Running head: STRATEGIC MANAGEMENT OF HEALTHCARE ORGANIZATIONS 1

Strategic Management of Healthcare Organizations

Steven Zhang

University of San Diego

Professor Cheri Pope

8/26/2019
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Step One: Setting the stage

Kaiser Permanente (KP) was started by Dr. Sidney Garfield and businessman Henry J.

Kaiser in 1945. Originally, Kaiser Permanente was a healthcare system only catered to Mr.

Kaiser’s construction, shipyard, and steel mill businesses during the 1930s and early 40s. In July

1945, Kaiser Permanente officially started as the healthcare organization we know today.

Currently, Kaiser Permanente spans nine states (Hawaii, California, Washington, Oregon,

Colorado, Georgia, Maryland, Oregon, and Virginia) and the District of Columbia across the

continental United States. They are split into eight regions: Northern California, Southern

California, Colorado, Georgia, Hawaii, mid-Atlantic, Pacific Northwest, and Washington. With

39 hospitals, 697 medical offices, employing nearly 300,000 employees and offering coverage to

more than 12.3 million members. Kaiser Permanente is the largest HMO network in the United

States (Who We Are 2019)

Each Kaiser Permanente region is split into three entities- Kaiser Foundation Health

Plans, The Kaiser Foundation Hospitals, and The Permanente Medical Groups (TPMG). Kaiser

Foundation Health Plans (KFHP) is a not-for-profit that offers support to employers and

employees regarding prepaid health insurance. This includes hospitals and general infrastructure

support between medical insurance and the services provided by the Kaiser Foundation

Hospitals. The Kaiser Foundation Hospitals (KFH) is the second not-for-profit corporate owns

and operate the community hospital and outpatient facilities (Kaiser Permanente Manage Care

Program 2018). This entity is the face of the organization. The third and final entity of the Kaiser

group is The Permanente Medical Groups (TPMG), which is the only for-profit entity. TPMG is

owned by a corporation of physicians that have worked for Kaiser. Physicians can join this group
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after three years of service within the Kaiser foundation hospitals (Kaiser Permanente Medical

Group).

For organizational wide strategic directions to be successful, organizations must involve

stakeholders from all parts within the organization. Not only does the executive team, the board

of directors, the medical board, and the strategic management group need to be involved, but also

stakeholders from all corners of the organization such as patients, community members, and

even vendors.

The strategy department is expected build a system to collect feedback and data from

Kaiser stakeholders. The data is collected and then presented to the strategic team. Certain

stakeholders from various departments will be invited to participate in the planning process to

offer their perspective.

A minimum of one year is needed from initial research to implementation approval.

Additional time will be needed to follow up and ensure accountability and progress. Three to six

months would be needed to collect to schedule, organize, collect and analyze the data from

stakeholders throughout the KP organization. The actual strategic process may take an additional

three to six months. Once the general direction has been established, realistically it will need

another three months to build out the implementation infrastructure in order to meaningfully

measure the progress.

The planning assumption and mandate for this exercise is that we are reevaluating KPs’

mission and vision are in alignment with current state of the organization. Restructuring of the

regions will be out of scope for this strategic planning session.

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Due to the nature of their position, the executive team and the board of directors will be

the final members to approval or make recommendations to the strategic management team.

Directional strategic cannot go forward until approval is made by all three groups.

The Strategic Management team: Is the primary driver of the strategic meeting process.

They are responsible for building the infrastructure, leading meetings, and helping KP identify

and refine the process. The management team is responsible for preparing the report for the final

approval.

Various stakeholders within the KP organization: They are responsible for providing data

and their perspective from their point of view. They work with the strategic managers to

correctly identify the strengths and weakness of the KP.

Step two: Doing your homework

KP is the largest HMO health care providers in the country. The company is quickly

expanding from the west coast to the rest of the United States. Its unique for-profit and non-

hybrid business model differentiates KP from its competitors. Their HMO’s healthcare system

allows greater control of their financial and operational control. Below is a SWOT (Strengths,

Weakness, Opportunities, and Threats) (Ginter) to give a high-level overview of KP’s current

situation.

