Tufts - New England Medical Center Marketing Analysis - Example

Tufts- New England Medical Center Case Table of Contents I. SOSI, SOSI Assessment 4 II. Stakeholder Analysis 5 III. SWOT Analysis 6 IV. Trends Analysis 7 V. Service Area Competitor Analysis 7 VI. Appendices 8 References 17 I. SOSI, SOSI Assessment The implicit statement of strategic intent for Tufts- New England Medical Center is to shore up the viability of the hospital as an Academic Medical Center of the highest caliber, and in keeping with its history and reputation as an AMC providing cutting-edge research, teaching, and care services, and in keeping with its mandate. This SOSI permeates all of the actions that Zane had taken since she took over as CEO, and was the impetus behind her many efforts to shore up the hospital’s financial viability and the excellence of its health care services, through rationalizing and optimizing operations efficiencies, shoring up rates paid to the hospital by the insurance systems, partnering with a regional provider of health care services to improve its referral network, strengthening relationships with individual care providers and community providers,strengthening hospital relationships with the Tufts Medical School, and coming up with plans to establish a community-based hospital located near patient locations. Shoring up finances is the first step towards charting a new future for Tufts-NEMC, and was a necessary step, given the history of financial losses that was undermining the continued existence of the facility. II. Stakeholder Analysis the key stakeholders for Tufts-New England Medical Center are as follows: 1) The health care insurance systems: Harvard Pilgrim, Blue Cross/Blue Shield, and Tufts Health Plan; 2) The patients 3) The Tufts academic community and the Tufts Medical School in particular; 4) the care provider network, including the Children’s Hospital and Primary Care LLC/ New England Quality Care Alliance or NEQCA; 5) the doctors, nurses, staff, and management in the medical center and in the network of partner/affiliate hospitals and NEQCA. Zane needed to be able to achieve a balancing act in terms of satisfying the financial demands of the hospital system and how that in turn affects the major stakeholders in the medical center. Patient care is dependent on the quality of the care providers, and both are interdependent stakeholders. The hospital in turn depends on the network of care providers and referrals provided by its partnership with the healthcare network. Its financial viability is dependent partly on being able to secure good rates from the insurance providers, who in turn need the medical center to be efficient in the management of its resources and to provide quality care. III. SWOT Analysis Key strengths include its history of care and research excellence, good reputation in the Boston area as an AMC, that allows it to attract top medical talent, and excellent top management headed by Zane. Its small size translates to flexibility and greater interpersonal and caregiver-patient warmth, another strength. Weaknesses include poor cash flow, smaller scale economies relative to the Harvard hospital system, inefficient care processes relative to competition, and relative inability to command higher rates from insurance systems compared to competition. Opportunities lie in shoring up financials in order to viably retain its AMC and non-profit nature, attract more talent and patients, and venture into hospital facilities closer to patient locations. Threats include medical talent poaching from other hospital systems, intensified competition, and relapse into inefficient, unprofitable past if and when Zane retires IV. Trends Analysis The top four trends are the shift in hospital admissions to AMCs from the community hospitals, coupled by the downsizing of the AMC capacities, leading to shortages in AMC capacity; the shift away from fixed payment schemes to pay for performance schemes to coerce hospital systems to improve processes efficiency, cost structures, customer/patient satisfaction levels, rates of admission, and support capabilities in IT; the rise in receivables levels and levels of debt; and increased competition for medical talent among the hospital systems. V. Service Area Competitor Analysis The top competitors for Tufts-NEMC are the Harvard affiliates Massachusetts General Hospital and Brigham and Women’s Hospital, and the Boston University Medical Center. The first two would form the Partners Healthcare System. Aside from these large institutions, two other hospital systems became dominant by 2005: Caritas Christi and CareGroup. These competitors have emerged from the consolidations of the prior decade and the ten key hospital systems from that region. The results of Porter Five Forces analysis on Tufts-NEMC together with the top four hospital systems reveal a high level of rivalry among hospital systems; low to moderate bargaining power for suppliers given the proliferation of options; moderate to high bargaining power for buyers due to the presence of good choices; low threat of new entrants given the established nature of the existing AMCs; and low threat of substitutes given the lack of alternatives to specialized care from the hospital systems. These translate to a tough environment for Tufts-NEMC. VI. Appendices A. SOSI Zane took it upon herself to turn around the operations at Tufts-NEMC, not just in terms of returning the hospital to an even financial footing, but achieving that as a means to a greater end, and that is to make sure that the hospital continues to perform its valuable service as a non-profit AMC. Its historical excellence in medical care rests on that identity, and it is that identity that has cemented its various stakeholders together, from the medical practitioners who stay because of the AMC status of the facility, to the patients who patronize the hospital because of the excellence that the AMC status of the hospital represents. The statement of strategic intent is embodied in the sense of mission that Zane embodied too, and in her vision of what her role is for the hospital. For the hospital itself, the statement of strategic intent continues to be what the founders and what its role has come to be over the course of its history, and summed up in its three functions of providing research, medical teaching, and care. Looking at its the organizational strategy that was in place prior to Zane and after she has made changes to recruitment and to the structure of the organization, one can say this statement of strategic intent has come to be in line with what the organizational DNA is so to speak. The statement of strategic intent is also reflected in practice in the way the hospital system has used getting back into financial shape as a staging ground to further putting into practice its mandate. It is using its newly established financial stability to further strengthen the quality of its medical providers by attracting top talent and putting in place mechanisms to retain