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Case #1: Brigham and Women’s/Faulkner Hospitals
This case takes an in depth look into the evolving medical industry. Key aspects of this case focus on the benefits and drawbacks of a merger between large and community sized hospitals and the possible cost subsidizing that may occur and the impact the qualitative factors may play in such cases.

Overview of Industry:
Health Care costs began to rise while insurance reimbursements began to fall. This led to a larger amount of patients being treated on outpatient basis. This aided in temporarily curbing the costs associated with overnight patients. AMCs therefore focused on primary care as means of reducing operating costs. Thus a lot of emphasis was placed on cost control. Managed Care plans lead to capped fee for hospitals. As a result, BWH saw a drop in incoming patients. AMCs thus focused on primary care as means of reducing operating costs. Community doctors were reluctant to recommend AMC doctors, instead sent patients to less costly hospitals.
The solution seemed to be pointing towards possible mergers. The mergers’ purpose was to achieve Economies of Scale and also get access to the patients and knowledge of community hospitals and fill the gap where the large hospitals lacked market penetration.
OUTLINE OF BWH HOSPITAL: Largest hospital in New England. Often ranked as best in service. High end teaching hospital. Employs more than 12,000 people with 44,000 patients. Annual research budget of $400,000,000.
THE FAULKNER HOSPITAL: Had a rich academic tradition. Partnership with local medical schools to train their residents. Employed more than 1,400 people with 8,300 discharges with 204,000 patient visits. Excellent performance improvement and a host of services.
Merging:
The reasons that led to this decision were mostly due to the fact that BWH was facing resource

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