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MHC Case Study
CASE: Strategic Planning at Multistate -Health Corporation
As you read this case, think about the relationship among competitive strategy and both the HR and HRD functions at Multistate Health Corpora¬tion (MHC). The case was written in 1994 and is real, but the corporation asked that its name not be used. The federal and insurance environment for health care has changed substantially since that time; however, the strategic planning issues faced by MHC remain relevant today. The infor¬mation provided here reflects the organization in 1993 as it was complet¬ing its strategic planning process.

The Organization
MHC is a health care provider owned and operated by a religious order. MHC owns 30 hospitals and four subsidiary corporations employing more than 10.OOO people. Its headquarters are in Michigan, with hospitals lo¬cated in 1 7 states across the country. The overall organizational structure and the corporate HR structure are depicted in Exhibits 2-1 and 2-2.
Competitive Strategy
In line with its mission, which is rooted in the tenets of the order’s religion, MHC focused on providing care to the indigent and less able members of the community. It was reasonably successful until 1989, when the health care industry began to experience considerable change in governmental reg¬ulations and insurance procedures. At the time of their strategic planning, hospitals were reimbursed on the basis of a preset, standardized price for treatment rather than the cost-plus method used previously. The federal and state governments were putting increasing pressure on health care

*Each hospital has a CEO reporting to the regional executive vice president (EVP). Hospital are referred to as divisions within MHC and have a CEO as well as a functional staff (including HR) for conducting divisional operations. Corporate HR is included as part of corporate staff, as described in Exhibit 2-