Problem Statement
The US healthcare industry was facing considerable developments that would have a bearing on access to quality and affordable health care services between 1900 and early 2000. As information and biotechnology converged to improve medical outcomes, maintaining the desired standards became difficult during the product development process. In essence, it became a challenge for a single enterprise to possess the requisite skills to ensure a high degree of product quality.
A feasible option towards improving efficiency in the healthcare system called for partnership among the leading companies. The realization resulted in interesting alliances that would have ramifications on access to quality and affordable healthcare in the US. The development of alliances took place at a time when the US experienced a significant increase in healthcare expenditures amid an increase in complexity in the delivery of healthcare services. It was during such trying moments that the Global Healthcare Exchange was formed. The enterprise was formed with three goals in mind. The enterprise aimed at developing value-added products or capabilities enhance financial execution and facilitate the attainment of critical mass.
Key Players
The case study points out that increasing complexities and costs associated with the healthcare system called for a modification in the supply chain design to mitigate the escalating costs. Remarkably, the early 2000 witnessed an increase in entities that relied on information technology to redesign supply chain activities in the healthcare industry. However, by early 2003, there were very few players in the healthcare industry that had a considerable effect on the supply chain activities. Among the notable players was Neoforma, which was based in Santa California and launched in 1996 (Applegate & Ladge, 2003).
By early 2003, the single healthcare trading platform was functioning as a publicly-traded company. The enterprise presented supply chain resolutions to healthcare industry players. The firm attained commendable success in responding to challenges in the supply chain activities. Other significant players in the healthcare sector in the early 2000s include Broadlane, HealthNexis, and Medibuy (Applegate & Ladge, 2003). The enterprises played a vital role in enhancing success in supply chain activities. However, the enterprises could not respond adequately to increasing complexities in the delivery of healthcare services. Most of the firms opted for mergers and acquisitions to respond to challenges.
A unique set of players in supply chain activities in the health sector were group purchasing organizations (GPO). By definition, a GPO is an organization that enhances savings by accumulating procuring volumes and using influence to successfully bargain for discounts. The second category of unique players was Integrate Delivery Networks (IDNs). Essentially, the IDNs brought healthcare providers such as hospitals, clinics, and medical groups.
The IDNs aimed at attaining integrated management systems and operations that were geared towards improving efficiency and enhance access to specialized patient care. Other notable players included managed care organizations. The organizations embraced a method of dispensing and disbursing for healthcare services through a system of provider networks. The organizations were mandated with providing and financing health care services in the community.
Context of the Problem
The increase in intricacy and expenses of medication combined with higher consumer demands and regulatory controls had a significant bearing on the increased inefficiencies in the healthcare supply chain. Notably, the costs of healthcare were increasing at an alarming rate, which locked out a significant portion of the population from accessing quality healthcare. The increase in healthcare expenditures was attributed to the grander accessibility of medical products and services. For instance, the sales of prescription drugs raised from $12 billion in 1980 to over $122 billion in early 2000 (Applegate & Ladge, 2003).
It was forecasted that prescription costs would rise to more than $414 billion by 2011. Another factor that had an adverse effect on the cost of healthcare services was the mounting number of senior citizens eligible for Medicare.
Remarkably, by early 2000, such eligible citizens were 12 percent of the general population. It was further forecasted that by 2003 when the last cohort of the baby boomer generation would be attaining the age of 65, about 77 million Americans would be eligible for Medicare benefits (Applegate & Ladge, 2003). The case study points out that as the costs of healthcare increased at an alarming rate, there was a corresponding increase in the exigence for excellent care and customer service. The patients and healthcare providers had expectations of the timely availability of the right products and at affordable prices. The common perception among citizens was that healthcare was a public good, and errors could have devastating effects such as loss of lives.
Besides, an increase in government regulations had a negative bearing on the costs and time taken to develop new drugs and care routines. The case study further points out that regulatory costs and complexities varied globally as each country had a distinct set of requirements. An effective response to the increasing costs and complications in the healthcare industry was the formation of mergers and acquisitions that resulted in mega-healthcare manufacturers, wholesalers, and medical health providers.
Addressing the increase in costs and complexities of the healthcare industry is an issue of concern to all stakeholders, including organizations that are involved in the manufacturing, distribution, and provision of healthcare services (Applegate & Ladge, 2003). Addressing the challenges would create a conducive business environment for the stakeholders and improve access to quality and affordable healthcare. Failure to address the challenges would result in high costs of doing business that afflict access to affordable healthcare. Such a scenario would result in adverse health outcomes among the general population.
Analysis of Issues: Innovation and Future Prospects of GHX
The Global Health Exchange was formed as a response to the enormous pressure that was mounting on the healthcare system to guarantee efficiency in supply chain activities and, by extension, reduce costs associated with access to quality healthcare. GHX aimed at providing excellent supply chain administration and clinical expertise that would lower operation costs among players in the healthcare industry. The company aimed at relying on the internet to avail of a world-class distribution infrastructure that would enhance access to great quality, affordable, and supple distribution opportunities to the clients (Applegate & Ladge, 2003).
Driving down the supply chain costs would help control the increase in healthcare expenditures. In addition, the enterprise was committed to delivering the highest degree of customer service, which matched the expectations of clients on the timely delivery of quality healthcare products. GHX believed that responding to such issues would have a positive impact on health outcomes. The mission and vision of the enterprise would be embracing constant innovation to respond to the challenges in the delivery of quality and affordable healthcare.
Insight on the innovation capabilities for the enterprise points out GHX attained commendable success in the use of the internet to respond to challenges in the healthcare supply chain. Remarkably, early 2000 witnessed a surge in the internet healthcare marketplaces (Applegate & Ladge, 2003). However, the number of enterprises that relied on the internet to offer healthcare solutions decreased significantly within months as industry trends were a great blow to investor confidence in the profitability of internet businesses. The decline of the world economy also made it difficult for new entrants to succeed.
