Strategic Management: Strategic Tactics
Synopsis of the Research Paper
This research paper intends to describe the theory of several strategy tactics implemented in three different medical centres as part of strategic management changes. The three medical cases utilized are Harvard Business Review Cases; two hospitals are based in the United States, and well known for their name, Cleveland Clinic and MD Anderson Cancer Center in Texas, and as an international example we will be using Narayana Hrudalaya Heart Hospital in Bangalore, India.
The topics that will be discussed include the use of strategy in Healthcare, competitive advantage in the industry, mission and vision, structural and managerial changes applied to cases, the use of technology to drive down costs and the use of measurement for patient satisfaction parameters.
Introduction to Strategy and HealthCare Cases
Strategy can be defined in different ways as a formal plan, a process developed to beat the competition, a way of doing business, positioning and organizing goals to achieve a mission. The outlined perspectives of a strategy allow a firm to plan decisions ahead of time that will hopefully maximize gains and lower the risks (Burns, L., Bradley, E., Weiner, B. 2012).
Cleveland Clinic was initially known for their cardiac surgeries and services, this allowed this medical centre to have a good standing international reputation by 1980. Along with the cardiac services, urology and the research department, the expansion of this centre started along with a private funding. The most noticeable achievements of Cleveland Clinic, along with their national and international expansion, is their “Patients First” mission; mission that promoted changes in several managerial tactics.
MD Anderson is a cancer health care institution that serves as a referral point for many types of cancer care internationally. Dr. Burke, its Chief physician and Executive Vice President proposed in 1996 a new approach to cancer care that would revolutionize their structural and managerial changes. Cancer would be referred to multidisciplinary centres and be treated per type and region of the body and not by medical speciality as it is traditionally done.
Narayana Hrudayalaya (NH) was founded in 2001 by Dr. Shetty an Indian cardiologist and philanthropist. NH is a cardiac health care institution that serves as a referral point for heart care in India and globally. NH mission is to provide the highest quality of care with the most affordable prices possible, without ever compromising quality. With this vision, Dr. Shetty achieved to complete the expansion of NH with a total of 500 patient beds and 10 operating rooms, started a viable insurance system with 10 million policyholders from the rural region and is currently working on “Health City” were other specializations and cares will be in close distance to NH (Khanna, T., Rangan K.V., & Manocaran, M. 2011).
Competitive Advantage and Generalities in HealthCare Organizations
Competitive advantage has been related to the market power you obtain as a result from efforts. Competitive advantage may include outgrowing your competition, distinguishing from your competitors and delivering more value though your product or service than the competition. Basically, in a competitive advantage you benefit or lose market through pricing, innovation and service quality. By solidifying a business from within you can take advantage in the environment you compete (Burns, et al. 2012).
Competitive advantage is well applied in for-profit organizations, but not all health care businesses are for profit. Many non-profit, can considerer that applying any strategic advantage is inappropriate. Rather than being competitive they like to focus their strategic management on their mission and are very patients, community and employee focused (Burns, et al. 2012).
As we know many health care organization in the USA compete for number of patients, that translate into more revenue. The American health system tends to be more profit-driven compared to many European countries where healthcare is provided for free to their citizens. Many clinics and health businesses in the US organization seek competitive advantage through prices, services and innovation.
Mission and Vision leads to Changes
The strategy of any company should have relationship with the mission, vision and values of the organization. With a clear vision of where the company is and will be will help shape the company’s growth, collaboration with competitors, allocation of resources and organizational culture (Burns, et al. 2012).
Cleveland Clinic restructuring changes were initially made as a part to accomplish their ultimate goal and mission “Patient First”. In 2012 the Cleveland Clinic Integrated Care Model CCICM was established as the patient-centred model. Its ultimate objective was to create a smooth experience for patients across the clinic adjunctions and minimize adjunctions over time. The CCICM achieved cost reductions, savings and lean administration across all the institutes with better functional outcomes for the patients (Porter & Teisberg, 2019).
In Cleveland Clinic staff started being encourage to make patients feel comfortable, and they compared their hospitality to a hotel service. They focused on room and food issues, allowed unrestricted visiting hours, redesigned gowns to resemble bathrobes, etc (Porter & Teisberg, 2019).
Cleveland clinic had a 44% for caregiving experience in 2008 and by 2013 the percentile increased to 87%. Non-physicians were previously labelled as “non-professional staff” and by substituting their denomination to “Caregivers” and including all of them (nurses, janitors, IT, technicians) in group discussions about the clinic mission, vision, values and patients, the patient satisfaction improved significantly (Porter & Teisberg, 2019).
Regarding NH case, Dr. Shetty made tremendous efforts in combining his business skills with his medicine background. Out of the three cases his mission was probably the most driven to help people with limited resources, not only in NH Hospital but across India through different programs like “Telemedicine” were physicians drove to remote and rural areas to provide healthcare. Every service provided in NH and the Telemedicine program was meant to be the highest quality at the lowest rate possible (Khanna, et al, 2011).