The strengths of KP are its Kaiser’s size and financial capital. They have the resources to

invest in any projects of their choosing. The KP brand is well respected on the west coast and

they are one of the pioneers in healthcare with their HMO business model. They are also one of

the best companies to work for according to glassdoor.com- with a rating of 4.2 out of 5 out of

6700 plus reviews (Kaiser Permanente Reviews).

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           Weaknesses of KP is that the organization is hindered by policies and ‘red tape’ it’s

ability to make rapid adjustments and is slow due to its size. With so many internal and external

stakeholders, decisions making speed is hindered because decisions made need to benefit most if

not all stakeholders. Due to its size, any negative incidents quickly garner the addition of the

press. KP would need to allocate resources and human-power to address those negative concerns.

KP have opportunities for the remainder of the United States as they are not yet a

nationwide healthcare organization. Additionally, KP can also acquire healthcare startups, in

which they can create a subdivision that targets patients that wants something more than the

traditional HMO/PPO experience. KP has the resources to lobby at the nation’s capital to

promote rules and regulations that would help both the patients and KP.

Threats to KP are the baby boomers coming into retirement age. This influx of new

patients will strain KP’s infurstrture. Additionally, the current political system is creating new

regulations on how healthcare organizations operate, forcing healthcare organizations to adapt to

new rules- resulting millions of dollars. Lastly the threat of data breeches is an immense concern.

Due to the size of KP, a single breach could affect millions of patient and staff.
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SWOT Analysis Table of Kaiser Permanente

 
Internal Factors External Factors
Positive Strengths Opportunities
 Unique business model  Continental United States
 Well-funded expansion
 Leading healthcare  Acquisitions of healthcare
provider Startups
 Brand recognition  Lobbying for healthcare
rules and regulations.

Negative Weakness Threats

 Many stakeholders, slow
decision-making process
 Large size, slow to react
to rapid changing
healthcare environment.
 Bureaucratic Red Tape
 Baby boomer generation
close to retirement age-
may overwhelm KP’s
capacity for proper care
 Changing federal
government landscape
 Cyber security threats

KP is to continue their expansion into the United States. Additionally, should invest in

cyber security and streamline operational processes to improve efficiency. Kaiser should also

investigate healthcare startup in order to find acquisition opportunities. Lastly, Kaiser should

develop contingency plans to ensure the influx of baby boomer patients will not overstress the

capacity of KP hospitals.

Step three: Describe our culture

Successful organizations around the world have clear and concise vision and mission

statements. Kaiser Permanente (KP) is no exception. What we aim to do now is to enhance KP’s

vision and mission statement by adding an institutional business plan, an institutional purpose,

and finally an institutional value.

Currently, according to the company website, Kaiser Permanente’s vision and mission are as

follow: “Vision: We are trusted partners in total health, collaborating with people to help them

thrive and creating communities that are among the healthiest in the nation. (Who we are)
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Mission: Kaiser Permanente exists to provide high-quality, affordable health care services and to

improve the health of our members and the communities we serve.” (Who We Are)

Kaiser plans to reach their vision by using their mission statement. KP’s mission

statement is the roadmap to the vision destination. Kaiser plans to reach the vision of becoming

partners in total health by providing high-quality care at affordable prices. This suggest that

Kaiser will provide high-quality care to all it’s members at affordable prices but does not imply

that they are the best quality care nor the most affordable healthcare option. This gives Kaiser

options depending on the condition of the healthcare marketplace. The second part of the mission

statement implies that Kaiser would improve the health of our members and the communities we

serve, meaning that their primary objective is to take care of their members first and their

respective communities. This could imply both hospital care and public health initiative for

preventable disease. Kaiser Provides different levels of membership to the public in an all-

inclusive setting. This allows members the ability to see their primary care physician, get their

blood test and fill their medication all in one place. Kaiser is a full-service healthcare

organization that range from yearly checkups to major surgeries.

Kaiser Permanente’s values are their commitment to quality and safety in patient care.

Reports measuring quality and safety of patient care is done frequently and the results are open

access for all to see and review. Kaiser also values the privacy of their members seriously and

have set up procedures and various ways to protect your privacy.

