Caregroup Case Study Summary

Background:
Formed by a merger in 1996, CareGroup is the second largest health care organization that serves eastern Massachusetts. CareGroup includes a variety of physician offices, academic health centers, and community hospitals. Some of the hospitals that are part of CareGroup include Beth Israel Deaconess Medical Center, Mount Auburn Hospital, and New England Baptist Hospital. There were several factors that resulted in the merger of CareGroup, and these factors include gaining contracting power over insurance companies (HMO’s), creating an integrated system across hospitals, and achieving a competitive advantage in terms of prices.
After reengineering the processes in several hospitals, CareGroup was able to achieve successful rates,

CareGroup is a healthcare organization and having a strong depedndable IT system is crucial. The network outage that occurred at Beth Israel Deaconess Medical Center on November 13, 2002 was a symptom of the problem that CareGroup was facing. The network collapsed after a huge data set overwhelmed a primary network switch and caused it to cease its functionality. Despite the built-in redundancy within the CareGroup network, the system was still unable to select different network paths to transfer the data flow as the situation became more complex. The backup switches were confused by the system as multiple primary switches, and that ended up creating an infinite loop that transferred the same data set back and forth between two or more switches until the entire network system lost its functionality and

The underlying causes of the problem can be directed back to a few key issues. One of the causes is the fact that the network used was “out of spec”. The network that was once considered the most advanced network in the region was discovered to be outdated and was not able to handle complex situations. The use of bridges and switches instead of routers is the best example in this case.
Another underlying cause of the problem is the lack of attention given to the report that Halamka requested from Cisco. This can also be related to the lack of Halamka’s lack of experience in networking in addition to the fact that an important network employee left his position at CareGroup without being replaced with someone that is equally experienced.
The most important underlying cause of the problem is the fact that CareGroup was more excited about cutting capital expenditure costs by 90%. These expenditures costs included the Meditech software system that was implemented without consultants. The result of cutting costs on implementing such an important software system did not have any immediate negative effects in the short-run, but it sure did have a huge impact on the long