Case Analysis: Caregroup

Page 1 of 5

Case Analysis: Caregroup

By | August 2010
Page 1 of 5
Case Analysis: CareGroup

Brief Synopsis
The case “CareGroup” prepared by the Harvard Business School recounts an astonishing tale of how the health-care company CareGroup’s leading state-of-the-art information technology (IT) systems had abruptly collapsed for three and a half days, what actions they took to recover, and the invaluable lessons learned through them.

Background and Analysis
On October 1, 1996 three prominent hospitals in eastern Massachusetts merged together to form CareGroup. CareGroup was a group of health-care professionals that offered community-based primary care and a broad spectrum of specialty services. CareGroup was formed in response to three key factors of the health care industry at that time. Firstly, the intense competitive environment within the industry in the mid-1990s had driven many hospitals to join forces to gain contracting power against HMOs. Secondly, there was a strong demand for hospitals to strengthen their balance sheets in a complex price war due to excess supply. Lastly, merging hospitals had the opportunity to develop integrated services that could greatly improve the quality of health care as well as drive down costs.

The merger that had formed CareGroup had been successful. Although the road to success had been bumpy the company had produced $1.6 billion in revenue and became the second-largest group of hospitals in eastern Massachusetts. An unforeseen achievement had been the development of an integrated IT system that linked the entire organization together. CareGroup became a leading innovator in IT not only recognized as the best in health care, but the finest in any industry. Strengths, Weaknesses, Opportunities, Threats (SWOT) Analysis Strengths

From a birds eye view the CareGroup IT systems were not only strong, but the most advanced in the nation. The company enjoyed the best e-mail system, voice and wireless, data center and web-based infrastructure in healthcare. Their IT systems...