin
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474   ORGANIZATIONAL CHANGE
Exhibit 5   Distribution of Health Care Expenditures in Massachusetts (1990 and
1998)
40
16
35
14
30
12
25
10
20
8
15
6
10
4
5
2
0
0
1990
1991
1992
1993
1994
Expenditures (in billions)
1995
1996
1997
1998
Percent of Gross State Product
Source: Massachusetts Health Care Trends: 1990–2004
Exhibit 6   Distribution of Acute Care Hospital Revenues by Payment Source in
Massachusetts (1991 and 2001)
Self-Pay/Free Care
8%
Self-Pay/Free
Care
Other
5%
3%
Other
3%
Medicaid
10%
Medicare
39%
Medicaid
12%
Medicare
39%
Managed Care
12%
Private/Commercial
Insurance
28%
Source: Massachusetts Health Care Trends: 1990–2004
Managed Care
30%
Private/
Commercial
11%
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Case Study 5   475
Exhibit 7   Distribution of Patient Disposition at Discharge from an Acute Care Hospital
in Massachusetts (1990 and 2001)
Hospital
3%
Died
3%
Died
2%
Other
2%
Other
3%
Hospital
7%
Nursing Home
4%
Home Care
6%
Nursing Home
10%
Home care
13%
Home
65%
Home
82%
Source: Massachusetts Health Care Trends: 1990–2004
Exhibit 8   Inpatient Days and Discharges for Teaching versus Community Hospitals in
Massachusetts (1990 and 2001)
Inpatient Days
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
Discharges
600,000
500,000
400,000
300,000
200,000
100,000
0
Teaching
1990
Community
2001
Source: Massachusetts Health Care Trends: 1990–2004
Teaching
1990
Community
2001
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Copyright © 2016 by SAGE Publications, Inc.
476   ORGANIZATIONAL CHANGE
Exhibit 9   Acute Care Hospital Discharges per 1,000 Population and Average Length of
Stay in Massachusetts (1990–2001)
160
149
150
151
147
140
120
6.82
100
6.43
6.16
137
8
130
125
126
126
126
125
127
7
6
5.97
5.68
80
5.39
5.2
5.11
5.01
5
5
4.9
4.9
4
60
3
40
2
20
1
0
0
1990
1991
1992
1993
1994
1995
Discharges
Source: Massachusetts Health Care Trends: 1990–2004
1996
1997
1998
Average Length of Stay
1999
2000
2001
Joslin Diabetes
Center
33,640
9.0%
$24 million
$95 million
5,000 (Beth
Isreal
Deaconess)
Harvard
Medical
School
Beth Israel
Deaconess,
Mt. Auburn
Hospital,
New England
Baptist,
Beth Israel
Deaconess-Needham
Community
Care Alliance
28,173
6.0%
$752 million
$1.06 billion
4,429
(Continued)
87,616
20.8%
$395 million
$1.5 billion
35,300
Harvard
Tufts
(Faulkner &
NSMC)
CareGroup
Spaulding
Shaughnessy-Kaplan,
RHCI,
Partners Home Care,
2 Skilled Nursing
homes
Revenues/
Net Assets26
Admissions
(2004)/
Discharge %
(2003)
Employees
(FTE)
Boston
University
PCHI
MGH,
BWH,
Faulkner,
Newton-Wellesley,
North Shore Medical
Center (NSMC),
McLean (mental
health)
Other Facilities
Boston
HealthNet
Quincy Medical
Center
Physician
Networks
Acute Care
Hospitals
Boston
Medical
Center (BMC)
Partners
Health Care
System
Name
Medical
School
Affiliation
Exhibit 10   Major Provider Networks and Other Care Institutions in the Greater Boston Market
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NOT FOR DISTRIBUTION, SALE, OR REPRINTING.
ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED.
Copyright © 2016 by SAGE Publications, Inc.
