Value chain
The value chain concept is an important factor that is required within the healthcare environment in order to optimize service delivery. Thus supply chain momentum is hugely influenced by effective resource monitoring and utilization due to the core prospects of cost saving implications. Various economists attached the value chain concept on the entire production chain, ranging from the input of raw materials to the output of the final product consumed by the end-users. The benchmark reflected under this concept aims at exploring the various stages that the production process involves, within the operations of an organization.
There are various paths that encompass the value chain concept and according to Lacy et al, (2001) the essence of value chain is for increasing efficiency and productivity. The significant and most essential players in health organizations often define the effectiveness of service delivery to the consumers. The major players in the healthcare organization value chain are basically; the producers or the manufactures, the purchasers who consists of group of purchasing organizations, GPOs, wholesalers or distributors and health care providers (hospital systems and integrated delivery networks (Lacy et al, 2001). In the stipulated analogy above, manufacturers make the products, GPOs makes the purchases in bulk, distributors take the title to them as they deliver them and the providers of healthcare consume them as they render services to the consumers.
Based on the offered analysis of the various supply chain considerations that are focused within the value chain model of the organization, health organization develop strategic techniques needed to examine the essentiality of each of the market players. The current trends emerging on value chain over the ages attributed by dynamism in production, technology and regulatory entities are significant aspects that are shaping value chain within organization (McFadden et al., 2000; Lombardi & Darr, 2002).
Healthcare organizations embrace developmental mechanisms that are based on vertical integration, horizontal integration, managed care pressures, changes on the federal reimbursement, commerce rise and the passage of the Health Insurance Portability and Accountability Act in 1996 some of the essential entities that have defined the level of value over the years. On the vertical integration aspect on value chain analysis, the provider organization such as the hospital systems are integrated vertically with the health insurance businesses, ambulatory care business and developing IDNs or the integrated delivery networks (Dyer, 2000).
The horizontal players of value chain of the healthcare organizations are basically consolidated. This is based on the availability or the capability of these hospitals to merge with each other’s systems such as their purchasing groups being merged to form large purchasing groups (GPOs), with distributors merging to build mega warehouses hence achieving economies of scale, the product manufactures merging to gain the market share, pool capital forces and deal with other consolidated players (Jeffrey, 2000). The existence of value chain plus supply chain is based on the existence of the vertical and horizontal entities in relation to maintaining effectiveness and efficiency towards organizational service delivery.
Organization description
Strengths
The organization’s mission to increase effectiveness and efficiency in service delivery to their patients at the best cost possible has compelled the company to develop strategic approaches within their chain value. The organization has been able to integrate manufacturers or the producers of the various drugs and medicines used by the organization within their daily operations, yielding a competitive market share in the industry. Another strength achieved by the organization is on their distribution channels. The organization has enacted strategic approaches that facilitate the organization to integrate producers within their demand limits and reliable suppliers who deliver the products within the convenient duration.
Weakness
Though the organization has been able to strategically establish strengths within their value chain some weaknesses seems to deter their service delivery. Environmental awareness and tapping the benefits attached to technology dynamism are some of the weaknesses that the organization suffers. The increasing awareness on environmental welfare to minimize pollution and waste disposals calls for the need of the organization to develop approaches aimed at catering for these factors. Technology innovations and the growing trends on value chain have not been fully harvested within the organization hence the need to develop strategies to enable the organization to benefit from these innovations (Rollins, 2003).
Competitive relevance
The weaknesses and the strengths availed within the proffered analysis on St. Johns Hospital and Medical Center offers competitive reliance, if fully utilized. The production and distribution strengths that the organization has been able to establish can be supplemented by upgrading the stipulated weaknesses. This can be achieved through embracing technology innovations and reflecting them on the distribution and interaction with the producers. This can supplement effectiveness and efficiency in service delivery. Developing effective strategies to cater for environmental awareness is essential towards minimizing environmental pollution. Developing an effective social corporate responsibility program that integrates the various essential entities confounded on the environmental aspects.
Conclusion
Value chain in healthcare organization is dynamic with various trends emerging such as technological innovations. Value chain players; producers or manufacturers, distributors, purchasers and the final users have a great impact on the effectiveness of an organizational value chain. This is evident based on the fact that failure of either of the players depicts an influential damage on the organization’s quality of service delivery. St. John Hospital and Medical Center through establishing a competitive advantage through the value chain; fails to tap the full benefits attached to the innovations in technology. The emerging trends of value chain should be supplemented by developing strategies aimed at offering a clear insight towards increasing effectiveness and efficiency in operations within the organization. The essence of strategically approaching value chain of the organization and in their performance based on quality service delivery, calls for closer scrutiny by respective organizations. Healthcare organizations are essential entities within the society; this depicts the diverse significance of strategizing on value chain. The medical services offered by these organizations towards creating healthy communities should be essential baselines towards strategizing on value chain of these organizations. Value chain is the essence of high organizational performance, effectiveness, reducing costs, reliability and quality service delivery and it also offers clear insights on the need to strategically upgrade and implement this concept within the organization.
References
Lacy et al. (2001) The Value of eCommerce in the Healthcare Supply Chain. Chicago: Arthur Andersen,.
Cap, G. E., & Young, L., (2001). The New Road to IDN Profitability: Realizing the Opportunity in the Health Care Supply Chain. Chicago: Cap Gemini Ernst & Young,
Dyer, J., (2000). Collaborative Advantage. New York: Oxford University Press,.
McFadden, C. D., and Leahy, M. T., (2000) US Healthcare Distribution: Positioning the Healthcare Supply Chain for the 21st Century. New York: Goldman Sachs,.
Thompson, J.M., (2007). Health services administration. In S. Chisolm (Ed.), The health professions: Trends and opportunities in U.S health care (pp. 357-372). Sudbury, MA: Jones and Bartlett.
Rollins, G. (2003). Succession planning: Laying the foundation for smooth transitions and effective leaders. Heathcare Executive, 18, 14-18
Lombardi, D.M., & Darr, K., (2002). Managing health services organizations and systems. Baltimore: Health Professions Press.
