Read Case 6, “The Health Care Industry” (pages 222–223 in the Greer text), and then answer questions 1–4 on pages 223–224 As a group, develop an action plan for a Hospital Administrator who deals with the upcoming trends in the healthcare industry. Specifically describe how the organization can meet its future needs and how it will prepare employees for their employment future. (Question 3 from the case study.)
The health care industry has been going through major structural changes in order to become more efficient to help stem rising costs of health care. During the previous decade, health care organizations hired MBAs to help streamline their organizations, introduce new efficiencies, and market their services. In addition, many physicians are obtaining MBAs in order to help introduce bettermanagement into the health care industry. Health maintenance organizations ( HMOs) continue to hold down costs by emphasizing prevention, by limiting access to specialists, by requiring copayments to make patients more sensitive to the costs of health care, and through increased bargaining power resulting from their size. There also have been mergers among health care organizations and hospitals. Unfortunately, many health care organizations have encountered financial difficulties and some have failed. The federal government also has tried to hold down costs by limiting Medicare and Medicaid reimbursements. 1 At the same time that the health care industry is struggling to become more efficient, the demand for health care is increasing and is expected to increase in the future because of an aging population, increased affluence, and advances in technology. By 2008, 7.2 percent of the U. S. population will be 75 years or older. This compares with 5.2 percent in 1978.2 Actual employment levels in selected health care occupations in 1998 and projections for 2008 are as fol-lows: 3
Occupation 1998 2008
Physicians 577,000 699,000
Dentists 160,000 165,000
Optometrists 38,000 42,000
Physician’s assistants 66,000 98,000
Registered nurses 2,079,000 2,530,000
Physical therapists 120,000 161,000
Respiratory therapists 86,000 123,000
Dental hygienists 143,000 201,000
Clinical lab technologists and technicians 313,000 366,000
Licensed practical and licensed vocational nurses 692,000 828,000 Speech- Language pathologists and audiologists 105,000 145,000
1. Most people have some familiarity with hospitals and the health care industry. ( If you lack such familiarity, you may want to interview someone who works in health care.) Based on your knowledge, in which quadrant of the staffing policies matrix ( Figure 4- 3) do you think hospitals are located? Are the staffing policies of hospitals more like baseball teams, academies, clubs, or fortresses? Explain your reasoning.
2. Examine the projections for the various health care occupational specialties. Are there substantial differences in the rates at which employment is expected to grow in the different occupations? How have the strategic actions by health care orga-nizations, such as mergers, shifts to preventative approaches, and the focus on cost control, affected the expected growth of the different specialties? How is the market demand for medical care expected to affect employment in the different specialties?
3. Given the uncertainty of the demand for health care workers, how can health care organizations be prepared to meet their future needs for such employees? How can they help their employees prepare for their employment futures?
4. Do Porter’s competitive strategies of cost leadership, differentiation, and niche or focus apply to hospitals or health care organizations? Explain.