A leading hospital streamlines operations and retains the core of its high-performing units.
Munich City Hospital is one of the largest public hospitals in Germany, with four large independently operated sites, all located in the city of Munich; 69 separate departments, each with its own medical director; and a 30% market share in the Munich metropolitan area. Because of overcapacity in the local market (Munich’s ratio of beds to inhabitants is twice the average in Germany) the hospital has been losing money for ten years. New European Union rules limiting public subsidies are requiring the hospital to develop a sustainable operating model in order to avoid bankruptcy.
In 2013, BCG began working with Munich City Hospital to help define a new strategic direction. The guiding principle behind the work was the conviction that the only way to consolidate and cut costs effectively was to focus on more than simply cost. Instead, the team started with a question: What is the right medical concept to ensure that we can deliver the highest quality of care?
The team took a hard look at the areas in which the various units in the hospital network truly excelled and devised an operating model that treated the four sites as part of an integrated network.
By identifying where the hospital delivered patient value—for instance, those specialty units that had enough patient volume to deliver high-quality outcomes—the team was able to establish a set of criteria not only for where to cut, but also for where to invest.