HSAD 7302 / PBHL 7203 HEALTH ADMINISTRATION STRATEGIC MANAGEMENT
THREE BASIC STRATEGIC MANAGEMENT QUESTIONS <ul><li>Where are we going and why? </li></ul><ul><li>How are we going to get t...
10 STEP STRATEGIC PLANNING PROCESS <ul><li>1.  EXTERNAL ENVIRONMENTAL ASSESSMENT </li></ul><ul><li>What are the key extern...
SWOT ANALYSIS <ul><li>STRENGTHS OF ORGANIZATION </li></ul><ul><li>WEAKNESSES OF ORGANIZATION </li></ul><ul><li>OPPORTUNITI...
MISSION, VISION, VALUES <ul><li>MISSION: </li></ul><ul><li>GENERAL STATEMENT OF THE PURPOSE AND  FUNCTION OF THE  </li></u...
SAMPLE MISSION STATEMENTS <ul><li>St. Vincent, Little Rock: </li></ul><ul><li>The mission of St. Vincent Health System and...
SAMPLE MISSION STATEMENTS <ul><li>Southwest Regional Medical Center, Little Rock </li></ul><ul><li>To meet and, whenever p...
SAMPLE VALUE STATEMENTS <ul><li>St. Vincent, Little Rock: </li></ul><ul><li>Reverence, Integrity, Compassion, Excellence <...
SAMPLE VISION STATEMENTS <ul><li>Baptist Health System, Little Rock </li></ul><ul><li>Shared Christian values of service, ...
10 STEP STRATEGIC PLANNING PROCESS <ul><li>4 . DEVELOP AND EVALUATE A SET OF GOALS AND OBJECTIVES TO IMPLEMENT THE VISION ...
BOSTON CONSULTING GROUP (RESOURCE PRODUCING OR RESOURCE CONSUMING PRODUCTS AND SERVICES) MARKET SHARE LOW HIGH DOGS (HOGS)...
10 STEP STRATEGIC PLANNING PROCESS <ul><li>5.  DEVELOP AND EVALUATE A SET OF ALTERNATIVE STRATEGIES (TACTICS) TO IMPLEMENT...
OFFENSIVE-DEFENSIVE STRATEGIES – SPORTS & GAMES <ul><li>BASKETBALL </li></ul><ul><li>FOOTBALL </li></ul><ul><li>SOCCER </l...
10 STEP STRATEGIC PLANNING PROCESS <ul><li>6. SELECT THE BEST ALTERNATIVE </li></ul><ul><li>DEFINE YOUR DECISION RULES FOR...
10 STEP STRATEGIC PLANNING PROCESS <ul><li>9 .  EVALUATE PERFORMANCE TOWARDS THE VISION, MISSION, GOALS AND OBJECTIVES. </...
Strategy Approaches <ul><li>PRESCRIPTIVE APPROACH: </li></ul><ul><li>Design School – CEO can design the strategic plan </l...
STRATEGY TERMS <ul><li>COMPETITIVE ADVANTAGE: </li></ul><ul><li>Achieve market advantage as provider of first choice </li>...
HEALTH CARE MARKET STRUCTURE <ul><li>ATOMISTIC  - MANY SMALL SELLERS </li></ul><ul><li>OLIGOPOLISTIC – FEW LARGE </li></ul...
MARKET SHARE <ul><li>BREATH OF MARKET SHARE </li></ul><ul><li>15% MARKET SHARE IN THE  </li></ul><ul><li>TARGETED MARKET <...
STAGES OF MARKET GROWTH <ul><li>Emerging   Growth   Mature   Decline </li></ul>
STAGES OF MARKET GROWTH
STAGES OF MARKET GROWTH
MILES AND SNOW TYPOLOGY REACTORS Organizations that perceive opportunities and turbulence but are not able to adapt effect...