that talent. it is also using its financial stability to venture into new areas, such as the establishment of hospital facilities closer to the patients. B. Stakeholder Analysis Primary Care through NEQCA is a key stakeholder, because it depends on Tufts-NEMC’s AMC status and its reputation and traction in the Boston area to realize its own regional ambitions. It is joined by the institutions networked with Tufts-NEMC, including the Childrens Hospital. The insurance systems, led by Tufts, Harvard Pilgrim, and Blue Cross are also primary stakeholders. The Tufts academic community, and Tufts Medical School make up a third set of stakeholders that matter for the facility. Patients are a fourth set of stakeholders, together with the general Boston community. The care providers and staff make up the final set of primary stakeholders for the firm. C. SWOT Analysis The medical center was operating from a number of fundamental strengths that has sustained it throughout its history. Its original mandate had been as a hospital for the needy, and its non-profit nature means that it has no incentive to operate purely for financial gain, but so it can remain true to its mandate. It has been a center of excellence for medical teaching and care, as well as research. It is smaller relative to other AMC, which translates to more attentive, personal and warm care. Its AMC status means that it is able to attract good talent, motivated to work in an AMC environment. Its reputation and stature in the community is excellent. Its weaknesses include that prior to Zane, it had been operating inefficiently, and with large losses. Those losses threatened the viability of the medical center, because its failing financial situation was putting the hospital on the brink of financial collapse and insolvency. The intense competition meant it had to act fast. Another weakness was in inefficient operations as reflected in such metrics as length of stay and speed of discharge, which are longer/slower for Tufts-NEMC compared to the other AMCs, leading to higher costs. Then too, its smaller scale of operations meant that it is weaker compared to competition when it comes to being able to leverage economies of scale. It is also unable to retain good talent as a result of its many operational and financial problems. There are opportunities to improve its finances through renegotiation of rates with the insurance providers, through improving operations to cut costs, and through continuous improvements of such processes as procurement to save on procurement costs and the like. Zane acted on these opportunities, and also in opportunities relating to partnering and networking with the likes of Childrens Hospital and Primary Care/NEQCA. These can be further pursued where beneficial for Tufts-NEMC. There are opportunities for increased collaboration with Tufts Medical School. Also there are opportunities to parlay improved financials to attract top medical talent and to expand the hospital facilities to areas closer to the patients, as Zane explored. The threats include the tightening of competition, the intensifying requirements for excellence from the insurance firms due to pay for performance mechanisms, and the threat of the programs and changes in Tufts being unsustainable in the event that Zane leaves. D. Trends Analysis The top four trends are the shift in hospital admissions to AMCs from the community hospitals, coupled by the downsizing of the AMC capacities, leading to shortages in AMC capacity; the shift away from fixed payment schemes to pay for performance schemes to coerce hospital systems to improve processes efficiency, cost structures, customer/patient satisfaction levels, rates of admission, and support capabilities in IT; the rise in receivables levels and levels of debt; and increased competition for medical talent among the hospital systems. Of these trends, the first has a high probability of continuing, and has a marked positive impact on Tufts-NEMC, if the hospital is able to leverage that trend by building more capacity and managing that capacity well. The second and fourth trends likewise have a very high probability of continuing and very high impact on Tufts-NEMC. The third trend, tied to receivables, has arguably a lesser probability of continuing, due to on-going reforms in the health care industry and due to the introduction of health insurance regimes, but this remains to be seen. The impact ,though, remains to be large. E. Service Area Competitor Analysis The new era post 2005 is one where the Boston hospital sector is dominated by large hospital systems, with the AMCs entrenched, together with a host of other major hospital systems. The case mentions that by 2005, there are four key players: Partners representing the Harvard affiliates, Boston Medical Center, Caregroup and Caritas Christi. Tufts-NEMC, partnering with Primary Care LLC, has come to form the fifth player in the space. Performing a Porter Five Forces analysis, the rivalry level is intense for existing players, characterized by a relentless drive to cut costs, improve operational efficiencies, meet insurance system standards for pay for performance, improve scale, and drive network growth forward to dwarf smaller players and get maximum referrals and market share. The competition for good medical talent is also intense. Here the rivalry is high. Looking at the bargaining power of suppliers, this is low to medium, given the proliferation of choices, though the AMCs have the upper hand over the smaller community hospitals. This is due to the shift in preference towards AMCs and the quality care that they provide, over smaller community hospitals. This latter reality tilts the balance slightly towards the supplier/hospital systems. Overall this is low to medium. Looking at the bargaining power of buyers, this is medium to high, given again the proliferation of many alternative hospital systems. This is mitigated by the quality on offer at the AMCs, which diminish the bargaining power of buyers for higher-quality, specialist services offered by Tufts-NEMC and others. Looking at the threat of new entrants, the consolidation through the past few decades and the intense competition existing make it very hard for new entrants to make a dent. The AMCs have very specialized and high quality services that are difficult for new entrants to match. This is generally low. Looking at the threat of substitutes, this is also low, given that high quality medical care is hard to get outside of the top hospital systems, who have superior staff, processes,and facilities. Looking at the five factors in general, one can see that this service area is a very tough and challenging one, and this spells difficulty for new players, and even for turnaround stories like Tufts-NEMC, to gain traction and market share. Tufts-NEMC though has proven that it could do that, but in general the level of competition is so high that Tufts-NEMC needs to continue moving to stay relevant. References Case 6, pp. 539-568 Read More