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Waltham-Weston Hospital (B)
Author(s):
Nelson, Carl
Functional Area(s):
   Finance/Financial Management
   General Management
Setting(s):
   Healthcare Management
Difficulty Level: Intermediate
Pages: 5
Teaching Note: Available. 
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First Page and the Assignment Questions:
Jim Salsbury's first contacts with the New England Deaconess Hospital (Deaconess) centered on the decision of Brigham and Women's' Hospital to drop Waltham as a site for its cardiac fellows’ program in the spring of 1992. Jim called J. Richard Gaintner, MD, president of the Deaconess, to inquire whether Deaconess cardiac fellows might be available as replacements. Jim and Dr. Gaintner knew one another through their board positions at the Massachusetts Hospital Association. The two met to discuss the issue, but the Deaconess was unable to accommodate Waltham-Weston Hospital's immediate need. Shortly thereafter, Waltham-Weston entered into a relationship with the New England Medical Center to make up the loss of the cardiac fellows' program.

In late summer, 1992, in the midst of Waltham-Weston's strategic planning process, Jim read that the Deaconess had signed a Memorandum of Understanding (MOU) with Nashoba Hospital (60 beds) for an affiliation. He quickly telephoned Dr. Gaintner and asked whether the Deaconess was "intending to do more of these deals." At the suggestion of Dr. Gaintner, they both agreed to meet for breakfast at the Harvard club, where they subsequently spoke in general terms about their respective institutions and how an affiliation could be mutually beneficial.

The Vision

In an initial meeting that lasted for 1 1/2 hours, Dr. Gaintner described his vision of a network of community hospitals linked to the Deaconess. He then asked what particular timetable would be necessary in pursuing the affiliation with Waltham-Weston. Jim responded that as long as clear progress could be shown in moving the Deaconess to embrace the idea over a three to six month period he believed that relationship could move forward. Their discussions and good rapport quickly led Jim to believe in the possibility of an affiliation and that he would always know where negotiations stood in the process.

 They agreed to a second meeting, to also be held at the Harvard Club. On this occasion, Dr. Gaintner was accompanied by the Deaconess's Senior Vice President for Planning, Ralph Horkey. The meeting focused on details of the market served by Waltham-Weston and its competitors. Dr. Gaintner later said that after this meeting, he believed the probability of actually culminating an agreement with Waltham-Weston was only about ten percent.

During this time period, Waltham-Weston was also contemplating other potential partnerships. Massachusetts General Hospital operated the hospital's radiation oncology unit. Boston University Hospital was talking about joint ventures, most particularly with Quorum (formerly Hospital Corporation of America). New England Medical Center officials did not return calls from Jim, and neither Brigham and Women's Hospital or Beth Israel Hospital had been approached. Some initial interest was shown by Mt. Auburn Hospital and Newton-Wellesley Hospital, but discussions didn't proceed too far. Only St. Elizabeth's remained as a potential partner, but not without its complications.

As discussions continued with the Deaconess, Jim kept his board and medical staff executive committees informed of all aspects of the potential "affiliation." The word "affiliation" was carefully chosen to avoid the more commercially sounding and possibly threatening terms "merger" or "acquisition." The consequences of medical staff and community member discord over a "secret takeover deal," as in the case of Metro-West Hospital's merger with Leonard Morse Hospital, were to be avoided at all costs. Dr. Gaintner had made it clear that unless Waltham-Weston's medical staff and trustees were all on board, there could be no deal.

Initial reactions of the medical staff at Waltham-Weston were reserved. Jim likened the beginning process of organizing the "small business-oriented medical staff" towards a similar vision to "trying to herd cats." Progress was slow.