Case Study of a Failed Merger of Hospital Systems

1. A)

The new created health system consisting of HMC and Geisinger, provided their medical care in three hospitals with 1342 hospital beds. Furthermore they offered a drug- and alcohol-treatment facility and 77 outpatient clinics.

B)

Tertiary-care is a specialized consultative health treatment. Hospitals with tertiary-care have specialists and personnel for special investigation and patient treatment. An example would be an open-heart surgery, where specialists and certain equipment are necessary.

2. A)

If we are to compare and analyze the structure of the board of directors and the executive committee, we can state that the board of directors was split evenly between the staff from the Penn State University and Geisinger. But the chairman of the board was given to Geisinger by a tie-breaking decision. That means that there was no absolute majority in the first round. Furthermore the membership of the executive committee of the board was also in favor of Geisinger, but with a 4:3 decision. That indicates that Geisinger had more power from the beginning of the merger, which can be seen as uneven.

B)

In my opinion the position for the chairman of the board could have been solved in a different way. Due to the fact that Geisinger obviously had more influence in the new system, HMC should have tried to find another solution. While the board of directors was split evenly, the other functions should have been tried to be the same. A suggestion would be for example to switch the position for the CEO of the new system after a certain time – between 1 and 3 years. That means that both HMC and Geisinger would have had the chance to elect their own staff. That would lead to more harmony within the merger.

C)

When the disagreement between HMC and Geisinger developed, two camps emerged very quickly. The result was that the CEO and other leaders of the new system were confronted with opposing constituencies. Another point was that while the leaders tried to...