Strategic Management of Quest Diagnostics - Essay Example

I. Executive Summary: Quest Diagnostics is the leading provider of esoteric testing, including gene-based medical testing, and provides advanced information technology solutions to improve patient care. Their services are provided to the medical profession, generally, or to the patient on referral from a health practitioner. The company offers the broadest access to diagnostic testing services through its national network of laboratories and patient service centers, and provides interpretive consultation through its extensive medical and scientific staff. In diagnostics, decision-making skills are used to match the facts of a particular case to a diagnostic category. Ideally the diagnosis is established with beyond a reasonable doubt certainty, but substantial uncertainty or frank diagnostic error can afflict the diagnostic process for a variety of reasons. Many of these diagnostic problems are explained by failures of decision-making. Their main strategic approach, competency and challenges are explained here with. II. Introduction (a) A general introduction of the study: Quest Diagnostics: Quest Diagnostics is the nation’s leading provider of diagnostic testing, information and services. They are the largest providers of global central laboratory services performed in connection with clinical research trials on new drugs and these trials assess the safety and efficiency of these new drugs. Quest diagnostics operates 24 hours a day, 7 days a week, 365 days a year providing their customers with a comprehensive menu of routine and specialty laboratory tests and services. Their major services include laboratory health care services, featured lab tests, online services and medical research etc. (b) Quest diagnostics vision, mission and values: Vision: Its main vision is to serve its patients with their dedicated people by improving their health through unsurpassed diagnostic insights and innovation. Mission: To be the undisputed world leader of diagnostic testing, information and services. Values: Patients are the core values. Some key points best remark them as the unique one are its quality, integrity, innovation, accountability, collaboration and leadership. (c) Company history: In New York City by 1967 Dr. Paul Brown launched the clinical laboratory industry with his vision to offer the high quality, highly automated and cost effective clinical testing. Corning Incorporated purchased Met Path in 1982 and continued to build the company. The business continued to expand and additional companies were acquired, including Damon in 1993, Maryland Medical Laboratory in 1994 and Bioran in 1994. Also in 1994, Corning acquired Nichols Institute, world-renowned for esoteric testing. On December 31, 1996, Corning Incorporated spun off the laboratory testing business to its shareholders, establishing Quest Diagnostics as an independent company trading on the New York Stock Exchange under the Symbol "DGX.”. The acquisition enabled the company to enter into a testing related business, providing services to the life insurance industry. Today, Quest Diagnostics performs testing for approximately 550,000 patients each day, serving approximately half of the physicians and hospitals in the United States. III. Analysis and interpretations of the study: (a) Strategic management process:- The process of strategic management is operable at all the levels of the organization and is the continuous process in development and functioning of an organization. As the company expands its activities, as it adds new lines of business, as it faces new challenges from market, competitions, new products, newer and newer strategies will have to be formulated. As and when the organization is exposed to new opportunities and threats from any of macro variables then the strategies for long term policy of organization may have to be formulated. Thus the process of strategic management is a continuous. Therefore the basic steps of strategic management ie, environmental analysis, strategy formulating/planning, strategy implementation and finally strategy evaluation and control are also continuously being made along with the process of development and functioning of firm. Resources are analyzed, new strategies are formulated, new and old strategies are implemented and are also evaluated on continuous basis. Strategy is a decision taken at suitable time relevant to achieve specific objective considering micro/macro variables influencing at that time. Thus strategic management is considered as a dynamic subject with continuously modifying its nature, process and issues of decision making. (b) Elements of strategic management:- i) Environmental analysis: Understanding, analyzing the external and internal environment of an organization. External factors include society and task environment. Internal factors include structure, culture and resources. ii) Strategy formulation / planning: Development of long range plans for effective management of external environment al opportunities and threats in the light of internal strengths and weakness. And thus includes defining mission, objectives, strategies and policies. iii) Strategy implementation: Process by which strategies and policies are put into action through development of programs, budgets and procedures. The aim of it is to translate the strategy into action so that the objective of the strategy is achieved. The process of strategy implementation may involve changes in overall culture, structure and or management system of entire organization. iv) Evaluation and control: Involves the evaluation of performance and review of decisions based on feed back and thus they form integral part of strategic management. Evaluation is a process of monitoring and assessing the corporate activities to know their performance. Such assessment is useful to compare the actual performance and desired performance. Evaluation serves the purpose of assessment and feedback. Assessment of strategy implementation leads to know whether the strategy has performed well or not. SWOT analysis is an important analytical technique used in strategic management to identify core competencies as well as lack of appropriate resources. The basis of SWOT analysis is