EIGHTH EDITION
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© 2018 Peter M. Ginter, W. Jack Duncan, Linda E. Swayne. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Previous editions published under the Jossey-Bass imprint by John Wiley & Sons, Ltd. Seventh edition published 2013.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Names: Ginter, Peter M., author. | Duncan, W. Jack (Walter Jack), author. |
Swayne, Linda E., author.
Title: Strategic management of health care organizations / by Peter M.
Ginter, University of Alabama at Birmingham, W. Jack Duncan, University of
Alabama at Birmingham, Linda E. Swayne, University of North Carolina at
Charlotte.
Description: Eighth edition. | Hoboken, New Jersey : Wiley, [2018] | Includes
bibliographical references and index. |
Identifiers: LCCN 2017051205 (print) | ISBN 9781119349709 (hbk)
Subjects: LCSH: Health facilities—Administration. | Strategic planning. |
Mission statements. | BISAC: MEDICAL / Nursing / Management & Leadership.
| HEALTH & FITNESS / Health Care Issues.
Classification: LCC RA971 .D78 2018 (print) | DDC 362.1068—dc23
LC record available at https://lccn.loc.gov/2017051205
ISBN 978-1-119-34970-9 (hbk)
ISBN 978-1-119-34969-3 (ebk)
ISBN 978-1-119-34971-6 (ebk)
For book adopters, the following cases from the health care sector are available on the book’s website, www.wiley.com/go/ginter8e.
School of Public Health, University of Alabama Birmingham
Cottage Senior Living (CSL) was a family owned assisted-living company headquartered in Huntsville, Alabama. CSL had developed or acquired nine continuing care retirement communities (CCRCs) in seven locations in Alabama and one each in Mississippi and Tennessee. CSL operated in a highly-controlled environment with regulations stipulating staffing and building requirements. The leadership team of CSL assembled at a strategic planning retreat to move the business “to the next level.” The purpose of the retreat was to answer three questions: (1) How to grow? (2) Where to grow? and (3) Do we have the organizational capacity to grow?
California State University at Eastbay
Asian Health Services (AHS) is a not-for-profit community health care provider that focuses on serving ethnic Asians in Oakland, California. With the advent of the Affordable Care Act (ACA or “Obamacare”), AHS had been preparing vigorously for significant changes. Now that the initial operational systems were in place, AHS’s CEO Sherry Hirota must decide what proposals to include in a coherent blue ocean strategy presentation at the upcoming board meeting that balanced AHS’s dual mission of social benefit against generating more revenues than costs. Looming threats included payments moving from pay-for-service to pay-per-patient or even pay-for-value. As the original founders had identified a blue ocean (i.e. uncontested markets) in the health care environment 40 years ago, now Hirota must find another blue ocean.
Belk College of Business, The University of North Carolina at Charlotte
In early 2010, Martin Grable, President of the Community Blood Center of the Carolinas (CBCC), was ready to move the first community blood center in North Carolina to a new level. In a strategic planning retreat, he asked the Board of Directors to evaluate seven strategic options for CBCC. Although all of the alternatives were needed by the community, CBCC did not have unlimited resources. Further, health care reform loomed on the horizon. Clearly, to serve the community, CBCC needed not only to survive, but to thrive in the near term. Which of the alternatives would allow achievement of that goal for the newest FDA-licensed community blood center?
Center for Primary Care, Harvard Medical School
Long-time president and CEO Katherine Gottlieb reflected on a recent meeting of Southcentral Foundation’s (SCF) board of directors where CEO succession planning was discussed as she contemplated retirement. The case provides background information about Alaska, the American Indian and Alaska Native (AIAN) health care system, and reviews SCF’s mission, vision, and key tenets of the organization’s culture: customer-ownership, core concepts, and continuous improvement. SCF’s approach to hiring and developing its workforce and its governance structure are highlighted as background for Gottlieb’s concerns in choosing the next CEO: maintaining SCF’s culture, choosing an internal or external CEO, and identifying the top three qualities that SCF’s next leader must embody.
Belk College of Business, The University of North Carolina at Charlotte and Colin Bain, President and CEO, LINET Americas
LINET was the leading manufacturer of ICU (intensive care unit) beds in Europe. In 2010 LINET Americas began competing with the two largest U.S. bed manufacturers, Hill-Rom and Stryker, by marketing to smaller hospitals based on lower prices and better safety features for caregivers. Hill-Rom and Stryker noticed and head-to-head competition began. Hill-Rom lowered its prices and extended its warranty to match two of LINET Americas’ competitive advantages; however, the innovative design was much harder to match. President and CEO Colin Bain needed to determine how he could continue to grow LINET Americas, especially when the company was blocked out of the largest group purchasing organization (GPO) that was offering Hill-Rom or Stryker ICU beds.
Florida International University
The first three years of operation of the West Kendall Baptist Hospital in Miami provided a “poster child” for efficient and cost-effective health care delivery to the West Kendall community. The 133-bed facility’s mission was to promote the preservation of life by improving the health and well-being of its constituents. WKBH exceeded every budget prediction and showed a profit in year 3; however, with the passage of the Affordable Care Act, the situation changed almost overnight. By the first quarter 2016, WKBH started to lose money in excess of budget predictions, despite its increased patient admissions, careful financial planning, expense reductions, quality service, and excellence in patient care delivery. A serious financial crisis loomed with little relief in sight; the management team was searching for solutions.
