Sheet1Lehman Health Care ConsultingKey Ratios MCMPC ProjectRatiosStandardMCMPCIMGRiversideGood SistersCurrent Ratio1.31.251.31.31.2Quick Ratio1.21.051.11.250.9Days Cash on Hand5051495140Days in Net Receiv4955484662Debt Svce Cov Ratio>11.10.9510.89Liab to Fund Balance0.2NANA0.250.15Operating Margin>.05-0.00150.0650.055-0.02 Sheet2 Sheet3 Lehman Health Care Consulting, LLC To: All Assigned Consultants Date: January 23, 2017 Fr: Stephen Katz Managing Partner Re: New Engagement: Middle County Medical PC As you know, I have held several meetings with Middle County Medical PC (MCMPC) over the last few weeks to discuss a possible engagement. On January 20, 2017, we concluded our discussions and Lehman Health Care Consulting is under contract with MCMPC. Our task is to assist them with a significant strategic management challenge. The narrative that follows presents the situation that our client faces. Our assignment appears at the conclusion of the narrative. Middle County Medical PC Introduction MCMPC is facing a unique situation in a market that has evolved significantly. With its location in the northwest suburbs of NYC, it faces challenges. How will it compete effectively in a market where health care is dominated by one enterprise, Innovative Medical Group (IMG)? IMG has broad strategic approaches that give it a significant market share and an alignment with the major county hospital, County Regional Medical Center (CRMC). It launched an Accountable Care Organization, taking advantage of the opportunities created by the Affordable Care Act. Its bargaining power, negotiating leverage and financial strength give it significant competitive advantages. Middle County Medical PC (MCMPC) MCMPC is a fifty (50) physician group practice with fifteen offices with 350 employees. They have physicians covering twenty (20) different specialties and subspecialties, but not every specialty/subspecialty. The Middletown location is the largest and busiest for this group. The group was formed in 1984 by Dr. Scott Balko. Dr. Balko is a board certified ER physician who had been Chief of Emergency Medicine at Bolton Hospital (Bolton Hospital has merged with Darien Hill Hospital creating CRMC) for ten years. He decided to leave the hospital and create an Urgent Care Center serving the Middletown community. Over the least thirty years, MCMPC grew, providing urgent, primary and many specialty services. For period 1997 to 2013, its annualized visits grew by eight percent (8%). Revenues reached $22 million in 2014 and the group was consistently profitable. In 2014, annualized visits declined and profits fell. Dr. Balko told us that the practice had an operating loss in 2016. The repeal of the ACA exacerbates this situation. MCMPC implemented the Medical Home and ran it profitably. The elimination fo this program and the lost revenue make fiscal situation even worse. Dr. Balko and the group’s Board of Directors realized that MCMPC n.

1. Sheet1Lehman Health Care ConsultingKey Ratios MCMPC
ProjectRatiosStandardMCMPCIMGRiversideGood
SistersCurrent Ratio1.31.251.31.31.2Quick
Ratio1.21.051.11.250.9Days Cash on Hand5051495140Days in
Net Receiv4955484662Debt Svce Cov Ratio>11.10.9510.89Liab
to Fund Balance0.2NANA0.250.15Operating Margin>.05-
0.00150.0650.055-0.02
Sheet2
Sheet3
Lehman Health Care Consulting, LLC
To: All Assigned Consultants Date: January
23, 2017
Fr: Stephen Katz
Managing Partner
Re: New Engagement: Middle County Medical PC
As you know, I have held several meetings with Middle
County Medical PC (MCMPC) over the last few weeks to
discuss a possible engagement. On January 20, 2017, we
concluded our discussions and Lehman Health Care Consulting
is under contract with MCMPC. Our task is to assist them with
a significant strategic management challenge. The narrative
that follows presents the situation that our client faces. Our
assignment appears at the conclusion of the narrative.
Middle County Medical PC
Introduction
MCMPC is facing a unique situation in a market that has
evolved significantly. With its location in the northwest
suburbs of NYC, it faces challenges. How will it compete

