The major issues of concern to health care providers are not unique to the US but applicable in many parts across the globe. In their endeavor to not only lower the cost of health care services but also provide value to the system, health care providers encounter a variety of challenges. These issues include physicians, pharmaceutical and life sciences organizations, hospitals, insurers as well as community groups among other issues. At the outset, cost reduction has been in the limelight in the recent past and continues to characterize healthcare sector in the US (US News, 2013). Consequently, health care providers, physicians and hospitals are bound to dig deep into their pockets and solicit more funds from their operations even if it means renegotiating with suppliers about contracts on pharmaceuticals, food, as well as medical equipment. The aforementioned issue is made possible by the fact that the Medicare and Medicaid programs have taken in a considerable chunk of GDP thereby subjecting health care organizations, physicians and hospitals to reforms in the form of future funding (US News, 2013).
Besides, regulatory mechanisms have controlled operations of health care systems of the US in Sacramento, California. The government heightened oversight, as well as regulatory measures adopted by non-governmental institutions concerning adverse changes in reimbursements; pricing pressures, among other programs, have imposed restrictive requirements on the health care providers and practitioners. For instance, pharma and device companies will be expected to disclose such charges as consultation fees paid to pharmacists, health insurers and physicians under the proposed Physician Payment Sunshine Act.
Just like other industries, health care sector also faces stiff competition within and outside the industry. The aforementioned challenge does vary from one aspect to the other. Competition may be viewed from the perspective of retention of health care providers and practitioners. Both well established organizations and new competitors in health care industry and outside present stiff competition to the existing healthcare institutions as far as retention of physicians and other health care practitioners and providers are concerned (White, 1995).
The new entrants in the healthcare industry including health groups among other healthcare systems/institutions have posed threats to PMH and continue doing the same because of their specialty in the market. The more conspicuous competitor is the clinic established almost 5 blocks north of the DHC which poses a great threat to the operations of Downtown Health Clinic’s (DHC) ambulatory facility. Some competitors in the same field have superior access to the channels of distribution which gives them an upper advantage in the healthcare industry.
Technological advancements currently witnessed in the global arena have impacted on almost all sectors and healthcare industry in Sacramento, California. For instance, the entry of such innovations as preferred provider organizations and health maintenance organizations has impacted on healthcare in a variety of ways (White, 1995). Notably, the innovation has affected healthcare expenditures, reduced in-patient days as well as altered the contractual arrangements between the outsized employer groups and health care providers. The growth in ambulatory services in PMH has been attributed to a vast range of issues including advancements in medical technology, standardized treatment practices and growth of paramedic professionals as well as adoption of proactive approaches by consumers in regard to where they want to access medical services.
Perpetual Mercy Hospital facility is one of the few general hospitals in the United States and is, therefore, characterized with positive aspects in the healthcare industry. To begin with, the health care organization has strong financial base compared to most urban hospitals in the US. It is actually free of debt. Besides, the hospital boasts of having the highest occupancy rates thereby out-competing the rivals in the industry. Moreover, PMH opted to open the Downtown Health Clinic (DHC) ambulatory facility in the downtown area as a strategic plan to maintain its financial standing (Mercy General Hospital, 2013). The aforementioned initiative was hatched after the organization realized that it depended on the residents with higher Medicare coverage instead of short-stay patients with private insurance cover.
PMH also has dedicated medical staff that provides outstanding healthcare services to the clients in conformity with the mission and vision of the organization. The healthcare organization has strong commitment to community service as it is not interested in making profits like other organizations but to serve the community (Mercy General Hospital, 2013). Finally, PMH has strong culture of success upon which an individual and organization behavior is formed.
The major weakness of the healthcare organization is its organizational structure. Communication and coordination has been impeded due to the silo type of divisional structure hitherto adopted by the institution. The aforementioned organization entails a more bureaucratic channel of communication and coordination between departments in an organization thereby compromising efficiency through disruption in the care continuity. Besides, the organization also faces a payer mix of a pool of uninsured patients or Medicaid patients. This phenomenon has negative impact on the financial performance of the organization.
In an attempt to enhance efficiency of its operations and subsequent success in the healthcare industry, Perpetual Mercy Hospital has to adopt certain measures to minimize the threats discussed above and remain operational in the market. The organization has a variety of objectives laid down including expansion of referral base of the institution, establishing collaboration with the business community, as well as increasing referrals of the patients with private insurance or Medicaid patients in order to achieve self-sufficiency in the next three years. However, the heightened competition posed by a similar clinic 5 blocks north of DHC has presented a fair share of challenges to the health organization.
Diversification is one of the strategies that Perpetual Mercy Hospital needs to adopt in order to enhance its performance and withstand the stiff competition posed by rivals in the market. Notably, the health care organization can opt to add gynecology services to its current set of services offered to the patients. Diversification is one of four strategies in the Ansoff’s Product/Market mix that an institution can adopt to increase sales volume for the newly introduced products/services and markets (Powell, 2003).
PMH’s intention to adopt the aforementioned strategy is to gain economic growth and profitability and therefore, gain the competitive advantage over competitors. According to Calori and Harvatopoulos (1988), the organization can either diversify its products/services in the market due to the fact that it is complimentarily to the firm’s current activities or to gain a considerable economic value.
Alternatively, Perpetual Mercy Hospital may extend the number of operational hours so as to provide ample time for service delivery to the patients. This implies that much more patients will be attended to, and more income will be generated to the organization. Consequently, the firm’s financial base is bound to increase thereby putting the institution in a better position to fund most of its operations (Raduan et al., 2009). A strong financial base of the organization positions it strategically against its competitors. According to Raduan et al., (2009), there is a positive relationship between the organization’s success and unique edge. The author argues that the unique edge, which in this case is the financial base of the organization, is able to considerably forecast the variance in the performance of an organization.
An organization can adopt a variety of strategies to gain its competitive advantage in the market full of competition. Notably, PMH’s Downtown Health Center faces stiff competition from another clinic being established 5 blocks north of the same location and therefore, there is the need to adopt certain measures aimed at gaining a competitive edge against the said competitor (Majeed, 2011). Such unique initiatives may entail introduction of innovative products/services which do not exist in the market but elevate the firm above its competitors. Alternatively, the organization can also opt to collaborate or merger with the new businesses so as to enhance its operations and profitability. The health care institution should enhance the quality of its health care delivery so as to attract more patient visits as well as ensure revenue generation and gain the unique advantage over its rivals (US News, 2013).