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HarvardBusinessSchool9-898-172Rev.March30,2000ProfessorJodyHofferGittellandMasonBrown,MBA'97,preparedthiscaseasthebasisforclassdiscussionratherthantoillustrateeithereffectiveorineffectivehandlingofanadministrativesituation.Copyright©1998bythePresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call1-800-545-7685,writeHarvardBusinessSchoolPublishing,Boston,MA02163,orgoto—electronic,mechanical,photocopying,recording,orotherwise—withoutthepermissionofHarvardBusinessSchool.1ReadingRehabilitationHospital:ImplementingPatient-FocusedCareRachelPflum,DirectorofRehabilitationServicesatReadingRehabilitationHospital(RRH),examinedtherapistutilizationforthepreviousyear.Althoughtherehadbeensomeimprovementfromtheextremelylowlevelsof1993,billablehoursfor1994remainedfarbelowthehospital’s75percenttargetlevel.Shewonderedwhetherthemovetoward“patientfocus”wasresponsibleforthelowlevelofutilization.Shehopednot.Patientfocuswastoutedinthehealthcareindustryasawaytoimprovethequalityofcare.1UndertheleadershipofPresidentandCEOClintKreitner,therapistshadbeenreorganizedfromtraditionaldisciplinesintointerdisciplinaryservicelines,eachfocusingonagroupofpatientswithaparticularsetofdiagnoses.Withinashortperiodoftime,however,therapistutilizationdroppedtonearly50percentfrompreviouslevelsof75percentandstillhadnotfullyrecovered.LeadingChangeClintKreitnerwasbroughtinasCEOofReadingRehabin1989fromoutsidetheindustry.AlthoughhehadspentthreeyearsontheboardofRRHpriortohisappointmentasCEO,hisknowledgeofthehealthcareindustrywasadmittedlyslim.Hehadspenttheearlypartofhiscareerasanavalofficer,andintheyearspriortoacceptingthepostatRRH,hadbeenarespectedentrepreneurwithfoursuccessfulstart-upcompanies,threeintheinformationsystemsindustry.WhenKreitnerarrivedatRRHheinheritedwhatappearedtobeastableorganization.Henoted:Thehospitalwasdoingwell.Ithadanawesomereputation,adedicatedstaff,andnodebt.Everyonethoughtthiswouldgoonforever,butmyinstinctstoldmeweweretoocomplacent.Overfiftypercentofourinpatientreferralscamefromonelargehospital,thehealthcareindustrywasinflictingunsustainabledouble-digitannualincreasesontheU.S.economy,andweweregoingaboutbusinessasusual.Idon’tthinkyoucouldhavebuiltabetterscenariofortroubleoverthehorizon.Kreitner’sopinionthatRRHwasheadedfordifficulttimeswasnotuniversallyshared.Hislackofhealthcareindustryexperiencemadeiteasyforstaffmemberstoassumethathisconcernswerenotwellfounded.Pflumexplainedthestaff’sreaction,WeknewKreitnerfromhisactivitiesasaboardmember,butwereskepticalabouthisabilitytoleadanestablishedhealthcareorganization.Shortlyafterhe1J.PhilipLathrop,RestructuringHealthCare:ThePatient-FocusedParadigm(SanFrancisco:Jossey-BassPublishers,1993).898-172ReadingRehabilitationHospital:ImplementingPatient-FocusedCare2arrivedhebegantoholdforumswiththehospitalstafftocommunicatetheneedforchange.Hisapproachwastoopenthebooks,financialandotherwise,sothateveryonecouldseethesamethingshecould.Thiskindofcommunicationwasafirstforus,andnottypicalofourindustry.Frankly,itmademanyofusuncomfortable.Manyofushadbeenintheindustryfor15or20years,andherewasthisnewguytellinguswewereintrouble.Thestaffjusthopedhedidn’tknowwhathewastalkingabout.RehabilitationServicesFoundedin1961asanacuterehabilitationhospital,RRHhad76beds,116therapistsand$20millioninrevenuein1994.MostpatientscametoRRHaftertreatmentofanillnessorinjuryatanacutecarehospital.Thejobofarehabilitationor“rehab”hospitalwastorestorebasicfunctioning,suchaswalking,climbingstairs,gettingdressedandfeedingoneself.RRHusedFunctionalIndependenceMeasures(FIMs)toassessanewpatient’sfunctionalstatusandsetgoalsforthatpatient’sfunctioningupondischarge(seeExhibit1).Forexample,RRHmightadmitapatientwhohadrecentlyreceivedorthopedictreatmentforherhipatanacutecarehospital.RRH’sjobwastoprovidetherapyandotherservicestohelpthatpatientachieveafullrangeofmotioninthehipsoshecouldgobacktoworkorhometoherfamily.Patientswithheadinjuriesorstroke-relateddisabilitiesrequiredmorecomplex,intensiveservices,butinallcasesthegoalwastohelppatientsleaveRRHfunctioningasindependentlyaspossible.RRH,likeotherrehabhospitals,alsodifferedfromacutecarehospitalsinbeingsmallerthanmostofthem.RRH’sannualrevenuesof$20millioncomparedtomorethan$190millionforthelargestand$40millionforthesmallestacutecarehospitalinitsregion.RRHadmittedpatientswithawiderangeofdiagnoses,includingheadinjury,stroke,spinalcordinjuriesandorthopedicproblems.Dependingontheirdiagnoses,patientsreceivedcarefromprovidersinfivetoeightdisciplines.Allpatientsreceivedcarefromphysiatrists(doctorsspecializinginrehabilitation),nurses,socialworkers,andphysicalandoccupationaltherapists.Patientswithdiagnosessuchasheadinjuryorstrokealsoreceivedcarefrompsychologists,cognitivetherapistsandspeechtherapistsasneeded.Since1993,RRHhadmeasuredtheeffectivenessofitsinpatientcarebybenchmarkingwithotherrehabhospitalsalongthreekeydimensions:averagelen