However, GHX embraced innovation to ensure it survived the tough economic times. Remarkably, the enterprise was keen on levering technology to avail a trusted, fair, and transparent marketplace without afflicting the activities of independent players in the industry (Applegate & Ladge, 2003). The approach made it possible for GHX to connect with several healthcare suppliers and potential buyers.
GHX continuously revolutionized its operations through innovation to ensure it attained the pillar of critical mass. The pillar was attained through strategic mergers with pivotal players in the industry. For instance, merged with Medibuy to link suppliers with a wide category of buyers. However, the realization of vital goals would not have been a success without aligning the operations of the mergers with company strategies. Notably, while the resultant enterprise had the capacity to link suppliers with buyers, there were limitations in the ability to auto-update catalogs for the different suppliers. In addition, there was a need to integrate the billing systems for GHX with that of respective suppliers (Applegate & Ladge, 2003).
The developments posed a challenge to the efficiency of relying on the internet to streamline supply chain operations in the healthcare industry. Addressing the challenges implied the company had to shift from being product-centric into customer-centric. It was resolving the new set of challenges that required new skills and capabilities at GHX. However, there were grave concerns among investors that addressing the premeditated objectives would put off the company from attaining a cash flow break before the end of 2003. The company acquired a software company that specialized in the development of online trading platforms.
The company developed software solutions that made it feasible to integrate operations, catalogs, and billing between suppliers, buyers, and other players in the healthcare sector. The developments augmented the development of value-added products and capabilities that yielded strong customer satisfaction. The enterprise also delivered on value-added service roadmap by improving content services, requisition process services, and contracting services. The company also merged with strategic partners in the healthcare industry to improve service delivery. The mergers were guided by principles that aimed at reducing costs in the supply chain activities. The company has attained remarkable success in reducing supply chain costs, which have, in turn, augmented access to quality and affordable healthcare services.
Future Prospects
GHX has an opportunity to improve supply chain activities in the healthcare sector. The capacity to improve costs relies on a strategic partnership between the enterprise and other key players. Notably, the partnerships will foster innovation in addressing healthcare challenges (Applegate & Ladge, 2003). Such partnerships will withstand challenges in the healthcare industry by conforming to the data ownership statement and principles that guided the establishment of the enterprise.
The enterprise should focus on how it can utilize the internet to facilitate collaborative commerce, which covers aspects such as automated bill presentment, online funds transfer, contract supervision, and examination and improvement on wireless access for services. Such innovations will reduce overhead costs in supply chain activities and, in turn, facilitate access to quality and affordable healthcare services.
Global Health Exchange should consider developing a predictive analytics tool that can empower the end-users. The approach will ensure the successful execution of all business operations and empower the users to make meaningful conclusions from available information (Wang, Kung, & Byrd, 2018). The introduction of machine learning technologies will empower Global Health Exchange to recognize vital trends in its operations. An evaluation of the patterns could inform on the aspect of the operation that requires improvements. Such an approach will promote efficiency and productivity which will enhance the quality of experience for consumers and other stakeholders.
Remarkably, Global Health Exchange should be keen on the adoption of predictive analytics tools. The enterprise should consider adopting analytics tools that do not extensive knowledge of statistical packages (Wang, Kung, & Byrd, 2018). It should target analytic tools that are relatively simple to use and that do not require several steps in their utilization. Ideally, the predictive analytic tools should be streamlined with different stages of operations for Global Health Exchange. Such an approach enhances the likelihood of attaining data with higher accuracy from the operations of the enterprise. A prudent adoption of predictive analytics and machine learning technologies will augment efficiency in operations and handling of healthcare information.
GHX should consider adopting a leadership approach that promotes innovation in the operations of the enterprise. The leadership should consider designing an innovation policy that is promoted throughout the organization. It should be communicated to employees of all levels.
The leadership ought to include aspects of heterogeneity in the formation of the teams (Barsh, Capozzi & Davidson, 2008). Besides, it will be necessary for the management at GHX to promote a team climate of emotional support, safety, respect, and shared decision-making to foster innovation in the operations of the enterprise. An approach to confer individual teams the autonomy to make decisions and solve problems would also promote innovativeness in the operations of the team
Innovation and innovativeness in addressing the challenges that GHX may face calls for placing emphasis on the adaptors spectrum. For instance, it could rely on Kirton’s creative style of facilitating creativity. The partners of GHX would produce sufficient ideas on addressing challenges in the operations once they have agreed on a proper definition of problems. The approach will offer them an opportunity to brainstorm feasible solutions. Generated ideas will help improve the operations of the enterprise only when they are in line with the objectives of resolving shared challenges.
Notably, an approach to rely exclusively on the innovator’s spectrum could deter the enterprise from attaining a higher degree of operational efficiency. Most innovators are more likely to reconstruct the problem and challenge any underlying assumptions in the bid to emerge with a much lesser expected solution (Barsh, Capozzi & Davidson, 2008). According to Kirton’s innovation spectrum, innovators are less concerned with doing things better but place focus on doing things differently. The GHX management should consider emphasizing the adaptor’s spectrum to attain a higher level of productivity whenever resolving any challenges that hinder operational efficiency.
Reference
Applegate, L. M., & Ladge, J. (2003). Global Healthcare Exchange. Harvard Business School.
Barsh, J., Capozzi, M. M., & Davidson, J. (2008). Leadership and innovation. McKinsey Quarterly, 1, 36.
Wang, Y., Kung, L., & Byrd, T. A. (2018). Big data analytics: Understanding its capabilities and potential benefits for healthcare organizations. Technological Forecasting and Social Change, 126, 3-13.