An Ophthalmology Hospital called “Super Eye Hospital” with 100 beds in the community is doing exceptionally well with 85% occupancy rates and making good profits. The organization structure has the Governance (board of directors) comprising of Independent board members with the representation from CEO and Medical Director. The Board of Directors and the CEO wanted to set up another hospital with Multi Specialties in the community. Since they are already having a hospital, they asked the in-house engineer to make a plan for the new hospital. This plan was approved by the CEO and the Governance gave their nod. The in-house engineers outsourced the construction to an external firm and they have started building the new facility. Post construction, the hospital was commissioned and inaugurated at the same time. The new hospital operational costs have gone really high with low occupancy and the hospital had to shut down operations as they incurred a huge loss continuously for 18 months.

Questions:

1.                 What went wrong with the facility once it had opened – in terms of design and finances? Explain in detail                                                   

2.                 Why are the occupancy rates low? Elaborate your answer        

3.                 What could the Hospital Governing board or management done different to make sure that their decision was right?