2. effectively in a market where health care is dominated by one
enterprise, Innovative Medical Group (IMG)? IMG has broad
strategic approaches that give it a significant market share and
an alignment with the major county hospital, County Regional
Medical Center (CRMC). It launched an Accountable Care
Organization, taking advantage of the opportunities created by
the Affordable Care Act. Its bargaining power, negotiating
leverage and financial strength give it significant competitive
advantages.
Middle County Medical PC (MCMPC)
MCMPC is a fifty (50) physician group practice with fifteen
offices with 350 employees. They have physicians covering
twenty (20) different specialties and subspecialties, but not
every specialty/subspecialty. The Middletown location is the
largest and busiest for this group. The group was formed in
1984 by Dr. Scott Balko. Dr. Balko is a board certified ER
physician who had been Chief of Emergency Medicine at Bolton
Hospital (Bolton Hospital has merged with Darien Hill Hospital
creating CRMC) for ten years. He decided to leave the hospital
and create an Urgent Care Center serving the Middletown
community. Over the least thirty years, MCMPC grew,
providing urgent, primary and many specialty services. For
period 1997 to 2013, its annualized visits grew by eight percent
(8%). Revenues reached $22 million in 2014 and the group was
consistently profitable. In 2014, annualized visits declined and
profits fell. Dr. Balko told us that the practice had an operating
loss in 2016. The repeal of the ACA exacerbates this situation.
MCMPC implemented the Medical Home and ran it profitably.
The elimination fo this program and the lost revenue make
fiscal situation even worse. Dr. Balko and the group’s Board of
Directors realized that MCMPC needed to act quickly.
Using the cash reserves that it had, Dr. Balko began buying
medical practices from a variety of locations in the county as

3. well as the neighboring counties to the north and west. These
practices were small group practices. The physicians were
older and ready to retire; none of them were willing to sell to
IMG. Dr. Balko and his team closed some of these offices
consolidating the practices at other locations and at the
practice’s Middletown location. These actions paid off visits
increased and so did revenue. The practice is once again
profitable. However, Dr. Balko and the Board are still
concerned. Once again visits and revenue seem to have
plateaued. They feel that they have not addressed the clinical
and financial opportunity associated with the large chronically
ill population who are now under MCMPC’s care as a result of
the purchasing these practices. A review of the Medical Home
Provision of Affordable Care Act and the NYS Patient Centered
Medical Home Initiative seems to be warranted since these
individuals have two chronic illnesses and are covered by
Medicare or are dually eligible. Dr. Balko implemented the
Medical Home under the NYS Initiative. This was a reasonable
option for our client given the large number of Medicare and
dual eligible patients under their umbrella. The cash infusion
certainly improved their financial performance even if it was for
a short period of time.
Current Situation
In the last thirty years, people from NYC relocated into the
County for more affordable housing, reasonable taxes and good
schools. Although rooted in the County they still look to the
City for employment, entertainment and services. As a result,
there is a significant outward migration of County residents to
the inner urban center for employment, cultural activities and
health care. At a recent County Chamber of Commerce
Breakfast, the CRMC CEO identified that fifty percent (50%) of
the hospital’s potential patient base are leaving the community
to acquire certain hospital related services closer to NYC, or
within the NYC itself.

