2/13/19

What is
Business Strategy
for a Hospital

Growth Strategies

Thinking Strategically
• Where are we now?
(Assessment)
• Where do we need to be?
(Gap / Future End State)
• How will we close the gap
(Strategic Plan)
• How will we monitor our progress
(Balanced Scorecard)

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Elements of Strategy
Scope
What business are we in
Goals and Objectives
Key performance measures
Resource Allocation
Priorities and budgets
Competitive Advantage
Strengths relative to competition
Synergy
Integrate and reinforce resources

Decision Logic of Strategy Formulation

Strategy Formulation Strategy

Implementation

Directional Adaptive Market Entry Competitive Implementation

Strategies Strategies Strategies Strategies Strategies

Ends Means

Ends Means

Ends Means

Ends Means

Strategic Thinking Map-

Hierarchy of Strategic Decisions and Alternatives

Directional Adaptive Market Entry Competitive Implementation

Strategies Strategies Strategies Strategies Strategies
Expansion of Scope • Purchase Strategic Service
•Diversification • Acquisition Posture Delivery
•Vertical Integration • Licensing •Defender •Pre-service
•Market Development • Venture •Prospector •Point of Serv
Mission •Product Development Capital •Analyzer •After-service
•Penetration
Vision
Contraction of Cooperation Positioning Support
Values Scope • Merger Market wide
•Divestiture • Alliance •Culture
Goals •Liquidation • Joint •Structure
•Cost leadership
•Harvesting Venture •Strategic
•Retrenchment
•Differentiation
Resources

Maintenance Scope Development Sgmnt wide Unt Action Plan

•Enhancement • Internal devp Cost leadership •Objectives
•Status Quo • Intrl Venture Differentiation •Timelines

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Mission Vision Values and Goals

guide manager when they make key organizational decisions.

• Mission attempts to capture organization's

distinct purpose or reason for being.
• The vision is the organization's hope for the future.
• Values are the principles that the organisation
will not compromise while achieving its
mission or vision
• The strategic goals are those overarching end
results the organization pursues to accomplish its
mission and achieve it vision.

What is our business ?

what is the reason for our existence ?

To make money
Although that may be the ultimate
objective but it is not their
raison d’etre.
The mission statement identifies what
the firm stands for and its basic
operating philosophy.

Mission Statement
For example mission statement of Kodak
is to provide
“customers with the solutions they need
to Capture Store Process
Output and Communicate Images
Anywhere Anytime.”
In other words Kodak exits to provide
Imaging solutions to customers.

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Kodak Digital Camera

What SBU type in the BCG growth-share matrix?

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Kodak Digital Photo Printer

What SBU type in the BCG growth-share matrix?

Mission Statement
Ford motor company describes it self as a
company that is

“passionately committed to providing

Personal Mobility for People
Around the World ”
In short ford exists to satisfy customer
needs for personal mobility
That is its mission

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Mission Statement
Both the missions focus on the customer
needs that the company is trying to satisfy
rather than the particular products
Imaging solutions
and personal mobility

rather than conventional

Films or Cameras and Automobiles

Mission Statement
These are customer oriented rather
than product oriented missions.

The Bellevue Hospital

The Bellevue Hospital
with
Respect Compassion Integrity & Courage

honors the individuality and confidentiality

of our Patients Employees And Community
and

is progressive in anticipating and providing

future health care services.

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Mission Statement of MedCath

Improve clinical outcomes for

cardiac patients through a
physician driven, patient
focused Approach.

Mission Statement of Mayo

Clinic
Mayo will provide the best care to
every patient every day
through integrated clinical practice,
Education and research.

VISION HAS FOUR COMPONENTS

“Become a $125 billion company by year 2000”

Fundamental aim “Crush Adidas”

“Become the company most known for changing

the world-wide poor quality image of Japanese
products”

Vision Core Strengths “To deliver quality second to none in premium

automotive market worldwide”

“To be best entertainment company in Australia

Focus and the Pacific Basin”

“Become the dominant player in commercial

Envisioned Future aircraft and bring the world into the jet age”

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The Strategic Planning Process

Goals and Objectives
• Goals are broad objectives are narrow

• Goals are general intentions objectives are precise

• Goals are intangible objectives are tangible

• Goals are abstract objectives are concrete

• Goals can't be validated objectives can be

validated

Beyond

Recruitment
Strategy
Purpose
Recruitment

Structure process
Selection

System people

Adaptive Strategies

Expansion
• Diversification
• Vertical Integration
• Market Development
• Product Development
• Penetration
Contraction
• Divestiture
• Liquidation
• Harvesting
• Retrenchment
• Outsourcing

Maintenance
• Enhancement
• Status Quo

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Expansion of scope
• Diversification
• Vertical Integration
• Horizontal integration
• Market Development
• Product Development
• Penetration

Growth Strategies
• Diversification: A strategy to grow by selling a new
product to a new market.
• Backward integration: a step back (up) in the value-
added chain toward the raw materials.
• Forwards integration: a step forward (down) on the
value-added chain toward the customers.
• Horizontal integration: occurs at the same level of
the value-added chain but simply involves a different,
but complementary, value-added chain.

Horizontal Integration
Single-Industry Strategy

Horizontal Integration:
the process of acquiring or merging with
industry competitors in an effort to achieve
the competitive advantages that come with
large scale and scope.

Staying inside a single industry allows a

company to

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Diversification
•Related diversification
– Entry into new business activity based
on shared commonalities in the
components of the value chains of the
firms.
•Unrelated diversification
– Entry into a new business area that has
no obvious relationship with any area of
the existing business.

