Cleveland Clinic Strategies Analysis Essay Example
Internal Weaknesses and Strengths
Cleveland Clinic is a multi-specialty academic organization that combines hospital and clinical care with education and research. The Clinic was founded in 1921 by doctors who used to work in the military. Their experience had taught them that, when physicians work together as a unit, they could increase the chances of improving the care given to the patients. The Clinic is non-profit one; in other words, its primary objective is to provide care to clients. This paper focuses on the analysis of the Clinics’ internal and external environments in order to understand its strategies and how they relate to the components identified in the evaluation.
A SWOT analysis of Cleveland Clinic has revealed that planning is the entity’s greatest weakness.
Planning determines activities that are vital for the achievement of Clinic’s goals (Allen, 2014). Cleveland Clinic has a planning process that distinguishes appropriate actions that are likely to result in desirable outcomes. A part of the organization’s corporate strategy is forming joint alliances with the Community Health Systems, which is a profit-making chain of hospitals. These alliances aim to share the good practices developed at Cleveland Clinic in order to improve healthcare in other hospitals. The venture provides an avenue for Cleveland Clinic to grow. The organization’s plans include building outpatient facilities; it is an effective response to the trends in the industry. The outpatient facilities that are working to promote care after treatment are on the rise. Despite the existence of the planning process, some flaws in it limit the organization’s ability to respond to the external threats such as increased competition, for example. A weakness in the planning process is evident in the decision to focus on heterogeneous clients. The Clinic serves people from all walks of life and treats every illness. The scope denies the Clinic a chance to increase its competencies in specific services.
The Clinic’s functional strategy depends on the standardization of processes. A shortcoming of this plan is the fact that there are other healthcare providers that provide specialized services. These corporations have decided to focus on the specialty treatment because they have identified the weakness in such providers as Cleveland Clinic. When a firm specializes in a process or activity, it achieves the learning scale in the field of specialization (Burke, 2010). Consequently, such an establishment can offer better services in its market segment than a competitor that serves various segments.
A part of the long-term plans is to focus on increasing the use of technology with the aim to enhance service delivery. An electronic platform is very comprehensive and span across all the aspects of the Clinic’s operations. Although the aim of a holistic integration of technology is to increase efficiency, it may erode intended gains. For instance, the integration reduces the need for online customers to visit healthcare facilities if they can solve their problems virtually. Patients catered for in the in-house settings receive a better high-touch care than online customers. Since the customer perception is an integral part of the quality evaluation system, the gap between the virtual and physical services may cause dissatisfaction and, consequently, lower quality. When a competitor comes with better ways to promote the quality of care, Cleveland Clinic may not have the flexibility to respond appropriately because of the scope of the technological use in its entire system. Some of the technological innovations that have originated from Cleveland Clinic have been spun off to become independent entities. The spinning off may allow companies to have leeway in the security of technologies they create. Since Cleveland Clinic is not a profit-oriented organization, it has managed to ensure that technologies it uses meet all appropriate requirements that would assure clients of their medical records’ privacy. The span off firms may prioritize profits at the expense of privacy issues. Any leakage of medical records would lead to legal suits that may taint Cleveland Clinic’s reputation and cause a market share loss.
Cleveland Clinic has undertaken several changes in its plans and strategies in the recent past. An organization has changed its operational plans by shifting physicians’ focus from the volume-based to value-based outcomes. A result of these changes has been the adoption of physician integration, which involves engaging physicians in decision-making that concerns the quality of care. The change entails restructuring of the work processes, and it is very expensive. A considerable drawback of the plan is that, while the costs are high, the results are rather uncertain. When the Clinic undertakes such a venture with uncertain benefits, it incapacitates its response to the emerging economic conditions. For instance, the Clinic is facing reduced reimbursement from the government. Previously, the government provided funding to healthcare providers that had instituted the quality reporting to motivate them to continue with the good practice. However, political decisions by the government in the recent past have made the quality reporting a requirement for all providers. As a result, there is no need to provide financial incentives for the quality reporting. Financial ramifications of such organizations as Cleveland Clinic are enormous. Consequently, Cleveland Clinic may not afford an investment in the environmental sustainability. Numerous firms around the world are focusing on sustainability measures in order to reduce their impact on the environment (Kondalkar, 2010).