4. The County is becoming as diverse as NYC creating many
potential unique market niches. Most notable is the large
Jehovah’s Witness community that is located in the surrounding
towns and villages within ten (10) miles of MCMPC’s base of
operations. In 2013, the Jehovah’s Witnesses announced that
they were selling their headquarters in the Dumbo area of
Brooklyn, relocating all their operations to the County. It is
likely that many members of this community will relocate to the
County as well. What makes this group attractive is that they
have some form of private insurance or Medicare. However,
their religious beliefs make them a challenge. Expertise in
bloodless surgery is an absolute necessity to serve this niche.
No one in the County is a provider or linked to a direct provider
for bloodless surgery.
The movement of the Jehovah’s Witness Community to the
County is consistent with general trends. The County’s
population continues to grow, clearly demonstrated in the Table
below:
Year
Population
Unemployment
2008
299,000
3.7%
2009
341,000
3.4%
2010
369,000
4.6%
2011
372,000
4.3%
2012
376,000

5. 4.2%
2013
377,000
4.3%
2014
379,000
5.5%
Population:
Income Data:
* White Population:
285,721
* Black Population:
27,601
*Avg. House Value:
$144,500.00
* Hispanic Population:
39,738
* Avg. Household Income:
$52,058.00
* Asian Population:
5,157
* Avg. Persons Per Household:
2.85
* Hawaiian Population:
123
* Median Age:
34.70
* Indian Population:
1,205
* Median Age (Male):
33.40

6. * Other Population:
13,962
* Median Age (Female):
35.90
* Male Population:
170,965
* Female Population:
170,402
The number of school age children in the county has increased
along with an increase in the number of adults 35-64 years of
age and seniors over the age of seventy-five (75). The only age
cohort that decreased is the 18-34 years of age. The education
level of the County’s children has also improved with high
school graduation rates reaching over sixty percent (60%) and

7. eighty-three percent (83%) of high school graduates going to
college. Poverty rates vary, with the largest concentration of
poverty in the County’s three cities including Middletown; the
poverty rate exceeds twenty-five percent 25% in these areas.
The health status of the County is reflected in an improved
mortality rate over the last ten years and is better than
surrounding counties. Also notable is that accidents are the
leading cause of death for children. For young adults (18-45)
the leading cause of death is accidents followed by cancer. The
leading cause of death for adults forty-five (45) and over is
cancer and heart disease, accounting for two thirds of the deaths
in this cohort. Pediatric diabetes (both types) is on the rise
particularly in the areas of the County that have the highest
poverty rates. Chronic disease is also on the rise in the
seventy-five (75) and over age cohort, with Diabetes, CHF,
COPD, and stroke accounting for the majority of illness
afflicting this group. Many individuals in this age cohort have
more than one chronic disease.
The County health care provider market has seen significant
change and consolidation is the last twenty years. It is no
longer dominated by small group practices. Instead there has
been significant consolidation with one dominant provider,
IMG. The consolidation of the acute care segment is well under
way with the merger of Bolton and Darien Hill Hospitals
creating CRMC. The construction of the new CRMC facility in
Middletown now complete and the new modern hospital is
operating smoothly. It is notable that the new CRMC is located
close to the Middletown locus of operations of IMG. CRMC is
closely aligned with IMG.
IMG is a large integrated medical group with twenty-five (25)
locations in four (4) NYC metro area counties and Manhattan.
IMG has over 200 physicians and 1100 employees. In 2010 and
2011 IMG opened two new facilities including a 120,000 square

8. foot center in the southern portion of the county across the
street from the recently closed Darien Hill Hospital. It added
twenty physicians and 175 employees for this center alone.
IMG opened its own Ambulatory Surgery Center just outside of
Middletown, and CRMC is a minority partner in the venture. At
the ground breaking of the Ambulatory Surgery Center, Dr.
Schwartz, CEO for IMG, commented that the center would help
reduce the number of IMG patients who go to the City for a
variety to treatments that this Center will provide. Dr.
Schwartz in his remarks estimated that approximately one third
of Innovative patients are leaving the County for this reason.
The new Center is doing just that; very few of its patients are
going into the city for the treatment that they can receive at this
Center.
IMG has revenues of almost $300 million and is very profitable.
Because its financial statements are strong, IMG has had easy
access to capital (we do not have their financial statements –
just their financial ratios). Its broad strategy and structure,
providing almost every specialty and subspecialty services,
means that it can hold onto its patients. It has with stood anti-
trust challenges by small group practices
It is remarkable how quickly IMG became the dominant health
care provider in this area. It’s President and Founder, Dr.
Martin Schwartz is a board certified oncologist, who was
trained at Memorial Sloan Kettering. IMG was a small
Oncology group run by Dr. Schwartz. Sensing changes coming
to health care in the 90’s, Dr. Schwartz took a sabbatical from
the group. He was accepted to the Harvard Business School and
completed an MBA. He returned to the group with a
strategic/business plan to create the largest medical group in the
county. Using his new found knowledge in both strategy and
finance, Dr. Schwartz transformed an oncology practice into the
dominant all-inclusive health care provider in the region.
Although a sophisticated executive with a gift for strategy, Dr.

