Strategic Thinking and Entrepreneurial Action in the Health Care Industry: Volume 6

Strategy and entrepreneurship have long been seen as separate realities to many scholars. In near-caricature form, the first has been seen as focused on large firms using explicit strategic planning methods supported by increasingly sophisticated information technology; and the second appeared primarily to reflect the actions of a determined, energetic, and intuitive founding entrepreneur or small entrepreneurial action team. Fortunately, many leading scholars in the two corresponding fields of study have recognized that these realities are indeed overlapping and should be approached by researchers as such, whenever possible.

Economic assumptions of self-interest and opportunism have sparked a debate about their impact on management behavior. This paper addresses this debate in the context of US hospitals. More specifically, the paper addresses whether self-interest and opportunistic behavior describe pre-existing behavior in hospitals. Our analysis concludes that there is no evidence that opportunism was an underlying industry wide behavior prior to the 1980s when economic theories began to shape policies and the industry. While we cannot determine from the evidence why it emerged, it may be linked to system incentives to reduce costs and/or the propagation of economic theories in health administration programs and business schools. Consequently, there is a necessity for on-going debate and future empirical research on this topic.

This paper offers a conceptualization of two dimensions of health care markets in the US, their interaction, and implications of that interaction. The combination of the amount of consumer out-of-pocket financial responsibility and the level of information available to consumers about services and pricing (along with accompanying potential decision-making empowerment) may well determine the way in which health care consumers will interact with health insurers and providers for many years to come. This paper presents a way to model the interaction of these dimensions. The interaction yields four possible future scenarios for health care in the US. These scenarios, in turn, can assist the major stakeholders in the health care system in what may well prove to be fate-making decisions. Finally, different scenarios suggest different entrepreneurial activity.

Many researchers and executives have viewed fit as a key to organizational survival and high performance (Summer et al., 1990). However, the type of fit and how it can be best achieved may often be in question (Venkataraman, 1989). The current study empirically examines both external and internal fit as predictors of firm performance where: (1) external fit is the alignment of, or congruence between, the organization's strategy and/or structure and the task environment, and (2) internal fit is the multidimensional matching of strategy with structure. The argument presented here is that both internal and external fit can, and do, occur simultaneously. Further, the presence of one type of fit may compensate for deficiencies in the other. Using fit in terms of both matching and moderation, hypotheses are tested to determine the nature of both internal and external fit of strategy and structure. Testing of the hypotheses is conducted using data from the medical group industry. Findings support the influence of individual strategy and structure variables on medical group performance. However, fit found between strategy and structure, be it as matching or moderation, shows little influence on performance. Implications for medical groups and the broader health care industry are discussed.

This paper analyzes health care as a context for building value through human capital and culture. We examine how health care managers can nurture a favorable culture for providers enabling them to focus on customer service. A case study of a large medical center examines how organization culture affects clinicians versus support and managerial staff while adversely impacting patient satisfaction and organizational costs associated with turnover and the cost of replacing personnel. An agenda for managing internal customers and organization culture is presented.

The purpose of presenting this chapter is to provide a summary understanding of the high-tech entrepreneurial process in the health care industry by providing a model with flow chart depiction for clarity. In building the Integrated Model, over twenty stage models in the academic literature were reviewed. The academic literature, the authors experience in entrepreneurial endeavors, and research in case studies are combined to derive the Integrated Model. Two case studies are utilized to illustrate certain key points as the model is explained in detail, as well as to suggest some effective ways to cope with the unusual demands of the new venture process.

In this paper, we argue that the opportunities created from the recent transformational change in the health care industry have provided the environment for entrepreneurship to thrive. As a result, new and innovative organizational forms have flourished particularly when embedded in communities of entrepreneurial activity where networks of experience, access, and social/work relationships exist. The major purpose of this paper is to initiate a theoretical dialogue in which entrepreneurship is introduced as a field of research that can be used to explain how and why health care organizations have emerged and changed into their present forms. First, we present the basic elements for understanding the process of entrepreneurship and how entrepreneurial activity is important to the innovation of new organizational forms. Second, we relate this to the field of health care by focusing on the three stages in the entrepreneurial model: creation, discovery, and exploitation of entrepreneurial opportunities. Third, we argue that the degree of entrepreneurial activity within a given community is the outcome of a dynamic process involving social networks along with positive economic and legal activities that reduce transaction costs and encourage entrepreneurship. To demonstrate this, we focus on the area known as the “health care business capital” in the U.S. – Nashville, Tennessee – and describe the entrepreneurial activity in that city beginning in the 1960s and relate this to the existing theory. We believe this research represents a juxtaposition of the practical and theoretical, so critical in understanding entrepreneurial activity and new organizational forms in health care.

Today's competitive health care markets demand innovation and risk taking on the part of organizations. However, increased government regulation and stiffer penalties enacted in the wake of recent high-profile corporate scandals and the resulting Sarbanes–Oxley legislation, may render boards less willing to undertake entrepreneurial ventures. This article extends the typology of corporate entrepreneurship (CE) developed by Covin and Miles (1999) by extending the CE types to address governance activities in the health care sector. Four case studies are presented that illustrate each of the typology's forms. In addition, the implications of the typology for health care executives and trustees are discussed and areas for future research are recommended.

In this chapter, we investigate whether innovation, as measured by an aggregate weighted innovation score, impacts on nursing home performance. We employ multiple measures of performance, including occupancy rate, payer mix, and the number of deficiencies cited on the annual Medicare/Medicaid recertification survey. Arguing from a contingency perspective, we hypothesize that the performance of nursing homes that engage in minimal innovation will not be significantly different from those that do not innovate at all. However, those that engage in more extensive innovation will have superior performance. Using Online Survey, Certification, and Reporting data from 1997 to 2002, we conducted a series of logit regressions, controlling for organizational and market characteristics that could influence nursing home performance. The results of these analyses support our hypotheses. From a theoretical perspective, this evidence is consistent with contingency theory arguments that organizations that are not responsive to a changing environment will experience declining performance. From a managerial perspective, these results support the importance of the entrepreneurial spirit in the nursing home industry.

The strategic management literature has developed several typologies and taxonomies concerning large, established firms. Yet, to date, no study has attempted to classify newly formed organizations based on their strategic intent. The study of biotechnology firms undergoing an initial public offering presents a rare opportunity to study recently formed organizations within an emerging industry. Drawing from the strategic management and entrepreneurship literature, the present study offers a typology for these firms.

Wal-Mart has had a major impact on both retailing and the U.S. economy in general through its supply chain management, efficiency, cost-containment, outsourcing, and market power. We examine Wal-Mart's strategy in retailing and its likely impact as it begins to make incursions into health care from the perspective of strategic entrepreneurship (SE) theory. Wal-Mart's resources including an expansion focus, low-cost culture, supply chain management, adoption of new technology, and market intelligence are described and related to the SE model. In addition, Wal-Mart's current health care services and target markets are outlined. This is the first paper which comprehensively outlines the competitive threat which Wal-Mart poses to traditional health care providers and insurers. The paper concludes with implications for the health care industry, future predictions, and potential future research.