Vanderbilt: Transforming a Health Care Delivery System

Case Solution

Michael E. Porter, Zachary C. Landman, Derek Haas
Harvard Business School ()

In 2013, Vanderbilt University Medical Center was ranked the top-rated hospital in Tennessee by US News and World Report and among the top academic medical centers in the Southeast region. The 2012 US News & World Report Hospital Rankings listed Vanderbilt’s treatment for kidney transplants (11th), women’s health (16th), heart (25th), and cancer (29th) as one of the best in the country. The National Institutes of Health research grants of $ 292 million ranked ninth nationally. Over the past decade, the medical center had increased its sales, more than tripled its operating margin, and operated at full capacity in many areas, with an average inpatient bed occupancy rate reaching 90 percent compared to average. 68 percent national. Despite its growth, Vanderbilt University Medical Center (VUMC) faced a $ 250 million loss in revenue over the next two years as more patients switched to lower Medicare reimbursements and increased pricing pressures from commercial insurers, employers and private clients. Dr. Jeffrey Balser, CEO of VUMC, needed to address the shortage while maintaining the quality of patient care, education and medical research.

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