Structural and Managerial Changes
“Patient First” efforts in Cleveland Clinic drove management to create new Support Institutes in adjunction to their health care institutes. Patient Care experience, legal, finance, marketing and Human Resources were some of the new institutes, and new positions (that didn’t exist in other health organizations) were opened like Chief of Wellness Officer and Chief Experience Officer (Porter & Teisberg, 2019).
Probably the most important structural changes made by both American based clinics, MD Anderson and Cleveland Clinic consisted in moving patient delivery services from traditional care to multidisciplinary units. Previously, patients attended physicians in their speciality institutes (like for example: endocrinology, cardiology, dermatology). The movement to multidisciplinary centres, were specific diseases or pathologies targeted to certain areas of the body grouped different physicians from different specialities allowed more collaboration between professionals that drove to better patient outcomes and reduced misdiagnosing. The creation of multidisciplinary units involves internal movement of offices, creation of new spaces and resources and changes in physician’s traditional hierarchies.
Tactics Used to Lower Costs and use of Technology
A strategy should be flexible and pivot or shift in response to environmental changes and pressures to maintain competitive advantage. Organizations, including health care, take part of a very dynamic and competitive era. Changes in the external environment can create either threats or opportunities, and management should be on guard and ready to react to the competition and market fluctuating costs, changes in their customer’s spending behaviour, technology and innovation (Burns, et al 2012).
Cleveland Clinic lowered costs though measurement a subject discussed with more extent later in this paper. Measurements efforts also took into account supplies and their costs, difference between activities or supplies across specialities, transparency in costs and coordination of lean use of instruments across surgeons specially. Excelarate, was the program created by the clinic to reduce costs in purchasing. The first year of the program the clinic reduced $4 million in savings. The Care Affordability task was created in 2013 by Dr. Cosgrove, that aimed, with help of a consulting firm, to study administrative and clinical costs to better understand their nature and how to cost reduce the service. By 2015 cost reductions totalled 513$ million (Porter & Teisberg, 2019).
Out of the three cases analyzed, NH Hospital excelled in reducing costs and optimizing their space and supplies utilization. Some of the most relevant tactics implemented included (Khanna, et al, 2011).:
- Managing utilization and productivity to drive unit costs lower. NH performed 8 times more surgeries than the average Indian hospital, which allowed to optimized the time of use of the operating room and machinery.
- Unlike the majority of hospitals NH payed its medical machinery monthly (vs buying) and after the machinery is paid off, the hospital only paid the reactives used tooperate the machines. This is very attractive to suppliers as the demand in NH is extremely high.
- Avoided long term contracts with suppliers, as market in Indian is very flexible. This gave them leverage to negotiate supplies when the market presented low prices in the supplies.
- Maintained a lean administration team to avoid corruption in the buying/selling of supplies and services.
- Increased the bargaining power through their alliance with the Asian Heart Foundation, enjoying 30-35% discounts in supplies.
- Incorporated new technology, like digital x-rays and management software that helped maintain minimal inventory and quicker response to demand.
- Use of generic medicine that is 80% cheaper than brands.
- Providing fixed salaries for doctors and staff, representing only 22% of their revenues vs 60% compared to other hospitals.
- Monitoring funds on a daily basis to asses “monetary health” of NH.
Measurement and Control
It is a common misconception to believe that a strategy is accomplished when it is created; the reality is only those strategies that are closely monitored with effective management operation are successful. Application of a strategy should be monitored by measuring progress and key performance indicators (Burns, et al 2012).
Cleveland Clinic “Patients First” was Dr. Cosgrove ultimate goal to measure quality, and he believed the institution would gain credibility and achieve their goals by comparing itself to other clinics and peer physicians. Making their own data public, Cleveland Clinic achieved their ultimate goal, learning and promote quality improvements through internal and external comparisons. The Knowledge Program KP, collected outcomes of patients at every appointment to create records. By 2015 the KP collected mood, social, cognition and functional records from thousands of patients (Porter & Teisberg, 2019).
MD Anderson Cancer Center presents a more standardized patient service since their initial consult, to diagnosing, treatment and post care of cancer patients. From the initial point of contact to the Center, a patient would know in 24 hours if he could be admitted or not. Every patient was assigned a team captain that overviewed the entire process and follow up of the patient up till recovery. Their most important performance measurement was comparing different number of indicators like survival rates (compared with Surveillance, Epidemiology and End Results “SEER” Program), patient satisfaction and referring doctor satisfaction. Continuous improvement of service and quality through short-term courses to train physicians and nursing staff (Porter & Jain, 2018).
- Burns, L., Bradley, E., Weiner, B. (2012). Shortell & Kaluzny’s Health Care Management: Organization, Design and Behavior.
- Khanna, T., Rangan K.V., & Manocaran, M. (2011). Narayana Hrudayalaya Heart Hospital: Cardiac Care for the Poor (A). Harvard Business School. 9-505-978. Pp 1-24
- Porter, M., Jain, S. (2018). The University of Texas MD Anderson Cancer Center: Interdisciplinary Cancer Care. Harvard Business School. 9-708-487. Pp 1-23
- Porter, M., Teisberg, E. (2019) Cleveland Clinic: Transformation and Growth 2015. Harvard Business School. 9-709-473. Pp 1-22