MICHAEL PORTER COMPETITIVE ADVANTAGE <ul><li>DEGREE OF COMPETITIVENESS IN A MARKET </li></ul>INDUSTRY COMPETITORS INTENSIT...
INTENSITY OF RIVALRY <ul><li>NUMEROUS COMPETITORS </li></ul><ul><li>EQUALLY BALANCED </li></ul><ul><li>DIVERSE </li></ul><...
NEW ENTRANTS IN MARKET <ul><li>MAJOR ENTRY BARRIERS </li></ul><ul><li>REGULATORY REQUIREMENTS </li></ul><ul><li>CAPITAL RE...
BUYER ( HEALTH INSURANCE, EMPLOYER, PATIENT, HOSPITALS) <ul><li>MAJOR BUYER FACTORS </li></ul><ul><li>BUYER CONCENTRATION ...
SUPPLIER FACTORS (INPUTS FOR PRODUCTION OF HEALTH SERVICES) <ul><li>MAJOR SUPPLIER FACTORS </li></ul><ul><li>SUPPLIER CONC...
SUBSTITUTES (CAN REPLACE EXISTING CARE MODALITY) <ul><li>SUBSTITUTE THREATS </li></ul><ul><li>TECHNOLOGICAL DEVELOPMENT </...
MICHAEL PORTER <ul><li>GENERIC STRATEGIES: </li></ul><ul><li>COST  </li></ul><ul><li>DIFFERENTIATION </li></ul><ul><li>FOC...
PORTER’S COMPETITIVE ADVANTAGE DIFFERENTIATION FOCUS COST FOCUS NARROW TARGET MARKET DIFFERENTIATION COST LEADERSHIP BROAD...
PORTER’S VALUE CHAIN FRAMEWORK
MICHAEL PORTER <ul><li>FOUR CORPORATE STRATEGIES </li></ul><ul><li>PORTFOLIO MANAGEMENT </li></ul><ul><li>DIVERSIFICATION ...
GENERIC STRATEGIES <ul><li>SPECIALIZATION / NICHE BY SERVICE/PRODUCT, BY MARKET OR BOTH </li></ul><ul><li>VERTICAL INTEGRA...
HORIZONTAL INTEGRATION <ul><li>LATERAL LINKING OF ORGANIZATIONS WITH SIMILAR </li></ul><ul><li>FUNCTIONS TO: </li></ul><ul...
HORIZONTAL INTEGRATION HOSPITAL A HOSPITAL B HOSPITAL C NURSING HOME A NURSING HOME  B NURSING HOME C
VERTICAL INTEGRATION <ul><li>BACKWARD VERTICAL INTEGRATION </li></ul><ul><li>INCORPORATING WITHIN THE ORGANIZATION THE </l...
BACKWARD VERTICAL INTEGRATION HOSPITAL MEDICAL GROUP NURSING SCHOOL ALLIED HEALTH SCHOOL DURABLE MEDICAL EQUIPMENT
FORWARD VERTICAL INTEGRATION <ul><li>FORWARD VERTICAL INTEGRATION </li></ul><ul><li>(PRODUCTS OR SERVICES ARE INPUTS TO OR...
FORWARD VERTICAL INTEGRATION HOSPITAL REHAB FACILITY HOME HEALTH NURSING HOME HOSPICE
INTEGRATED DELIVERY SYSTEM <ul><li>A SINGLE ORGANIZATION THAT PROVIDES A COMPREHENSIVE RANGE OF HEALTH SERVICES AND PROVID...
INTEGRATED DELIVERY SYSTEM INFORMATION SYSTEM HOSPITAL HOME HEALTH SNF REHAB MENTAL  HEALTH PHYSICIANS MCO/HMO FINANCING O...
ORGANIZATIONAL STRATEGIES <ul><li>MARKET SHARE BUILDING </li></ul><ul><li>MARKET SHARE HOLDING </li></ul><ul><li>DIVERSIFI...
