McKinsey Case Study: Hospital Chain Revenue
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- Опубликовано: 29 авг 2021
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Enjoy this McKinsey-style healthcare case study with Tomasz, a future L.E.K. consultant, and Stephanie, a former McKinsey Engagement Manager. The case involves a challenging revenue problem for a large hospital chain. The communication, structure, and problem-solving skills required in consulting are on full display here as Tomasz runs through the case. Follow along with pen and paper and see if you can solve the healthcare case study alongside Tomasz!
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Questions we’ll answer in this video:
◈ “How do I prepare for a McKinsey case interview?"
◈ "How to pass a healthcare case study interview interview?"
◈ "Healthcare case study examples?"
Highlight Timestamps:
0:15 - Intro to the case
1:28 - Case recap
5:38 - Building a framework
23:52 - Final recommendation
27:58 - Feedback by the interviewer
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Great example of showing how to ask for help during a case
Such a humble guy
This was amazing
Nice! I however need some clarification on the right issue tree to use for this case. I believe (from the initial prompt that) this case was supposed to be focused on revenue (topline) but all through the case, the conversation was on profitability. Can someone help clarify this?
Let's say this is a problem that the declining revenue drives down the profitability. That's why we talk about the break-even/closing down the chains or not in the later part of the case.
I don't think this case is well-designed. I agreed with you that the case didn't match with the initial objective. As the interviewee double confirmed, the objective should be how to maintain the topline but he suddently used a profitability frame work to solve the profit issue, which is not a good transction. Additionally, I am not sure why the sudden she asked about hurdle rate question , which is unclear to me and not tied to the case.
Stephanie is great! I hope to work with her
Honestly I was scared of her.
Client's goal is to help him to decide which hospital he should close if any.. Right ?
So from my perspective, the key of the structure is to think about criteria we should look at before deciding if we should close any hospital..
And regarding the client's goal, two things are important to look at : (1) profitability of the hospital, (2) global revenue of the chain
Consequently, i would formulate a structure like that :
1. Assessment profitability per hospital
a. Drop in revenues
a1. option 1 : if we apply the new legislation
a2. option 2 : shift in strategy, what impact in terms of revenues (% client we can lose vs. revenues of new therapy)
b. Cost associated
c. Profitability
2. Growth profitability opportunies per hospital and ability to achieve that
a. Revenue side (more focus on this side regarding the prompt)
b. Cost side
3. Other criteria to decide
a. Location : Strategic area in terms of brand
b. Interdependance with other hospitals (example % customers going there and in another one of the chain, etc.)
What do you think ?
Open to get your inputs and feedbacks..
I have problem with the hurdle rate question. If 5,000=200X as being discussed in the interview, the answer 475 will lead to -$5000 (=200*475-100,000). It’s negative already, not to mention uncovering 50,000 exit cost yet.
My thought: 200X - 100,000 > 55,555 (=50,000/0.9), X > 777.775
Or did I misinterpret the exit cost as well as the hurdle rate? Kindly correct me then.
The way to think about this is that if you have X patients, then the annual profit is 200X-100,000. So having a 10% hurdle rate (or return per year) means that from all the future years you will get (200X-100,000)/10%, which is a perpetuity formula. But you want this number to be bigger than the COST of exit (negative), so you want (200X-100,000)/10%>-50,000. Yo can multiply by 10%, then 200X-100,000>-5,000 -> 200x>95,000 -> x>475
But a simpler way to look at it is what the interviewer said. The number of additional customers that you could afford to lose to match the -5,000 (=50K*10%), which is -5K/200=-25, so the number of patients is 500-25=475 (same number)
@@FelipeSotoArevalo but the exit cost is supposed to /10% too right? so the formula should be (200x-100000)/10%>50000/10%
0:51 it is important to double check that revenue will actually decrease from this strategy. do the calculations
closing any hospital would definitely decrease revenues. Because, said hospital would have been performing surgeries, and this would have brought in money.
how profitable are alternative therapies?
"a strategy that would shift its focus towards less profitable surgeries by using altenrative therapies" - this doesn't make sense. Sounds like a bad strategy. They should be shifting to the new, most profitable surgeries, by cutting out and not performing the least profitable surgeries anymroe and use alternative therapies (which hopefully are more profitable) as a replacement for these surgeries that are removed from the 'menu', so to speak.
It makes sense to produce more of/prioritise the most profitable products/surgeries and reduce production of the least profitable products.
They are worried about less revenue, so i will assume that they will be happy if I'm somehow able to increase their revenue.
16:06
I think he took the questioning down the wrong line of reasoning
What does “3 apes of their surgeries” mean that she said at 25:23?
3/8th
how is 7.5% matching with 69%?
They said6-9% I.e. a range not 69%
For next video remove silence.