Strategic Analysis of General Healthcare Group Ltd - Essay Example

 Strategic Analysis of General Healthcare Group Ltd. I. Business Information General Healthcare Group Ltd. (GHG) is specialising in health care services in the United Kingdom. At present, GHG is in control of 67 hospitals and clinics (General Healthcare Group(a) 2011). The company employed thousands of consultant specialists to provide health care services in designated specialty areas. In terms of facilities the company has adequate numbers of bed (General Healthcare Group(d) 2011). Netcare UK and BMI Healthcare are its two major subsidiaries. Netcare UK offers general surgery, ENT, and orthopaedic services. Netcare carries out 45,000 surgical operations annually (General Healthcare Group(d) 2011).BMI Healthcare (BMI) is in control of several private hospitals and treatment centres. GHG, in general, provides health care services to 250,000 in patients and 1,000,000 outpatients annually. GHG is based in Middlesex, UK (General Healthcare Group(a) 2011). In particular, GHG provides services in the fields of pain management, fertility, endocrinology, emergency care, paediatrics, dietetics, dermatology, complementary therapies, ophthalmology, oncology, nuclear medicine, neurology, immunology, cardiology, audiology, imaging and radiology, antenatal care, and anaesthetics (General Healthcare Group(a) 2011). GHG also offers services in the fields of women’s health, hand and wrist, vaccinations, hematology, urology, sports and exercise medicine, gynecology, geriatric medicine, spine-care, speech and language therapy, rheumatology, respiratory medicine, general medicine, psychiatry/psychology, gastroenterology, physiotherapy, and pathology (General Healthcare Group(a) 2011). Furthermore, GHG offers treatments in the fields of weight loss, vascular, spinal, general, podiatric, plastic, ENT, orthopaedic, cosmetic, oral maxillofacial, neuron, colorectal, cardiothoracic, and breast surgery services (General Healthcare Group(a) 2011). GHG was born in 1993 and is initially based in Brentford, UK (General Healthcare Group(a) 2011). The Mission and Vision statement of GHG was reconstructed to clearly deal with a large number of health care conditions in the UK (General Healthcare Group(c) 2011). It illustrates the company’s dedication to deliver affordable, premium healthcare services in its immediate communities. It afterwards develops value propositions about the value of each person, working with reliability, and treating others with dignity, respect, and commitment. This mission is shown in the written business plans of GHG, which sets off by talking about the value of the patients and dedication to conformity and moral principles. Another major business plan is for GHG to concentrate on areas where the company will be either the top or minor health care provider (General Healthcare Group(d) 2011). These services are usually based in major cities or urban areas distinguished by strongly integrated health care system (Hillestad & Berkowitz 2003). GHG is currently in an unstable position, with drastic changes during the recent decade. A comprehensive analysis of its current business plans, environment, and examination of its internal business processes is required to determine its present competitive status and prospects. Industry Competitors In the UK, demand for physicians is triggered by demographics and growth in population. The commercial gains of individual professions rely on the specialisation and standing of the personnel and physician (General Healthcare Group(b) 2011). Major professions have privileges in influencing costly diagnostic facilities and administrative procedures. Minor professions compete successfully by offering expert services and premium customer service (Grant 2005). Doctors usually have a number of competitors in neighbouring communities (Grant 2005). However, industry competition is less of a concern for GHG. Its business approach towards being the market leader in the UK encouraged them to compete in major cities mainly against non-profit hospitals. Several of the non-profit hospitals are owned by either the government or the church, and do not have uniform financial performance goals. Recently, GHG stripped itself of several hospitals that were in weak competitive status and their subsidiary health organisations (General Healthcare Group(c) 2011). One section where in GHG has attained a unique lead over its competitors is billing. GHG strengthened and merged its billing units into regional headquarters which employ new technology to make prompt and exact billing, which consequently has both cut down the administrative cost for these services and enhanced cash flow (General Healthcare Group(d) 2011). Employing this evaluation process suggests that GHG has responded competitively to trends in the industry. They have transferred their assets to major facilities that maintain long-term corporate plans. Economies of scale have allowed them to control expenditures for administrative activities like billing, and provide the company further influence in negotiating agreements with main providers (General Healthcare Group(d) 2011). The company has also executed business plans to allow them to respond to the upward development of a national dearth in certified physicians; being capable of having adequately staffed healthcare centres, as competitors confront problems finding the right people, will keep on recognising and strengthening the idea of being a