OWNERSHIP STRATEGIES <ul><li>PURCHASE </li></ul><ul><li>LEASE </li></ul><ul><li>JOINT VENTURE </li></ul><ul><li>CONTRACT <...
THREE BASIC STRATEGIC MANAGEMENT QUESTIONS <ul><li>Where are we going and why? </li></ul><ul><li>How are we going to get t...
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7302-STRATEGIC MANAGEMENT

  1. 1. HSAD 7302 / PBHL 7203 HEALTH ADMINISTRATION STRATEGIC MANAGEMENT
  2. 2. THREE BASIC STRATEGIC MANAGEMENT QUESTIONS <ul><li>Where are we going and why? </li></ul><ul><li>How are we going to get there? </li></ul><ul><li>How will we know if we have arrived? </li></ul><ul><li>Strategic Assumption: Resources are limited </li></ul>
  3. 3. 10 STEP STRATEGIC PLANNING PROCESS <ul><li>1. EXTERNAL ENVIRONMENTAL ASSESSMENT </li></ul><ul><li>What are the key external changes impacting on the </li></ul><ul><li>organization? </li></ul><ul><li>2. INTERNAL ENVIRONMENTAL ANALYSIS </li></ul><ul><li>SWOT analysis </li></ul><ul><li>3. DEVELOP THE ORGANIZATIONAL MISSION, VISION AND </li></ul><ul><li>VALUES </li></ul><ul><li>What are the values of the organization? </li></ul><ul><li>What will we look like in 5-10 years? </li></ul><ul><li>How will we impact on the community we serve? </li></ul>
  4. 4. SWOT ANALYSIS <ul><li>STRENGTHS OF ORGANIZATION </li></ul><ul><li>WEAKNESSES OF ORGANIZATION </li></ul><ul><li>OPPORTUNITIES FOR THE ORGANIZATION </li></ul><ul><li>THREATS TO THE ORGANIZATION </li></ul>
  5. 5. MISSION, VISION, VALUES <ul><li>MISSION: </li></ul><ul><li>GENERAL STATEMENT OF THE PURPOSE AND FUNCTION OF THE </li></ul><ul><li>ORGAIZATION IN THE COMMUNITY IT SERVES </li></ul><ul><li>VISION: </li></ul><ul><li>GENERAL STATEMENT OF WHAT THE ORGANIZATION IS TRYING TO </li></ul><ul><li>BECOME </li></ul><ul><li>VALUES: </li></ul><ul><li>GENERAL STATEMENT OF THE MORAL BASIS FOR DECISION MAKING </li></ul><ul><li>AND BEHAVIOR WITHIN THE ORGANIZATION </li></ul>
  6. 6. SAMPLE MISSION STATEMENTS <ul><li>St. Vincent, Little Rock: </li></ul><ul><li>The mission of St. Vincent Health System and Catholic Health Initiatives (CHI) </li></ul><ul><li>is to nurture the healing ministry of the Church by bringing it new life, energy </li></ul><ul><li>and viability in the 21 st Century. </li></ul><ul><li>Baptist Health System, Little Rock: </li></ul><ul><li>Baptist Health exists to provide quality patient-centered services, promote and protect the </li></ul><ul><li>voluntary not-for-profit healthcare system, provide quality health education and respond </li></ul><ul><li>to changing needs of the citizens of Arkansas with Christian compassion and personal </li></ul><ul><li>concern consistent with our charitable purpose. </li></ul><ul><li>Methodist Health Care System, Houston, Texas: </li></ul><ul><li>To provide high quality, cost-effective health care that delivers the best value to </li></ul><ul><li>the people we serve in a spiritual environment of caring in association with </li></ul><ul><li>internationally recognized teaching and research. </li></ul><ul><li>Texas Health Resources, Dallas, Texas: </li></ul><ul><li>To improve the health of the people in the communities we serve </li></ul>