the essence of strategy is the opportunity decided by capacity (resources) to take advantage of the opportunity. But weaknesses in other resources can also prevent a strategy from being successful. In the final stage, SWOT analysis will be summarized to generate Internal Factor Analysis Summary (IFAS) as well as External Factor Analysis Summary (EFAS) representing micro and macro environment. (c) Strategic approaches:- Every strategy must have specific objectives decisive to the operation. These objectives must be clearly understood. A perfect strategy makes an organization to come up with best results. Strategic planning consists of the process of developing strategies to reach a defined objective. An effective strategy can be changed quickly to meet changing environmental variables and may even contain alternate objectives. And thus it tries to create more desirable future results by influencing the outside world and adapting current programs and actions so as to have more favorable outcomes in the external environment. Sustainable competitive advantage adds up the merits. Innovation promotes efficiency improvement in new ways of doing business with the new rapidly globalizing economy and thus it helps in reaching and servicing the right customers. The effort to help organizations improve their performance is ongoing. There are no cut-and-dried answers to the various problems encountered while conducting organizational assessments. The range of quality assurance and control has recently broadened and become controversial. Presentation of the range of methods in use today and of those based on new technologies where use is proposed or has just begun also was achieved with little or no dispute. However, there was lack of consensus on exactly how quality assurance and quality control methods are to be assessed. Indeed, there was little consistency in the use of different outcome measures with which we can judge success or failure of specific quality options. In addition, the tension between pressure to adopt sometimes uncertain or expensive method enhancements and pressure to maintain affordability and the widest possible access for populations that most need cervical cytology screening is greater than ever. An enabled assessment will be required for the clearest possible understanding of cost/benefits and current or new assumptions of risk. Other task forces, such as medico legal, cost/benefit and those devoted to new technologies, are their essential partners in meeting the challenges already described. Six Sigma is focused on trying to prevent problems by building quality into processes. (Mohapatra, 2000). Measuring the impact of improvements in reliability and efficiency they can acquire the best organization. Some of the key elements are to: Understand the value of aiming for continuous flow in health care and proper usage of data will help to diagnose a problem and to design the right solution and focusing in one area could sub-optimize a process. Then the required results can be achieved quickly. For these very reasons they concentrate on their well planned efforts on researching and building agendas that aim to appeal to varying Healthcare organizations and enable participants to successfully confront the diverse challenges associated with business process excellence. (d) Competency:- They primarily compete with three types of clinical test providers. They are Hospital-affiliated laboratories, other independent clinical laboratories and physician-office laboratories. Hospitals generally maintain on-site laboratories to perform testing on their patients (inpatient or outpatient). In addition, many hospitals compete with independent clinical laboratories for outreach (non-hospital patients) testing. Most physicians have admitting privileges or other relationships with hospitals as part of their medical practice and hospitals may seek to leverage their relationships with community physicians and encourage the physicians to send their outreach testing to the hospital's laboratory. In addition, hospitals that own physician practices generally require the physicians to refer tests to the hospital's laboratory. As a result of this affiliation between hospitals and community physicians they compete against hospital-affiliated laboratories primarily based on quality of service. Their failure to provide a broad test menu or service superior to hospital-affiliated laboratories and other laboratories could have a material adverse effect on their business. If they fail to compete effectively then the business could be adversely affected and net revenues and profitability could be damaged. Certain measures have implemented by the authorities to control the utilization and pricing of healthcare services, including clinical test services. Medicaid reimbursement varies by state and is subject to administrative and billing requirements and budget pressures. Business development activities are inherently risky and integrating operations with businesses we acquire may be difficult and, if unsuccessfully executed, may have a material adverse effect on the business. The success of their strategic alliances depends not only on their contributions and capabilities, but also on the property, resources, efforts and skills contributed by their strategic partners. Further, disputes may arise with strategic partners, due to conflicting priorities or conflicts of interests. Each acquisition involves the integration of a separate company that previously operated independently and has different systems, processes and cultures. Integration of acquisitions involves a number of risks including the diversion of management's attention to the assimilation of the operations of businesses they have acquired, difficulties in the integration of operations and systems and the realization of potential operating synergies, the assimilation and retention of the personnel of the acquired companies, challenges in retaining the customers of the combined businesses, and potential adverse effects on operating results. If they are unable to get acquired successfully to integrate strategic acquisitions in a timely manner, business and then their growth strategies could be negatively affected. Then the business could be negatively