In recent times, there has been a marked slowing in this trend of integration, mergers and networking in health care organizations. The fact is many such partnerships have been, or are, in the process of dissolution. The integration of hospitals and other health care organization has not greatly enhanced the efficiency and better price for those integrated organizations in the healthcare industry. According to the findings of Cuellar & Gertler (2002), “integrated organizations have higher prices than stand-alone hospitals and that the differences are larger for exclusive arrangements and in less competitive markets.
Also, integrated organizations are no more efficient than stand-alone hospitals” the decline in hospitals integration is adduced to the use of stabilization strategies by health care organizations to make changes in the target markets or products/ services. The two most pronounced stabilization strategies used by hospitals are enhancement and status quo. These stabilization strategies are adopted as measures in meeting up with lost ground that integration, mergers and networking, previously used, had accrued to the organization in concern.
Hence, the adoption of these strategies is ways of meeting the original set goals and targets for the organization. According to Gellis (2001), cited in Mizrahi & Berger (2005), “with organizational changes (for example, mergers, downsizing) administrators find themselves balancing an internal and an external focus simultaneously. Whereas some administrators rise above the challenges and continue to provide positive leadership, others may become overwhelmed by the chaos and pressure and t urn negative. Still others may attempt to survive by accommodating and adjusting to their environment, exhibiting the traits of transactional leader”.
ENHANCEMENT STABILIZATION STRATEGY Enhancement stabilization strategy is adopted when a management believes that its hospital is progressing toward its vision and objectives but needs to do things better that will act as an impetus in the speedup of attaining the desired height. In this instance, neither expansion nor contraction of operations is appropriate. Therefore, the organization has to concentrate on the already acquired resources and their sizes, enhancing them towards the desired target for the development of the organization.
Many times after an expansion or merger strategy, the hospital engages in stabilization enhancement strategies. Typically after an acquisition, organizations initiate enhancement strategies directed towards upgrading facilities, reducing purchasing costs, installing new computer systems, enhancing information systems, improving the ability to evaluate clinical results, reducing overhead costs, and improving quality. Integration and mergers in hospitals is known to have increased the financial cost of the organization’s operations.
Hence, this negates the process of the enhancement stabilization strategy the organization is pursuing, therefore the noticeable reduction in the practice of integration, merger and networking in the industry. In support of this view Markham and Lomas (1995), cited by Brousselle, et al (1999), has it that “Expected disadvantages relate to increased financial costs to create the new entity, lack of easy access to certain services, insecurity of human resources, loss of managerial and organizational identity, and disruption of routines at the clinical and organizational level”.
In the same vein, Alexander, et al (1996), Cuellar & Gertler (2002), found out that “expenses increases after mergers, but less than in non-merged hospital”. In adopting an enhancement stabilization strategy most hospital have resorted to restructuring the organization’s operating framework in order to reduce cost and also be more efficient. In this view, Mizrahi & Berger (2005), put it that “Most hospital have restructured to achieve flatter organizational frameworks by eliminating professionally defined departments such as social work, nursing, and physical therapy.
Many have moved to a more service line approach or to more integrative structure”. The enhancement stabilization strategy adopted by healthcare organizations is a strategy used in enhancing the available resources on ground in a pattern that would efficiently meet the aspired goals and objectives of the organization. Hence, all resources within the organization are synchronized and directed towards this targeted end. STATUS QUO STABILIZATION STRATEGY A status quo strategy is based on the assumption that the market has matured and periods of high growth are over.
Hence, the need to come up with a strategy to safeguard the already achieved growth in the organization, this be comes most desirable. In status quo strategy, the goal is to maintain market share. According to Andreopoulos (1997), “some research laboratories could be reduced in size and their administrative support services bundled together…strategists have too often ignored the problem, keeping the status quo as a solution. There is a need for leadership in the integration of these activities”. A hospital investing heavily in marketing to prevent market share erosion for inpatient services is adopting the stat us quo strategy.
Hospitals hold their market share (status quo) in slow growth markets such as cardiac and pediatric services and attempt market development in higher growth services such as intense, short-term rehabilitation care (renal dialysis, ophthalmology, or intravenous therapy). In mature markets, industry consolidation occurs as firms attempt to add volume and reduce costs. This instance is where most managed care organizations had failed.
To Kleinke (2001), “managed care really was ‘managed cost’- all along- but it failed to accomplish even that goal, and the U. S.health care system is worse off for the experiment”. The integration of hospitals has resulted in changing the longstanding medical model status quo.
According to Agrawal & Veit (2002), “A paradigmatic shift from a physician- dominated professional model to a market- based system characterized the revolutionary period that followed…the health care delivery system has long been static. Most physicians were self-employed, predominantly in solo practice, and the ratio between capital and labor in the typical practice was low. Vertical integration of individual and institutional providers was rare.
The result was a non- system of independence small business bereft of any means to coordinate the delivery of medical services to ensure their continuity, quality, or cost-effectiveness”. For managers of hospital to consolidate the organization by adding volume and reducing cost, it become important they are wary of the emergence of a single dominant competitor that has achieved a significant cost differential. This status quo strategy is appropriate when there are two or three dominant providers in a stable market segment because, in this situation, market development may be quite difficult and extremely expensive.
Hence, the appropriate setting to maintain a status quo strategy is during stability in the market. And this has turn away the near futile rush to integrate, to a contemporary need to stabilize and consolidate on available resources with the aim of efficiently meeting set targets and keeping the organization very vibrant and robust.
REFRENCES Agrawal, G. B. & Veit, H. R. (2002), “The Managed Care Revolution” in Law and Contemporary Problems Vol. 65, Issue 4. Alexander, J. A. , et al (1996), “The Short-term Effects of Merger on Hospital Operations” in Health Services Research Vol. 30, No 6. Andreopoulos, S.(1997), “The Folly of Teaching Hospital Mergers? ” in The New England Journal of Medicine Vol. 336, No1.
Brousselle, Astrid, et al (1999),”What Do We Know about Hospital Merger? A selected annotated bibliography”. December. http://www. chrsf. ca/final_research/commissioned_research/programs/pdf/mergerbib_e. pdf (24/04/06) Cuellar, A. E. & Gertler, P. J. (2002), “Strategic Integration of Hospitals and Physicians” May1. http://faculty. haasberkeley. edu/gertler/working_papers/hospitals_V1_5_10_02pdf (22/04/06) Field, J. and Peck, E. (2003), “Mergers and Acquisition in the Private Sector: What Are the Lessons for health and Social Services?
” in Social Policy & Administration Vol. 37, No7. December Health Forum Journal (1994), “The Illusive Logic of Integration” Health Forum Journal (September/ October) http://www. healthfutures. net/pdf/w-ili. pdf (22/04/06) Huck, Steffen & Konrad, Kai A. (2004), “Merger Profitability and Trade Policy” in Scandinavian Journal of Economics Vol. 106, No1. Kleinke, J. D. (2001), Oxymoron: The Myth of a U. S. health Care System. San Francisco: Jossey-Bass P xi. Mizrahi, T. & Berger, C. S. (2005), “A Longitudinal Look at Social Work Leadership in Hospitals: The Impact of a Changing health Care System” in Health and Social Work Vol. 30, Issue 2.