Team 2
Note: This paper contains concepts and data that is representative and may not be entirely
true and/or accurate but is being used for purposes of an educational experience.
John Hospital and Medical Center Marketing Archive, 2002). The hospital remains in its
original location and is situated in the eastern ring of the city of Detroit and connects with
the affluent suburban Grosse Pointe communities.
SJHMC is a tertiary plus, teaching hospital with 761 licensed beds, 1,300 member
medical staff and approximately 4,500 associates (St John Providence Health, 2015).
SJHMC is designated as a Level II trauma center and its areas of specialty include but are
not limited to: cardiovascular, emergency medicine, oncology, surgery, pediatrics,
neonatology, neurosciences, imaging and womens health. In addition, the hospital
provides numerous subspecialities in cardiology, pediatrics, oncology, and surgery.
Inpatient psychiatric and acute rehabilitation care is provided in its two distinct units.
SJHMC operates outpatient services through four ambulatory centers located in
neighboring suburbs (Grosse Pointe, St Clair Shores, Harrison Township, and Macomb
Township) in addition to numerous physician practice offices scattered throughout its
geographic catchment area. SJHMC provides medical education to over two hundred
medical residents and students annually.
The determination and mission of the Sisters of St. Joseph is the foundation for
this vital healthcare network that has grown to include thousands of physicians and
healthcare professionals, and multiple facilities that provides numerous services (St John
Hospital and Medical Center Archive, 2002). The network grew stronger when the
Sisters of St. Joseph of Kalamazoo, and the four American Provinces of the Daughters of
Charity of St. Vincent de Paul, announced their decision to create a new health ministry
based on co-sponsorship of the two congregations under a new name, Ascension Health
(St John Hospital and Medical Center Marketing Archive, 2002). Today, Ascension
Health (AH) is the largest Catholic tax-exempt healthcare organization in the country.
SJHMC and its parent, St John Providence Health system (SJP) are part of the AH
Michigan Ministry Market that also includes Genesys (Grand Blanc), Borgess
(Kalamazoo), St Marys (Saginaw and Tawas).
Brief Timeline of Events
1928 Sisters of St Joseph (SSJ) received permission from Rome to build a
hospital on the
eastside of Detroit
1929 Stock market crash necessitated abandonment of the project
1943 SSJ purchased land on Moross Road that was the Beaupre farm and known
as the Widows dower
1950 Construction began and the cornerstone was laid
1952 Hospital opens in May
1985 Major construction project of $117m occurs adding five stories, 12 new
operating rooms, new emergency department, labor & delivery, neonatal intensive
care, pediatrics, laboratory and radiology areas
1999 SSJ and the Daughters of Charity form a new partnership that creates a new
organization called Ascension Health and at the same time the SSJ and Daughters
of Charity SE MI hospitals come together to form St John Providence Health
System (SJP)
1999 Other Michigan Ascension Health ministries include Borgess Medical
Center in Kalamazoo, Genesys Regional Medical Center in Grand Blanc, and St.
Marys Hospitals in Saginaw and Tawas.
2015 Crittenton Hospital in Rochester joins Ascension Health Michigan
ministries
Directional Strategies
Directional strategies play an important role for SJHMC because they help define
the purpose of the organization and guide action plans that will ultimately shape the
future of the organization. Directional strategies are found in the mission, vision, values,
and strategic goals of the organization.
3)
statement appears effective in defining its purpose, however, Ginter, et al., (2013)
developed a strategic thinking map to facilitate the creation of a mission statement. The
strategic thinking map not only assists in the creation of the mission statement but it
assists us in evaluating the SJHMCs mission statement. The following table is the
Strategic Thinking Map completed for SJHMCs mission statement.
1.
2.
3.
4.
5.
6.
Component
Target Customers and clients
Principal services delivered
Geographical domain
Specific values
Explicit philosophy
Other important aspects of distinctiveness
The above map points out strengths and weaknesses in the SJHMC mission statement.