Sustainability requires financial resources, which are currently scarce due to the prioritization of risky processes. The implication of a weak environmental conservation policy includes reduced funding from charitable institutions that form a part of Cleveland Clinic’s financiers. Moreover, the failure to address sustainability adequately can lead to the loss of clients because customers are currently supporting corporations with a conservation agenda. A planning process should reduce spending on high-risk activities with the aim to cover the cash shortfall resulting from the economic changes.
The leading function of Cleveland Clinic has been a strength that supports its strategy implementation. The Clinic’s leadership has been exemplary and has contributed to its reputation. The CEO, Delos Cosgrove, has played a critical role in the organization’s care measurement since he took over leadership in 2004. His communication skills have assisted him in implementing his vision concerning care measurement in the whole corporation. Since the man is a medical doctor, he possesses skills that empower him to understand effects of his strategies on each aspect of Cleveland Clinic. A part of his strategy is publishing the care measurement plan for the public to see. The move has motivated employees to improve their performance because they do not want to face shame because of underperforming. His participation in the U.S. Air Force as a doctor is ideal for understanding Cleveland Clinic, which was founded by the war veterans. He has a powerful Chief Human Resource Officer (CHRO) with experience in cultural and organizational change and quality systems management. The CHRO has been vital in preparing employees and designing job descriptions that align with the change.
The controlling function is a strength that has empowered Cleveland Clinic by maintaining the quality, curtailing financial wastage, and ensuring practices align with the strategies and objectives. The employee performance appraisals rely on the quality of care instead of the volume of patients served. Making the quality outcomes measurements public allows underperformers to make adjustments and high achievers in order to set new goals and either improve or maintain its productivity. The publicity also appreciates the top performers so that they can remain motivated to sustain the quality standards. The internal financial controls include a certification of controls by the management (Cleveland Clinic Foundation, 2015). The management ascertains on a quarterly basis that there are internal mechanisms that ensure the best practices in financial auditing and reporting. Its information technology is the best in the market because Cleveland is the market leader in healthcare-related technologies.
The organizing function of the management is a supporting pillar that reflects the strength of Cleveland Clinic. The Clinic uses a matrix organizational design because of the complexity of its operations. The design reflects functions, products, and geographical dispersion of operations. The jobs are designed to align with the institutes, which are the multi-disciplinary systems for collaboration. The Clinic has organized institutes according to organ systems and related diseases. The employees in each institute provide a flawless service to patients through collaboration with the aim to cover every aspect of the illness. Through these institutes, the Clinic enhances the quality of care and reduces readmission. The workers receive salaries and enjoy other benefits, which correlate with their performance on the quality metrics. Cultural inclusion of minorities and diverse people provides the Clinic with a pool of talents that has varied problem-solving skills (Browaeys & Price, 2011). Additionally, a diverse workforce helps in the care delivery for the clients because employees understand cultural aspects of patients. Understanding how to manage a diverse workforce increases Cleveland’s flexibility to venture into foreign markets by leveraging the experience.
External Opportunities and Threats
Porter’s Five Forces
Today, new entrants’ threat is low in the healthcare industry. Existing organizations have gained economies of scale that allows them to offer competitive prices that new entrants cannot afford. Secondly, current operators have exclusive access to distribution channels, which lock out new players. Additionally, the entry is capital intensive; thus, few new competitors can raise the amount required. Therefore, the low threat of new entrants is an opportunity for Cleveland to gain an extra market share.
The bargaining power of suppliers in the healthcare industry can be divided into physicians and other professionals. Physicians are suppliers because they refer clients to various hospitals, and their power is high. Material suppliers are numerous; thus, they have a low bargaining power. The high power of physicians is a threat to Cleveland Clinic because they can take away its clients and refer them elsewhere. Material suppliers represent an opportunity because the organization can negotiate for low prices and high-quality products.
The rivalry among competitors is intensive because they are numerous and have access to vital resources (Swayne, Duncan, & Ginter, 2012). Competitors are threats to Cleveland Clinic because they can reduce its market share and profitability. Despite the need to respond to the competition, the Clinic may not succeed because of the gap in the quality that exists between its online customers and in-house clients. An organization-wide application of technology has made flexibility difficult to respond to such a gap.
Many competitors offering similar products and services create powerful substitutes. Substitutes threaten Cleveland Clinic’s products and services because they can serve the same purpose (Lutchman, 2011). The entity’s only advantage is high switching costs, which would curtail its current customers from seeking competitors’ services.
The bargaining power of customers is high because they have a variety of products and services, from which to choose. On the one hand, affluent customers pose a threat to the Clinic because they can always choose other providers. On the other hand, poor clients represent an opportunity to Cleveland Clinic because they have limited options as services of the majority of competitors are too expensive for them.