Growth
Strategies

Strategy Corporate Hospital

Business Strategies Business Strategies
• Specialties • Ambulance service
• Accreditations • Easy billing and
• International patients discharge
• On Line appointments • Excellent diet for patients
• Facilities • Safety gadgets
• Our Partners • Attendants stay facility
• Executive Health • Patients record
• Dr. ----- • Attachments with firms
• Primary chain hospitals • In house all the
procedures
Best of physicians, Pleasant Staff, Robust Process, quality treatment
Blogs, E wom,

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Corporate Hospital strategy

Diversification Business Strategies
• Teaching hospital • Hospice services
• Yoga classes • Social responsibility
• Satellite Health centers • High impact research
• Sports centers • Aerobics Center
• Nursing colleges
• Fitness Center
• Pharmaceuticals
• Franchise hospitals
• Insurance
• Medical tourism • Clinical trial center
• Home care • Contract Research

Best of physicians, Pleasant Staff, Robust Process, quality treatment

Blogs, E wom,

Related and Unrelated Diversification by a Primary Provider

Physician
Group
Ambulatory
Hospice
Care

Diagnostic Long-term
Lab Care

Radiation Home
Treatment Hospital Health

Outside the Health Within the Health

Care Industry Care Industry

General environment Health Care Environment

•Restaurants •Pharmaceuticals
•Health and fitness •Medical Supplies
•Parking lots •Insurance
•Shopping Centers •Managed Care
•Office Building •Medical Schools
•Laundry •Others
Related Diversification
Unrelated Diversification

Patterns of Vertical Integration Among Health Care Organizations

Upstream Strategic Business Unit Downstream

A B C D E F G
No integration 1

2
Total integration

Vertically integrated 3
Upstream

Multi-hospital
4
Vertically integrated

Closed System 5

A = Wellness/health promotion unit

B = primary care unit Solid lines depict fully
C = urgent care unit Internal transfers
D = hospital (inpatient acute care) unit
E = skilled-nursing unit
F = rehabilitation unit
Dashed lines depict market
G = home-health unit And external transfers

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Hospital chains adopt diverse

growth strategies
The country’s largest hospital chain
Fortis is sharpening its focus on the
domestic market.

Apollo and Manipal

are eyeing both domestic and overseas
opportunities in the mainstream
hospital businesses and related areas.

Contraction Strategies

• Divestiture - operating strategic unit (or

entire business) is sold as a result of a
decision to permanently and completely
leave the market.

• Liquidation - selling the assets of an

organization, which cannot be sold as a
viable and operational organization (assets
still have value, but not the business).

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Contraction Strategies
• Harvesting - reaping maximum short-term
benefits riding a long-term decline in the
market.
• Retrenchment - response to declining
profitability usually brought about by
increasing costs - needs redefinition of
target market, selective cost elimination,
and asset reduction.
• Outsourcing - Involves not performing
certain value chain activities internally and
relying on outside vendors to perform
needed activities and services.

Stability – Maintain the Portfolio

• Rapid growth outstripped financial and

managerial resources
• Difficulties in assimilating recent portfolio
additions
• Some current SBUs may have serious
financial or operational problems
• No attractive acquisition opportunities
available

Restructuring:
Contraction of Scope
Why restructure?
– Pull-back from over diversification.
– Attacks by competitors on core businesses.
– Diminished strategic advantages of
vertical integration and diversification.

Contraction (Exit) strategies

– Retrenchment
– Divestment– spinoffs of profitable SBUs to investors;
management buy outs (MBOs).
– Harvest– halting investment, maximizing cash flow.
– Liquidation– Cease operations, write off assets.

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The Main Steps of Turnaround

• Changing the leadership
– Replace entrenched management with new managers.
• Redefining strategic focus
– Evaluate and reconstitute the organization’s strategy.
• Asset sales and closures
– Divest unwanted assets for investment resources.
• Improving profitability
– Reduce costs, tighten finance and performance
controls.
• Acquisitions
– Make acquisitions of skills and competencies to
strengthen core businesses.

Strategic Alliance

Firm A Firm B
Resources Resources
Capabilities Capabilities
Core Competencies Combined Core Competencies
Resources
Capabilities
Core Competencies

Mutual interests in designing, manufacturing,

or distributing goods or services

Strategic Alliances

• vertical complementary
Technological Development

strategic alliance is formed

Human Resource Mgmt.
Support Activities

Service
Firm Infrastructure

Marketing & Sales

between firms that agree
Procurement

Outbound Logistics
Operations
to use their skills and
Vertical Alliance

Inbound Logistics

Primary Activities
capabilities in different
Supplier stages of the value chain
to create value for both
firms
Technological Development
Human Resource Mgmt.

• outsourcing is one
Support Activities

Service
Firm Infrastructure

Marketing & Sales

example of this type of

Procurement

Outbound Logistics

alliance
Operations
Inbound Logistics

Primary Activities

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Strategic Alliances
Buyer Buyer
Potential Competitors
Technological Development

Technological Development
Service Service
Human Resource Mgmt.

Human Resource Mgmt.

Marketing & Sales Marketing & Sales
Support Activities

Support Activities
Firm Infrastructure

Firm Infrastructure

Outbound Logistics Outbound Logistics

Procurement

Procurement
Operations Operations

Inbound Logistics Inbound Logistics

Primary Activities Primary Activities

• horizontal complementary strategic alliance is formed between partners

who agree to combine their resources and skills to create value in the
same stage of the value chain
• focus on long-term product development and distribution opportunities
• the partners may become competitors
• requires a great deal of trust between the partners

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