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BOSTON CHILDREN’S HOSPITAL: MEASURING PATIENT COSTS Case Solution & Answer

BOSTON CHILDREN’S HOSPITAL: MEASURING PATIENT COSTS

PEST ANALYSIS:

POLITICAL:

The organization majorly operates in the various cities and regions of the U.S. which is a highly democratic and stable country in terms of political environment. The governance of the country is also quite impressive with no political and civil unrest in the country. This gives a chance of smooth functioning and operations of various corporate entities in the regions and markets of the country.

The threat of terrorism still haunts and looms over the country however; such incident are very rare and minute in strength due to the tight and effective security measures and counter-terrorism laws of the government of the country.

The healthcare industry is highly influenced and regulated by the department of health of the country and due to this reasons the standards of services delivered to the patient are quite high.

ECONOMIC:

Although the economy of the country is in a very good shape with impressive growth rates however, the country is still looming under the effects of the recession that had struck the country twice in the past. The unemployment rates are significantly high in the country than what they were historically and due to this reason, more segment of the population of the country is increasingly dependent upon the government assistance programs and aid.

Due to this reason, the management of the organization have failed to aggressively penetrate the markets to the full potential of the organization because the costing principles and approaches of the business are quite ineffective in terms of determining the cost of the services to the customers or patients and the costs of the processes of the organization. This leads to higher prices being quoted to the patients by the organization.

SOCIAL:

Although the unemployment rate in the country is high than it was before, however the society and population of the country are witnessing improvement in development and growth in the country and this is also having a positive influence on the social lives of the population of the country.

The assistance programs of the federal and state governments of the country along with the increasing income levels of the employed individuals are a positive step for the society itself and the social dimension of the environment of the country. All of the above factors have contributed to the better living standards and improved purchasing power of the population of the country.

TECHNOLOGICAL:

The technological dimension of the environment of the country is also immensely positive and motivating as the country is a developed nation with a very attractive environment and resources for the researchers and innovation seeking organizations. The education institutions of the country are also very impressive and provide excellent environment to the students and teachers for excelling in their respective fields of life. All of the above mentioned elements of the society and environment of the country have contributed towards the rapid modernization and development of newer technological platforms in all fields of life including the healthcare and medication industry.

PORTER COMPETITIVE STRATEGY:

The generic and competitive strategic model reveals that the low-cost leadership and differentiation leadership strategies are a major competitive advantage and critical success factors for any organization irrespective of the industry they operate in.

They are considered as broad and long term based strategies. The other aspect of the model reveals that the cost focus or the differentiation centric policies and approaches of the management of the organization are narrow minded and short term strategies, which might only serve the tactical objectives and goals of the management of the organization.

The comprehensive analysis of the case study and the strategic direction and focus of the management of the hospital reveals that the organization has adopted the differentiation leadership strategy as a centre pillar for the operations and services of the organization.

The emphasis and focus of the management of the organization in the research and development department of the hospital has facilitated the management of the organization to introduce unique and comprehensive services for the children. This has allowed the management of the organization in differentiating itself from the rivals and competitors of the hospital.

The foundations of this differentiation strategy of the management of the company have been provided by extensive investments and comprehensive focus on the research and development department of the hospital.

The comprehensive analysis of the case study also reveals that the management of the organization has been unsuccessful in introducing and promoting the cost leadership strategy in the services and operations of the organization due to the absence of efficiency and effectiveness in the costing systems and approaches of the business.

It has been identified that most of the calculations of the systems of the organization are not accurate and representative of the exact expense for a service to the patient or customer. The case study also reveals that the system fails to identify singular contribution of the secondary expenses of the organization and therefore, it is difficult to track the exact cost of a service to a customer. Due to this reason, the management of the company could not successfully develop and implement a cost leadership strategy for the organization.

COST OF CARE ANALYSIS:

The cost of care reveals the importance of identifying individual costs for the services that the organization provides to the visiting patients and customers at the hospital and various other sites of the organization. The case study of the hospital also reveals the tremendous amount of value and effectiveness to address a greater market such function and features might bring with themselves for the betterment of the organization and its interests in the markets where it operates.

The analysis of the heath care industry of the country reveals the importance of cost leadership for the organizations and hospitals that operate in the industry of the country. It is critical that the management of the company promotes cost leadership culture and approaches in order to address the needs of the target market and gain competitive advantage over other in the industry. It is the most critical success factor for an organization in the health care industry of the country.

It is imperative for the management of the company to track and trace the costs and expenses of the business internally in order to forecast the external needs and targets for the company. The organization follows the strategy of differentiation through research and innovation and due to this it diverts a significant amount of resources towards this aspect of the business.

It is critical for the management of the company to identify such expenses separately from the costs that are incurred for serving the customers and patients of the company. The main concept behind a need for such approach of the management of the company is to address the market needs by offering prices that are relevant and in line to compete with the rivals in the industry. The only possible way of doing such forecasts and offering such prices to the patients of the organization is by promoting efficiency and effectiveness in the internal costing systems of the organization….

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