Corporate Strategic Plan - Term Paper Example

Strategic Plan (Part I) 20 October Introduction The business strategy of any firm consists of the various plans,choices and decisions used to guide a company to achieve its corporate objectives, greater profitability and success (Kourdi, 2009, p. 3) in the long term. In other words, it is the deliberate actions of getting the firm from here to there. Powerful changes in the business world due to technological changes are re-shaping how managers will formulate, select and implement effective business choices. A corporate strategic plan is good for 3-5 years only but some firms plan out their own corporate strategy for as long as 20 years into the horizon like what Panasonic did when its founder Konosuke Matsushita was still alive; other firms normally plan a decade ahead. This paper deals with Kaiser Permanente which is the largest health care organization in the United States today. It has 8.6 million health plan members and employs a total of 14,600 doctors and 167,000 employees. This impressive business organization was the response to the Great Depression by industrialist Henry Kaiser and Dr. Sidney R. Garfield. It was founded in 1938 because the United States is the only industrialized nation in the Western world not to have a national health plan or the so-called socialized medicine. The Kaiser Permanente operates on four core principles which are group medical practice, prepaid medical services, the focus of medical services is on prevention and the rendition of the whole set of medical services under one roof. These principles are the forerunners of what we today know as health-maintenance organizations (HMOs) by which a group of health-care providers are contracted to deliver specified pre-paid medical services to a defined group of enrollees or what is known today as health plan members (Boyer, 2001, p. 1). Discussion Today, there are close to 700 health maintenance organizations nationwide. Most of them are for-profit organizations although many of them originally started as charitable or tax free organizations designed to provide medical care access on a broad democratic basis to all people who needed them. Because of lack in the US of any socialized or subsidized national health plan, the HMO gained widespread acceptance as logical alternative to fee-for-services arrangements that existed before but which some poor people can no longer afford due to high or escalating costs. The idea of HMO gained further traction because of its emphasis on health maintenance (preventive care) and managed care that seeks to minimize health costs. The two end results of HMO are the increasing corporatization of the practice of medicine and the loss of a physician’s traditional independence and autonomy as a private practitioner. Location – Kaiser Permanente is spread in nine states including District of Columbia. It has its headquarters in Oakland, California and had $1.3 billion net income last year from a gross total operating revenue of some $34.4 billion. It is the largest managed care organization with 8.6 million members which is slightly down from its peak of 9.1 members years earlier. It consistently received the highest rating among health care plans, 7 out of 8 possible stars. Its key values are to provide affordable health care as codified in its advertising slogan of a perfect match between choice and price. In other words, the organization emphasizes to all prospective members that there is a suitable plan for everyone no matter at what income level in order to provide that needed peace of mind regarding health care coverage. It is the foremost advocate of what some doctors derisively termed as “socialized medicine” but in the face of rising medical costs, it is still the best way to go these days. However, health plans are also becoming too pricey for most people. The organization always emphasizes its key values of regulatory compliance, ethics, integrity and confidentiality of sensitive information. It also places great importance on cultural diversity in its hiring policies and helps their careers. Kaiser Permanente sees its mission as providing the affordable health care that all US citizens deserve in the absence of any universal health insurance plan by the government. It tries its best to balance competing interests of consumers, employers, organized physicians and the federal and local government units. It is offering to the public an alternative to usual fee-for-service arrangements which is beyond the reach of most ordinary Americans. Its vision is to be the largest and best health care organization in the country with the awards it had gotten so far in terms of ranking among rated health care plans. It is overall the best or better than average in terms of two quality measures: care by doctors and medical care provided by a primary care physician. Kaiser Permanente is proud to say it is leading in all 12 key measures of quality care such as breast cancer screening, weight assessments for children based on their body-mass index (BMI), Chlamydia screening, both diabetes and hypertension control, counseling for nutrition for children and 7 other key criteria (Levin, 2010, p. 1). Target Market – the segmented target market of Kaiser Permanente are the employees of big companies in which it can offer discounted group health plans. This makes sense from the standpoint of the Kaiser Permanente as its emphasis has always been on preventive health care which helps to keep costs down. Besides private employees, it has also targeted federal employees who desire to upgrade or avail of additional health insurance to augment whatever health plans they already have. Its main selling points are its doctors are paid by salary and not on a commission basis hence there is no incentive for them to profit unduly such as by ordering unnecessary laboratory tests or recommend expensive procedures or surgeries. The organization further helps its clients by planning their clients’ stay in hospitals and moves them to outpatient clinics soonest whenever possible to reduce hospital-related costs. It is this emphasis on cost-containment measures that is a great selling point for Kaiser Permanente. It made the organization number one among managed-care organizations by its focus on quality care but at the same time affordable to almost everybody with its customized health plans. Organizational Structure – Kaiser Permanente is divided into three distinct corporate groups which are the Kaiser Foundation Health Plan, the Kaiser Foundation Hospitals and the autonomous, regional and for-profit Permanente Medical Groups. The first two groups are the non-profits while the third is operated as for-profit professional partnerships or corporations by several doctors depending on their medical specialties. The Permanente Medical Groups are actually physician-owned and physician-operated business entities existing for profit. The last group derives its main income from reimbursements provided by the two other groups. Organizational Culture – its basic corporate culture is on the premise that a physician is first and foremost a doctor