first-class healthcare service provider. The continuous expansion and utilisation of self-governing surgery centres as a supplementary product quarter to their treatment clinics should also function to boost their overall value. The analysis of UK’s healthcare industry relates to the execution of merger and acquisition operations to improve processes (Kossowski 2007). GHG had strategically employed that technique. Concerning other threat of competition, GHG has strong financial advantages over rivals owing to its general income and size. It has rigidly conformed to a yearly capital investment (General Healthcare Group(d) 2011). This scheme involves the repair of current facilities, such as improving emergency rooms and constructing new hospitals to substitute previous facilities (General Healthcare Group(c) 2011). In the present economic environment not many other health companies have the assets for this point of capital growth, granting GHG an evident competitive lead. Another element of the competitive environment of the hospital industry is the capability of providing a complete range of health care services. Through getting hold of other forms of health providers, such as rehabilitation centres, home care units, outpatient surgery facilities, skilled physician and nursing group centres, hospitals have the opportunity to promote themselves to health maintenance groups and patients as providing the entire range of required health services (Kossowski 2007). This form of set up also had considerable financial benefits, as portions of fixed costs incurred by hospitals could be transferred to the other units, which were refunded by healthcare insurance companies based upon expenses instead of patient evaluation. This resulted in a movement in hospitals expanding their control over cost-refunded healthcare centres (Luke, Walston & Plummer 2004). Another benefit of vertical integration for hospitals is that this integration contributes to the guarantee of a reliable referral current from the other units to the treatment centres within the same healthcare structure (Luke et al. 2004). This industry analysis suggests that GHG is presently situated in a highly competitive healthcare industry. II. Additional Information Instead of using the traditional Porter’s Five Forces Model, the Remote Analysis Model (RAM) offers an external assessment approach that analyses a business through various components (Raisch 2004). RAM separates and examines primary components which make up the isolated or external environment of a specific industry or organisation. The components of this approach are the remote environment, made up of political, economic, ecological, technological, and social components (Raisch 2004). An evaluation will follow using each component relative to the position of GHG and the larger healthcare industry, as well as definite GHG business plans developed to openly deal with that component. The social component involves not just the present social patterns but lifestyles, values, and beliefs of customers and staff of the company as well. The business strategies of GHG are intended to exploit some present demographic patterns. One illustration of such a plan is location, since most of GHG hospitals are based in areas in the UK facing high growth in population. GHG is also positioned to exploit another demographic pattern, aging. As the population of elderly people grow, GHG aims to offer growing forms and amounts of healthcare services. Concerning the lifestyles, values and beliefs factor of the social component, analysts have identified that an absence of established principles in top management was a major cause of restructuring recently (Kossowski 2007). Human capital and values are currently a main concern in the company’s business strategies, and GHG has executed several internal plans that strengthen the essence of ethical behaviour to the staff. This dedication to quality care and people is transmitted to the external environment, in a continuous attempt to alter the current view of GHG, as well as the view of commercial organisations generally, as being disreputable or unprincipled. Evaluation of the social element suggests that GHG is in an excellent situation to exploit demographic patterns, that they have deal with numerous concerns about their staff, and that they have begun attempts to overturn the unfavourable belief held by the general public of merely being interested with profit instead of people. Second, the technological component puts emphasis on the level of technological development within a specific industry (Williamson, Cooke, Jenkins, & Moreton 2003). The healthcare industry in the UK finds itself in a situation of constant technological advancement, with healthcare technologies intended for improved diagnostic capacities and to carry out less interfering treatments. Other technological developments belong to information systems intended to modernise healthcare procedures. The economies of scale obtained from owning different facilities within a geographic area enable GHG to capitalise on the newest medical innovation by assigning specialty centres, which prevent doubling of expenditures for this apparatus at all units. One more case of these economies of scale is with the consolidation of the local billing units. The technology experts have developed a uniform billing proposal that directs data entry staff to relevant data, and the mechanism filters the data for inaccuracies in an effort to make sure that