Disloyal Change of Taste

St. John’s Hospital is in the middle of major changes to reposition the organization in their market. Its operating margin has steadily deteriorated over the last few years; last year the hospital experienced a 4.5 percent loss. The previous CEO retired two years ago and Peter, the new CEO, has decided that drastic action is needed. After reading about a new style of change management focused on rapid process improvement, he decided to organize and implement major changes to put the hospital back in the black.

Peter created four nine-person committees, one to redesign each of the hospital’s primary processes—financial, ancillary, nursing, and support. He hired a consulting firm to work with the committees and set the goal of a 20 percent cost reduction in all areas. Because Peter wanted novel ideas, he refused to allow area leaders and supervisors to participate in the committees and the redesign discussions. Each team was given 60 days to develop their recommendations.

About 40 days into the committee process, draft recommendations began circulating in the hospital. Many of the department managers became very concerned that the proposals they were seeing were not feasible. For instance, one committee was proposing that materials purchasing be decentralized and each major department take responsibility for their own purchases. When the director of purchasing, Fred, first raised his concerns about this in a department meeting, Peter told him not to worry, everything would work out.

Two weeks later, the committees had started making formal presentations on their proposals, and yet no material changes had been made. At the department meeting after the first presentation, Fred again raised his concerns. This time Peter became red and tense. Quietly and calmly, Peter said that only loyal managers should be working at their hospital, and that leaders needed to get on or off the bus. Those speaking against the changes would be considered disloyal.

After the department meeting this week, Peter is now certain that everyone agrees with him. There have been no further concerns voiced over his proposed changes.

Case Studies:
The student will complete each case study scenario and answer questions from the case studies outlined in the assignment using the guide below. One reference (within the last four years). Address all five areas below.

1. Introduction
   • Present an overview of the key problems and issues in the case.
   • Provide a thesis statement that summarizes your analysis in one or two sentences.
2. Background, key facts, and issues
   • Provide background information, relevant facts, and the most important issues.
   • Tie to class materials, making sure to include how these issues impact the organization and individuals in the organization.
3. Alternatives
   • Outline two possible alternatives.
   • Discuss the critical constraints.
   • Explain the strengths and weaknesses of the alternatives.
4. Proposed solution
   • Recommend one solution.
   • Explain why this solution was chosen.
   • Support this solution with facts and class materials.
   • Provide personal experiences, if applicable.
5. Recommendations
   • Determine and discuss the specific strategies needed to accomplish the proposed solution.
   • If applicable, define what further information is needed.