Why do you think the board chose Mr. Josephson over Mr. Larson for the CEO position?
( 1 page 275 words )
2. What challenges did Mr. Josephson face when he arrived at Centuria? How did he deal with them? ( 1 page 275 words )
3. Contrast the changes Mr. Josephson made at Centuria with those made by Mr. Roberts. Please be as specific .as you can. What aspects of the organization did the TUL Program affect, for example? How? What other aspects, ( 1 page 275 words )
if any, did Mr. Josephson address, and how?
4. How, if at all, have the cultural changes at Centuria prepared the organization for success in an environment with a high concentration of managed care? What obstacles remain? What challenges does Mr. Josephson face in overcoming them?( 1 page 275 words )
Centuria Health System
When I arrived at Centuria, the prevailing emotions among midlevel managers and senior VPs alike ranged
from fear to panic. In an organization unused to major change, people feared that I would come in and begin
“swinging the ax.” Moreover, Centuria was very protective of its fledgling new culture. The organization had
worked hard to change, and people were concerned that I would not understand or embrace the new culture and
The speaker was David Josephson, recently appointed CEO of Centuria Health System. He continued:
Over a period of three months, I interviewed 100 people—physicians, board members, community leaders,
managers—asking them for their opinions of Centuria’s strengths, weaknesses, and future direction. The interview
process gave me an opportunity not only to establish a personal connection with representative members
of all constituencies of the hospital community, but to begin to plant the seeds of a vision and a direction
for the hospital.
Now, some two years later, Mr. Josephson was assessing the changes he had made at Centuria,
and wondering if he had prepared the organization adequately for the challenges it was facing in a
managed care environment.
Centuria Health System, located in Northern California, was founded as Centuria Hospital during
California’s gold-rush days, by the wife of a successful prospector. The hospital grew steadily
over the years to its current size of 500+ beds, and was a regional teaching hospital. In addition,
during the past two years, Centuria had expanded its activities in response to the intense competition
and high penetration of managed care in the Northern California region. This expansion included
the development of an IPA-type HMO (called “Physician’s Health Plan, or PHP), a regional
cancer center, a regional pediatric center, an ambulatory services center, and an outpatient rehabilitation
center. Three years ago, in recognition of its increasingly diverse activities, it changed its
name to Centuria Health System.
Centuria had a staff of 570 physicians and 2,800 employees, and treated some 120,000 people
each year, serving an eight-county population of nearly one million. Prior to the major changes of
the past couple of years, it had been thought of, by members of the staff, Board, and town alike, as
“a sleeping giant.” Located in a mid-sized city, it had always been the major hospital, more than
twice the size of the next largest hospital in town, and had never known significant competition. The
cost-plus reimbursement environment that prevailed from 1965 to 1984 contributed to the sleepinggiant
image. During that era, there were no external pressures to contain costs or streamline operations.
Centuria’s employees were loyal—when you took a job at Centuria, you became part of “the
Centuria family,” and had every intention of staying on for the rest of your working days. The
prime example of Centuria longevity was Mr. Josephson’s predecessor, Christopher Roberts, who
had been at the hospital for 32 years, until he retired.
HBSP Product Number TCG143
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