claims reported to payers are correct (Hillestad & Berkowitz 2003). The programme also enables GHG to discuss managed care agreements from a firmer standpoint, by giving more thorough information about medical expenditures related to particular patient evaluation sets. GHG has a plus point, in the sense that most competitors would not be capable of paying for the capital outlay that this programme needed. Examination of this component suggests that GHG is taking advantage of technology to acquire competitive lead. Third, the ecological component involves the obligation of organisations to work in a way that is not detrimental to the planet’s ecology (Williamson et al. 2003). For the entire healthcare industry and for GHG as well this is not a crucial issue, as concerns like the dumping of hospital garbage are regulated by the government. Because healthcare organisations should conform to these uniform national policies there is no considerable competitive lead to any definite reform or facility. The examination of this component suggests that GHG would hold some influence in settling a favourable garbage disposal fee owing to their economies of scale. Fourth, the economic component puts emphasis on the economy that a particular industry is situated, concerning such issues as the accessibility of credit, interest rates, inflation, and common revenue sources existing to make a business economically possible (Raisch 2004). The healthcare industry has witnessed a recent development towards trimmed down reimbursement from most payers (Raisch 2004). Consequently, hospitals have experienced different cost control strategies, such as the suspension of operations of ineffective subsidiaries. In multi-hospital structures, ineffective healthcare centres have either been shut down or transformed into other forms of health centres (Grant 2005). This is a much detested step to embark on, as it affects the local areas with the losses of employment and security aspects of the district healthcare centre not being easily contacted in case of emergency. GHG has implemented the reverse strategy towards emergency units, stressing admission to emergency care as an important input to each market, and initiating major capital advances to every emergency unit. Even though several acute care units have been centralised to individual GHG centres within each major city they have prioritised the establishment of emergency units at every centre. With regard to whether cost control techniques of centralisation really work, an investigation examined the correlation between hospital cost control and length-of-stay schemes (Luke et al. 2004). The findings showed that the real cost cutbacks obtained from reduced length-of-stays have been miscalculated, particularly when assessed against quality of care and the large expenditures sustained when having to re-confine a patient for health problems that occurred after being released too soon from the hospital (Luke et al. 2004). GHG has a clear business plan of upgrading their operations by means of cost management policies. A further economic competitive advantage is via curbed labour cost by utilising shared personnel between units instead of depending upon external recruitment organisations to satisfy minimum recruitment requirements. Other developments concerning economic subject matters relate to staffing. Evaluation of this component indicates that GHG has economic power in relation to competitors. The political component denotes the regulatory and legal contexts where in organisations operate (Raisch 2004). The healthcare industry is significantly controlled, through federal conditions and state licensing obligations (Grant 2005). Hospitals should also conform to policies as ordered by their certifying agencies and insurers. Conformity to all provisions is a costly and time consuming activity, and most hospitals have CEOs committed solely to these responsibilities (Grant 2005). Another major political component is that of the certification for expansion (Luke et al. 2004). Applying this evaluation approach shows that GHG has positioned itself to capitalise on demographic patterns within their preferred markets; GHG’s economies of scale will enable them to outdo rivals in the sense that they can exploit technological assets in a more lucrative way. The company’s main limitation in relation to rivals is its blemished reputation and severe government inspection as an outcome of previous errors. Although GHG has started to try to invalidate this unfavourable image, this will require time consuming and challenging procedure, particularly in relation to the fact that several of the unfavourable views will consistently be related to the organisation’s commercial reputation. III. Recommendations Major recommendations for GHG can be developed based on the multiple evaluations: (1) Regulate acquisitions of subsidiaries or treatment centres. GHG has made major steps to reorient its hospital activities in chosen markets. Possible acquisitions of subsidiaries or hospitals should be thoroughly examined and realised only after methodical investigation. (2) Stay concentrated on the main objective. GHG has separated from subsidiary ventures, and should not be encouraged to re-penetrate these markets. Planned associations can be built for patient range of treatment and care without risking the financial standing of GHG. (3) These plans consider the industry appeal of healthcare organisations that GHG is currently engaged in. They adopt