Global forces represent issues arising from the world markets that affect the performance of an organization. One of the global forces is globalization, which has increased interconnectivity of the markets (MacLennan, 2011). Globalization is an opportunity for Cleveland Clinic because it offers possibilities for the growth in foreign markets.
Demographic forces refer to different characteristics of a population such as religion, ethnicity, and nationality. In the American society, demographic forces present an opportunity for Cleveland Clinic. The American society is increasingly diversifying in terms of ethnicity, religion, and origins (Reiss, 2012). Consequently, Cleveland Clinic can build its inclusion program by taking advantage of the talent from around the world, which can empower its workforce.
Political and legal forces are a result of the decisions made by governments concerning policies and regulations governing business operations. Some of the recent forces include the requirement for all healthcare providers to report on the quality. Such a requirement has eliminated the reimbursement that Cleveland used to get from the government as an incentive to continue reporting on the quality. Such a requirement is a threat to Cleveland Clinic because it reduces its financial resources.
Ethical requirements are potential threats to the Clinic because any violation may lead to negative consequences. For instance, the increased use of electronic records requires ethical considerations to protect the privacy of clients. However, such activities as hacking can threaten the organization by exposing sensitive information to unauthorized personnel.
Fulfilling environmental sustainability requirements can create a positive image for Cleveland Clinic, which can attract donors. Since the Clinic is a non-profit entity, it strongly depends on well-wishers. Therefore, it is an opportunity for the organization. However, the scarcity of money due to planning problems may hinder the exploitation of this chance.
Technological changes and forces represent opportunities for Cleveland Clinic because it is the current leader in the medical technologies. It can leverage its expertise in order to develop a cutting-edge technology, which can become its competitive advantage.
Social changes include such aspects as the lifestyle (Yuxiang & Qinghua, 2014). These changes have resulted in the lifestyle diseases. For Cleveland Clinic, such changes are opportunities to provide its excellent quality services and treatments and make a difference in people’s lives.
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Evaluating the SWOT Analysis
According to the SWOT analysis, Cleveland Clinic can gain a competitive advantage by making minor changes in its planning process. The organization’s ability to achieve competitiveness results from the opportunities available in the market and the nature of threats that are facing it. The main obstacle towards achieving a competitive advantage is the Clinic’s inability to address the competition in the market and the substitute products. Competitors have identified a quality gap in Cleveland Clinic’s services caused by the differences in the care of its online and in-house clients. Most market competitors offer specialized care, which makes delivery of the quality care easy. Although Cleveland serves people from different market segments, it can leverage its institutes’ settings in order to ensure that the quality of care is at par with that of competitors. Such a move can reduce the negative effects of competition and the substitutes they offer in the market.
Some minor changes in the technology plans can involve the collaboration between Cleveland Clinic, its online clients, and affiliate clinics that are located near customers’ locations to improve the quality of services. Other threats from Porter’s five forces analysis and the macro-environment are not unique to Cleveland Clinic and affect all the other competitors in the market. The current matrix organizational structure is perfect because of multiple affiliates and alliance partners involved. Control systems can be replicated in other geographical regions, to which the company may decide to expand. They have ensured that the company has retained its edge in the quality and financial reporting despite its increase in size. Corporate level strategies include activities such as building outpatient facilities and forming alliances and joint ventures with the aim to expand. The strategies fit the situation as explored by the SWOT analysis because there are numerous opportunities to be exploited using these corporate strategies. The business level strategy that is remarkable and capable of providing a competitive edge is the formation of institutes and the care they offer to patients. The physician integration taking place at Cleveland Clinic is unprecedented, and once the process is functional full, other competitors may need a while before replicating the competency. Meanwhile, Cleveland Clinic, therefore, can enjoy the first mover advantage before imitators can create any similar institutes.
The primary weakness facing Cleveland Clinic is the planning process. All the other management functions represent strengths that the corporation can use to gain a competitive advantage. The aspects of Porter’s five forces analysis that are opportunities for Cleveland Clinic include the threat of new entrants, the power of material suppliers, and the power of poor clients. On the other hand, substitutes, physician suppliers, competition, and rich customers are threats to Cleveland Clinic. In turn, global forces, environmental requirements, technological, demographic, and social changes are promising opportunities. Political and ethical changes threaten the operations of Cleveland Clinic. The company can gain a competitive edge by utilizing its strengths and making few changes in its planning process.