  7. 7. SAMPLE MISSION STATEMENTS <ul><li>Southwest Regional Medical Center, Little Rock </li></ul><ul><li>To meet and, whenever possible, exceed the healthcare expectations of our customers. </li></ul><ul><li>To provide excellence in healthcare </li></ul><ul><li>To provide an environment in which our people work together towards continuously improving the quality of services for patients, physicians and employees. </li></ul><ul><li>To support continuing education activities and training of staff to maintain a high level of performance. </li></ul><ul><li>Henry Ford Health System, Detroit: </li></ul><ul><li>To improve human health through excellence in the science and art of health care and healing. </li></ul><ul><li>Saline Memorial Medical Center, Benton: </li></ul><ul><li>Saline County Medical Center is the health care leader for Saline County that provides quality services for our customers to enhance health and quality of life. </li></ul><ul><li>Rebsamen Medical Center, Jacksonville </li></ul><ul><li>To promote good health in our community and support healthcare expectations of our customers. </li></ul>
  8. 8. SAMPLE VALUE STATEMENTS <ul><li>St. Vincent, Little Rock: </li></ul><ul><li>Reverence, Integrity, Compassion, Excellence </li></ul><ul><li>Baptist Health System, Little Rock: </li></ul><ul><li>Service, Honesty, Respect, Stewardship, Performance </li></ul><ul><li>Methodist Health System, Houston, Texas: </li></ul><ul><li>Integrity, Compassion, Accountability, Respect, Excellence </li></ul><ul><li>Henry Ford Health System, Detroit </li></ul><ul><li>Respect for people, High performance, Learning and continuous improvement, A social conscience </li></ul><ul><li>Rebsamen Medical Center, Jacksonville </li></ul><ul><li>Do the right thing for the right reason, Operational </li></ul><ul><li>excellence, Value to the health system, Equal respect </li></ul><ul><li>among team members, Serve our customers. </li></ul>
  9. 9. SAMPLE VISION STATEMENTS <ul><li>Baptist Health System, Little Rock </li></ul><ul><li>Shared Christian values of service, honesty, respect, stewardship and performance, combined with a </li></ul><ul><li>commitment to customers satisfaction through continuous improvement, allows Baptist Health to unite </li></ul><ul><li>Physicians, Nurses, Employees, Technology and Access into the most comprehensive healthcare </li></ul><ul><li>provider, delivering total health services to the citizens of Arkansas. Serving the spiritual, emotional </li></ul><ul><li>and physical needs of patients from the inception of life to support at life’s end means </li></ul><ul><li>compassionately providing total health from