9. Schwartz remains a physician deeply committed to quality.
IMG physicians are either Board Certified or Board Eligible.
Board Eligible physicians’ must become Board Certified within
five years of joining the practice. Approximately forty percent
(40%) of the medical staff had academic appointments at
medical schools before joining the practice. IMG is able to
recruit physicians for many areas of the country and around the
world.
IMG has offices that are located along Route 37, the major road
that cuts across the county. They now have offices in other
counties that are conveniently located near the major population
centers. They now have office at several locations in Manhattan.
Their bargaining power and geographic locations give them
favorable rates with MCOs and insurers, and influence with the
local hospitals. Dr. Schwartz does not hesitate to exercise the
bargaining power that IMG possess. In 2006, IMG stopped
admitting to one of the Wickers Hospital in the neighboring
County because of poor clinical outcomes. The hospital had to
move quickly to address the issues IMG raised, and ultimately
signed a management contract with CRMC. After six months,
IMG returned to this hospital, but a ripple went through the
health care community. Not only did IMG have clout, they
were willing to use it. IMG is trying to exercise is clout in the
south eastern portion of the County.
There is a perceived opportunity in the south eastern corner of
the County with the closure of the Darien Hill Hospital Division
of CRMC. Several health care providers see this departure as
an opportunity to gain market share in this community. These
include new providers who are either trying to establish a
presence (Urgent Ex Cell opening Urgent Care Centers) or
increase their market share in the southern portion of the
County (Good Sisters Health System). Whatever opportunity
may exist is tempered by IMG’s major complex just across the
street from the closed Darien Hill Hospital. Phase one included

10. offices for primary and specialty physicians along with the
necessary diagnostic services. Phase two will include a second
ambulatory surgery center; no word on the status of this project.
Good sister entry into this region create a possible relationship
with our client.
MCMPC is experimenting in a limited venture with Good
Sisters Health System in this part of the County. Good Sister
operates in the north western corner of the neighboring county
and also has small hospitals in the Southern tier of the County.
MCMPC has opened an office in this area and has a cardiologist
who is affiliated with Good Sister located at this site. Dr.
Balko is using this venture to evaluate whether an alliance with
this system makes sense. There will be more discussion on this
issue in the section entitled; Strategic Partnerships. This is an
example of Dr. Balko’s inconsistent leadership ability.
Leadership is a significant issue for MCMPC. Dr. Balko is an
excellent physician who is deeply committed to his patients. He
often works sixty (60) hour weeks and if he is scheduled to
work until closing, he will see patients who arrive in the
parking lot, even though he has locked the doors to the office
and is in his car ready to go home. It is important to note that
while he does this, none of the other physicians emulate this
behavior. Dr. Balko dislikes the administrative side of his
position. Although he recently hired an experienced health care
executive as the COO, it is not clear if this individual will have
any real authority. Dr. Balko does not attend staff meetings or
have any formalize structure for managerial decisions. He can
and does act decisively; the purchases of physician practices
and the experiment with Good Sisters are examples of such
behaviors. He routinely gives Tuesday and Friday afternoons,
after 3:30 PM for administrative matters. Lately it seems that
Dr. Balko may have lost his enthusiasm for the business aspects
of the practice. The new COO for the practice may help address
this issue

