Academic journal article Journal of the International Academy for Case Studies

The Development of a Strategic Plan for HealthTrust Utah

Academic journal article Journal of the International Academy for Case Studies

The Development of a Strategic Plan for HealthTrust Utah

Article excerpt

CASE DESCRIPTION

Critics charge that the American healthcare delivery system is broken, that while consuming an ever-increasing portion of the Gross National Product, it fails to provide accessibility and quality. Many charged with fixing the system lack the tools to address the problem including an understanding of how the healthcare industry differs from other industries. This case study provides an overview of problems facing a cluster of hospitals owned by a large hospital corporation as it tries to compete in a continually changing environment.

The case is based on an actual strategic plan prepared for the Utah division of HealthTrust, Inc. and explains the steps one might follow in preparing a strategic plan. The names of all individuals have been changed.

The case can be covered in one class period. Student preparation time is approximately two hours. The case can be used in any business course addressing the topic of strategic planning or in a course on health administration where the instructor wishes to provide the student with an overview of the problems facing large healthcare organizations. The case has a difficulty level appropriate to students who are juniors in a bachelor's degree business program.

CASE SYNOPSIS

Dr. Richard Mallory, a professor, consultant, and former hospital administrator has signed a contract to develop a strategic plan for the Utah division of HealthTrust, a large for-profit hospital corporation headquartered in Nashville, Tennessee.

The division's six hospital administrators initiated the contract. It was the outgrowth of their increasing frustration with corporate management, whom they believe do not understand the unique characteristics of the Utah market. This has caused the corporation to impose a management model the local administrators believe is incompatible with Utah's competitive environment.

Mallory is considering a traditional format for the strategic plan that will include an environmental scan and an evaluation of the strengths and weaknesses of both HealthTrust and its Utah competitors. He plans to evaluate several generic marketing strategies for their applicability to the healthcare industry. These include cost leadership, product differentiation, innovation leadership, niche marketing, and a copycat strategy.

Students will assume the role of Dr. Mallory. Using Mallory's research, including interviews with major stakeholders, they will propose and vigorously defend one or more strategies for the Utah division of HealthTrust.. At the conclusion of the exercise, the instructor will reveal the actual strategy chosen and review the impact it had on the Utah division.

INSTRUCTORS' NOTES

Recommendations for Teaching Approaches

Review Definition and Basic Principles of Strategic Planning

The instructor may wish to begin the discussion of the case by having students relate what they know about strategic planning. Very briefly, the strategic plan:

* Defines the values and mission of the corporation.

* Identifies the purpose for its existence.

* Determines where it should be in the future, and develops a roadmap to get there.

Review How the Healthcare Industry Differs from Other Industries

The next item for discussion might be how the healthcare industry differs from other industries students have encountered in case studies. The objective of this discussion would be to give students an understanding of how the unique characteristics of the healthcare industry might affect the strategic plan. As many students will have little experiences with the complexities of the health care industry, this portion of the case study may amount to a mini-lecture. Some differences include:

1. The absence of market mechanism.

2. Inelasticity of demand and supply.

3. The impact of third party reimbursement on stakeholder behavior. …

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