For example, key words such as holistic, spiritually centered care suggest differentiating
characteristics in providing healthcare. Some weaknesses are that the mission does not
explicitly define the type of healthcare services provided nor defines the geographic area
of the communities served. A proposed alternative mission statement could be:
[SJHMC], as a Catholic health ministry, is committed to providing full continuum of
healthcare services in a spiritually centered, holistic manner which sustains and improves
the health of individuals in the communities we serve primarily in southeastern Michigan
with special attention to the poor and vulnerable.
The vision statement for SJHMC states Our passion for healing calls us to
cultivate trust, advocate wellness and transform healthcare (St John Providence Health,
n.d. p. 1). A vision is a futuristic projection or picture of what success will look like from
a leaders perspective. Effective visions possess four important attributes: idealism,
uniqueness, future orientation and imagery (Ginter, et al., 2013, pg. 179).
A Strategic Thinking Map can also help coordinate the writing of a Vision Statement. The
strategic thinking map can be used to guide leaders in a direction to solely focus on the
future. Ginter, et al., (2013) discussed the five components that are useful in helping
leaders think about the vision statement.
1.
2.
3.
4.
5.
Component
Clear Hope for the future
Challenging and about excellence
Inspirational and emotional
Empower employees first
Memorable and provides guidance
St. Johns vision statement possesses all of these components and provides an ambitious
direction.
Values are the fundamental guidelines that shape the organizational culture along
with the mission and vision to ensure we are displaying ethical behavior and standards.
The desired behaviors are outlined in SJHMCs values statement as follows-- We are
called to:
Service of the Poor Generosity of spirit, especially for persons most in need
Reverence Respect and compassion for the dignity and diversity of life
Dedication Affirming the hope and joy of our ministry (St John Providence
Health, n.d.)
Strategic goals should be determined after the mission statement is established to
insure alignment with the organizations purpose and its vision. The mission, vision, and
values of any organization serve as the foundation for goal setting. Strategic goals are
put in place to bring the organizations vision to life. When setting strategic goals, keep in
mind that goal setting should be focused on those areas that are critical to mission
accomplishment (Ginter, et al., 2013, p. 190). SJHMC uses a goal framework with three
themes Healthcare that works, Healthcare that is safe and Healthcare that leaves no one
behind that facilitates alignment with its mission and vision (Ascension Health, 2016).
External Environmental Analysis
General
St. John Hospital and Medical Center is a successful organization due to the
utilization of strategic planning to adapt to changes taking place in the general
environment. Per Ginter, et al., (2013) changes can be classified as competitive,
regulatory, legislative/political, economic, social/demographic, and technological
changes.
Organizations and individuals create change. Therefore, if health care managers
are to become aware of the changes taking place outside their own organization,
they must have an understanding of the types of organizations that are creating
change and the nature of change. (Ginter, et al., (2013, p.45)
A change in the general environment that affects SJHMC is within the social or
demographic category with the rise in the population greater than 65.
10
Per the U.S. Census Bureau (2016), one in five Americans will be elderly by the year
2050. An increase in the geriatric population fueled the need for SJHMC to create a unit
specifically designed for the care of the elderly. With many more American babyboomers entering senior citizenship, it is crucial for more physicians and support staff to
be trained to provide specialized care in the Acute Care for the Elderly (ACE) Unit.
Social workers are available to the patient and their families so that continuing care or
long-term care can be set up when the patient is discharged, if necessary. Services needed
for transition outside the hospital will be essential to aid the patient as the geriatric
population increases and such placement will become more limited. An increased
geriatric population may undoubtedly affect the amount of staffing needed to
accommodate this growing population. SJHMC appears to be planning strategically for
the future by implementing such ACE units and providing extraordinary care for the
communities they serve.