affected if they are unable successfully to continue to improve their efficiency. Blueprint for Wellness™ is the innovative wellness solution from Quest Diagnostics, the nation’s leading laboratory and health information provider. (Business Directory). IV. Challenges:- The diagnostics testing industry is faced with changing technology and new product introductions. Other companies or individuals, including their competitors, may obtain patents or other property rights that would prevent, limit or interfere with their ability to develop, perform or sell upon their tests or operate the business or increase costs. In addition, they could introduce new tests that may result in a decrease in the demand for tests or cause us to reduce the prices of their tests. Thus their success in continuing to introduce new tests, technology and services will depend, in part and their ability to license new and improved technologies on favorable terms. The development of new, more cost-effective tests that can be performed on their customers or by patients could negatively impact the testing volume and net revenues. Advances in technology may lead to the development of more cost-effective tests that can be performed outside of an independent clinical laboratory. Their ability to attract and retain qualified employees is critical to the success of the business and the failure to do so may materially adversely affect their core performance. It appears that substantial components of decision-making are too poorly understood to study or improve. For example, instant pattern recognition use of implicit knowledge and use of creativity represent areas where discussion may not be helpful. In contrast, rule-based problem-solving is sufficiently well understood that the members of an almost purely cognitive specialty might be prompted to ask, what we know about what we do when we solve the problem. Diagnosis is usually based on the symptoms the patient is presenting with. However, in infants and persons with partial immunity, diagnostic tests may be necessary. Manufacturing or design defects, unanticipated use of products, or inadequate disclosure of risks relating to the use of the product can lead to bad image on the company. Personal injuries relating to the use of the products can also result in product liability claims being brought against them. In some circumstances, such adverse events could also cause delays in new product approvals. Similarly, negligence in performing services can lead to injury or other adverse events. In diagnostics business it is possible to generate or maintain sensitive information, such as patient data and if it’s not adequately safeguard that information and it were to become available to persons or entities that should not have access to it, then the company could be impaired and leads to reputation could suffer. (a) HR Challenges:- Idle leaders in diagnostics take seriously on the role of their patient’s compliance. Their challenges are designed to encourage people. Forward-looking statements that involve risks or uncertainties and the results could differ materially from those anticipated in these forward-looking statements as a result of certain factors including the risks. The clinical testing business is highly competitive and if they fail to provide an appropriately priced level of service or otherwise fail to compete effectively it could have a material adverse effect on their net revenues and profitability. While there has been significant consolidation in recent years in the clinical testing business, it remains a fragmented and highly competitive industry. Diagnostics people are a critical resource and competition for qualified employees is strong. If they lose or to fail to attract and retain, key management personnel or qualified skilled technical or professional employees at their clinical laboratories, research centers or manufacturing facilities, the Company's earnings and revenues could be adversely affected. V. Conclusion: Failure to establish, and perform to, appropriate quality standards to assure that the highest level of quality is observed in the performance of their testing services and in the design, manufacture and marketing of the products could adversely affect the results of their operations and adversely impact diagnostics reputation. Thus the redesigning of diagnostics resulted in reduced costs, greater pharmacist satisfaction and improved patient care. That is why the industry comprises establishments known as medical and diagnostic laboratories primarily engaged in providing analytic or diagnostic services, including body fluid analysis and diagnostic imaging. As Quest diagnostics have numerous political, legal, operational and other risks as a result of their international operations which could impact their business in many ways. Although they conduct most of their business in the U.S., it will help in expanding international operations increase their exposure to the inherent risks of doing business in international markets. Reference Mohapatra, Surya N. (2000). What is Six Sigma Quality at Quest Diagnostics?: All Labs Are Not Created Equal, Quest Diagnostics. Retrieved 28 May, 2008, from http://www.questdiagnostics.com/brand/b_home_six_sigma.html Business Directory: Health Information, GVFHRA: Greater Valley Forge Human resource association: Quest Diagnostics. Retrieved 28 May, 2008, from http://www.gvfhra.org/business_directory.asp Business Strategy/Planning, (1998-2008). CRM Knowledge Base: IT toolbox. Retrieved 28 May, 2008, from http://crm.ittoolbox.com/topics/t.asp?t=553&p=553&h1=553 Quest Diagnostics Incorporated SWOT Analysis and Company Profile, (2008). Manta. Retrieved 28 May, 2008, from http://reports.manta.com/datamonitor/summary/0289-1374_ITM Lewandrowski, K. Selection of a Clinical reference Laboratory: General Principles and Some Observations from Massachusetts General Hospital, Elsevier. Vol.25. Iss.5. P.33-37. Retrieved 28 May, 2008, from http://linkinghub.elsevier.com/retrieve/pii/S0196439903800211 Total Rewards 2008: The Real Facts of Life: When Faulty Perception of Health Risks Meets Reality: Workshop Code: B19TH2, Worldat Work. Retrieved 28 May, 2008, from http://www.worldatwork.org/waw/philadelphia2008/attendee/workshops.jsp Read More