Vanderbilt is a large hospital that has many locations, many patients and a lot of employees. Stakeholder analysis and value identification is therefore very important in order to assess the impact that the company has on the society at large and the ways in which different stakeholders may affect the company’s strategy (Demars, 2007). The Vanderbilt University Medical center mission statement is.
To bring the full measure of human knowledge, talent and compassion to bear on the healing of sickness and injury and the advancement of health and wellness through preeminent programs in patient care, education, and research. (Vanderbilt, 2010).
Enterprise Level Strategy
The enterprise level strategy also referred to as societal level strategy is the comprehensive strategy level that seeks to determine aspects such as the part the corporation plays in the society and the basic principles that the company stands for (Carroll & Buchholz, 2008). It mainly includes the development and expression of the organization’s public policy.
The Vanderbilt enterprise level strategy has been presented in its credo. The Vanderbilt credo states:
We provide quality in education, healthcare and research
We treat others as we would like to be treated
We constantly assess and improve our performance
The credo guides the Vanderbilt staff and management team on how to deal with the various stakeholders who come into contact with the organization. To fulfill the organization’s credo, Vanderbilt has also specified the credo behaviors that govern all its employees including the higher level management team. The credo behaviors include:
Giving the highest priority to those I serve
Respect to privacy and confidentiality
Each employee has a sense of ownership and
Commitment to fellow colleagues
The enterprise level strategy in Vanderbilt therefore includes a commitment by all employees to offer their best services to all the people it comes in contact with. The guiding principle in the medical center is to be aware of the inherent dignity, worth and uniqueness of all people.
The organizational culture describes the defined set of norms and values that people in a given organization share and that guide the way they interact together and with their various stakeholders (David, 2001). The culture in Vanderbilt is very strong as it aligns perfectly with the mission and strategy of the center. The organizational culture in Vanderbilt can be characterized by various factors. First of all, the employees at Vanderbilt have a sense of ownership.
This is exemplified by the employee dedication to solve any concerns, whether real or perceive. The employees are also very aware of the huge cost of education, healthcare and researches hence they try to optimize their resources while at the same time provide exemplary services (Vanderbilt, 2010). The second aspect of culture is that employees in Vanderbilt are committed to each other.
This is applied through proper and respectful treatment of fellow colleagues, appreciation of diversity, interdepartmental cooperation and strong communication between different levels of employees. The final aspect of Vanderbilt organization culture is the ability of the employees to participate in innovation and customer care in the healthcare industry.
The health industry organizational culture is arguably the noblest in all industries. The culture can be summed up by the quote “do no harm”. This quote is the guiding principle by which all healthcare practitioners and facilities conduct themselves (Beinhocker, 2006).
Should a hospital be in need of a specialized surgeon or doctor, other hospitals will always try to provide one if the can. If a hospital has no room or expertise to treat a patient, it will put the patient first over business interest and refer the patient to another hospital. The healthcare industry culture is thus based both on competition to improve services and cooperation to help all the stakeholders connected with the industry (Senge et al., 2008).
Integrated concepts from readings
The Vanderbilt mission entails incorporation of talent, compassion and knowledge to heal sickness and to advance the healthcare system by using the finest programs in research, patient care and education. Looking at the enterprise level strategies and the organizational culture in the medical center we can easily deduce that all these three factors are aligned.
The employees have a sense of ownership and act in a compassionate manner towards their patients fulfilling the center’s mission. According to the credo, employees respect their patients’ privacy and give them the highest priority at all time. This is also congruent with the center’s mission and overall strategy (Vanderbilt, 2010).
Evidence and Implications
The Vanderbilt University Medical center was voted as the 14th best hospital in the country. Last year alone, the center had over 1.5 million patient visits with more than 54, 000 patients admitted to the various Vanderbilt hospitals across the country (Vanderbilt 2010).
One of the main reasons the hospital was ranked so high is because its customer service is above par. The medical center also provided more than $320 in charity care and uncompensated care for all those who could not afford treatment. The center also offers various community services such as Adolescent rehabilitation for substance abuse, primary care to under-served communities and an outreach program in maternal-infant care.
One of the major impacts is that the hospital has become popular all over the country and many patients and customers are increasingly being attracted to the center. The next important impact is that the medical center has attracted funding from investors and other parties. In 2010 the medical center received over $48.7 million from various philanthropists.
General Force Analysis: External-Remote Environment
The general force analysis involves assessing the external environment in order to identify various forecasts or trends that may affect the organization (Burgelman et al. 2004; Epstein, 2008). There are five categories of force in the external environment: economics, demographics / social / culture, government / legal / military, physical environment, and technology.
Economics: The main economic trend facing the health care system is the rate of growth of the GDP in the country. In 2010, the GDP grew by 3% with the GDP per capita being $50, 000. The GDP is a measure of economic growth at the moment it lags behind the growth in health care spending.
In 2010, the health care spending in the United States grew by 6.7% and now takes 16% of the GDP (DeNavas, Proctor & Smith, 2010). It can be seen than the growth in health care spending exceeds that of the GDP and this trend has been forecasted to continue up to the year 2017.