Another change in the general environment that will likely affect SJHMC relates
to the political arena. With the upcoming presidential election, change may occur when a
11
new President is placed in office. Each candidate has different views and goals and
therefore, different agendas are pushed for issues important to him or her. For example,
President Obama pushed for implementation of Obama Care and the Affordable Care Act
(ACA) and George W. Bush pushed for the prescription drug bill. Per Ginter, et. al.,
(2013), the prescription drug bill created by George W. Bush affected the environment of
many organizations and individuals including insurance companies, organizations
representing the elderly, and/or retirees. Similarly, the early healthcare reform initiatives
of the Obama administration resulted in the passage of ACA, however, its
implementation was spread over a number of years and affected virtually all institutions
in the general environment just not healthcare organizations"(Ginter, et. al., 2013, p.46).
Per St. John Providence Faith and Health newsletter (2013), there are many reasons why
the Affordable Care Act was needed such as skyrocketing health care costs, people falling
into health insurance holes, people being rejected for insurance coverage due to preexisting conditions, or being denied coverage due to exceeding their lifetime limit. In
addition, many business owners had difficulty providing and covering health insurance
costs for their employees. Per the U.S. Department of Health and Human Services
(2016), The Affordable Care Act put in place comprehensive health insurance reforms
that have improved access, affordability, and quality in health care for Americans. (p.1)
With SJHMCs continued dedication to providing affordable health care to its patients,
the organization will continue to grow and be successful in the communities in which
they serve.
12
Industry Specific
A major change in the healthcare industrys environment is the growth and
evolution of technology. By staying up-to-date with technology, SJHMCs patients now
have the opportunity to utilize new services such as Spinal Cord Stimulation (SCS) to
automatically adapt to a patients position, activity level and pain relief needs.
SCS is appropriate for patients with chronic or severe pain from herniated disks or
pinched nerves who have not been significantly helped by surgery, are not
candidates for surgery, or have chronic pain syndromes such as complex regional
pain syndrome, failed back surgery syndrome, or painful peripheral neuropathy.
(SJHMC Medical Education and Physician Resources, 2013, p. 1)
Such innovation in technology allows for patients to receive care that previous
procedures did not fully correct and allows SJHMC to remain competitive with other area
hospitals. Todays technology also allows for patients and their families to have access to
online medical records twenty-four hours a day through a patient portal on the
organizations website. Patients can schedule appointments, find a physician, a translator,
search all locations, and even pay their bill online which aides in finding care with more
ease and confidence. Physician finder breaks the physicians into categories based on
specialty and gives a description of that doctor including where they are located, phone
number, and other important information such as board certification credentials (St John
Providence Health, 2016). Per the American Health Association (2016), Americas
hospitals have been pioneers in harnessing information technology to improve patient
care, quality and efficiency and share the vision of a health care system where widespread
use of interoperable electronic health records (EHRs) supports improved clinical care,
13
better coordination of care, fully informed and engaged patients, and improved public
health (p.1). The American Health Association also works every day to ensure adequate
privacy and security for patients and their personal health information. (American Health
Association, 2016).
Competitive changes in the industrys environment will also likely affect SJHMC.
For example, health care organizations may be required to consolidate to remain
competitive and to deal with cost pressures. Niche services and other market strategies
will be increasingly important so that SJHMC can draw consumers from other area health
care organizations. Per St. John Providences website (2016) one such market niche
service offered is minimally invasive surgery. The use of minimally invasive surgery
results in less pain, smaller scars, shorter hospital stays, lower rates of complications, and
faster recoveries. It has become the method of choice for a variety of surgical conditions.
The St. John Providence Minimally Invasive Institute continually meets or exceeds local
and national surgical benchmarks. The organization proudly states that in regards to
minimally invasive surgery, We are set apart from other health systems and designed
with strengths in the following areas: size, surgeon experience, innovation and expertise,
education, and satisfaction, (St. John Providence, 2016, p. 1). More challenges in
competition include filling shortages of health care workers.
Service Area Competitor Analysis
The Service Area
St. John Hospital and Medical Center covers a broad geographical area of
approximately 4,390 square miles and a population of approximately 4.5 million people.
The primary service area includes Wayne County that covers 672 square miles and a
14
population 1,820,652 people and Macomb County that covers 570 square miles and
840,978 people. The secondary service area includes Oakland County covering 908
square miles and a population of 1,202,362 people. SJHMC also serves some less
populated counties such as Washtenaw County covering 723 square miles and a
population of 344,791 people, St. Clair County covering 837 square miles and 163,040
people, and lastly, Monroe County covering 680 square miles and a population of
152,021 (Semcog, 2016).