11. The new COO, Maxine Smith, could make a significant
difference to this practice if she is empowered with decision
making authority. Ms. Smith has over fifteen years’ senior
management experience with medical group management. She
inherits a management staff that is mixed at best. Although the
group has a CFO, Director of HR, Director of IT/Physician
Recruitment and a Director of Operations, none of these
individuals possess any significant decision making authority.
The Director of Operations was Dr. Balko’s secretary when he
was Chief of Emergency Medicine at Bolton Hospital.
Although deeply committed and extremely loyal to Dr. Balko,
her decision making is questionable and she tends to screen Dr.
Balko from issues that need to be resolved. Ms. Smith is trying
to address this reality. The Director of Operations is struggling
with her new reporting relationship to Ms. Smith. Recently Ms.
Smith shared with me in confidence that she is also concerned
about the culture of the practice and the decision making
process in general. Planning for the long term is non- existent.
The practice is reactive rather than proactive, the practice does
not view debt as a tool to build and grow. Ms. Smith also had
many comments about the operations and clinical deficits in
general.
MCMPC staff members are generally caring, responsive and
accommodating. However, the informality of the organization
has not been perceived positively by many in the community.
Staff members do not have a uniform and people often work in
their jeans and sport shirts. No one seems to take charge other
than Dr. Balko. Physicians work in their areas and are not seen
looking beyond their own silo. This aspect of the practice will
be a significant issue if the Practice is serious about the
Medical Home. The main office can be sloppy at times; when
Dr. Balko or Ms. Smith makes rounds, the office is quickly
cleaned.

12. MCMPC still gets disgruntled former patients from IMG. These
individuals report that IMG is a cold organization. Many
people feel like a number, without a personal relationship with
any individual in the practice. The “rules are the rules,” with
little latitude for diversion from the policy and procedure is
alienating to these individual. However, with IMG creating a
practice that offers everything under the sun, it is likely that
this small migration of patients may disappear.
MCMPC’s current strategy appears to be the creation of a broad
based clinical entity. They continue to want to compete with
IMG head-on, which may have been an effective strategy twenty
years ago when IMG was less dominant in the market. MCMPC
has identified that it lacks specialist and subspecialist necessary
to assure it can offer the broad services that will allow it to hold
onto its patients. However, it is no longer able to recruit local
specialist or subspecialist since they are either affiliated with
IMG or are winding down their practice and preparing to retire
(some of them say that making a deal with Dr. Balko is difficult
– you can’t seem to get him to close the deal anymore).
MCMPC is now considering health care entities outside of the
County for affiliations with the hope that they will provide
specialist and subspecialist physicians. MCMPC also seems
stuck in some of its thinking; Dr. Balko still has not absorbed
the current reality when considering potential hospital partners.
People in the County will travel to specialist and hospitals in
other nearby counties and NYC. Even CRMC is adapting to this
reality as it explores possible relationships with hospital based
systems from NYC. A partnering with a hospital could make
sense. It might support the development of a unique market
niche and increase market penetration. However, the issue is
which one or whether either of the two suitors is appropriate.
Strategic partnerships are very possible since in this situation
both parties (MCMPC and the potential hospital partner) can
realize gains. In exchange for their location and access to their