477
478
NEQCA
Tufts-NEMC
Floating Hospital For
Children
Lawrence Memorial,
Melrose-Wakefield
Hospitals
New England
Medical
Center
Hallmark
Health System
Malden Medical
Center, other long
term care, home
health and diagnostic
services
St. Joseph Nursing
Care Center,
Neponset Valley
Nursing Association,
Good Samaritan
Hospice, St. Mary’s
Women & Infants
Center of Dorchester
Other Facilities
Tufts (family
practice),
Hallmark
School of
Nursing
Tufts
Tufts
Medical
School
Medical
School
Affiliation
17,000
2.7%
2.7%
$225 million
$180 million
15,781
11.6%
$487 million
$389 million
$90 million
$20 million
12,000
3,000
Revenues/
Net Assets26
Employees
(FTE)
Admissions
(2004)/
Discharge %
(2003)
Source: Massachusetts Health and Educational Facilities Authority. Accessed from: www.mehfa.org August 7, 2006. WebMD Quality Services. Accessed from: www.webm
dqualityservices.com August 7, 2006.
Ell Pond
Medical
Association
Caritas
Physician
Physician
Networks
Caritas St.Elizabeth’s
St. Anne’s Fall River,
Holy Family Hospital
and Medical Center,
Caritas Norwood,
Caritas Carney
Hospital Dorchester,
Caritas Good
Samaritan Medical
Center Brockton
Acute Care
Hospitals
Caritas Christi
Healthcare
Name
Exhibit 10 (Continued)
FOR THE USE OF CAPELLA UNIVERSITY STUDENTS AND FACULTY ONLY.
NOT FOR DISTRIBUTION, SALE, OR REPRINTING.
ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED.
Copyright © 2016 by SAGE Publications, Inc.
FOR THE USE OF CAPELLA UNIVERSITY STUDENTS AND FACULTY ONLY.
NOT FOR DISTRIBUTION, SALE, OR REPRINTING.
ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED.
Copyright © 2016 by SAGE Publications, Inc.
Case Study 5   479
Exhibit 11   Tufts-NEMC Operational Indicators Versus Industry Benchmarks
Industry
Benchmark
NEMC
(FY 2006)
Translated
Impact on
Budget
Impact on Cash
Days in Accounts
Receivable
48.8
55.6
$ 775,416
$ 7,049,234
Accounts Payable
Days
60.0
51.2
$ 1,203,061
$ 10,936,918
Average Length of
Stay
5.5
5.79
$ 2,085,627
$ 2,085,627
Operating Margin
1.9%
0.4%
$ 10,169,579
$ 10,169,579
$ 609,468
$ 5,540,621
$ 40,000,000
$ 40,000,000
Days Cash on Hand
110.7
89.4
Commercial
Insurance Contracts
Source: Company records
Notes
1. Tufts-NEMC employed roughly 5,000 people,
who accounted for 3,000 full-time equivalent
(FTE) positions in 2006.
2. Ferguson, Christine C. “Massachusetts Health
Care Trends: 1990–2004,” Massachusetts
Division of Health Care Finance and Policy,
March 2003, page 5. Accessed from: www.state
.ma.us/dhcfp August 7, 2006.
3. Nonresident discharges refer to number of
patients from out of state.
4. “Analysis in Brief—Massachusetts Inpatient
Hospital Trends,” Massachusetts Division of
Health Care Finance and Policy, Number 6, April
2004, page 1. Accessed from: www.state.ma.us/
dhcfp August 7, 2006.
5. Provider refers to any hospital, AMC, or ancillary service that provided medical care.
6. Those patients who needed high levels of care,
such as surgery.
7. Ferguson, Christine C. “Massachusetts health
Care Trends: 1990–2001,” appendix iii–vi.
8. Community Report—Boston, Massachusetts
Third Visit 2000–2001. Center of Studying
Health System Change, Report 11 of 12, summer
2001. www.hschange.org.
9. The Boston metropolitan area was generally
described as being inside Interstate 495. Statistics
10.
11.
12.
13.
14.
15.
16.
17.
provided by Massachusetts Health and
Educational Facilities Authority, Revenue Bonds,
Partners HealthCare System Issue, Series F
(2005). Accessed from: www.mehfa.org August
7, 2006.
Community Report—Boston, Massachusetts
Center of Studying Health System Change,
Report 11 of 12, December 2005. www.hschange
.org
Information in this section derived from www
.nemc.org and www.bostonhistory.org/m_china
.php accessed June 7, 2006.
The Boston Dispensary archived records. A summary available online at: simmons.edu/resources/
libraries//archives/char_coll/char_coll_027.htm
accessed August 9, 2006.
The Miriam and Rhode Island hospitals were the
two largest hospitals in Rhode Island and affiliated with Brown Medical School.