The health insurance costs in the country are also rising at a much faster rate than both inflation and wages (Wangness, 2009). The timeframe for this trend is immediate and it seems it will be continuously increasing hence it is a critical importance to the health care industry.
Another economic issue that may affect the health care industry is the increase in unemployment rates. Between 2009 and 2010, the unemployment rate rose from 15.9% to 17.1% (DeNavas, Proctor & Smith, 2010). The impact of unemployment poses an immediate impact on the health care industry as more people will be unable to pay for medical services.
The trend however is not expected to last as the government as instituted various recovery stimulus that will avail more jobs to Americans. This trend is therefore not critical and can be dealt with case by case.
Technology: The rate of change in technology is increase day by day. Medical technology has not been left out and various equipments are being developed in the industry. In 2006, 85% of global research and development spending in biotechnology came from the United States (Fiksel, 2009).
This trend has been increasing constantly throughout and is expected to carry on into the future. The impact on the health care system is high changing the manner in which most hospitals operate and treat patients (Fisher, 2009). This trend has a very long life time as more and more research institutes, medical centers and pharmaceutical companies are engaging in Research and development to develop better and better technology and drugs that will improve the US medical system (Cornish, 2004).
The importance of change in technology in the healthcare system is critical to the industry. Many diseases that could not be cured now have cures and some diseases that could not be managed now can be easily managed and people can life fulfilling lives.
Demographics/Social/Cultural: The United States in is the Middle of a cultural and demographic change that is generating new challenges in health care delivery (Garland, 2007). In 2008, the ethnic minorities in the country accounted for a third of the total population. It is however, projected that by 2050 they will become the collective majority.
This demographic change factors such as health insurance status, economic status and education attainment all pose several challenges to the health care system. A large percentage of the ethnic minorities are poor and have poor records of education attainment. A large percentage of uninsured persons are also from the ethnic minorities group. This trend has a very large impact on the health care system and is of critical importance to the industry. The trend is expected to carry on for a very long time to come (Hardley, 2003)
Another important social change has been increased health consciousness. A large percentage of the population has become very conscious about their health. More and more people are seeking medical service and living in a healthy manner. This trend has a high impact on the health industry and is projected to continue for a very long time to come. Its importance to the industry is important as it avails more consumers to hospitals hence a need for better services.
Government/Legal/Military: The main variable of interest from this aspect of the external environment is the Health care reform passed by the president on 23rd March 2010. The reform includes increasing the eligibility of Medicaid to comprise 133% of the Federal Poverty Level, subsidization of health insurance premiums, banning insurance coverage denial based on pre-existing conditions, and enticing corporations to provide health care benefits by offering incentives (Kaiser, 2011).
This has a very impact on the health care industry as more and more people can seek and afford services. The timeframe is immediate and by 4 years this bill will be in total compliance. The trend is of critical importance to the health care system because no one will be turned away due to financial matters or lack of insurance coverage.
Physical Environment: An important trend in this category has been changes in climate. Over the years, the change in climate has caused several diseases to increase in occurrence such as cancer. This trend is of medium importance to the health care system as it affects the way businesses run operations and imposes a responsibility to all.
The trend has been increasing slowly over the years and without drastic changes, it may become a very big problem to the health care system. The trend is of importance to the industry as we are also required to align our activities to be environmentally conscious to curb further changes in climate (Glenn & Gordon, 2009).
Implications of General Forces
The external trends listed above have various implications to the health care system and the way it operates.
Threats: The health care system is under an economic threat from the slow rate of growth of the GDP as compared to the rapid increase in health care spending. Another threat involves the demographic change being witnessed in the country where the minority group in rapidly increase in size.
The rate of growth of GDP determines the amount of money available for health care spending. If the economic growth is lower than health care spending, the amount of money released by the government will be insufficient to provide the necessary service required.
The increase in minority group is a threat since a large percentage of minority groups are not insured and most of them are poor. This means they might not be able to afford medical services or would be unable to pay for their services. Another threat is from the physical environment that has seen the climate change constantly over the years.
Climate change due to global warming is causing the increase in certain diseases such as cancer and other tropical diseases. Climate change therefore requires hospitals to recycle and embark on “going green”. Looking at the critical factors, demographic change and the slow rate of economic growth are the top threats to the industry as well as the Vanderbilt University Medical Center.
Opportunities: There are several opportunities to the health care industry stemming from the external environment. First, the rapid change in technology, research and development is critical to the industry. Another opportunity is the new health care bill that embarks on availing health care to as many people as possible. These two opportunities are critical for the industry and have an important impact on the Vanderbilt University Medical Center.
Porter’s Five Force Industry Analysis: External-Industry Environment
It is important to analyse the business micro environment in order to present a valid business marketing strategy. The Porter five forces are those forces that affect the ability of a corporation to make a profit or serve its consumers (Miles & Snow, 2003).