prevention to long-term care. </li></ul><ul><li>SALINE MEMORIAL HOSPITAL, BENTON </li></ul><ul><li>Saline County Medical Center, while maintaining a sense of community and as a partner in a health </li></ul><ul><li>care system, commits its resources to meet the needs of our community, which includes education, </li></ul><ul><li>state-of-the art service in a caring environment and promotion of wellness and quality of life. </li></ul><ul><li>HENRY FORD HEALTH SYSTEM, DETROIT </li></ul><ul><li>To put patients first by providing each patient the quality of care and comfort we want for our families </li></ul><ul><li>and for ourselves. </li></ul><ul><li>REBSAMEN MEDICAL CENTER, JACKSONVILLE </li></ul><ul><li>To be an innovative health system composed of an empowered, skilled staff, working as a team, whose passion is </li></ul><ul><li>caring. </li></ul>
  10. 10. 10 STEP STRATEGIC PLANNING PROCESS <ul><li>4 . DEVELOP AND EVALUATE A SET OF GOALS AND OBJECTIVES TO IMPLEMENT THE VISION AND MISSION. </li></ul><ul><li>GOALS = BROAD STATEMENTS </li></ul><ul><li>GOAL 1: EXPAND HOME HEALTH SERVICES </li></ul><ul><li>OBJECTIVES = QUANTIFIED GOALS </li></ul><ul><li>OBJECTIVE 1.1: ADD FIVE RN’S BY 12/31/04 </li></ul><ul><li>OBJECTIVE 1.2: CONTRACT WITH TWO </li></ul><ul><li>ADDITIONAL MANAGED CARE </li></ul><ul><li>ORGANIZATION BY 12/31/04. </li></ul>
  11. 11. BOSTON CONSULTING GROUP (RESOURCE PRODUCING OR RESOURCE CONSUMING PRODUCTS AND SERVICES) MARKET SHARE LOW HIGH DOGS (HOGS) CASH COWS LOW QUESTION MARKS STARS HIGH MARKET GROWTH
  12. 12. 10 STEP STRATEGIC PLANNING PROCESS <ul><li>5. DEVELOP AND EVALUATE A SET OF ALTERNATIVE STRATEGIES (TACTICS) TO IMPLEMENT THE OBJECTIVES. </li></ul><ul><li>Objective 1.1: ADD FIVE RN’S BY 12/31/04 </li></ul><ul><li>Alternatives: </li></ul><ul><li>STRATEGY1. Hire new RN’s </li></ul><ul><li>STRATEGY2. Agency staffing </li></ul><ul><li>STRATEGY3. Part-time contracts </li></ul><ul><li>STRATEGY4. Move current employees </li></ul>
  13. 13. OFFENSIVE-DEFENSIVE STRATEGIES – SPORTS & GAMES <ul><li>BASKETBALL </li></ul><ul><li>FOOTBALL </li></ul><ul><li>SOCCER </li></ul><ul><li>CHECKERS </li></ul><ul><li>POKER </li></ul><ul><li>AUTO RACING </li></ul><ul><li>BASEBALL </li></ul><ul><li>WATER POLO </li></ul><ul><li>MONOPOLY </li></ul>
  14. 14. 10 STEP STRATEGIC PLANNING PROCESS <ul><li>6. SELECT THE BEST ALTERNATIVE </li></ul><ul><li>DEFINE YOUR DECISION RULES FOR SELECTING </li></ul><ul><li>ALTERNATIVES AND APPLY TO ALTERNATIVES. </li></ul><ul><li>7. DEVELOP AN IMPLEMENTATION PLAN </li></ul><ul><li>OBJECTIVE 1.1 HIRE 5 NEW RN’S BY 12/31/04 </li></ul><ul><li>STRATEGY 1: HIRE RN’S </li></ul><ul><li>ACTION 1: ADVERTISE IN REGIONAL MEDIA </li></ul><ul><li>ACTION 2: PROVIDE RECRUITMENT BONUS FOR </li></ul><ul><li>CURRENT STAFF </li></ul><ul><li>8 . IMPLEMENT THE PLAN </li></ul><ul><li>WHO? WHEN? HOW? FROM IMPLEMENTATION PLAN </li></ul>
