Valley-wide Health Systems Inc. Harvard Case Solution & Analysis

Valley-wide Health Systems Inc. Case Study Solution

Abstract

The case illustrates the business strategy of Valley-Wide Health Systems, established by Salazar in Saint Louis as a for-profit organization but to treat insured and uninsured patients both in the facility. Before the initiation of the business model, there have been limited accessibility for the uninsured patients in the San Louis Valley, seeking the market gap and opportunity, Valley-Wide initiated its operations to offer full fledge medical services to the patients.Under the leadership of Salazar, the hospital adopted best practices to enhance the business operations.In doing so, the healthcare was taught the best practices from the other businesses and hence lead to successful operations in the market.

In 1998, the Mercy Hospital reached to Valley-Wide Health Systems to out source the certain type of patient care to the Valley-Wide hospital, in an attempt to downsize and control the cost. The project however failed to prove successful opportunity for Valley-Wide, due to inadequate understanding of the culture, government funds and expected cash flow stream. This lead to continuous losses to Valley-Wide hospital and lead to laying off the employees in an attempt to control the cost and sustain the position in the market.

Keywords:  Culture, Market Dynamics, Organizational Strategy, Regional strategies

Introduction

The Valley-Wide Health Systems started its operation in 1976, after analyzing the market gap of inadequate medical facilities and services for the uni nsured patients in the San Luis Valley.The healthcare started as it hired five doctors in the initial period to serve the purpose.The business model of the Valley-Wide Health care remains to be for-profit with budgets and financial statement.

Since majority of the healthcare assistance has been provided by the federal government in shape of grants, the facilities remained limited to a certain level for the valley and the patients. Analyzing so, Salazar, the CEO of the Valley-Wide hospital acquired 40% financial assistance from financial insurance companies. 40% from the Medicare and Medicaid’s and 20% as a federal grant. Such business model reduced the dependence of the hospital on the federal grant and hence improved the profitability in the given period. Also, under the leadership of Salazar, the company adopted the best business practices and understanding of the culture to develop the right fit for itself and hence improve the level of operations and effectiveness of the service.In doing so, Salazar hired medical knowledge equipped person nel and perspective of business in the hospital to develop a uni-focal direction and business approach. However, in 1998, the company accepted the Durango project in south San Louis location as a third party to support the patient care in Mercy Hospital. The Mercy Hospital has been looking to downsize the operation and spun off its two facilities.The Valley-Wide accepted the projects and expanded its operations in the region. The business model mere depended on the federal funds to run the facility operations. However, the expected funds become reduced due to affluent position of the South San Louis Valley, along with the financial crisis in 2003 which made the hospital to cut down the cost in order to make the other ends meet.

 

Valley-wide Health Systems Inc. Harvard Case Solution & Analysis

 

However, the financial instability has not been the only issue for Valley-Wide to operate in Colorado, the culture and values also differ as of the parent region. This difference made the management to deal with the regular issues differently, and also hindered the implementation of the best practices adapted and learned in San Louis Valley in the particular region, resulting in continuous conflict, demotivated employee morale and hence the overall productivity...............

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