Taking Charge of the Beth Israel Deaconess Medical Center (A)
John
School of Business/ Department of Organizational Leadership
02/25/2008

Taking Charge of the Beth Israel Deaconess Medical Center (A)/ Paul Levy
Introduction /Background

In 1916 the Beth Israel Hospital was formed in the Boston area mainly because Jewish doctors wanted a hospital they could perform their practice. At the time Jewish doctors were dismissed at the notion of being able to work at local hospitals in the area. The financing of the BI Hospital derived from the Jewish communities donations. Millions of dollars were donated in order to create an upper class academic medical center that was known not only for the quality of its research and teaching but also for the quality of its care. As time went on capitalism showed its face by driving the local
Boston hospital’s to want more market share in their geographic locations.
A Dean of Harvard Business School by the name of John McArthur organized a session in which he proposed the Brigham Hospital merge with the Massachusetts General Hospital to create a new organization called Partners Healthcare System. None of the surrounding hospitals in the area were notified when the decision to go ahead with the plan was made. Not only was the merger established because of the growth of market share but the organization would be able to capture a bigger portion of the market and therefore have a greater influence on the insurance companies and the other payers. Negotiating insurance contracts is a very important asset and strategy to the success of the hospital financially. When word broke of the merger other local hospitals felt a need to respond by finding new partners themselves to obtain leverage on the insurance companies as well gain market share.
BI started looking for hospital to merge with and found Deaconess to be the