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Step four: Identify the strategic areas/Framing the questions

Strategic Concerns:
After the SWOT analysis and data collected from stakeholders throughout the KP

organization, the strategic management team can create a stakeholder map to give a high-level

overview. The stakeholder map visually demonstrates the interdependency of KP and its

stakeholders- how events and decisions from one area can affect various others in various ways.

Thus, by having this visual aid, strategic decisions can be made that will benefit all stakeholders

Stakeholder Map of Kaiser Permanente

Professional and
Shareholders Contract Agencies Patients
Clinical Staff

Federal, state, and Medicare, Medicaid, Community Professional

local regulations Insurance Organizations Associations

Community Supplies/Medication
Governing Board Local Communities
Organizations Vendors

Medical Board Executive Team

Kaiser Permanente (KP)

There are three critical weaknesses that KP should address to ensure competitive

advantage over the competition.

1. Many stakeholders, slow decision-making process

2. Large size, slow to react to rapid changing healthcare environment.

3. Bureaucratic Red Tape

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All three issues are comprehensive because it covers the entire landscape of the

organization from Hawaii to the East coast. All three of these weaknesses are true across all

seven Kaiser Permanente markets from Hawaii to Maryland.

Slow decision-making process: Due to the size of the KP and the sheer number of

stakeholders involved, it takes a tremendous amount of coordination and resources for

stakeholders to get together and make decisions. The process itself may bog down due to lack of

facilitation- negations can take weeks if not months and costing the organization a considerable

amount of time and resources. Thus, it is important to have plans and other strategies to ensure a

smooth and effective decision-making process within the KP organization.

Inability to adapt to the changing healthcare environment: KP’s ability to adjust to the

everchanging healthcare landscape is hindered due to its large size. Even if decisions are made

quickly, the amount of planning, testing, and implementation can take a considerable amount of

time before reaching to the patient level. This will create opportunities for more agile

organization to quickly grab market share in emerging healthcare markets.

Bureaucratic Red Tape: One of the side effects of a large organization is the growth of

bureaucratic red tape. Overly complicated and/or redundant procedures to complete simple tasks

hurts moral, employee initiative, and the creative process. This is another area in which strategies

should be developed to streamline current operational processes. The potential cost savings

associated with better operational processes can potentially save KP substantiable labor cost.

These items can be changeable if the proper procedures are set in place. As Kaiser

Permanente continues to grow and expand, steps need to be implemented to ensure patient care

and safety is the highest priority. While creating contingencies is good, one must ensure that it
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does not create so much steps and procedures that hinder clinicians from doing their job

effectively while staying competitive in the marketplace.

Step five and six: Strategies and action steps

Strategic Area of Concern #1.1 Large number of stakeholders resulting in slow decision-
making process.

Strategy:
Build a strategic management sub team that specialize in meeting facilitation. A new decision-
making training program will be made to further enhance the productivity of these decision-
making meetings.
Action Step: Action Step: Action Step:
Facilitators will create a During the meetings the Once this process is
training program in which all facilitators will guide the streamlined, this type of
decision makers must read participants through the decision-making process will
prior to the actual meetings. decision-making process until be taught to all other
decisions are made. departments within the KP
organization.
Strategic Area of Concern #2: Large size, slow to react to rapid changing healthcare
environment.
Strategy:
Building an environment that promotes innovation thinking through funding and competition.
Using Kaiser as center for healthcare innovation.
Action Step: Action Step: Action Step:
Understand the locations of Build a platform in which Host conferences,
innovation is occurring in the (both physical and/or virtual) competitions, and even
United States or even for innovators, entrepreneurs, acquisitions to position KP as
worldwide. Understanding and startups can gather and the driver and/or supporters
what is currently happening share ideas. Use that as a of healthcare innovation.
in those landscape. Examples method to collect information
can be telemedicine, and idea.
healthcare technology and so
on.
Strategic Area of Concern #3:
Bureaucratic Red Tape is costing KP time and money in addition to suffocating employee
innovation.
Strategy:
Using technology and other tools to streamline redundant and unnecessary procedures in KP’s
daily operation.
Action Step: Action Step: Action Step:
Work with regional, The operations team will When solution is approved, it
divisional, all the way down submit various solutions is implemented to all KP
to the unit leads to discuss (software, new process, pure departments that this solution
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procedures that are elimination) to the group and applies to.

unnecessary or redundant. test the effectiveness of these
Operations team will verify potential solutions.
the validity of these claims
and will work with
stakeholders to find possible
remedies.

