Strategy Implementation - Healthcare Industry

Read Case 6, "The Health Care Industry" then answer questions 1-4.

The Health Care Industry

The health care industry has been going through major structural changes in order to become more efficient to help stem rising costs of health care.  During the previous decade, health care organizations hired MBAs to help streamline their organizations, introduce new efficiencies, and market their services.  In addition, many physicians are obtaining MBAs in order to help introduce better management into the health care industry.  Health maintenance organizations (HMOs) continue to hold down costs by emphasizing prevention, by limiting access to specialists, by requiring co-payments to make patients more sensitive to the costs of health care, and through increased bargaining power resulting from their size.  There also have been mergers among health care organizations and hospitals.  Unfortunately, many health care organizations have encountered financial difficulties and some have failed.  The federal government also has tried to hold down costs by limiting Medicare and Medicaid reimbursements.

At the same time that the health care industry is struggling to become more efficient, the demand for health care is increasing and is expected o increase in the future because of an aging population, increased affluence, and advances in technology.  By 2008, 7.2 percent of the US population will be 75 years or older.  This compares with 5.2 percent in 1978.  Actual employment levels in selected health care occupations in 1998 and projections for 2008 are as follows:

Note! See the attachment Occupations                         

1. Most people have some familiarity with hospitals and the health care industry.  Based on your knowledge, in which quadrant of the staffing policies matrix (fortress, baseball team, club, and academy; the four distinct strategic staffing types four distinct strategic staffing types) do you think hospitals are located?  Are the staffing policies of hospitals more like baseball teams, academies, clubs or fortresses?  Explain our reasoning.

2. Examine the projections for the various health care occupational specialties.  Are there substantial differences in the rates at which employment is expected to grow in the different occupations?  How have the strategic actions by health care organizations, such as mergers, shifts to preventative approaches, and the focus on cost control, affected the expected growth of the different specialties?  How is the market demand for medical care expected to affect employment in the different specialties?

3. Given the uncertainty of the demand for health care workers, how can health care organizations be prepared to meet their future needs for such employees?  How can they help their employees prepare for their employment futures?

4. Do Porter's competitive strategies of cost leadership, differentiation, and niche or focus apply to hospitals or health care organizations?  Explain.

Attached file(s):

Occupations.doc  View File