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Children’s Hospital of Philadelphia: Network Strategy Essay

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Updated: Aug 14th, 2020

In the harsh economic circumstances, hospitals need to apply the best network strategies to survive and remain profitable. One of the best examples of applying a network strategy was presented by the Children’s Hospital of Philadelphia (CHOP). Before 2009, CHOP did not differ much from the alike healthcare facilities. It had two major competitors: Nemours/Alfred DuPont Hospital for Children and St. Christopher’s Hospital for Children, and also some regional and suburban competitors (Porter, Daly, & Dervan, 2011). However, in 2009, CHOP employed a new network which became the biggest in the US concerning admissions as well as outpatient visits (Porter et al., 2011). Due to the implementation of this network, CHO became able to add value for its patients and achieve a reasonable profit margin. However, it still had some difficulties such as spreading too thin across the market.

Adding value to healthcare delivery requires an integrated strategy that enables the hospital to provide a full range of operations. In the case of CHOP, this range included the following major options: a cardiac center, a sickle cell center, a center for hemostasis and thrombosis, a center for inflammatory bowel disease, and an asthma program (Porter et al., 2011). Additionally, the added value was realized through reimbursement programs for the customers. Currently, CHOP manages three essential strategies that allow it to own a leading position among healthcare facilities in the country and provide added value for the patients. The first of such methods is an extended regional network offering a variety of procedures and services. Thus, CHOP has thirty primary care satellite offices and nine specialty care center which provide surgery and same-day procedures tests (Tully, 2013). The second strategy is concerned with a special approach to the delivery of newborns – CHOP performs highly complicated procedures allowing to perform operations on a fetus and save infants’ lives. The third core strategy CHOP is the employment of its innovations by increasing its venture capitalist efforts (Tully, 2013). These policies make CHOP a perfect platform for adding value for the customers.

Apart from suggesting various benefit programs for its patients, CHOP also takes care of maintaining the profit rates. Despite being a non-profit organization, CHOP was able to achieve and keep a reasonable profit margin. Its annual revenues reach nearly $2 billion, around 85 percent of which comes from customers and 8 percent – from federal research funds (Tully, 2013). These $2 billion allow CHOP to compensate all expenditures connected with wages and rent. Moreover, the hospital also contributes $55 million to the research and covers $74 million in uncompensated care (Tully, 2013).

CHOP is currently spread too thin across the market because its network is still in the process of development, and before spreading further, the organization needs to achieve the goals it set. However, CHOP is developing a partnership project with the healthcare network VPS, which is based in the United Arab Emirates (Lurye, 2016). The purpose of this program is to assist in the enhancement of child healthcare in the Middle East.

With its thoroughly developed network strategy, CHOP was able to become a leading child healthcare facility in the US and is an example for similar organizations all over the world. Being able to provide added value for patients and maintain a reasonable profit margin, Children’s Hospital of Philadelphia gives hope for the establishment of affordable healthcare for millions of people.

References

Lurye, S. (2016). . Philly Voice. Web.

Porter, M. E., Daly, C. A., & Dervan, A. (2011). The Children’s Hospital of Philadelphia: Network Strategy. Harvard Business School.

Tully, S. (2013). . Fortune. Web.

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