S t r a t e g i c M a n a g e M e n t o f H e a lt H c a r e o r g a n i z a t i o n S e i g H t H e d i t i o n S t r a t e g i c M a n a g e M e n t o f H e a lt H c a r e o r g a n i z a t i o n S P e t e r M . g i n t e r University of alabama at Birmingham W. J a c k d U n c a n University of alabama at Birmingham l i n d a e . S W a y n e University of north carolina at charlotte Cover Design: Wiley Cover Image: © Jamie Grill/Getty Images © 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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For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762–2974, outside the United States at (317) 572–3993 or fax (317) 572–4002. Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on- demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com. 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) Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 http://www.copyright.com http://www.wiley.com/go/permissions http://booksupport.wiley.com http://www.wiley.com https://lccn.loc.gov/2017051205 v c o n t e n t S Preface xiii Features of the Text xiv Organization of the Text xvi To the Students: Why This Book About Strategic Management Is Important xviii The Author Team xviii Acknowledgments xix Chapters Chapter 1 The Nature of Strategic Management 1 Chapter 2 External Analysis 37 Chapter 3 Service Area Competitor Analysis 79 Chapter 4 Internal Analysis and Competitive Advantage 121 Chapter 5 Directional Strategies 163 Chapter 6 Identifying Strategic Alternatives 205 Chapter 7 Evaluation of Alternatives and Strategic Choice 259 Chapter 8 Value-Adding Service Delivery Strategies 313 Chapter 9 Value-Adding Support Strategies 359 Chapter 10 Communicating Strategy and Developing Action Plans 401 Resources for Strategic Thinkers Resource 1 Analyzing Strategic Health Care Cases 431 Resource 2 Health Care Organization Accounting, Finance, and Performance Analysis 443 Resource 3 Health Care Acronyms 463 Resource 4 Glossary of Strategic Management Terms 471 vi contentS Cases in the Health Care Sector Case 1 Cottage Senior Living Case 2 Asian Health Services: Rediscovering a Blue Ocean Case 3 Community Blood Center of the Carolinas: Building for a Better Community Case 4 Navigating Change at Alaska’s Southcentral Foundation Case 5 LINET Americas: This Bed Is Just Right! Case 6 West Kendall Baptist Hospital: Meeting the Demand of Community- Based Health Care in the New (and Stormy) Regulatory Environment Case 7 Humana’s Bold Goal: 20 Percent Healthier by 2020 Case 8 Pricing the EpiPen: This Is Going to Sting Case 9 Cavalier Hospital Case 10 Pleasant Bluffs Hospital: Launching a Home-Based Hospital Program Case 11 Kaiser Permanente: Creating a No-Wait Emergency Department Case 12 ExAblate Neuro Case 13 Huntington Hospital Case 14 Valley Health Index 495 vii c a S e S For book adopters, the following cases from the health care sector are available on the book’s website, www.wiley.com/go/ginter8e. Case 1 Cottage Senior Living Andrew C. Rucks, PhD 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 organi- zational capacity to grow? Case 2 Asian Health Services: Rediscovering a Blue Ocean Ken Chung, PhD and Wendell N. Chin, MBA 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. Case 3 Community Blood Center of the Carolinas: Building for a Better Community Linda E. Swayne, PhD 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 http://www.wiley.com/go/ginter8e viii caSeS 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? Case 4 Navigating Change at Alaska’s Southcentral Foundation Erin E. Sullivan, PhD, and Jessica L. Alpert 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 gov- ernance structure are highlighted as background for Gottlieb’s concerns in choos- ing 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. Case 5 LINET Americas: This Bed Is Just Right! Linda E. Swayne, PhD 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 manu- facturers, 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. Case 6 West Kendall Baptist Hospital: Meeting the Demand of Community-Based Health Care in the New (and Stormy) Regulatory Environment Miriam Weismann, PhD, and students Javier Hernandez Lichtl, Heather Pierce, Denise Harris, Lourdes Boue, and Cathy Campbell 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 ixcaSeS 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 over- night. 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. Case 7 Humana’s Bold Goal: 20 Percent Healthier by 2020 Nancy M. Kane, DBA with the assistance of Deborah Milstein 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. Case 8 Pricing the EpiPen: This Is Going to Sting Thomas J. Steenburgh, PhD 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? Case 9 Cavalier Hospital Kenan W. Yount, MD MBA under the supervision of Michael J. Schill, PhD 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. Case 10 Pleasant Bluffs: Launching a Home-Based Hospital Program Laura Erskine, PhD 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. Case 11 Kaiser Permanente: Creating a No-Wait Emergency Department Edward D. Arnheiter, PhD 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 mem- bers 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.

