Hoag Orthopedic Institute

Two groups of orthopedic surgeons form a joint venture with a community hospital to establish Hoag Orthopedic Institute, a for-profit hospital and two ambulatory service centers. By controlling and integrating all aspects of the patients' medical treatment, the physicians deliver superior outcomes, which they communicate with an annual public outcomes report. They also introduce bundled payment contracts with three insurers for orthopedic surgeries, and join a multi-hospital study for applying time-driven activity-based costing to identify process improvement and cost reduction opportunities. The case concludes with HOI leaders examining several options for expansion and growth.