13. patients, MCMPC may be able to gain access to resources,
competencies, most notably specialist and subspecialists. There
are two active suitors: Good Sisters and Riverside Hospital and
Medical Center
Good Sisters has begun a relationship with MCMPC. The joint
office in the southern part of the County is a chance to evaluate
with a relationship is beneficial. However, when evaluating this
system, MCMPC should consider the financial weakness,
customer perceptions and the turnover in the CEO position. Jim
Gallagher came to Good Sisters after spending ten years as the
COO at East Side Medical Center in the city. He built a solid
reputation around excellence and strong relationships with the
medical staff. Over his career, he demonstrated innovation, a
deep understanding of customer service, an ability to work well
politically even with rival hospitals and a genuine sense of
mission. He came to Good Sisters at a crossroads. The morale
at the hospitals was low and the medical staff was indifferent to
the hospital. Although Gallagher has met with Dr. Balko twice
and there was good chemistry between them, it is not clear how,
when or whether Good Sister might take the MCMPC co-venture
to the next level. Gallagher has resigned and the hospital is in
disarray. While the hospital Board of Directors seems
interested in collaborating with MCMPC, it is not able to focus
on this relationship given other issues that have to be addressed.
What is clear to Dr. Balko is that the southern portion of the
County is a market that Good Sisters covets and Gallagher aims
to claim. The financial information for Good Sisters Health
System will be forward to you soon.
Riverside Hospital and Medical Center is very interested in
MCMPC because of its location and a particular market niche.
Riverside Hospital and Medical Center located in NJ and the
NYC metropolitan area, has expressed interest in collaborating
with MCMPC. Riverside is known for its Bloodless Surgery
Program, among other services. It serves a significant number

14. of Jehovah’s Witnesses. On any given day, approximately
fourteen (14%) percent of the hospitals inpatient beds are filled
with Jehovah’s Witnesses. The hospital believes that a presence
in the Middletown community will help increase this patient
population.
Riverside is the only hospital in the area the currently offers
bloodless surgery. They are willing to connect MCMPC to an
Orthopedics and Urology Group (two important specialties that
MCMPC currently lacks) to help improve service at MCMPC.
Dr. Balko has some concern about this relationship since this
hospital is a one-hour drive from the MCMPC office. Riverside
just completed a major renovation and has a state of the art
physical plant. It does face major competition from NJ
University Medical Center, which is the dominant tertiary care
provider in its region. NJ University is successfully competing
with the academic medical centers in the urban center and is
extremely successful. Although they are fully integrated and
offer every possible specialty and subspecialty, they do not
perform bloodless surgery nor appear to have any interest in
this area. It is clear that Riverside is making this market niche
an important part of their strategy. The Riverside financials are
also attached
Comparative clinical data is included for the evaluation of
potential partners.
Clinical Data (Source: www.medicare.gov; Hospital Compare
update 12/2013)
30-Day Death Rate from a heart attack at the hospital, risk
adjusted – US National rate is 16.1 %
Riverside Hospital and Medical Center is better than Average
Good Sisters is at the National Average
% of Surgery patients given an antibiotic at the right time
before surgery

15. US Average 85%
Riverside 94%
Good Sisters 84%
% of Surgery Patients given the right kind of antibiotic
US Average 92%
Riverside 76%
Good Sisters 97%
% of Surgery patients whose antibiotics were stopped at the
right time
US Average 83%
Riverside 88%
Good Sisters 90%
% of all Heart Surgery patients whose blood glucose is kept
under good control after surgery
US Average 86%
Riverside 90%
Good Sisters 92%
% of Surgery patients who had hair removed from surgical area,
but not with a razor
US Average 95%
Riverside 87%
Good Sisters 99%
% of Surgery patients whose MD ordered treatments to pr3vent
blood clots
US Average 82%
Riverside 91%
Good Sisters 77%
% of patients who got treatment at the right time to help prevent
blood clots
US Average 79%
Riverside 72%
Good Sisters 82%
Other information for Consideration:
Length of Stay

16. Riverside is better than or at the National LOS average
Good Sisters is worse than the National LOS average, perhaps
by as much as 2 day
Statistics:
2010
2011
2010
2011
Hospital
Riverside
Riverside
Good Sisters
Good Sisters
Admissions
18,545
20,095
21,915
20,024
Patient Days
87,639
93,072
131,490
120,144
ER Visits
38,298
41,558
62,721
65,818
Outpatient/Ancillary/Surgery
412,626
472,237
460,820
434,118
Outpatient Cancer visits