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InstructionsPlease open link below to see the activity/scenarioVila Health: Collaboration for ChangeI will do the video and personal experience part listed in redFor this assessment you will create a 5-10 minute video reflection on an experience in which you collaborated interprofessionally, as well as a brief discussion of an interprofessional collaboration scenario and how it could have been better approached. Demonstration of Proficiency· Competency 1: Explain strategies for managing human and financial resources to promote organizational health.1. Identify how poor collaboration can result in inefficient management of human and financial resources supported by evidence from the literature.1. Competency 2: Explain how interdisciplinary collaboration can be used to achieve desired patient and systems outcomes.2. Reflect on an interdisciplinary collaboration experience noting ways in which it was successful and unsuccessful in achieving desired outcomes.2. Identify best-practice interdisciplinary collaboration strategies to help a team to achieve its goals and work more effectively together.1. Competency 4: Explain how change management theories and leadership strategies can enable interdisciplinary teams to achieve specific organizational goals.3. Identify best-practice leadership strategies from the literature, which would improve an interdisciplinary team’s ability to achieve its goals.1. Competency 5: Apply professional, scholarly, evidence-based communication strategies to impact patient, interdisciplinary team, and systems outcomes.4. Communicate via video with clear sound and light.4. The full reference list is from relevant and evidence-based (published within 5 years) sources, exhibiting nearly flawless adherence to APA format.Professional ContextThis assessment will help you to become a reflective practitioner. By considering your own successes and shortcomings in interprofessional collaboration, you will increase awareness of your problem-solving abilities. You will create a video of your reflections, including a discussion of best practices of interprofessional collaboration and leadership strategies, cited in the literature.ScenarioAs part of an initiative to build effective collaboration at your Vila Health site, where you are a nurse, you have been asked to reflect on a project or experience in which you collaborated interprofessionally and examine what happened during the collaboration, identifying positive aspects and areas for improvement.You have also been asked to review a series of events that took place at another Vila Health location and research interprofessional collaboration best practices and use the lessons learned from your experiences to make recommendations for improving interprofessional collaboration among their team. Your task is to create a 5–10 minute video reflection with suggestions for the Vila Health team that can be shared with leadership as well as Vila Health colleagues at your site. Note: If you require the use of assistive technology or alternative communication methods to participate in this activity, please contact  DisabilityServices@Capella.edu  to request accommodations. If, for some reason, you are unable to record a video, please contact your faculty member as soon as possible to explore options for completing the assessment.InstructionsUsing Kaltura, record a 5–10 minute video reflection on an interprofessional collaboration experience from your personal practice, proposing suggestions on how to improve the collaboration presented in the  Vila Health: Collaboration for Change  activity.Be sure that your assessment addresses the following criteria. Please study the scoring guide carefully so you will know what is needed for a distinguished score:· Reflect on an interdisciplinary collaboration experience, noting ways in which it was successful and unsuccessful in achieving desired outcomes.· Identify how poor collaboration can result in inefficient management of human and financial resources, citing supporting evidence from the literature.· Identify best-practice leadership strategies from the literature that would improve an interdisciplinary team’s ability to achieve its goals, citing at least one author from the literature.· Identify best-practice interdisciplinary collaboration strategies to help a team achieve its goals and work together, citing the work of at least one author.· Communicate in a professional manner, is easily audible, and uses proper grammar. Format reference list in current APA style.You will need to relate an experience that you have had collaborating on a project. This could be at your current or former place of practice, or another relevant project that will enable you to address the requirements. In addition to describing your experience, you should explain aspects of the collaboration that helped the team make progress toward relevant goals or outcomes, as well as aspects of the collaboration that could have been improved.A simplified gap-analysis approach may be useful:· What happened?· What went well?