Find the mission and values statements for four different hospital types. Do their missions and values reconcile with your expectations for the type of organization? Look at a religiously based organization. Do their mission and values reflect their religious teachings and mission? Now examine a for-profit hospital. Do their mission and values include the need to increase their owners’ value and maximize their earnings? Why do you think the missions and values are structured as they are?
Valley General Hospital: “Working together, we exist to serve the changing health care needs of our community. We will provide personalized patient care known for quality and excellence with a healing environment through caring relationships.” This mission statement identifies its competitive edge as personalized care but does not state how it will achieve it. It does not also state the boundaries that it intends to operate under, as well as uses vague terms such as caring relationships. For a public institution, the statement does well in stating the intention to collaborate with others to offer service that meets changing community healthcare needs.
Stony Brook University Medical Centre: “Stony Brook University Medical Centre improves the lives of our patients, families, and communities, educates skilled healthcare professionals, and conducts research that expands clinical knowledge.” Precise and states the objectives of the hospital, the market segment that it intends to serve, and how it intends to serve it. It, however, fails to mention the institution’s values. As a medical center, the institution clearly states its commitment to medical research.
Novartis: “To improve patients’ lives by providing customers with innovative science and differentiated healthcare solutions delivered by diverse and engaged talent with integrity, passion, and focus on performance.” The statement precisely states how it intends to deliver its service to the community. It also identifies the market segment it intends to serve. The company values are talent, integrity, and passion for work. As a pharmaceutical company mission statement is clear on the company’s intentions to provide healthcare solutions.
St. Vincent Charity Medical Centre: “Faithful to the philosophy and heritage of the Sisters of Charity of St. Augustine, the St. Vincent Charity Medical Centre family is committed to the healing mission of Jesus. As Caregivers, we serve with: a deep respect for the dignity and value of all persons; our practice of quality care; our dedication to the poor; and, our commitment to education.” It identifies the values and objectives of the institution it intends to meet.
It is also clear on the market segments it intends to serve. However, it fails to identify how it intends to achieve those objectives. As a catholic based hospital, the institutions are very clear on its intentions to include Christian faith and philosophy as part of its healthcare solutions. The mission statement also focuses on the teachings of Sisters of Charity of St. Augustine as the basis of its doctrine.
Tenet Healthcare Corporation: “Quality is our mission, and it shows. At Tenet, our business is health care. Our mission is to improve the quality of life of every patient who enters our doors.” Being a for-profit organization, the mission statement mentions its intentions of making quality healthcare as a business. However, it does not state how it intends to achieve its business objectives. It also does not identify its market segment it intends to serve. It also fails to show how it intends to maximize profits from its healthcare services.
Health care in the United States has been traditionally a mixture of not-for-profit and for-profit organizations. Do you think that markets where more for-profit firms exist would be inherently more competitive? Why or why not?
In the United States of America, healthcare is varied with for-profit and not-fro-profit organizations being set up to offer healthcare. For-profit healthcare organizations were established in the 1980s. These types of institutions are advantageous over nonprofit organizations to the country for several reasons. For-profit organizations have a strategic advantage and positioning in the market. As compared to not-profit organizations, for-profit organizations are established on a ‘win-loose’ basis.
In this case, they have to compete effectively with competitors or lose market share. Suffice to say that such completion results in specialized services and further research, which leads to the advancement of healthcare services. Furthermore, any organization must generate profit from its activities to sustains its operations.
Business models describe four components of how an organization is organized. They can show comparative differences in a competitive analysis. What is the relationship between strategy and business models?
A business model is a strategy that comprises the key components of any organization. In healthcare organizations, business models constitute key elements such as customer value, inputs, profitability, and business processes. With time healthcare organizations have to change their business model components to accommodate new industry challenges most of which are brought about by new technologies. For healthcare organizations to be strategically placed in the market, they must keep changing their business model components to help them gain market advantage.
An important aspect of strategic planning is analyzing the internal and external environments. Recently, a large organization completed its environmental analyses only using a very extensive SWOT process. They then used the strengths, weaknesses, opportunities, and threats generated by this process as their environmental analysis. What would be the value of using this technique only? Should other methods also be used? How could data trends be used?
SWOT analysis is the most effective tool that helps the members of the organization understand and assess all the aspects of the organization’s performance. Other than helping the organization identify its opportunities for growth, SWOT techniques are also useful because they are easy to set off and are all-inclusive (involve many participants and stakeholders). There are other strategies that are available for use by healthcare organizations. They include generic strategies that involve the establishment of low-cost services and products as well as the differentiation of these products and services. Healthcare can also use data trends effectively to improve its healthcare services. This can be attained by using demographic data to strategize how to meet cultural and demographic healthcare needs.
There are many firms that have positioned part or all of their products at a low cost. Low costs are also commonly thought to equal low prices. Are low costs necessarily the same as low prices? Could a firm have low costs and still have high prices?
One of the strategies for establishing organizations’ effectiveness is low costing. Healthcare organizations, concerned with healthcare needs, have to combine low cost with quality services. Healthcare organizations that position themselves as low-cost providers find themselves not attracting desirable clients for profitability as healthcare consumers connect low cost and low quality. However, low cost should not be confused with low pricing. Healthcare service maybe low cost yet not be low priced. Consumers of healthcare products who have insurance policies are cushioned from the high cost of these services. As such firms could still have a low costs but high products and services such as plastic surgery.
Large pharmaceutical companies have prospered by owning their discovery, production, and marketing assets and have traditionally made significant portions of their profits from a small number of “blockbuster” drugs. How is the pharmaceutical companies’ business model predicted to change? What are the forces that are influencing this change?