17. 43,665
51,754
17,129
15,762
Surgeries
12,274
13,495
19,352
18,005
Additional Considerations
EMR
· Riverside has implemented its EMR and all the “bugs” have
been addressed
· Good Sister’s EMR in finally implementing its EMR
Affiliations
Riverside is freestanding although is part of network affiliated
with one of NYC’s academic medical centers.
Good Sister’s is part of the Mid-Atlantic Catholic Health
System, which includes health care providers in NY, NJ, Pa,
Delaware and Maryland, with Revenues of over $1.0 Billion.
The entire system is struggling from a financial perspective.
Health care experts assume there will be closures of some
facilities and/or reductions in beds at some of their hospitals.
Affordable Care Act and It Repeal
The Affordable Care Act offered potential opportunities for
growth as well. IMG took advantage of the Account Care
Organization provision. With the large number of patients and
financial resources, this action made sense for them. Other
provisions of the law create new revenue streams for medical
practices willing to take responsibility for chronically ill
individuals. The Medical Home provisions seemed relevant for
MCMPC. Nearly two thirds of the Medicare patients that the
practice treats have two chronic illnesses. The Medical Home
payment system includes a patient per day (PPD) fee and a

18. traditional fee for service reimbursement methodology. The
PPD’s focus is on care coordination and other interventions
designed to reduce hospitalizations. Dr. Balko was very
interested in this option.
MCMPC implemented Medical Home successfully. They
increased early intervention and prevention programs. Patients
enrolled in this program were hospitalized less often compared
to when said patients were not in this kind of program. Medical
Home was profitable initially; as the PPD was reduced,
profitability fell. With the potential elimination of this
program, the fiscal.
The task at hand is to develop a strategy for MCMPC. Should it
continue to try competing head on with IMG? Should it
consider carving out market niches and focus on them? Some
members of the Board have suggested that MCMPC sell itself to
IMG. Dr. Balko will not accept this alternative. He becomes
very angry when this becomes an item for discussion and
refuses to consider this option. It is likely that there is bad
blood between him and Dr. Schwartz. Staff will neither confirm
or deny this, and refuses to discuss this all together.
Lehman Health Care Consulting (LHCC) task is so develop a
strategic plan for MCMPC – a road map to growth in this unique
service area. As part of this assignment, LHCC groups will
write several briefing memos to the managing partner, who is
working directly with the Doctor Balko. You will use the
Situation Analysis model for several parts of your analysis, do a
review of potential partners and consider the potential positive
impact of Value Based Competition (Porter 3 & 4) and The
Affordable Care Act for our client. Mr. Katz will give you and
your group specific assignments.
A Twenty (20) page report will be delivered to the Managing
Partner and the Senior Partners on a date to be determined. The
report will incorporate all the memos, fully integrated into a
well-organized report. The last part of the report is for you to
recommend what MCMPC should do to grow. Please present
options considered and why you rejected them. Please note that

19. the Managing Partner shared the Michael Porter article with
Doctor Balko. Doctor Balko likes the concept of Value Based
Competition (which will be presented to you in a few weeks)
and providing care across the continuum. He wants our work to
include this concept. Dr. Balko wants to go into 2016 with a
fresh direction, so we have some time to assess the situation and
develop a plan that makes sense.
Cc: Senior Partners
Lehman
Health Care Consulting, LLC
To:
All Assigned Consultants
Date:
January 23
, 201
7
Fr:
Stephen Katz
Managing Partner

