Sample Case Essay

Words: 949
Pages: 4


SAMPLE CASE ‐ Instructor has added comments in brackets[] Good Hands Healthcare (GHH), a nursing home provider and a major player in the American healthcare industry, is at a crossroads: the company has been facing financial trouble in recent years and the board must decide whether the current founder and CEO, George Jackson, is fit to revive the company and what can be done to turn the precarious situation around.

External Analysis Environmental and industry opportunities for GHH include: • The increasing need for eldercare services due to increasing life expectancies and aging baby boomers • Rapid expansion and
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Cons: pushback from top management (friends of CEO); potentially a lack of industry expertise; expensive (severance package) 4. Replace Jackson as CEO and keep him as chairman of the board a. Pros: continuity in experience/strategy, lower cost than total severance b. Cons: CEO still has control in the company (may push own views)

Recommendation Given Jackson’s extensive industry expertise and proven past results with the company over the last 30 years (building it from a small nursing home business into a $3 billion publicly traded company), the CEO should be kept. There are some measures that can be taken to turn the company around, without having to pay Jackson’s $25 million severance, face public scrutiny, and further damage the company. The following implementation will further outline the steps that need to be taken to ensure GHH’s viability.

Action Plan What GHH must do immediately to alleviate some debt is to sell some of their facilities. Since 85% of the net revenues come from nursing homes, 10% from assisted living and 5% from facilities for people with Alzheimer’s, and there are healthy revenue growth forecasts for nursing homes, it naturally follows that GHH will have to (at least temporarily) halt expansion plans