15
year 2040 (Semcog, 2016). A percentage of people under the age of 65 are disabled in
the service area with Wayne county at 12.3 %, Oakland County at 7.8%, Macomb County
at 9.4%, Washtenaw County at 5.8%, St. Clair at 12.4%, and Monroe at 9.3% (US
Census, 2016).
St. John Hospital and Medical Centers service area population has a mix of
cultures and varying degrees of education. The majority is white at 68.5% percent,
African American at 21.6%, Asian at 3.6%, Hispanic at 3.9%, multiracial at 2%, and
others not in that mix making up .4%. Education levels vary as well starting with the
population who did not graduate high school at 2.2% and 28.5% with a highest level of
education graduating high school. The people with some college but no degree are
23.2% whereas Associate degree level of education is 7.7% and 17% that hold a
bachelors degree. Lastly, 11.5% of the population has the highest level of education
with graduate degrees (US Census Bureau, 2016).
The median household and per capita incomes vary by county in the service area
of St. John Hospital and Medical Center. Wayne County has a Median Household
income of $41,421 and a per capita income of $22,643. Oakland Countys median
household is $66,436 and a per capita income of $37,089. Macomb County has a median
household income of $54,059 and a per capita income of $27,145. The median
household for Washtenaw County is $60,805 with a per capita income of $34,258. St.
Clair Countys median household is $48,703 and has a per capita of $24,820. Lastly,
Monroe Countys median household income is $54,911 with a per capita of $ 26,617.
These are in line with the entire state of Michigans household income at $49,087 and a
per capita of $26,143 (US Census, 2016).
16
The primary service area of SJHMC has a high percentage of persons in poverty.
The State of Michigans mean is 16.2%. However, Wayne county is higher than the mean
at 24%, but the other counties are lower with Oakland at 10%, Macomb at 12.3%,
Washtenaw at 14.3%, St. Clair at 13.8%, and Monroe at 10.4% (US Census, 2016).
SJHMC serves a diverse population measured in age, race, and economic status.
Having identified the geographical and pertinent demographic information related to the
service area, we will now begin the competitor analysis.
Competitor Analysis
We identified the competitors of St. John Hospital and Medical Center as Henry
Ford Macomb Hospital, DMC- Detroit Receiving Hospital, and Beaumont Hospital Troy.
Henry Ford Macomb Hospital is located in Clinton Township, Michigan and is one of the
top competitors for SJHMC. Henry Ford Macomb Hospital is known as Macomb
Countys most comprehensive health care organizations as well as the fifth largest
employer. In 2007, Henry Ford Macomb Hospital was fully owned by Henry Ford Health
System, which occupies five service area hospitals within the same market HFHS is
known as one of the nations leading clinical and research-based health systems.
Henry Ford Macomb has approximately 638 licensed beds and offers
comprehensive acute and tertiary care. Their specialty services include Heart & Vascular
Institute, Josephine Ford Cancer Institute, womens and childrens services, orthopedics,
and neurosciences. More than 1,000 medical staff, 3,000 staff employees, and 700
community volunteers help to service the community. The American College of Surgeons
Committee on Trauma has verified Henry Ford Macomb Hospital as a Level II-Adult
Trauma Center. (Henry Ford Macomb Hospitals, n.d.).
17
A level II- Adult Trauma Center has the capabilities to initiate definitive care for
all injured patients. Level II Trauma Services include 24- hour staffing, immediate
coverage by general surgeons, orthopedic surgery, neurosurgery, anesthesiology,
emergency medicine, radiology, and critical care. (Henry Ford Macomb Trauma, n.d.).
Henry Ford Macomb Hospital recognizes that they must balance investments in
technology, facilities and our employees with the pressing needs of those we serve
(Henry Ford Macomb Hospital, n.d., p.1).