and not a businessman. This is why the organization has relieved the doctor of worries about business concerns such as paying the rent, utilities, paying for the medical equipment and meeting the monthly payroll (Anderlik, 2001, p. 87). The idea is to help them establish trusting doctor-patient relationships without financial considerations. The inevitable conflicts within the organization are managed through a cooperative culture that rewards cooperation and collaboration among the practitioners themselves. It likewise places a great importance on ethical medical practices and compliance to legal regulations. Programs and Services - the organization lives up to its ideal of the original founders’ mission and vision statements which is to provide affordable medical care to everyone based on its customized health care insurance plans. Besides offering treatments for various ailments and common laboratory diagnostic tests, it is a health advocate too. It promotes healthy living such as eating right (a balanced diet), exercise more to avoid the dangers of obesity, diabetes and cardiovascular diseases, how to quit smoking and how to delay the effects of aging. In this regard, it views itself not only as your usual health maintenance organization but offers the complete continuum of health care delivery by providing the laboratory, the hospital, the clinic, the pharmacy and the caregiver. Kaiser Permanente is also engaged in medical research such as the development of vaccines. It promotes community health through various grants. Marketing – the company hires marketing consultants to help improve its image after some issues emerged with regards to some medical practices which were considered to be the examples of unethical business methods such as dumping of patients (to avoid costs to it) and transferring them to other hospitals by refusing admission. It has launched various advertising campaigns designed to promote its advocacy of preventive medicine to help reduce costs and it maintains an active Web site that is updated quite often to reflect important developments. The organization is pursuing what is known as concentrated marketing strategy by its focus on only one niche or market segment which is the affordable health care segment (Berkowitz, 2006, p. 165). In this regard, it might be difficult to market a premium health care plan due to the general perception of being a low-cost provider. Strategic Planning Model – the organization is pursuing the 5Ps as conceptualized by Professor Henry Mintzberg, which are the following, namely: plan, ploy, pattern, position and perspective (Campbell, Stonehouse & Houston, 2002, p. 8). Its plan is to offer low-cost care by a focus on cost reductions, ploy is to appeal to the emotions of its customers by offering them an affordable health plan, pattern is offering complete medical care under one roof, its position is determined by its strict adherence to best practices in the industry and perspective is offered by its stated mission to provide a viable alternative to fee-for-service arrangements. Mission, Vision and Values – these three items are aligned to the strategic plans of the organization in terms of providing quality, broad-based but affordable medical care to people. This means its organizational structure and culture are designed to accomplish its strategic aims and also takes into account its key strength which is group practice by doctors based not on fee-based services but on their salaries which takes away the profit motive to recommend expensive but unnecessary medical procedures and laboratory diagnostic tests. The current CEO is Mr. George Halvorson who serves on both Kaiser Health Plans and Kaiser Hospitals. However, each Permanente Medical Group is operated with its own board of directors. Each board operates independently but pursues an overall business strategy that is very closely aligned to the mission and vision of Kaiser Permanente. Mr. Halvorson provides the overall direction of implementing its strategic goals and as an advocate of the entire health care industry with regards to pending legislation in Congress. The guiding principle is overall and universal commitment to providing quality but affordable health care services. New Product Offering – in line with its niche marketing strategy, I propose that Kaiser Permanente include surgical robotics in its near term plans. There are many advantages that a robotics strategy can provide such as extreme precision, miniaturization, articulation beyond the normal manipulation by hand and a three-dimensional magnification. This new approach to using robotics will help solve the problem of shortage in qualified medical personnel and at the same time promote the social mission of the organization which is to provide remote care. Other advantages include improved dexterity, surgical comfort, less pain, no hand tremors and no feelings of exhaustion which can cause possible mistakes or errors. Conclusion In the health care industry, value is created by feelings of satisfaction by the patients or the consumers. Value is the amount of satisfaction received in relation to the price paid and in this industry, there are numerous ways to create added value. Examples are patient-friendly billing systems, efficient appointments and courteous health care personnel from the doctors to the nurses down to the hospital receptionist (Swayne, Duncan & Ginter, 2006, p. 153). Kaiser Permanente places great importance on change management and uses various tools like organizational effectiveness (OE) programs such as mentoring and peer coaching in addition to a focus on innovations (Goldsmith & Carter, 2009, p. 351) and is so successful in this that the organization has only a 5% attrition rate versus the higher rates of its competitors. The organization has leveraged well its strategic resources such as a good brand name and the excellent reputation of its doctor teams with providing quality but affordable health care. References Anderlik, M. R. (2001). The Ethics of Managed Care: A Pragmatic Approach. Bloomington, IN: Indiana University Press. Berkowitz, E. N. (2006). Essentials of Health Care Marketing. Sudbury, MA: Jones and Bartlett Learning. Boyer, P. S. (2001). Health Maintenance Organizations. Retrieved October 19, 2010 from Encyclopedia.com: http://www.encyclopedia.com/doc/1O119-HealthMaintenanceOrgnztns.htm Campbell, D., Stonehouse, G. & Houston, B. (2002). Business Strategy: An Introduction. Woburn, MA: Butterworth-Heinemann. Goldsmith, M. & Carter, L. (2009). Best Practices in Talent Management: How the World’s Leading Corporations Manage, Develop and Retain Top Talent. Hoboken, NJ: John Wiley & Sons, Inc. Kourdi, J. (2009). Business Strategy: A Guide to Taking your Business Forward. London, UK: Profile Books. Levin, F. (2010, October 11). Kaiser Permanente Leads the Nation in 12 Quality Measures. Retrieved October 20, 2010 from the News Center: http://xnet.kp.org/newscenter/pressreleases/nat/2010/101110ncqameasures.html Swayne, L. E., Duncan, W. J. & Ginter, P. M. (2006). Strategic Management of Health Care Organizations. Malden, MA: Blackwell Publishing. Read More