A Strategy for Health Care Reform, Essay Example

Corporate level growth strategies

Corporate level growth strategies focus on market selection and general company positioning, instead of individual business unit strategies. Corporate level strategies focus on market selection, and growth strategies are designed to create or explore new markets.      Corporate level strategy can be diversification, which entails the development of new business areas that are somewhat different from the existing ones. A health care organization might develop a growth strategy that is related to serving new populations, such as creating a unit that is somewhat related to the existing business model (related differentiation). A health care organization might be already providing respiratory emergency services, however, it might decide to introduce regular screening at a low price for payers. While the service area is related, the diversification carries a risk, as the demand for the service cannot be correctly estimated. Another corporate level growth strategy can be horizontal integration, when the business acquires one of its competitors. A large hospital might decide to buy a smaller health care provider, to enter new markets, and increase the number of people served. Vertical integration on the corporate level might result in acquiring suppliers. A large hospital might purchase a laboratory that has a contract with multiple hospitals in the area, to expand the scope of services, and acquire more control over laboratory facilities. This would increase the organization’s competitive advantage, and potentially increase revenues at the same time.

The impact of culture on strategy implementation

The organization’s strategy is linked with the culture through the mission, vision, and values. The organization’s mission and vision needs to be aligned with the culture. The culture, however, should be also relevant to the strategy selected. If there is a close connection between the culture and selected corporate strategy, employee commitment will be higher. This will result in a greater willingness to participate in decision-making processes and projects related to implementing the strategy. Culture has a great impact on the development of internal strategies. An internal situational analysis needs to be completed before developing a strategy implementation plan. The success of implementation will depend on the alignment of the strategy with the internal environment (culture). It has been found that cultures nurture cohesion within the organization (Swayne), and determine behavioral norms. Each strategy requires a certain behavior norm. The importance of culture on strategy implementation, therefore, should not be underestimated, as the level of alignment will have an impact on the success of the strategy. Culture can not only increase group cohesion, but also has the ability to improve effectiveness and organizational performance (Swayne).

Positive sum competition

According to Porter’s 2004 article, the main problem with today’s health care is that it is unable to create value for the population it serves (zero-sum competition). The author proposes positive sum competition, which is designed to serve patients’ interest. In order to achieve a positive sum competition in health care, structural changes need to be implemented. Providers should not try to match competitors’ business model, but aim for distinctiveness. Patients’  rights to choose any provider should also not be restricted to only a few options. To create a positive sum competition, providers should also implement transparent pricing strategies. Billing should be simplified, and this would result in cost decrease. Consequently, cost shifting that is present in zero-sum competition would be eliminated, and more resources would become available to create value for customers.

In his 2009 article, Porter further expanded on the strategies of positive sum competition to create value for customers. The first feature is that true health outcomes would be measured, instead of single processes. Organizing delivery of prevention and screening, according to Porter, would also create additional value for patients. Porter (111) also states that “we must expect and require providers to compete for patients, based on value at the medical-condition level”, and this is believed to increase the quality of service.

Product life cycle and evaluation of potential strategies

Analyzing the product life cycle might be beneficial for evaluating potential strategies, however, it does not provide a complete and absolutely reliable method. Therefore, the above statement is partly confirmed. Determining which stage of the life cycle ( introductory, growth, maturity, and decline) the product or service is will help identifying the relevant strategies. However, strategy evaluation and selection should be based on internal and external situational analysis, and needs to take into consideration the organization’s competitive environment, as well. I believe that in the first stage of strategy selection product life cycle analysis plays an important role, however, further assessments of market conditions (Swayne, 98) are needed to make the right strategic choice. I would certainly complete a service area structural analysis as well, in order to address the threats relevant to the selected strategy, such as the threat of new entrants, bargaining power of suppliers and buyers, and the threat of substitute products. Further, for each business segment, a service area competitor analysis needs to be carried out to ensure that the strategy selected is suitable for all individual markets.

Works Cited

Porter, Michael E. (3) “A strategy for health care reform—toward a value-based system.” New England Journal of Medicine 361.2 (2009): 109-112.

Porter, Michael E. (2). “Redefining competition in health care.” Harvard Business Review 82.10 (2004): 152.

Swayne, Linda E., W. Jack Duncan, and Peter M. Ginter. Strategic management of health care organizations. John Wiley & Sons, 2012.