Henry Ford Macomb Hospital provides services to a large percentage of working
families. This is beneficial because most of these families are insured with private health
care insurance. This hospital is centrally located and is considered to be a local
community based hospital versus a large medical center. In addition to having a local
hospital within the community, Henry Ford Macomb Hospital is part of the Henry Ford
Health System. The hospitals medical staff is primarily independent physicians along
with the employed Henry Ford Medical Group.
Henry Ford Macomb Hospital has a few potential weaknesses such as the
population age bracket within Macomb County. They are young, healthy families that
may not require as much healthcare assistance as the elderly population. This could cause
a lower number of patient visits. The potential of splitter private physicians who also
practice out of SJHMC and or Beaumont Troy could cause other issues. The clinical
aspect of being a Level II facility anything requiring more care would be transferred out
to another facility or location, which causes frustration for patient quality of care. Lastly,
there is lack of teaching programs within all of the Henry Ford Health System. The
potential for patient care volumes to fluctuate upon the age and health of the population
18
in the suburbs can cause significant drawbacks for patients looking for the best quality
services and highest technology.
The Detroit Medical Center (DMC) is a health system located in the metropolitan
Detroit area and is comprised of nine specialty hospitals (Detroit Medical Center, n.d.).
The DMC considers itself a leading academic healthcare provider with more than 2,000
licensed beds and 3,000 affiliated physicians. DMC is a competitor of SJHMC more as a
combined health system rather than one or more of its nine hospitals due to the location
within the service area. However, for purpose of this competitor analysis, the focus will
be on one of the nine DMC hospitals, DMC Detroit Receiving Hospital, that is ranked
10th for discharges in the service area with 6,643 discharges or 3.5% market share.
DMC Detroit Receiving Hospital is Michigans first Level 1 Trauma Center and
its primary service is in emergency medicine (Detroit Medical Center, n.d.). In addition
to emergency medicine and complex trauma, the hospital provides services in critical
care, orthopedics, neurosciences, nephrology, pulmonology, diabetes, geriatrics, and
urology (Detroit Medical Center, n.d.). Due to its trauma status and emergency expertise,
DMC Detroit Receiving Hospital is a model for local, regional, state and national
emergency preparedness (Detroit Medical Center, n.d.). DMC Detroit Receiving has a
verified burn center that is one of 43 in the country as well as a 24/7 hyperbaric oxygen
program (Detroit Medical Center, n.d.).
As a Level 1 Trauma Center, DMC Detroit Receiving Hospital may be the
recipient of high acute complex trauma cases that generally have a higher payment rate
than other services. The hospitals strenght in emergency medicine can be a feeder for its
other specialty services such as orthopedics and neurosciences. The City of Detroit has a
19
growing population of people over the age of 65 years and this population generally
requires higher utilization of health care services. However, an influx of young
professionals are moving into Detroit due to the number of recent investments and
employer moves to the city. This could result in a positive outlook for healthcare
services.
A potential weakness of DMC Detroit Receiving Hospital is that it is located in
the heart of the City of Detroit where the population has decreased significantly each year
and has a higher than average persons living in poverty. This can influence the number of
patients seeking medical care and the ability to be paid for the services provided. Patients
seeking elective care may avoid DMC Detroit Receiving due to its high level emergency
care.
Beaumont Health System is made up of 8 hospitals and 3337 beds (Beaumont
Health System, 2016). However, for the purpose of this competitor analysis, the focus
will Beaumont Hospital in Troy, MI. The focus is due to its ranking of number 2 in the
service area. This is an outpatient and in-patient hospital with 458 beds. It offers centers
of excellence in pediatrics, cancer, digestive health, heart and vascular, neuro science,
orthopedics, urology, and womens health. It also specializes in emergency care, family
medicine, laboratory services, radiology, rehabilitation services, and surgical services
(Beaumont Health System, 2016).
