Just Chapter 6: Strategic Management of Healthcare Organizations.

a purchase strategies that allows an organization to use its resources to enter a market quickly. may run it as a separate business or may integrate into present operations
adaptive strategy
provides the primary methods for achieving the vision( adapting to the environment). These strategies determine the scope of the organization and specifiy how the organization will expand, reduce or maintain.
loosely coupled arrangement among existing organizations that are designed to achieve some long-term strategic purpose not possible by any single organization.
analyzer strategic posture
a combination of prospector and defender strategic postures. tries to balance stability and change. Maintains a stable core but search for new opportunities and engage in market innovations.
backward vertical integration
growing the channel of distribution towards the suppliers
combination strategy
often used in larger complex HCO because a single strategy is not sufficient
competitive strategy
2 types of strategies, 1 that determines an organization’s strategic posture and 1 that positions the organization via other organizations within the market. Market oriented.
concentric diversification
entering a market that is similar or related to its present operations. ( also called related) Uses synergy between the core business and the new product. Acute care hospitals adding skilled nursing
conglomerate diversification
Entering into a market unlike the present operations.( Also called unrelated) involves semi-autonomous divisions or strategic service unites
cooperation strategy
mergers, alliances and joint ventures.
cost leadership
positioning strategy that is used to gain an advantage over competitors by producing at a lower cost than competitors. Based on economies of scale in operations, marketing administration, and use of technology.
defender strategic posture
the HCO focuses on a narrow market with a limited number of products or services and aggressively defends this market thru pricing or differentiation strategies. Devote primary attention to improving the efficiency of existing operations.
development strategy
using internal resources to enter new markets. Can be through internal development, internal ventures, or reconfiguring the value chain
a strategy to make the product or service different from competitors. of no benefit unless the difference is both valuable to the buyers and capable of being sustained against competitors
directional strategies
broadest strategies that set the fundamental direction of the organization by establishing a mission for the organization, vision for the future,
identifying markets outside the core business that offer potential for substantial growth. Can be related or unrelated.
contraction strategy in which an operating strategic service unit is sold off as a result of a decsion to permanently leave the market despite its current viability
ends-means chain
the directional strategies that use the mission, vision and values are the ends, the adaptive strategies are the means to accomplish the directional strategies. At each stage in the decision chain, previous upstream decisions and implications for downstream must be considered or reconsidered
typically a quality program, to progress the HCO towards its vision.
Can be a cost-reduction program to make the HCO more efficient
expansion of scope strategy
an adaptive strategy, includes diversification, vertical integration, market development, product development and penetration
focused factory
market development strategy that an organization focuses on only 1 function and it is likely to perform better. Becomes so effective that other providers are forced to use their services. Have targeted profitable procedures from insured patients, requiring local not-for-profits to care for the less profitable patients.
focus strategy
Identifies a specific niche in the total market that the HCO will focus on. Rehab or oncology hospitals
forward vertical integration
growing along the channel of distribution towards the patient
generic strategy
from Porter,general strategies that any HCO could use to position itself in the marketplace
this is selected when the market has entered a long-term decline as a part of planned downsizing
horizontal integration
method of obtaining growth across markets by acquiring or affiliating with direct competitors rather than using internal operational strategies to take market share from them
implementation strategy
most specific and are directed toward value-added service delivery and value added support areas.
internal development
uses the existing organizational structure, personnel and capital to generate new products/services or distribution strategies
internal venture
typically set up separate, relatively independent entities within the organization, especially vertically integrated systems. (a hospital may do home health care through an internal venture)
joint venture
when risks are too high for single HCO, may pool assets or talents
1. contractual
2. subsidiary- new corporation is formed, usually for non-hospital activities
3. partnerships- formal or informal to engage in mutually beneficial
an alternative to acquiring a complete company. avoids the time and costs of product development and provide rapid access to proven technologies. Franchising is another form of licensing
involves selling the assets of an organization with the underlying assumption that the unit cannot be sold as a viable and ongoing operation. the facilities still have value and may be sold for other uses.
maintenance of scope strategy
pursued when management believes the past strategy has been appropriate and few changes are required. 2 Strategies: enhancement and status quo
market development
divisional strategy used to enter new markets with present products or services. designed to achieve greater volume thru geographic expansion or targeting new mark segments within the present geographic area (market niche). typically selected when the org. is fairly strong in the market, market is growing, and the prospects are good for long-term growth
market entry strategy
indicate the means for accomplishing the adaptive strategies
market wide strategy
Determine a product or service’s place in the market in regard to the competitors and position the products/ services to appeal to a broad audience ( the entire market)
similar to acquisitions, but the 2 organizations combine thru mutual agreement to form a single new organization, often with a new name. Motives for mergers:
1. improve efficiency and effectiveness-may be possible to exploit cost-reducing synergies and spread risk
2. enhance access- provide a broader range of programs
3. enhance financial position- by gaining market share
4. overcome concerns about survival
penetration strategy
used to increase volume and market share. Implemented by marketing strategies
positioning strategy
from Porter, for both market wide and market segment focus there are 2 fundamental positioning strategies- cost leadership and differentiation
product development
The introduction of new products/ services to present markets (geographic and segments)
prospector strategic posture
HCOs that are frequently searching for new market opportunities and regularly engage in experimentation and innovation. In rapidly changing environments
purchase strategy
use financial resources to enter a market quickly, and then initiate the adaptive strategy. There are 3 purchase strategies: acquition, licensing and venture capital investment
reactor strategic posture
Do not have a strategy or plan. Therefore the organizations are inconsistent and unstable in their response to the environment. Are HCOs that are not able to adapt effective in response to opportunities. Make changes primarily in response to environmental pressues.
reconfigure the value chain
An HCO may change the activities or sequence of activities it performs and therefore change how value is delivered to the customer. Requires rethinking the ways in which existing organizations serve customers. Marketing and operations focused
reduction of scope strategy
decrease the size and scope of operations. includes divestitures, liquidation, harvesting and retrenchment
related diversification
entering a market that is similar or related to its present operations. ( also called concentric) Uses synergy between the core business and the new product. Acute care hospitals adding skilled nursing
a response to declining profitability usually brought about by increasing costs.
status quo
organization has secured an acceptable market share and the defenders can be defended against competitors
strategic posture
how the organization behaves within their market segments or industry. There are 4 postures: Defenders, prospector, analyzer, reactor
strategy formulation
development of strategic alternative, evaluation of alternatives, and strategic choice.
unrelated diversification
Entering into a market unlike the present operations. Also called conglomerate involves semi-autonomous divisions or strategic service unites
venture capital investment
offer an opportutinity to enter a market and try it while keeping risks low. used to become involved in a small organization that has the potential to develop new technology. (biotech, pharmaceutical, medical devices,)
vertical integration
a decision to grow along the channel of distribution of the core operations. Can grown towards suppliers (backward) or toward its patients ( forward). VI can reduce supply costs, . Commits an organization to a product, management must believe in the long-term viability of the product/service. If the intent is to control the flow of patients to the various units, vertical integration occurs.
Fundamental adaptive strategy for developing integrated systems of care.

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