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Over the past three years, Brady Hospital has gone from being a hospital on the brink of closing to being
a financially viable and respected partner in the local community. Brady’s reputation is outstanding, and
its programs have improved the community’s health through cultural, behavioral, and policy changes. In
fact, the hospital’s accomplishments were just referenced in the governor’s state of the state address.
Mr. Walsh, the CEO of University Hospital has just reached out to you, Brady Hospital’s CEO. Mr. Walsh
wants University Hospital to acquire Brady Hospital. The acquisition would not change Brady Hospital’s
organizational structure and no jobs would be cut. However, there would be many changes. First, each
member of Brady’s C-Suite would report to/meet with the person with the same responsibilities at
University Hospital. Therefore, Brady’s C-Suite would have to get University Hospital approval for all
programming, operational, purchasing, etc. decisions that are not part of typical day-to-day operations.
As well, all staff will have to conform to uniform policies that require all employees to wear scrubs that
match their roles in the hospital. Brady Hospital employees currently enjoy wearing smocks of their
choice with blue, green, or white bottoms. Another substantial change will be in health plans. University
Hospital has a self-funded healthcare plan. Therefore, all employees must use University Hospital
facilities for their medical care. Out of network emergency care is provided. While this will decrease
Brady Hospital employee’s copays to $0 for all non-surgical care (i.e. physician exams, radiology, etc.), it
also eliminates the opportunity to go to Queens and Liberty Hospitals, two world-renowned private
hospitals that are frequented by a number of Brady Hospital’s employees.
Despite those inconveniences, there will also be many potential strengths garnered from this
acquisition. Brady will have direct access to University Hospital’s purchasing agents and will be able to
order all medical supplies, office supplies, medicines, medical equipment, etc. at University Hospital
prices. This will allow Brady to save approximately 25% on all major purchases (medical equipment) and
15% on lower-priced items (most everything but medical equipment). As well, as part of the University
Hospital system, Brady will be eligible to receive up to 50% subsidy for capital improvements, such as
new construction or remodeling. Finally, as part of the acquisition agreement, University Hospital and
Brady Hospital physicians will participate in exchanges. In the exchanges, with the exceptions of division
heads, University Hospital physicians will be able to switch positions with like physicians from Brady
Hospital. The exchanges will provide Brady Hospital physicians with opportunities to work side-by-side
with University Hospital physicians, who are largely regarded as some of the best in the state, thereby
providing opportunities to learn new techniques and collaborate in more experimental trials. Because
University Hospital is 72 miles from Brady, physicians taking advantage of the exchange will either be
reimbursed mileage or will be housed in University Hospital properties located adjacent to both
hospitals.
Brady Hospital’s Board of Directors must decide on this acquisition offer. In a memorandum to Chairman
of the Board, Pete Rivers, express your position on the acquisition. Be sure to develop your argument
well to convince Chairman Rivers to support your recommendation to the rest of the board.

Brady Hospital Case Study