Beaumont Troy has a Healthgrade five star rating in coronary interventional
procedures, (inpatient) defibrillator procedures, heart attack heart failure, respiratory
failure, sepsis, Esophageal/Stomach Surgeries, gall bladder removal surgery, pancreatitis,
stroke, hip replacement, chronic obstructed pulmonary disease, and pneumonia
20
21
widen the performance gap is to create value for patients and other key stakeholders. The
value chain model by Ginter, et al., (2013) suggests that organizations look at value
creation in the service delivery activities such as pre-service, point-of-service, and afterservice. For purposes of this exercise, we analyzed point-of-service activities and the
following strengths and weaknesses were identified.
Point of Service
Strengths
Weaknesses
specialty coverage
Emergency department and trauma capabilities Large medical center to navigate for
Caregivers aligned with values and provide
services
Shortage of nurses and other
holistic care
Innovative service offerings in many
caregivers
Innovative and niche services are
early years
Marketing efforts focus on system
oncology
Medical education programs with residents
Resources
High
Competencies
High
Capabilities
High
22
Yes
Difficult
Yes
Yes
Difficult
Yes
Yes
Difficult
Yes
23
SJHMC offers community outreach sessions where prospective patients can attend to
hear about a niche service (St John Providence Health System, 2016).
Patient satisfaction is an on-going challenge as it is for most hospitals. The
Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey
was developed with the intent to have a standardized method for patients to assess his/her
experience. SJHMC pursues initiatives to improve the patient experience (T. Marx,
personal communication April 1, 2016).
Organizational Structure
The value chain model by Ginter, et al., (2013) suggests that organizations look at
value creation not only in the service delivery activities of an organization but also in the
support activities of the organization. Support activities include organizational culture,
organizational structure, and strategic resources. For purposes of this exercise, we
analyzed the organizational structure of SJHMC and the following strengths and
weaknesses were identified.
Organizational Structure
TYPE: Functional (see note A below)
Strengths
Leverage national contract pricing for
Weaknesses
Product selection is not always the preferred
service selection
Shortage of patient caregivers
24
Inability to respond to special needs
Limitations on capital spending to achieve
cash goals in addition to priorities across the
national system
Note A: SJHMC operates within an organizational structure that encompasses all three
types of hierarchical designs described by Ginter, et al., (2103) as functional, divisional,
and matrix. For example, there are functional support areas such as supply chain,
finance, human resources, and legal that support all hospitals within St John Providence
Health System (SJP). SJHMC operates within the East Region (Division) of SJP and
certain regional structures exist. Lastly, the organizations functions and regions have
matrix reporting to SJP, Ascension Michigan, and Ascension Health national office. The
above strengths and weaknesses congealed around specific functions therefore, the
functional type was chosen.
Next, we evaluated the competitive relevance for strengths and weaknesses by
determining the value, rareness, imitability, and sustainability of resources, competencies,
and capabilities of the organizational structure.
Organizational Structure
TYPE: Functional (see note A above)
Resources
Value (High or Low)
High
Rare (Yes or No)
No
Imitability (Difficult or Easy)
Difficult
Sustainability (Yes or No)
Yes
Competencies
High
No
Difficult
Yes
Capabilities
High
Yes
Difficult
Yes
25
Using the above evaluation tools, the organizational structure of SJHMC can be generally
described as a strength. The strengths identified are of high value though not all rare.
The skill set or resources may be imitable with difficulty. There is expertise that renders
the capability as rare and thus, a competitor may have to steal in order to imitate.
SJHMCs supply chain support system facilitates the service delivery by insuring
goods and services are acquired at competitive rates. The ability to leverage national
purchasing power through Group Purchasing Organizations (GPO), exclusive contracts,
and other vehicles is a strength.
The [organizational] structure should have enough flexibility to allow for
responding to special needs (Ginter, et al., 2013, p. 135). System procurement activities
can be rigid due to restrictions of GPOs and/or other barriers block the ability to purchase
the desired supply or product.
While SJHMC has strengths in organizational structure, a major impediment to
service delivery is in the human resource support area with issues that hinder timely
talent acquisition. The talent management function moved from a regional authority
matrix to a national authority matrix and this could result in less knowledge of the local
environment.
Being part of a national healthcare organization changes local dynamics.
