Soter: Opening a new hospital in Madrid
Soter, a company with two top-quality hospitals, is facing a decline in demand from private patients. At the same time, its top competitors are growing and improving their quality of service. The company has to decide whether to invest in a greenfield hospital, buy an existing one, or do nothing.
Collection: IESE (España)
Ref: F-990-E
Format: PDF
Number of pages: 17
Publication Date: Feb 20, 2023
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Description
Soter, a company with two top-quality hospitals, is facing a decline in demand from private patients. At the same time, its top competitors are growing and improving their quality of service. The company has to decide whether to invest in a greenfield hospital, buy an existing one, or do nothing.
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Year: 2014
Geographic Setting: Spain
Learning Objective
In the context of a strong company culture, the case provides elements to discuss the advisability of opening a new hospital. Another option is to buy two hospitals that were for sale at the time. The case explores a methodology for capital budgeting through discounted cash flows, as well as an estimation of how to get to a reasonable rate of return.
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