Step seven: Discovering the Vision

Since it’s official creation in the 1940s, Kaiser has transformed the healthcare industry with our

patient-hospital partnerships in the United States. Through the concept of total health, Kaiser will

eradicate preventable diseases by empowering the staff, patients, and their families.

 Creating the best preventative medicine plan through public health programs

 Securing the best talent from all over the world to help reach our vision

 Be the leader in healthcare in the United States

We will first create a culture that reinforce the vision by encouraging each department to

modify the organization vision to suit their needs. This exercise will increase the level of buy-in

from the staff.

Kaiser will then review and rebuild its current public health programs in order to learn

effective ways to better partner with members outside of the hospital and find ways to teach

members healthier lifestyles in order to dramatically reduce preventable diseases.

Kaiser will offer strong competitive wages to attract the best people- and evaluating both

technical and emotional intelligence.

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Step Eight: Action plan

(Holding Yourself Accountable)

Arguably the most important part of the strategic process. Step eight creates the turn-by-

turn roadmap in which Kaiser Permanente will take a concept and make it into a reality. So many

organizations fail to implement this step due to the lack of accountability and creating achievable

goals. For Kaiser, the ideal timeline for the completion of the strategic direction will be three

years or one year for each objective. A full five years should be allocated as a buffer in case of

unforeseen complications.

As stated in the earliest steps, accurate collection of data from stakeholders throughout

Kaiser will be critical. Throughout this survey process, the strategy team can identify additional

leaders within KP that can take a larger role in the strategic management process. This planning

and execution of the data collection phase should range between three to six months.

The executive team, and the boards, along with the strategic team will ensure that they

are pointing the organization in the right direction. Upper and middle management and

stakeholders selected during the data gathering process will create the who, what, when and how

aspect of the strategic plan. They will be the done that assigns the task and due dates. They will

be the one that identifies what should be measured and what constitutes as success and present

that to the executive team for approval. Once the data has been collected, analyzed and prepared

for presentations to address the three strategic opportunities stated earlier in this report. Working

with the boards, executive team, upper management, and the newly discovered leaders during the

data collection phase. Action items will be assigned to individuals and groups formed during this

planning process. It is critical to set up due dates and accountability meetings, as failure to do so

will result in a delay of the project.

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This strategic direction process allows organizations to work on their organization rather

than in. This process forces leaders to look at the organization from the outside in order to

identify issues and trouble areas otherwise not visible due to the demands of daily operations.

Like a family planning a road trip in which everyone in enjoy, organizations must communicate,

plan, and execute in order to be successful.

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References:

Ebener D.R. & Smith F.L. (2015) Strategic Planning: An Interactive Process for Leaders,

Paulist Press New York/Mahwah NJ

Ginter, P.M., Duncan, W.J., & Swayne, L.E. (2013) Strategic Management of Health Care

Organization. San Francisco, CA: Jossey-Bass

Northwell Health, (2018). About Northwell Health. Retrieved from: https://www.northwell.edu/

(n.d.). Kaiser Permanente: Lobbying. Retrieved from https://www.opensecrets.org/orgs/lobby.php?

id=D000034986

(n.d.). Our vision. Retrieved from

https://healthy.kaiserpermanente.org/health/care/consumer/center/!

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EIMRAu1GURn67GNG8WWjg0TaGkYdIU0zJtIZD7JWnNIL91VFRmfG5pycw4W0N5cXwO

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Permanente, K. (n.d.). Kaiser Permanente Medical Care Program. Retrieved from

http://info.kaiserpermanente.org/info_assets/cpp_nca/ncal_HMOProviderManualsec1_2018.pdf

(n.d.). Who We Are. Retrieved from https://about.kaiserpermanente.org/who-we-are