  15. 15. 10 STEP STRATEGIC PLANNING PROCESS <ul><li>9 . EVALUATE PERFORMANCE TOWARDS THE VISION, MISSION, GOALS AND OBJECTIVES. </li></ul><ul><li>HOW WILL WE KNOW IF WE HAVE ARRIVED? </li></ul><ul><li>DID WE HIRE THE 5 NEW RN’S BY 12/31/04? </li></ul><ul><li>10. REVIEW AND REVISE PLAN AS NEEDED </li></ul>
  16. 16. Strategy Approaches <ul><li>PRESCRIPTIVE APPROACH: </li></ul><ul><li>Design School – CEO can design the strategic plan </li></ul><ul><li>Planning School – Department of Planning designs the strategic plan </li></ul><ul><li>Positioning School – Focus of planning is on positioning organization in market </li></ul><ul><li>DESCRIPTIVE APPROACH: </li></ul><ul><li>Strategy is the outcome of organizational learning rather than careful planning </li></ul>
  17. 17. STRATEGY TERMS <ul><li>COMPETITIVE ADVANTAGE: </li></ul><ul><li>Achieve market advantage as provider of first choice </li></ul><ul><li>COOPERATIVE ADVANTAGE: </li></ul><ul><li>Achieve market advantage by the network of relationships formed </li></ul><ul><li>VALUE ADDED: </li></ul><ul><li>For customers, outcomes are greater than costs </li></ul><ul><li>VALUE = OUTCOME/COST </li></ul>
  18. 18. HEALTH CARE MARKET STRUCTURE <ul><li>ATOMISTIC - MANY SMALL SELLERS </li></ul><ul><li>OLIGOPOLISTIC – FEW LARGE </li></ul><ul><li>SELLERS </li></ul><ul><li>MONOPOLISTIC – MAJOR SELLER </li></ul>
  19. 19. MARKET SHARE <ul><li>BREATH OF MARKET SHARE </li></ul><ul><li>15% MARKET SHARE IN THE </li></ul><ul><li>TARGETED MARKET </li></ul><ul><li>DEPTH OF MARKET SHARE </li></ul><ul><li>80% MARKET SHARE FOR </li></ul><ul><li>HEALTH SERVICES USED BY </li></ul><ul><li>THE 15% MARKET SHARE </li></ul>
  20. 20. STAGES OF MARKET GROWTH <ul><li>Emerging Growth Mature Decline </li></ul>
  21. 21. STAGES OF MARKET GROWTH
  22. 22. STAGES OF MARKET GROWTH
  23. 23. MILES AND SNOW TYPOLOGY REACTORS Organizations that perceive opportunities and turbulence but are not able to adapt effectively. They lack consistent approaches to strategy and structure and make changes primarily in response to environmental pressures. DEFENDERS Organizations that engage in little search for additional opportunities for growth and seldom make adjustments in existing technologies, structures or strategies. They devote primary attention to improving the efficiencies of existing operations. ANALYZERS Maintain stable operations in some areas, usually their core product or business, but also search for new opportunities and engage in market innovations. Characteristically they watch competitors and rapidly adopt those strategic ideas that appear to have the greatest potential. PROSPECTORS Frequently search for new market opportunities and regularly engage in experimentation and innovation. May not be the most efficient competitors.
  24. 24. MICHAEL PORTER COMPETITIVE ADVANTAGE <ul><li>DEGREE OF COMPETITIVENESS IN A MARKET </li></ul>INDUSTRY COMPETITORS INTENSITY OF RIVALRY SUBSTITUTES BUYERS NEW ENTRANTS IN MARKET SUPPLIERS
