Managing Orthopaedics at Rittenhouse Medical Center

Richard M.J. Bohmer; Robert S. Huckman; James  Weber; Kevin J. Bozic

Case | HBS Case Collection | June 2007 (Revised March 2010)

Managing Orthopaedics at Rittenhouse Medical Center

by Richard M.J. Bohmer, Robert S. Huckman, James Weber and Kevin J. Bozic

Abstract

Considers the issues associated with running multiple business models–a private practice and an academic faculty practice--within the confines of the orthopaedics department of a single medical center. Students assume the role of Neela Wilson, Executive Director of Rittenhouse Medical Center, in managing the operational requirements of, and organizational tensions created by, these competing models. In analyzing the case, students have the opportunity to: (1) gain a better understanding of operational focus and the concept of a "focused factory" in health care, (2) consider the concept of a "factory within a factory" in the context of an academic medical center, and (3) build an appreciation of the managerial challenges associated with operating related, and often competing, business units within the same organization.

Keywords: Business Units; Business Model; Health Care and Treatment; Service Operations; Conflict Management; Competition; Health Industry;

Format: Print

19 pages

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Citation:

Bohmer, Richard M.J., Robert S. Huckman, James Weber, and Kevin J. Bozic. "Managing Orthopaedics at Rittenhouse Medical Center." Harvard Business School Case 607-152, June 2007. (Revised March 2010.)

Case | HBS Case Collection | October 2016 (Revised March 2019)

Carrum Health: Scaling Bundled Payments

Robert S. Huckman and Sarah Mehta

Founded in 2014, Carrum Health helped self-insured employers located in three markets (San Diego, California; Seattle, Washington; and San Francisco, California) save money on their employees’ planned surgeries. It did so by contracting directly with top-quality hospitals located within the area, and negotiating a set fee (known as a bundled payment) for each of five common surgical procedures: knee replacement, hip replacement, cervical spinal fusion, lumbar spinal fusion, and coronary bypass. By 2016, the company was growing steadily and saving its clients over 40% on average on these five procedures.
In September 2016, Sachin Jain, Carrum’s CEO, received an email from North Beach Apparel, a large retailer based in San Francisco with a growing presence near Chicago, Illinois and Columbus, Ohio. North Beach was ready to partner with Carrum, but the terms of the deal required Carrum to enter the Chicago and Columbus markets in order to serve all North Beach employees. The deal would significantly increase Carrum’s revenue and begin to move the entrepreneurial venture closer to profitability. However, by expanding to Chicago and Columbus, the young company ran the risk of spreading itself too thin, especially given the opportunity for growth in Carrum’s current three markets. But Jain knew that if he waited too long to expand geographically, Carrum might lose its first-mover advantage in several markets. With limited resources, Jain needed to decide how to scale his young company: should Carrum enter the Chicago and Columbus markets with a guaranteed initial client base and then focus on selling the existing five bundles to new customers there; or, should the company add new bundles to its product line through the existing provider networks in the three markets it currently served?

Keywords: health financing; health insurance; value-based healthcare reimbursements; bundled payments; innovation; Scale; Health; Health Care and Treatment; Cost Management; Growth and Development Strategy; Decision Choices and Conditions; Health Industry; California; San Francisco; San Diego; Seattle;

Citation:

Huckman, Robert S., and Sarah Mehta. "Carrum Health: Scaling Bundled Payments." Harvard Business School Case 617-017, October 2016. (Revised March 2019.) View Details

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Work-scheduling research typically prescribes task sequences implemented by managers. Yet employees often have discretion to deviate from their prescribed sequence. Using data from 2.4 million radiological diagnoses, we find that doctors prioritize similar tasks (batching) and those tasks they expect to complete faster (shortest expected processing time). Moreover, they exercise more discretion as they accumulate experience. Exploiting random assignment of tasks to doctors’ queues, instrumental variable models reveal that these deviations erode productivity. This productivity decline lessens as doctors learn from experience. Prioritizing the shortest tasks is particularly detrimental to productivity. Actively grouping similar tasks also reduces productivity, in stark contrast to productivity gains from exogenous grouping, indicating deviation costs outweigh benefits from repetition. By analyzing task completion times, our work highlights the tradeoffs between the time required to exercise discretion and the potential gains from doing so, which has implications for how discretion over scheduling should be delegated.

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Managing Orthopaedics at Rittenhouse Medical Center

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