20. Re:
New Engagement: Middle County Medical PC
As you know, I have held several meetings with Middle County
Medical PC (MCMPC) over
the last few weeks to discuss a possible engagement.
On
January 20, 201
7,
we concluded our
discussions and Lehman Health Care Consulting is under
contract with MCMPC. Our
task is to
assist them with a significant strategic management challenge.
The narrative that follows
presents the situation that our client faces. Our assignment
appears at the conclusion of the
narrative.
Middle
County
Medical PC
Introduction
M
C

21. MPC
i
s facing
a unique situation in a market
that
has evolved significantly
.
With its
location in the northwest suburbs of NYC, it faces challenges.
How
will
it compete effectively in
a ma
rket where health care is dominated by one enterprise,
Innovative
Medical Group
(IMG)
?
IM
G
has
broad strategic approaches that give
it a significant market share and an alignment with
the major county hospital, County
Regional Medical Center
(
C
RMC)
. It

22. launch
ed
an Accountable
Care Organization
,
tak
ing
advantage of the opportunities created by the Affordable Care
Act.
Its
bargaining power, negotiating leverage and financial strength
give it significant competitive
advantages.
Middle County Medical PC (MCMPC)
MCMPC is a
fifty
(5
0
) physician group practice with
fifteen offices with 350 employees.
They have physicians covering twenty (20) different specialties
and subspecialties, but not every
specialty/subspecialty. The
Middletown
location is the largest and busiest for this grou
p

23. . The
group was formed in 1984 by Dr. Scott Balko. Dr. Balko is a
board certified
ER physician who had
been Chief of Emergency Medicine at Bolton Hospital
(Bolton Hospital has merged with Darien
Hill Hospital
creating CRMC)
for ten years. He decided to
leave the hospital and create an Urgent
Care Center serving the Mid
dletown
community. Over the least t
hirty
years, MCMPC
grew,
providing
urgent,
primary and
many
specialty services. For
period 1997 to 20
13
, its annualized
visits grew by eight percent (8
%)
. Revenues reached $22 million in 20
14

24. and the group was
Lehman Health Care Consulting, LLC
To: All Assigned Consultants Date: January 23, 2017
Fr: Stephen Katz
Managing Partner
Re: New Engagement: Middle County Medical PC
As you know, I have held several meetings with Middle County
Medical PC (MCMPC) over
the last few weeks to discuss a possible engagement. On
January 20, 2017, we concluded our
discussions and Lehman Health Care Consulting is under
contract with MCMPC. Our task is to
assist them with a significant strategic management challenge.
The narrative that follows
presents the situation that our client faces. Our assignment
appears at the conclusion of the
narrative.
Middle County Medical PC
Introduction
MCMPC is facing a unique situation in a market that has
evolved significantly. With its
location in the northwest suburbs of NYC, it faces challenges.
How will it compete effectively in
a market where health care is dominated by one enterprise,
Innovative Medical Group (IMG)?
IMG has broad strategic approaches that give it a significant
market share and an alignment with
the major county hospital, County Regional Medical Center
(CRMC). It launched an Accountable
Care Organization, taking advantage of the opportunities

25. created by the Affordable Care Act. Its
bargaining power, negotiating leverage and financial strength
give it significant competitive
advantages.
Middle County Medical PC (MCMPC)
MCMPC is a fifty (50) physician group practice with fifteen
offices with 350 employees.
They have physicians covering twenty (20) different specialties
and subspecialties, but not every
specialty/subspecialty. The Middletown location is the largest
and busiest for this group. The
group was formed in 1984 by Dr. Scott Balko. Dr. Balko is a
board certified ER physician who had
been Chief of Emergency Medicine at Bolton Hospital (Bolton
Hospital has merged with Darien
Hill Hospital creating CRMC) for ten years. He decided to
leave the hospital and create an Urgent
Care Center serving the Middletown community. Over the least
thirty years, MCMPC grew,
providing urgent, primary and many specialty services. For
period 1997 to 2013, its annualized
visits grew by eight percent (8%). Revenues reached $22
million in 2014 and the group was