DARTMOUTH HITCHCOCK MEDICAL CENTER Case Study Analysis
Opportunities
Opportunities refer to the macroeconomic factors or the externals, which have the ability to enable a company to expand its market share and to go for future expansion. The opportunities for Dartmouth HitchcockMedical Center are as follows:
- The medical center can apply its unique strategy of treating patient without surgery to other departments of the medical center. It has a strong research and development unit, which would enable the center to determine how these procedures can be applied into other units.
- The non-surgical treatment has been actively adopted by the patients in the United States, where the surgical treatments have remained quite inefficient. These highly specialized non-surgical services related to spine care could be offered by the medical center beyond the United States, i.e. the medical center has an opportunity to enter other geographical locations.
Threats
Threats come from the external environment and possess the ability to hinder the growth and market development of a company, in future. The threat to the Dartmouth Hitchcock Medical Center are explained as follows:
- The non-surgical spine treatments is a highly growing service segment in the health care industry, as the customers are actively involved in seeking non-surgical treatment for their spine related health issues. The high demand poses a threat of new entrants into the industry, ultimately threatening the medical center’s market share competitive advantage.
Porter’s Five Forces
· Threat of New Entrants
There is a small number of institutes in the industry which possess dominant position and the threat of new entrance in the industry is relatively lower, because the entry would require high investment and resource requirement. A small firm can be affected by the large potential player in the industry, but the switching cost is expensive in the health care industry. For Dartmouth Hitchcock Medical Centre; it is recommended to reduce the cost of its operations, especiallyin the spine centre and to increase the customer value in order to maintain a competitive position in the industry. Major players can cause potential threat for the hospital because these major players have the ability to generate value for the customers. Dartmouth Hitchcock Medical Centre can reduce the chances of new entrance by achieving the economies of scale and investing more in research and development and setting new trends and regulations in the industry, which will automatically discourage the new entrants from entering in the industry.
· Threat of Substitutes
The customers always prefer quality and affordability both while looking for the amount. So, Dartmouth Hitchcock Medical Centre should focus on the services along with products as well. The potential service providers and other hospital can play together play the role of substitutes for the customers. The threat of substitutes is moderate, because the services that Dartmouth Hitchcock Medical Centre is providing are a bit unique and its Spine center's services are better as compared to other hospitals. So the threat of substitutes is moderate. Dartmouth Hitchcock Medical Centre should invest in understanding what customers require and what their potential needs are, and then it should work hard to increase the switching cost for the consumers.
· Bargaining Power of Buyers
The bargaining power of consumers is low in the health industry, because they have to pay for the services and they prefer to avail the health insurance. Dartmouth Hitchcock Medical Centre should increase its customer base. It will assist the hospital in reducing the bargaining power of buyers, alongside which it will also increase hospital’s sales. It will help Dartmouth Hitchcock Medical Centre to smoothen its production process. Dartmouth Hitchcock Medical Centre should develop new innovative products and offer discounts to the customers as it will decrease the bargaining power of customer. By introducing new products; the hospital would be able to remove the existing loop holes and could better compete with its competitors.
· Bargaining Power of Suppliers
Hospitals in the health sector get their equipment and materials from the suppliers, so the bargaining power of suppliers in the health industry is high. The negotiation power is important in this sector, because high bargaining power of suppliers leads to high prices and it affects the profitability. Dartmouth Hitchcock Medical Centre should build a well-designed supply chain with the suppliers. Build a reliable relationship with the suppliers in order to maintain stability in the business.
· Existing Rivalry
In the health care industry; the competition is high because the potential players try their best to become greatest and unbeatable service providers. Dartmouth Hitchcock Medical Centre is following new and innovative treatments in its spine centre, and patients prefer this treatment because it is medicated. The competitors in the industry are also considering to start the same kind of treatment, which will increase the business competition in the industry.
Diamond Model
Demand conditions
For Dartmouth Hitchcock Medical Centre; the patients now prefer to obtain medicated treatment and avoid the surgeries, due to which the current market demand for non-surgery business is increasing. Other rivals in health sectors are also looking for ways to come up with new facilities that patients are looking for. Now Dartmouth Hitchcock Medical Centre has an opportunity to fulfil the consumers’ demand. The demand for non-surgical treatment in the USA is on an increasing trend, so Dartmouth Hitchcock Medical Centre should adopt this approach in its other departments as well.
Firms Strategy Structure and Rivalry
In this competitive environment; the companies are responding to the consumers’ needs and are continuously working on research and development to come up with non-surgical treatment departments. The hospitals use product differentiation strategies, whereas currently Dartmouth Hitchcock Medical Centre is using product differentiation approach for its spine centre. All the competitors in the industry keep a close eye on the business and the trends. Currently medical industry is facing boom due to high investments in the research and development.
Related and supporting industries
There is huge number of supplier in the business and limited competitors in the industry but the competition in the industry is high and Dartmouth Hitchcock Medical Centre is the only hospital that is offering non-surgical treatment in their spine centre. Dartmouth Hitchcock Medical Centre needs to maintain this differentiation point for the company and it should also maintain a long term market position.
Factors condition
Dartmouth Hitchcock Medical Centre has the research and development centres to fulfil the patient’s demand and the hospital does have capable medical teams. Dartmouth Hitchcock Medical Centre is looking to stabilize the business so that it could give tough competition to its competitors. Dartmouth Hitchcock Medical Centre has developed a culture in the industry to offer non-surgical treatment. Further refer to appendix for summary.
Recommendations
Dartmouth Hitchcock Medical Centre is doing well in the industry as the spine centre non-surgical treatment triggers competition in the industry but spine centre is still facing the issues of alignment. So, to increase the alignment; Dartmouth Hitchcock Medical Centre needs to implement group based approach to make the spine centre activity cycle smooth.
The departments should work collectively to improve the knowledge sharing among doctors and they should also work on research departments to find better ways to treat patients without any surgery. The hospital should use separate profit and loss system for the departments because the spine center's revenues do not go for any other business. The hospital should revise the revenue generation system of non-surgical department to maintain the revenues for the hospital.
The department needs separate financial statements to get approval from the parent hospital for further expansions and initiatives. Dartmouth Hitchcock Medical Centre should invest in research and development centre to find strong drug treatments for other departments because it will increase the demand and patients will prefer to go for non-surgical treatment..................
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