and improve established methods, while considering prospective profit capacity. GHG has currently embarked on several internal business plans, which the evaluation suggests to have been thriving. In order to sustain competitive advantage, these business strategies should be continuously carried out or enhanced and take into consideration the following: (1) The evaluation of the concerns has underlined areas where new plans should be created so as to enhance the general corporate image of GHG as well as the necessity to develop a favourable image of the company within each local area. The main suggestion would be for GHG to carry out additional investigation into how to most favourably satisfy the requirements of the local community in order to build a constructive awareness of the services they offer and deliver. (2) Centralise administrative operations employing technology. GHG has effectively centralised their billing operations into local hospitals. Other administrative tasks as well as medical and financial assessment should be maintained so that GHG will strengthen its position or leverage in negotiating agreements and get the most out of reimbursement. (3) Keep on employing and keeping employees. There is a developing national issue brought about by the lack of medical staff, which may have long-term implications accomplishing the quality of treatment and care at undermanned centres. IV. Summary and Conclusions The analysis of GHG provides a definite case employing one healthcare organisation. This case illustrates how business analysis models, such as the Remote Analysis Model (RAM), can be applied to analyse other enterprises. The analysis has shown that GHG has major competitive advantages in the UK’s healthcare industry. The analysis also reveals the main limitations or weaknesses of the company. The kind of evaluation may be performed for other healthcare organisations or for enterprises in other industries. This comprehensive analysis used a single strategic analysis approach, the Ram, focused on both the external and internal environment. This integrated application of external and internal analysis has given an even-handed analysis of an organisation. This analysis started with an external examination of industry competition. An external analysis would, in addition, be the most appropriate place to start an evaluation of an organisation in a particular industry. It is important to have an estimate in order to assess the business strategies of the company with regard to the external context that it works within. The external evaluation of the healthcare industry in the UK revealed that it had high entry barriers. The industry confronted buyers with considerable control over repayment, a growing pattern towards substitutes to conventional services and a highly competitive environment. When these aspects had been recognised it was feasible to afterwards analyse how the business strategies of GHG worked together with these components. This technique would be just as valid for analysing other organisations. As a final point, in the ever more competitive global economy it is vital for entrepreneurs and managers to adopt an impartial perception of the business strategies of their organisations. An impartial perception should be conducted applying an integrated strategic planning perspective to make the analysis inclusive and precise. References General Healthcare Group(a) @ Brentford, Middlesex, UK accessed 19 March 2011 http://www.generalhealthcare.co.uk/GHG-PLC/about-us/who-are-we General Healthcare Group (b) @ Brentford, Middlesex, UK accessed 19 March 2011 http://www.generalhealthcare.co.uk/GHG-PLC/about-us/management-team General Healthcare Group (c) @ Brentford, Middlesex, UK accessed 19 March 2011http://www.generalhealthcare.co.uk/GHG-PLC/about-us/corporate-social-responsibility General Healthcare Group (d) @ Brentford, Middlesex, UK accessed 19 March 2011 http://www.generalhealthcare.co.uk/GHG-PLC/about-us/growth-strategy General Healthcare Group (e) @ Brentford, Middlesex, UK accessed 19 March 2011 http://www.generalhealthcare.co.uk/GHG-PLC/financial-information/financial-highlights/operating-performance Grant, R.M., (2005) Contemporary Strategy Analysis: Concepts, Techniques, Applications. Carlton, Victoria, Australia: Wiley-Blackwell. Hillestad, S.G. & Berkowitz, E.N., (2003) Health Care Market Strategy: From Planning to Action. London: Jones & Bartlett Learning. Kossowski, A., (2007) Strategic management: Porter’s model of generic competitive strategies—theory and analysis. GRIN Verlag. Luke, R.D., Walston, S.L. & Plummer, P.M., (2004) Healthcare strategy: in pursuit of competitive advantage. Cornell University: Health Administration Press. Raisch, S., (2004) Dynamic Strategic Analysis: Demystifying Simple Success Strategies. Germany: DUV. Williamson, D., Cooke, P. Jenkins, W. & Moreton, K.M., (2003) Strategic Management and Business Analysis. Burlington, MA: Butterworth-Heinemann. Appendix A Operating Performance of GHG (2009-2010) Revenue growth was driven by a rise in caseload. Despite an increase in the mix of NHS cases, the continuing operations margin has improved, reflecting the ongoing efficiency programme. *Taken from (http://www.generalhealthcare.co.uk/GHG-PLC/financial-information/financial-highlights/operating-performance, retrieved march 19, 2011) Appendix B Growth Strategy of GHG *taken from (http://www.generalhealthcare.co.uk/GHG-PLC/about-us/growth-strategy, retrieved March 19, 2011). Read More