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Resource 1

Analyzing Strategic Health Care Cases

“Case studies provide low-risk experience.”

How do students of management gain experience in strategic thinking and making strategic decisions in health care organizations? One way is to work their way up the organization – holding a variety of positions, observing others, experimenting as they develop their decision-making skills – as they deal with issues and develop strategies. Then, when the opportunity presents itself, they combine what they have learned from others and their own management philosophy, and do the best they can. Unfortunately, learning chiefly through experience may be risky in rapidly changing environments and in the often unique situations that health care managers and leaders face.

Hospitals, HMOs, long-term care facilities, public health and other health services organizations prefer to trust important decision making to accomplished managers and leaders. Case studies have been used successfully as a surrogate method to provide aspiring managers and leaders with experience in strategic thinking, strategic planning, and making decisions without undertaking substantive risk. The best case studies contain real situations actually faced by managers and leaders in health care organizations and are documented in a way that makes them useful in providing experience for future strategic decision makers. Because many instructors in strategic management classes use case studies to provide future health care decision makers experience in making strategic decisions, this resource has been included, not to prescribe how cases should always be solved, but to offer some initial direction on how to surface and address the real issues.

An Overview of Case Analysis

Case analysis provides health care students with an exciting opportunity to act in the role of a key decision maker. From hospitals to community blood centers to physicians’ offices, students have the chance to learn about a variety of health and medical organizations and to practice decision-making skills through analyzing cases.

The decisions required to “solve” cases represent a wide range of complexity, so that no two cases are addressed in exactly the same manner. However, the strategic thinking maps presented in this text provide frameworks to aid in strategically thinking about case issues. The fundamental task of the case analyst is to make decisions that will serve as a map to guide the organization into the future. Therefore, most case instructors will expect a comprehensive plan for the organization that addresses relevant current issues and provides a viable and reasonably complete strategy for the future. To achieve this goal, the case analyst typically should:

Summarize the key issues.

Analyze the situation.

Develop an organizational strategy.

Develop an implementation plan.

Set benchmarks to measure success.

These categories represent the major elements of strategy development and make appropriate section headings for a case analysis written report or presentation. First, using the strategic thinking map presented in Chapter 1 (Exhibit 1–1), it is important to do some serious strategic thinking about the external environment of the organization – the political/legal, economic, social/cultural, technological, and competitive situations faced by the case characters. After gathering information about the issues in the general environment, health care system, and the service area, the service area competitors should be assessed. Next, it is important to relate the internal resources, competencies, and capabilities of the organization to external conditions, which will require a thorough and objective analysis of the competitively relevant strengths and weaknesses. The value chain provides a useful tool for uncovering these strengths and weaknesses. These strengths and weaknesses must be evaluated according to their potential to create competitive advantages or disadvantages for the organization. External issues and the organization’s competitive advantages and disadvantages provide the basis for strategy formulation. In addition, to create the strategy for a health care organization, understanding its unique mission, vision, values, and strategic goals (directional strategies) is necessary.

Once the situational analysis is complete, strategic alternatives can be generated as possible solutions to the issues identified in the case. Consideration must be given to the feasible adaptive strategies, market entry/exit strategies, and competitive strategies that provide the means for achieving the organization’s mission and goals and lead to the accomplishment of its vision. The effectiveness of the chosen alternative for each type of strategy must be evaluated. In addition, attention must be given to the likely outcomes resulting from the different choices. After the evaluation, a recommendation needs to be made from among the alternatives.

Nothing will happen, of course, unless the strategy can be implemented. Therefore, the case analyst must address how the strategy will be carried out. The development of a practical implementation plan should include specific service delivery and support strategies and, where possible, action plans. These areas are important because they create value for the organization and translate strategy into organizational and individual actions – the work to be done.

Finally, the case analyst should consider how the success of the proposed strategy should be measured. Returning to the mission, vision, values, and goals will provide an initial measure of success. Other measures will include fit with the changing external environment, internal changes (development of competitive advantages and lessening of competitive disadvantages), and other more specific measures such as financial measures, market share, revenue growth, and so on.

Although the approach outlined here is logical, it is important to remember that a case should be approached and appreciated as a unique opportunity for problem solving. If everyone agrees that a case has only one solution – there’s only one right answer – then it is not a good decision-making aid, and rather than applying decision logic and learning from others, participants will simply rehash case facts. Moreover, managers in health care organizations rarely face problems where the solution is obvious to everyone. This does not mean that there are no good and bad answers or solutions in case analysis; some are better than others on the basis of the logic presented. Sometimes the issues presented in a case are not even problems (defined as a negative occurrence that needs to be addressed). Often the greatest challenge facing an organization is recognizing and acting on an opportunity rather than solving a problem. The evaluation of a case analysis is often based more on the approach and logic employed than the precise recommendation offered.

Cases, Strategic Management, and Health Care Organizations

Cases add realism that is impossible to achieve in traditional lecture classes. Realism results from the essential nature of cases, although students may complain that cases fail to provide all the information necessary for decision making. The complaint is valid because cases rarely provide everything that is needed;

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