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Rethinking the Hospital - Value of business models for hospitals

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Rethinking the Hospital - Value of business models for hospitals

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Master thesis presentation of Maarten den Braber about the value of business model theory for hospitals

Master thesis presentation of Maarten den Braber about the value of business model theory for hospitals

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Rethinking the Hospital - Value of business models for hospitals

  1. Rethinking the hospital The value of business models for hospitals Master thesis Maarten den Braber (m@mdbraber.com)
  2. What is this presentation about? • Strategy • Hospitals • Value • Business model Business model Customer! Value! Market! Strategic! Value! Competitive! Cost /! Value ! preferences ! proposition! segment! position! chain! strategy! revenue! delivered ! value! value! implementation! creation! appropriation!
  3. Question: what is important for you?
  4. Running a hospital is a balancing act 4
  5. Demand-side demographics disease patterns public expectations Pressures are rising Supply-side knowledge workforce Societal financial pressures internationalization global R&D
  6. Zero-sum competition • No value is created • Competition is about shifting costs, increasing bargaining power and competition to capture patients • Escaping through value-based strategy Porter & Teisberg (2006)
  7. Reactive behavior is not enough
  8. Field research: 11 interviews - 2 sessions
  9. • Specialized medical care considered core business • Decisions often supply-driven • Scale and scope important decision criteria • Governance structure complicated • What are reasons for success and failure? What issues? 5 examples
  10. Current literature: boxed solutions • Darzi (2007) • MacKinnon (2002) • McKee & Healy (2002) • NVZ vereniging van ziekenhuizen (2000)
  11. Darzi as example: 6 boxed solutions
  12. But “one size does not fit all”
  13. How to build your specific hospital?
  14. Strategy helps determine direction
  15. Value-based strategy?
  16. Value is defined by attributes • Viewed from the customer perspective • Spans the complete process • Delivered through a sustainable process
  17. Value-based strategy requires balance
  18. Outside-in: customer preferences
  19. Inside-out: organizational preferences
  20. Models help solving complex problems
  21. Business model Customer! Value! Market! Strategic! Value! Competitive! Cost /! Value ! preferences ! proposition! segment! position! chain! strategy! revenue! delivered ! value! value! implementation! creation! appropriation! Business model: build strategy • Comprehensive • Coherent • Structured
  22. Value! Market! Strategic! Value! Competitive! Cost /! proposition! segment! position! chain! strategy! revenue! Value proposition: core functions • What (and for who), where, how and when? • What are your core functions? Curing sick people or keeping people healthy? • Who are your stakeholders? Patients, family, physicians, nurses, insurers, ... • Who is your customer?
  23. ! Current value proposition: different?
  24. Value! Market! Strategic! Value! Competitive! Cost /! proposition! segment! position! chain! strategy! revenue! Market segment: define potential • Who and how many? • What defines your market? Geographic region, specific illnesses? • What is your market potential? Market size, share, volume, growth, ...
  25. Value! Market! Strategic! Value! Competitive! Cost /! proposition! segment! position! chain! strategy! revenue! Strategic position: link with environment • What is inside and what is outside? • What is our position in the value chain? Who comes before, who comes after? • How do we balance scale and scope? Compete, collaborate, collaborate to compete? • What is our governance structure? Who runs the organization, what are the dependencies?
  26. Health care value chain
  27. Value! Market! Strategic! Value! Competitive! Cost /! proposition! segment! position! chain! strategy! revenue! Value chain: exchanging value • How to structure processes? • Link value exchanges to the core functions Does the exchange add real value? • Optimize the value chain Lean management,TQM, Six Sigma...
  28. Value! Market! Strategic! Value! Competitive! Cost /! proposition! segment! position! chain! strategy! revenue! Competitive strategy: stay ahead • What is your advantage? • Tools and techniques already available PESTEL, SWOT, 5 forces, ... • Non-profits need competitive strategy Just as for-profits organizations do • Current: quality is medical-technical quality What other types of quality are possible?
  29. Quality can be many different things
  30. Value! Market! Strategic! Value! Competitive! Cost /! proposition! segment! position! chain! strategy! revenue! Cost structure / revenue potential • Make your activities sustainable • Cost and revenue mean more than accountability Investment needs, projections, variable/fixed costs, ... • Balance your service portfolio Profit centers versus cost centers • Tools: do not reinvent the wheel BCG matrix, GE matrix, ...
  31. Business model: strategy building tool Comprehensive. Coherent. Structured.
  32. Business model and the hospital • Does it fit? (suitability) • Will it work? (feasibility) • Will it be used? (acceptability)
  33. Suitability: does it fit? • Makes decision-makers smarter • Aligns with organizational specifics • Makes knowledgeable about succes and failure • Possible to test current and analyze new scenarios
  34. Feasibility: will it work? • Not easy moving away from established policies • Business model helps building and connecting logic • Many tools available already that can help • Strategic mindset in the whole organization is needed
  35. Acceptability: will it be used? • Again: not easy moving away from established policies • There is willingness to change • Inclusive ways are an addition to current methods • Business model reduces complexity
  36. Conclusions about the business model • Business model makes decision makers smarter • Comprehensive. Coherent. Structured. • Aligns well with the organization • Needs effort and time to be implemented • Delivers value... for customer and organization
  37. Remember this?
  38. With the right tools
  39. We can build this!
  40. ! And now...

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