However, many value creation opportunities continue to emerge by being a part of the
largest Catholic, tax-exempt healthcare system in the nation. For example, SJHMC
participated in numerous quality initiatives that were grant funded to promote health and
well being of its patients (Ascension Health, 2014). Another benefit of being part of a
large national health system is the ability to work with strategic vendor partners in
26
developing new products and/or technologies. The cash position of SJHMC and in turn,
SJP and AH, provides borrowing power to finance growth initiatives with days cash on
hand of 250 as of March 31, 2015 (Ascension Health, 2015).
Strategy Formulation and Evaluation
Overview
Strategy formulation of a healthcare organization such as SJHMC is no easy task.
Strategic thinking involves an awareness of the environment; intellectual curiosity that
is always gathering, organizing, and analyzing information; and the willingness to be
open to creative ideas and solutions (Ginter, et al, 2013, p. 208). Strategy formulation
should draw from the directional strategies developed by the organization and answer
three questions- 1) what is the organization doing now that it should stop doing? 2) what
is the organization not doing but should start doing? and 3) what is the organization doing
that should be done differently? The mission of SJHMC as committed to providing
spiritually centered, holistic care which sustains and improves the health of individuals in
the communities we serve and the vision of Our passion for healing calls us to cultivate
trust, advocate wellness and transform healthcare (St John Providence, 2016, p. 1), we
are confident our strategy formulation will align with the directional strategies. Our
strategy formulation and evaluation will focus on SJHMCs pediatric program.
Adaptive Strategy
Adaptive strategy provides the primary methods for achieving the vision within
the organization (Ginter, et al., 2013, p. 211). We learned in the service area analysis that
pediatric population is declining and baby boomers are aging. In addition, strong
competitors exist for Pediatrics (Beaumont and DMC Children's) that also have strong
27
programs. While SJHMC enjoys strong market share today, the market share may
decline. According to Rappleye (2015), Dr. Bauer (a health futurist and medical
economist) said healthcare will account for 15 to 19 percent of GDP by the end of the
decade. He forecasts a 15 percent chance of growth, 45 percent chance of stagnation and
a 40 percent chance of decline (para. 6). For these reasons, we decided to take the
adaptive strategy of maintenance of scope with a focus on enhancing market share. In this
type of strategy, the goal is to maintain market share and keep services at their current
level. Environmental influences affecting the products or services should be carefully
analyzed to determine when significant change is imminent (Ginter, et al., 2013, p. 227).
To validate our decision to maintain scope and enhance market share, we used
two methods to evaluate the fit of the adaptive strategy selected. First, the strategic
position and action evaluation (SPACE) matrix was used. This matrix is used to
determine the strategic profile that will best suit the organization. The SPACE analysis
looks at four areas which are: service area strength or stability position (SP), the stability
of the environment or industry position (IP), the competitive advantage of an organization
or competitive position (CP), and the financial strength of the organization or financial
position (FP) (Ginter, et al., 2013).
The FP ranked five categories that are return on investment, liquidity, leverage, working
capital, and cash flow. The ranking was 1 to 7 with 1 being the best and 7, the worst. The
same ranking was used for the IP in the categories of growth potential, financial stability,
ease of entry into market, resource utilization, and profit potential. SP and CP were
ranked using numbers of -1(Best) to -7 (Worst). SPs categories were rate of inflation,
technological changes, price elasticity of demand, competitive pressure, and barriers to
28
entry into market CPs categories were market share, product quality, customer loyalty,
technical know-how, and control over distributers. Here are the results:
External
Analysis:
Stability Position (SP)
Internal Analysis:
Financial Position (FP)
Return on Investment
(ROI)
Leverage
Liquidity
Working Capital
7
7
Cash Flow
Rate of
Inflation
Technological
Changes
Price Elasticity of
Demand
Competitive Pressure
Barriers to Entry into
Market
-2
-3
-3
-2
-2.6
External
Analysis:
Industry Position (IP)
Internal Analysis:
Competitive Position (CP)
Market Share
-2
Product Quality
-1
Customer Loyalty
Technological knowhow
Control over Suppliers and
Distributors
-2
-3
-1
-1
-1.4
FP
Growth
Potential
Financial
Stability
Ease of Entry into
Market
Resource Utilization
Profit
Potential
Industry Position (IP) Average
4
6
4
7
4
5.0
29
SJHMC
7.0
5.0
3.0
CP
1.0
-1.0
-3.0
-5.0
-7.0
SP
30
Stars
Question
1.0
Low 0.0
Growth Rate
High
0.20
Dogs
Low 0
High
Low
We can see the BCG matrix puts SJHMC in the Cash Cow segment. Cash cow
services have low market growth but a high market shares and profitability. Thus,
strategies should be directed toward maintaining market dominance through
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enhancement (Ginter, et al., 2013, p. 271). This solidifies that we have made the right
choice in maintaining scope while enhancing market share.