  25. 25. INTENSITY OF RIVALRY <ul><li>NUMEROUS COMPETITORS </li></ul><ul><li>EQUALLY BALANCED </li></ul><ul><li>DIVERSE </li></ul><ul><li>LIMITED DIFFERENTIATION </li></ul><ul><li>HIGH FIXED COST </li></ul><ul><li>SLOW INDUSTRY GROWTH </li></ul><ul><li>HIGH EXIT BARRIERS </li></ul><ul><li>LACK SWITCHING COST </li></ul>
  26. 26. NEW ENTRANTS IN MARKET <ul><li>MAJOR ENTRY BARRIERS </li></ul><ul><li>REGULATORY REQUIREMENTS </li></ul><ul><li>CAPITAL REQUIREMENTS </li></ul><ul><li>BRAND IDENTITY </li></ul><ul><li>ECONOMIES OF SCALE </li></ul><ul><li>PRODUCT DIFFERENCES </li></ul><ul><li>COST ADVANTAGE </li></ul>
  27. 27. BUYER ( HEALTH INSURANCE, EMPLOYER, PATIENT, HOSPITALS) <ul><li>MAJOR BUYER FACTORS </li></ul><ul><li>BUYER CONCENTRATION </li></ul><ul><li>PRICE SENSITIVITY </li></ul><ul><li>BUYER SWITCHING COST </li></ul><ul><li>BUYER INFORMATION </li></ul><ul><li>BRAND IDENTITY </li></ul><ul><li>BUYER LEVERAGE </li></ul>
  28. 28. SUPPLIER FACTORS (INPUTS FOR PRODUCTION OF HEALTH SERVICES) <ul><li>MAJOR SUPPLIER FACTORS </li></ul><ul><li>SUPPLIER CONCENTRATION </li></ul><ul><li>SWITCHING COST </li></ul><ul><li>IMPORTANCE OF VOLUME </li></ul><ul><li>FEW SUBSTITUTES </li></ul><ul><li>DIFFERENTIATION OF INPUTS </li></ul>
  29. 29. SUBSTITUTES (CAN REPLACE EXISTING CARE MODALITY) <ul><li>SUBSTITUTE THREATS </li></ul><ul><li>TECHNOLOGICAL DEVELOPMENT </li></ul><ul><li>PRICE </li></ul><ul><li>SWITCHING COST LOW </li></ul><ul><li>BUYER PROPENSITY TO SUBSTITUTE </li></ul><ul><li>PROXIMITY </li></ul>
  30. 30. MICHAEL PORTER <ul><li>GENERIC STRATEGIES: </li></ul><ul><li>COST </li></ul><ul><li>DIFFERENTIATION </li></ul><ul><li>FOCUSED COST </li></ul><ul><li>FOCUSED DIFFERENTIATION </li></ul>
  31. 31. PORTER’S COMPETITIVE ADVANTAGE DIFFERENTIATION FOCUS COST FOCUS NARROW TARGET MARKET DIFFERENTIATION COST LEADERSHIP BROAD TARGET MARKET DIFFERENTIATION LOWER COST
  32. 32. PORTER’S VALUE CHAIN FRAMEWORK
  33. 33. MICHAEL PORTER <ul><li>FOUR CORPORATE STRATEGIES </li></ul><ul><li>PORTFOLIO MANAGEMENT </li></ul><ul><li>DIVERSIFICATION THROUGH ACQUISITION </li></ul><ul><li>RESTRUCTURING </li></ul><ul><li>RESTRUCTURE BUSINESS UNITS </li></ul><ul><li>CHANGE MANAGEMENT, ADD TECHNOLOGY, TRIM FAT </li></ul><ul><li>TRANSFERRING SKILLS </li></ul><ul><li>DEVELOP INTERRELATIONSHIP AMONG UNITS </li></ul><ul><li>TRANSFER SKILLS AMONG UNITS </li></ul><ul><li>SHARING ACTIVITIES </li></ul><ul><li>SHARE ACTIVITIES THAT ENHANCE THE PRODUCT </li></ul><ul><li>COLLABORATION ENCOURAGED AND REINFORCED </li></ul>
  34. 34. GENERIC STRATEGIES <ul><li>SPECIALIZATION / NICHE BY SERVICE/PRODUCT, BY MARKET OR BOTH </li></ul><ul><li>VERTICAL INTEGRATION, BOTH BACKWARD AND FORWARD </li></ul><ul><li>HORIZONTAL INTEGRATION </li></ul><ul><li>DIVERSIFICATION ( CONCENTRIC OR CONGLOMERATE) </li></ul><ul><li>RETRENCHMENT OR DIVESTITURE </li></ul><ul><li>STRATEGIC ALLIANCES </li></ul>