The current business model in pharmaceutical involves undertaking all activities involved in its line of business. This involves doing everything from scientific research, marketing, trials of drug prototypes among others. The model resulted in pharmaceuticals releasing blockbuster drugs, which generated the company enormous profits. However, this type of business model is changing as there have emerged multiple drug companies resulting in multiple drugs, for any significant profit.
In the future, pharmaceuticals will have to limit their activities to any of the core activities. Furthermore, profit generation will not be through direct sales but negotiated deals, especially with healthcare insurance companies. The change in business model has been influenced by the latest technological changes that allow easier access to services. Furthermore expanding the number of pharmaceuticals has played a major role in the change of business model.
Porter recommends generic strategies of low cost or differentiation. Is it possible to obtain both at the same time? In health care, is low cost a reasonable strategy? If so, in what circumstances might this be an acceptable strategy?
Differentiation in healthcare provision involves offering unique products and services to consumers. Low costing involves offering a multitude of services at a low cost. In healthcare, it has been proven that most of the consumers of healthcare prefer quality at a high price. It is therefore not necessary to obtain the two simultaneously. Low cost is usually seen as a reasonable strategy in the provision of healthcare services. Low cost does not attract the most desirable clients because of quality issues connected with low-cost healthcare. However, it is reasonable as it enables the provision of a wide variety of healthcare services. Furthermore, low-cost healthcare is affordable to the majority of consumers as it is supported by health insurance.
To sustain a competitive advantage, an organization must have valuable resources, endure over time, are hard to imitate, and are difficult to find substitutes for. What are some of the common resources in health care that could convey a sustained competitive advantage? How do these differ for the different segments of the health care industry: For hospitals, Insurance companies, Pharmaceutical companies, Equipment manufacturers?
A fully competitive health care institution normally has at its disposal several resources. They include tangible assets (building, equipment, personnel) and intangible assets such as organizational culture and tacit knowledge. While tangible assets are can be replaced with ease, intangible resources cannot. Organizational culture helps a healthcare organization to build a set of unique products and services which result in a healthcare organization gaining a competitive advantage. These resources differ from one segment of healthcare to another. Pharmaceuticals can gain a competitive advantage if they use new and patented drugs. Hospitals may gain an advantage by employing specialists in various fields that offer unique services.
Under what circumstances would you agree with someone who said that alliances are very risky?
Establishing an alliance between healthcare providers is encouraged. However, in certain circumstances such alliances are risky. Links through which these alliances are established are very delicate. They expose parties to major risks that other collaborating partners will be hard-pressed to collaborate effectively. When organizations that have entered in an alliance fail to disambiguate their basic comparisons, this exposes them to risk.
What dimensions would you use to classify the various types of strategic alliances? Why those dimensions?
Alliances can be classified into several dimensions. They include several member alliances where two or more members are involved. This type of alliance encourages diversity where more members for the alliances. Another dimension is governance structured collaborations. Governance structures of different alliances form an alliance of their own by incorporating a member from each of the individual alliances. This type of alliance is crucial in philanthropic work. There are also mandated versus voluntary alliances where organizations are compelled by an external legal authority to ally. This type of alliance is useful as it ensures legal compliance amongst members.
Which alliance motivations do you think are the most compatible with each other?
Organizations intending to establish alliances must understand their strategic intentions to make the alliances effective. Several motivations must be present to ensure that the partners are compatible with each other. These include an in-depth understanding of one’s owns allied partner. For compatibility, an alliance must be motivated by an explicit mission statement as well as understanding the intentions of each of the collaborating partners. Organization forming alliances must also be motivated to attain the purpose of that alliance.
What do you consider to be the likely stages of strategic alliance development? Does every alliance have to go through each stage?
A successful alliance is developed through a series of strategies. Alliance formation begins by finding alliance partners. Organizations with similar ideals and intentions must be identified to be incorporated into the alliance. The transition stage follows, where the alliances establish the most effective mechanism for making decisions. Partners are allocated their share of control. If the alliance successfully goes through the transition stage, it enters into the maturity stage. This is the stage through which the attainment of objectives is the major preoccupation of such organizations. This is coupled with keeping members committed to the alliances. After maturity alliances move on to critical crossroads, a point where they become too independent and individual partners start to feel the weight of alliance. At this point, it is usually crucial to maintain a mechanism for establishing collaboration while maintaining individual autonomy. This is intended to strengthen the alliance.
What is the difference between an alliance problem and an alliance symptom, and what does this difference mean in terms of managerial intervention?
Most of the alliances fail because they do not differentiate between a problem and a symptom. An example of a problem in healthcare alliances includes a situation in which a partner fails deliberately to collaborate with others to benefit alone. Another example of problem may involve the inability of an alliance to form a set of rules and norms that govern that alliance. Symptoms are signs that the alliance is not progressing well. In this scenario a symptom may involves explicit exhibition of non compliance with other members. Alliance managers must move with speed to intervene to save the alliance by clearly establishing the boundaries between the symptom and the problem and dealing with the problem rather than the symptom.
When can you tell if your partner is not likely to have a cooperative orientation?
In forming an alliances there are a various types of partners involved in. The success of alliance depends on the ability to identify if the partner has competitive tendencies or not. To establish the partner’s corporative orientation, one needs to critically analyse the partner’s behaviour early on during the emergence stage. Early characteristic must be noted to establish the intentions of the type of an alliance that the partner is interested in. These signs include evaluating the partner’s strategic goals. Vigilance must be established throughout to identify if cooperative orientation partners orientation shifts.