Market-Entry Strategy
Our adaptive strategy is to maintain scope and this strategy is used when
management believes the past strategy has been appropriate and few changes are required
in the target markets or the organizations products/services (Ginter, et al., 2013, p. 226).
Market entry strategies should assist the organization in achieving the adaptive strategy.
SJHMC has a solid market share in its market area. Therefore, we look to market
strategies that will enhance SJHMCs current position through further internal
development.
SJHMC appears to be progressing forward in the right direction without a need to
make significant changes at this time. However, opportunities typically exist in any
organization to increase efficiency, improve services and/or quality outcomes. SJHMC
should look to existing products or services that it could further develop and/or enhance.
Internal development uses the existing organizational structure, personnel, and capital to
generate new products/services or distributional strategies (Ginter, et al., 2013, p. 237).
By doing so, the organization is able exploit existing resources, competencies, and
capabilities. Internal venture strategy is another potential strategy for SJHMC. For
example, if SJHMC has expertise in neonatology or pediatric surgery, it could look to
sell these services to other hospitals to leverage this internal expertise. Other
enhancement strategies also include improvements of services provided, customer
service, and flexibility to the services offered within the organization.
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Draws on Competitive
Advantage or Fixes a
Disadvantage?
Internal venture
Yes; provides key
services to a distinct
population of the
community
Yes; leverages internal
expertise
Yes; relates to value of
Courageous Innovation
Yes; cultivates trust with
other hospitals and
potentially transforms
healthcare
Yes; provides healthcare
leaving no-one behind
such as pediatric
patients
Competitive Strategies
Competitive strategies are important to strategy formulation as they also assist the
organization in achieving its directional strategies. Competitive strategies are relational to
33
the market and the organizations competitors. The two types of competitive strategies are
discussed below.
Strategic Posture.
Based upon our adaptive strategy and market entry strategies, it appears that the
posture of SJHMCs pediatric service is that of a defender strategic posture (Ginter, et al.,
2013). Defender organizations try to drive costs down through vertical integration,
specialization of labor, a well-defined organizational structure, centralized control and
standardization, and cost reduction while maintaining quality (Ginter, et al., 2013, p.
292). Defender characteristics are outlined by Ginter, et al., (2013) as an organization
being capable of developing a single core technology, allowing for cost efficiency,
protecting their marketplace from competition, having the capacity for engaging vertical
integration strategies, emphasizing centralized control/stability, a structured division of
labor, developing a well defined hierarchical communication channel, utilizing cost
control expertise, and maintaining well-defined procedures and methods, as well as a
high degree of formalization or centralization. As discussed in above sections, SJHMC
has demonstrated strength in leveraging its supply chain initiatives to reduce its costs.
There appears to be management emphasis on centralized control and well defined
procedures and methods as being part of a national health system. SJHMC has loyal
physicians and caregivers in the pediatric division and numerous pediatric subspecialists,
as well as the organizations ability to leverage internal expertise. The defender posture
seems to fit with the external environment of SJHMC as indicated by the appropriate
external conditions outlined by Ginter, et al., (2013) for the defender posture strategy
which are a stable external environment, predictable political/regulatory change, slow
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35
36
37
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