  35. 35. HORIZONTAL INTEGRATION <ul><li>LATERAL LINKING OF ORGANIZATIONS WITH SIMILAR </li></ul><ul><li>FUNCTIONS TO: </li></ul><ul><li>IMPROVE OPERATING EFFICIENCY-ECONOMY OF SCALE (LOWER AVERAGE COST CURVE) </li></ul><ul><li>JOINT PURCHASING POWER </li></ul><ul><li>JOINT MARKETING-MARKET POWER </li></ul><ul><li>MANAGEMENT EXPERTISE </li></ul><ul><li>GEOGRAPHICAL INTEGRATION </li></ul><ul><li>POLITICAL POWER -SIZE </li></ul>
  36. 36. HORIZONTAL INTEGRATION HOSPITAL A HOSPITAL B HOSPITAL C NURSING HOME A NURSING HOME B NURSING HOME C
  37. 37. VERTICAL INTEGRATION <ul><li>BACKWARD VERTICAL INTEGRATION </li></ul><ul><li>INCORPORATING WITHIN THE ORGANIZATION THE </li></ul><ul><li>STAGES OF PRODUCTION TO: </li></ul><ul><li>INCREASE OPERATING EFFICIENCY (REDUCE AVERAGE PRODUCTION COST) </li></ul><ul><li>CAPTURE MARKETS </li></ul><ul><li>INCREASE COORDINATION OF CARE </li></ul>
  38. 38. BACKWARD VERTICAL INTEGRATION HOSPITAL MEDICAL GROUP NURSING SCHOOL ALLIED HEALTH SCHOOL DURABLE MEDICAL EQUIPMENT
  39. 39. FORWARD VERTICAL INTEGRATION <ul><li>FORWARD VERTICAL INTEGRATION </li></ul><ul><li>(PRODUCTS OR SERVICES ARE INPUTS TO OR </li></ul><ul><li>OUTPUTS FROM OTHER COMPONENTS OF THE </li></ul><ul><li>ORGANIZATION) </li></ul><ul><li>INCORPORATION OF CHANNELS OF DISTRIBUTION </li></ul><ul><li>INTO THE ORGANIZATION TO: </li></ul><ul><li>INCREASE MARKET SHARE </li></ul><ul><li>INCREASE COORDINATION OF CARE </li></ul><ul><li>INCREASE OPERATING EFFICIENCIES </li></ul><ul><li>INCREASE COMPREHENSIVENESS </li></ul>
  40. 40. FORWARD VERTICAL INTEGRATION HOSPITAL REHAB FACILITY HOME HEALTH NURSING HOME HOSPICE
  41. 41. INTEGRATED DELIVERY SYSTEM <ul><li>A SINGLE ORGANIZATION THAT PROVIDES A COMPREHENSIVE RANGE OF HEALTH SERVICES AND PROVIDING INSURANCE/FINANCING FOR THOSE SERVICES. THE ORGANIZATION GENERALLY HAS ELEMENTS OF HORIZONTAL AND VERTICAL INTEGRATION. </li></ul>
  42. 42. INTEGRATED DELIVERY SYSTEM INFORMATION SYSTEM HOSPITAL HOME HEALTH SNF REHAB MENTAL HEALTH PHYSICIANS MCO/HMO FINANCING OUTPATIENT RURAL CLINICS DME LAB
  43. 43. ORGANIZATIONAL STRATEGIES <ul><li>MARKET SHARE BUILDING </li></ul><ul><li>MARKET SHARE HOLDING </li></ul><ul><li>DIVERSIFICATION/PORTFOLIO </li></ul><ul><li>VERITICAL INTEGRATION </li></ul><ul><li>HORIZONTAL INTEGRATION </li></ul><ul><li>DIVESTITURE </li></ul>
  44. 44. OWNERSHIP STRATEGIES <ul><li>PURCHASE </li></ul><ul><li>LEASE </li></ul><ul><li>JOINT VENTURE </li></ul><ul><li>CONTRACT </li></ul><ul><li>NETWORK </li></ul><ul><li>ALLIANCE </li></ul>
  45. 45. THREE BASIC STRATEGIC MANAGEMENT QUESTIONS <ul><li>Where are we going and why? </li></ul><ul><li>How are we going to get there? </li></ul><ul><li>How will we know if we have arrived? </li></ul><ul><li>Strategic Assumption: Resources are limited </li></ul>
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