“NEMCs bold move,” Boston Business Journal,
January 17, 1997 and Van Voorhis, Scott. “NEMC
discusses hospital network,” Boston Business
Journal, January 24, 1997. Accessed online at:
http://boston.bixjournals.com July 21, 2006.
Quaternary refers to most advanced level of care,
such as bone marrow and organ transplants.
Bone marrow transplant.
Duff, Susanna and Becker, Cinda, “Here we go
again,” Modern Healthcare, Chicago: September
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480   ORGANIZATIONAL CHANGE
18.
19.
20.
21.
22.
23.
9. 2002, pg. 8. Accessed online at: http://proquest
.umi.com, July 20, 2006.
Ibid.
Pronounced “peachy.”
Lutch Bender, Ellen., “A new chapter for the venerable Tufts-NEMC,” Boston Business Journal,
December 26, 2003. Accessed online at: http://
boston.bizjournals.com July 21, 2006.
The Massachusetts legislature.
Pronounced “Pickle.”
Hollmer, Mark, “Tufts-NEMC wants a more
campus feel in Chinatown,” Boston Business
Journal, June 30, 2006. Accessed online at: http://
boston.bizjournals.com July 21, 2006.
24. Ibid.
25. Rowland, Christopher and Bailey, Steve, “Tufts
Affiliates Plan Hospital in Suburbs,” The Boston
Globe, September 8, 2006, page A1, Section:
Metro/Region. Accessed online at: www.boston.
com/news/bostonglobearchives September 13,
2006.
26. From IRS Form 990 fiscal year ending 2003.
Available at: www.guidestar.org/findocuments/
2004.
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4
CHALLENGES AT TUFTS/NEMC
1990’s
Medicare and Medicaid reimbursement less than cost.
1991-1996
24% decline in hospital discharges and average length of stay.
1990’s
Massachusetts insurance plans merged creating increasing power in the marketplace.
1991
Hospital deregulation.
1990’s
47 acquisitions and mergers, 19 acute care hospital closures, and 10 new major hospital systems.
Thru 2005
Lack of capacity due to years of merging and downsizing.
Thru 2005
Pay for performance gaining in popularity.
Thru 2005
Difficulty recruiting new doctors and nurses.
Thru 2005
Increasing bad debt due to uninsured and underinsured patient population increase.
CREDITS
Subject Matter Expert:
Darleen Barnard
Interactive Design:
Tara Schiller
Instructional Designer:
Marisa Johnson
Project Manager:
Catherine Baumgartner
TIMELINE OF EVENTS AT TUFTS/NEMC
INTRODUCTION
Tufts/New England Medical Center (NEMC) is an Academic Medical Center (AMC) located in Boston,
Massachusetts that has undergone major change since its inception in 1796. The following timeline
supports the case study in your text and highlights the major milestone experiences at Tufts/NEMC. As
you review the timeline, reflect on the course materials and think about how you would handle the
situation at each milestone. What could have been done differently?
1796: Boston Dispensary was Formed
The Boston Dispensary was formed by Samuel Adams and Paul Revere. It was the first permanent
medical facility in New England and quickly gained a reputation for innovation.
1929: New England Medical Center (NEMC) was Formed
NEMC was formed by the merger of the Dispensary and Tufts College Medical and Dental Schools. By
1965, Floating Hospital and the Pratt Diagnostic Clinic-New England Center Hospital were both added.
1990: $130 Million in Debt
Tufts/NEMC was $130 million in debt.
1992: Boston’s First Private Teaching Hospital
Tufts/NEMC became the first full-service, private teaching hospital in Boston. Thanks to extensive
innovation including strong cancer treatment programs, transplants, and a neurosurgery program, TuftsNEMC became the first full-service, private teaching hospital in Boston and added a maternity service.
1995: Harvard Pilgram Health Care discontinued coverage to Tufts/NEMC
In a particularly devastating blow to the hospital, Harvard Pilgram Health Care removed Tufts/NEMC
from their network. Physicians began sending patients to Brigham which further threatened the
financial viability of Tufts/NEMC.
mid-1990s: Tufts/NEMC Begins to Look for A Partner
Because Tufts/NEMC needed more clout with the health plans, more referrals from community
hospitals, and a partner to help pay for growth, Tufts/NEMC began talks with Columbia/HCA – a forprofit hospital…
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