Barriers to Entry: One of the most important barriers to entry in the health care system is economies of scale. Small health care centers usually have a lot of problems acquiring equipments, expensive drugs and the best doctors. Big companies on the other had can easily acquire these items and they can also trade amongst themselves if a need arises. Economies of scale are a high level threat for new and upcoming centers.
The capital requirements for starting a new health care center are also enormous thereby restricting most new entrants. This is a high level threat in the industry. The access to distribution channel may be hard to get for new entrants as the need for drugs is high and most of the time the big centers are given the first priority. This is a high level threat in the health care industry.
Substitutes: The health care industry is all about service delivery. Substitutes in this industry either exist as voodoo or the belief in miracles. These substitutes however are of no real threat in the health care industry and very few people subscribe to them.
Bargaining power of Suppliers: The bargaining power of suppliers to affect profitability in the health care industry can be high. A hospital cannot function without drugs or equipments hence suppliers have a very strong control over the health industry.
The health care industry is however filled with drug manufacturers and suppliers. In most cases most of the drugs or equipment can be easily acquired but in certain cases, it can be quite challenging to acquire specific drugs especially for serious illnesses. In the past few years, there has been a drug shortage in the country also putting extra pressure on the health care industry.
Bargaining Power of Buyers: The bargaining power of buyers in the health care system is very high. Consumers have the ability to bargain for higher quality and a wider variety of services. The cost of health care however is seldom affected by buyers and competition is mainly in the form of customer service and in the ability to provide more services.
Competitive Rivalry: The competitive rivalry in the health care industry is a medium level threat. Competitiveness in the industry exists in the form of increasing the number of patient visits in the hospital.
This is through investing in the best doctors, investing in the best equipment and aligning the company with the largest drug suppliers available. In Tennessee Vanderbilt is the largest hospital and the threat from competitors is very low. The top three competitors are Takoma regional hospital, Centennial Medical Center, and the Baptist hospital.
These hospitals are however but a pale comparison to Vanderbilt hospital with regards to size, facilities, variety of service offered and overall performance. The three hospitals offer services all present in Vanderbilt and have a lower capacity the Vanderbilt Medical Center. In Tennessee, the Vanderbilt Medical Center has no equal in terms of consumer satisfaction, level and type of services offered or sophistication of available equipments.
Implication of the five forces
The Vanderbilt hospital has very little threats in the Tennessee health care industry. It excels in most of the services offered, it has a very large economy of scale and consumer satisfaction is very high. The hospital has also been able to develop an effective distribution line whereby it can acquire drugs and equipments from various different trusted suppliers
Threats: The main threats affecting the Vanderbilt University Medical center are the Bargaining power of consumers and the bargaining power of suppliers. These threats are however low level threats as for a long time the center has built up its reputation in the society as the best hospital in Tennessee and one of the best in the country.
Consumer satisfaction is high and the perception of consumers is that the hospital is the best place to be treated in the state. The bargaining power of suppliers is quite low as the center has set up a network of trusted suppliers. The hospital can also buy drugs directly from the manufacturers as it is one of the biggest medical centers in the country
Opportunities: From the five forces we can identify several opportunities that the center can utilize. First, from the barriers to entry, we see that the company has a large economy of scale hence can capitalize by constructing more centers in different locations of the state and the country as a whole.
From the competitive rivalry force, we note that the company does not have any real competition in the state and that it is able to compete well in the national scale. The Center should therefore expand its operations to all states in the country, improve its visibility through advertisements and word of mouth and finally seek for more investment from large investors.
Detailed Value Chain Analysis: Internal Environment
Value Chain of Activities
Business ProcessYour OrganizationCompetitor 1Competitor 2
ManagementExcellent management team capable of organizing large organizationGood management teamGood management team
R&DLarge R & D department, sufficient funds to carry out R&D, ample qualified personnelSmall R&D department, Lack of sufficient R&D funds, small team of qualified personnelNo R&D department
HRExcellent human resource department able to handle large number of employees, good communication systemGood HR departmentGood HR Department
ProcurementProcurement from both manufactures and suppliersProcurement mainly from suppliersProcurement dependent on suppliers
Inbound LogisticsExcellent transportation facilities, in-house warehousing capabilities, strong online logistic capabilitiesGood transportation facilities, no warehousing facilities, poor online logistic capabilitiesPoor transportation facilities, no warehousing facilities, poor online logistic capabilities
OperationsAble to produce recurring income, A very large quantity of assets, business value is very highAble to produce recurring income; moderate quantity of assets, business value is highAble to produce recurring income; moderate quantity of assets, business value is high
Outbound LogisticsCan access consumers from over 50 centers, online portal also able to access consumers. Presence of numerous ambulances, 5 helicopter and 1 planeOnly 5 centers to access consumers, online portal for accessing patients, good number of ambulance, 1 helicopter no planesMain medical center is the only way to access consumers, no online portal, 6 ambulance, no helicopter
SalesAnnual revenue exceeds $2 billionAnnual revenue about$875 millionAnnual revenue $520 million
ServiceExcellent services over 25 specialized servicesExcellent service, about 13 different services offeredGood services, About 16 services offered