· What did not go well?3. What should have happened?After your personal reflection, examine the scenario in the Vila Health activity and discuss the ways in which the interdisciplinary team did not collaborate effectively and the negative implications for the human and financial resources of the interdisciplinary team and the organization as a whole.Building on this investigation, identify at least one leadership best practice or strategy that you believe would improve the team’s ability to achieve their goals. Be sure to identify the strategy and its source or author and provide a brief rationale for your choice of strategy.Additionally, identify at least one interdisciplinary collaboration best practice or strategy to help the team achieve its goals and work more effectively together. Again, identify the strategy, its source, and reasons why you think it will be effective.You are encouraged to integrate lessons learned from your self-reflection to support and enrich your discussion of the Vila Health activity.You are required to submit an APA-formatted reference list for any sources that you cited specifically in your video or used to inform your presentation. The  Example Kaltura Reflection  will show you how to cite scholarly sources in the context of an oral presentation.Refer to the Campus tutorial  Using Kaltura [PDF]  as needed to record and upload your reflection.Additional Requirements· References: Cite at least 3 professional or scholarly sources of evidence to support the assertions you make in your video. Include additional properly cited references as necessary to support your statements.· APA Reference Page: Submit a correctly formatted APA reference page that shows all the sources you used to create and deliver your video.2. You may wish to refer to the Campus  APA Module  for more information on applying APA style.Portfolio Prompt: Remember to save the final assessment to your ePortfolio so that you may refer to it as you complete the final Capstone course. Instructions Pleaseopen linkbelowto see the activity/scenario Vila Health: Collaboration for Change I will do the video and personal experience part listed in red For this assessment you will create a 5–10 minute video reflection on anexperience in which you collaborated interprofessionally, as well as a briefdiscussion of aninterprofessional collaboration scenario and how it could havebeen better approached.   Demonstration of Proficiency · Competency 1: Explain strategies for managing human and financialresources to promote organizational health. · Identify how poor collaboration can result in inefficient management ofhuman and financial resources supported by evidence from theliterature. · Competency 2: Explain how interdisciplinary collaboration can be used toachieve desired patient and systems outcomes. · Reflect on an interdisciplinary collaboration experience noting ways inwhich it was successful and unsuccessful in achieving desiredoutcomes. · Identify best–practice interdisciplinary collaboration strategies to helpa team to achieve its goals and work more effectively together. · Competency 4: Explain how change management theories and leadershipstrategies can enable interdisciplinary teams to achieve specificorganizational goals. · Identify best–practice leadership strategies from the literature, whichwould improve aninterdisciplinary team’s ability to achieve its goals. · Competency 5: Apply professional, scholarly, evidence–based communicationstrategies to impact patient, interdisciplinary team, and systems outcomes. · Communicate via video with clear sound and light. · The full reference list is from relevant and evidence–based (publishedwithin 5 years) sources, exhibiting nearly flawless adherence to APAformat. InstructionsPlease open link below to see the activity/scenarioVila Health: Collaboration for ChangeI will do the video and personal experience part listed in redFor this assessment you will create a 5-10 minute video reflection on anexperience in which you collaborated interprofessionally, as well as a briefdiscussion of an interprofessional collaboration scenario and how it could havebeen better approached. Demonstration of Proficiency Competency 1: Explain strategies for managing human and financialresources to promote organizational health. Identify how poor collaboration can result in inefficient management ofhuman and financial resources supported by evidence from theliterature. Competency 2: Explain how interdisciplinary collaboration can be used toachieve desired patient and systems outcomes. Reflect on an interdisciplinary collaboration experience noting ways inwhich it was successful and unsuccessful in achieving desiredoutcomes. Identify best-practice interdisciplinary collaboration strategies to helpa team to achieve its goals and work more effectively together. Competency 4: Explain how change management theories and leadershipstrategies can enable interdisciplinary teams to achieve specificorganizational goals. Identify best-practice leadership strategies from the literature, whichwould improve an interdisciplinary team’s ability to achieve its goals. Competency 5: Apply professional, scholarly, evidence-based communicationstrategies to impact patient, interdisciplinary team, and systems outcomes. Communicate via video with clear sound and light. The full reference list is from relevant and evidence-based (publishedwithin 5 years) sources, exhibiting nearly flawless adherence to APAformat. “Looking for a Similar Assignment? 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