Harvard T.H. Chan School of Public Health
Humana, Inc., headquartered in Louisville, Kentucky, was the fourth largest U.S. health insurance firm with annual revenues of $54.3 billion, membership of 14.2 million, and 50,100 employees in 2015. The company served members in 17 states plus the military. Under the leadership of CEO Bruce Broussard, Humana was attempting to shift its focus from paying claims to improving the health of beneficiaries. Humana set an “aspirational Bold Goal of improving the health of the communities we serve by 20 percent by 2020 because we make it easy for people to achieve their best health.” Dr. Andrew Renda, hired as Director, Bold Goal Measurement, knew that senior leaders understood that it would take time to change population health, yet they wanted to see some results quickly.
The Darden School of Business, University of Virginia
Mylan Inc., a generic drug manufacturer, bought the EpiPen product line from Merck, invested in marketing, and dramatically increased the price from $100 to $600 per two-pack, igniting consumer anger and provoking a media firestorm. Congress was compelled to step in, demanding to know how Heather Bresch, CEO of the company, could justify the high price of EpiPens. Such health care companies face a tension between doing good in the world and making a profit. Is it fair for drug prices to vary so dramatically across countries (as the EpiPen is priced at $85 in France)? How should such a public controversy be resolved?
The Darden School of Business, University of Virginia
A midsize (650-bed) community not-for-profit hospital, located in south central Virginia, chose an expansion strategy in 2008 by bringing all its cardiology under one roof in a new comprehensive care center. Impressive results drew the attention of several insurers who approached Cavalier Hospital, each hoping to include the hospital in its network of physician providers. In preparation for his first board meeting, the physician director wanted to assess the hospital’s overall financial condition to determine which strategies should be pursued next: focusing on acquiring patient volume, expanding investment into integrated care, setting the reimbursement structure for revenue collection, or moving to a capitation-based payment system. The evaluation of revenue models would help him understand which alternatives could best be supported for the business strategy.
Ivey Business School, University of Western Ontario
Pleasant Bluffs Health System was a Level I Trauma Center with 400+ licensed beds that provided outpatient care, acute and subacute care, biomedical research, and graduate and undergraduate education. Pleasant Bluffs wanted to create a pilot program for home-based hospital care. Graft Salot, as the director of the hospital’s Performance Improvement (PI) department, was asked to recommend the pilot program’s location, duration, eligible population, and possible changes to the intake process. Salot must consider issues related to an educational program about home-based care and an implementation strategy for it as well as a cost/profit comparison for providing care in the hospital versus home-based care.
Ivey Business School, University of Western Ontario
Kaiser Permanente, based in California, was a vertically integrated health care system comprised of 38 hospitals, 619 medical offices, and 10.1 million members in eight western U.S. states. In 2007, the emergency department at South Sacramento was experiencing long patient wait times; it became clear that a better way was needed. Changes were made from 2007 until 2015 by Dr. Karen Murrell, leader of the LEAN program, and her flow group, to significantly improve many key performance measures of the emergency department. In 2016, she was wondering whether there were any additional ways to create capacity in the ED.
Matthew Thames, MBA/MD under the supervision of Robert E. Spekman, PhD
The Darden School of Business, University of Virginia
InSightec, a privately-held Israeli company, developed a new medical device, ExAblate. Focused ultrasound provided precise concentration of sound waves to act on a particular part of the body; the guidance of magnetic resonance imaging (MRI) technology allowed for non-invasive, targeted destruction of diseased tissue. The company required a marketing strategy, navigating a number of barriers that could impinge on its ability to successfully introduce the new technology. The FDA approved its use for removing uterine fibroids and bone metastases. Yet the holy grail of this technology was the application to the brain. InSightec needed to develop a go-to-market strategy for ExAblate Neuro, which was intended to treat essential tremor (ET) and other diseases, such as Parkinson’s, for which there was no cure at present.
Stanford Business Graduate School, Stanford University
Located in Pasadena, California, Huntington Hospital (HH) was a 625-bed not-for-profit organization named among the top-performing hospitals in 2012 by U.S. News & World Report. To further HH’s focus on high-quality, patient-centered care, Jim Noble, Executive VP-COO/CFO, was looking for a change in direction, particularly in the Business Services Office. Accounts Receivable (AR), a key billing metric, could be lower; Noble hired Kim Markey with the mandate to improve performance. Markey’s long-term vision involved re-examining the revenue cycle and the hospital’s processes to ensure that HH would become a stronger performer. She needed to get her metrics under control as a first step before transforming the departments she oversaw into truly patient-focused business centers.
The Darden School of Business, University of Virginia
Felton Wayne, MD, began his career in private practice with a friend. After ten years of developing the practice, he sold his share and Dr. Wayne joined the much larger practice of Valley Health (VH) that had recently merged with Franklin Memorial Hospital (FMH). He was appointed Chief Medical Officer (CMO) and was responsible for the North Carolina organization. The medical staff was unhappy and many physicians left; two CMOs left before Dr. Wayne took up the position. During a feedback session with John Richmond, from the South Carolina division of VH, Dr. Wayne was stunned to discover that Richmond considered him a “cowboy!” Dr. Wayne personally thought he was doing a good job of developing a better working environment.