This is the article-Timothy Rogers, President and Chief Executive Officer of Scarlet Hospital,
has a dilemma. His institution is facing an interesting and potentially threatening situation which ironically is the result of something beneficial
occurring in the community. Specifically, an interstate highway is being extended from Salem, a large metropolitan area of 187,452 residents,
Walnut Grove, a small community of 25,454 residents located approximately 50 miles away, which serves as the home of Scarlet Hospital.
This new transit route, located in the Mountain region of the United States, will reduce the travel time between Salem and Walnut Grove from
just over 1 hour via a winding two-lane local highway to approximately
40 minutes via the modern four-lane interstate highway, dramatically improving the accessibility between the two cities and beyond. While this
development has the potential to yield many benefits for Walnut Grove, it also will usher in a new set of challenges to every business in the city, as Walnut Grove will become less distant—at least in terms of travel time—
to the larger city of Salem and its burgeoning pool of competitors eager
to attract new business from outer-lying communities. Needless to say,
this has Timothy concerned, knowing that Scarlet Hospital will face challenges associated with retaining its patient population, given improved
access to Salem and its four major medical centers.
Timothy has served in his current position at Scarlet Hospital for the past 14 years and he has witnessed many challenges over that time period.
Dealing with competition, however, has not been much of an issue in recent years, making the threat associated with the new interstate an especially challenging matter. A 350-bed, not-for-profit medical care provider,
Scarlet Hospital is the only hospital in Walnut Grove, the result of a merger
between two competing hospitals over a decade ago, and is the largest
healthcare provider within a 50-mile radius. The distance between Scarlet
Hospital and the larger metropolitan areas teeming with healthcare institutions has benefited the facility in that consumers in the marketplace histori-
cally have been inclined to look to Scarlet Hospital for delivery of healthcare
services, viewing more distant facilities simply to be out of reach.
In fact, the only competition in the marketplace has been in the area
of outpatient care, as Walnut Grove is the home of several medical practices that compete with Scarlet Hospital on several service fronts. All in
all, Scarlet Hospital has enjoyed delivering medical services in a highly insulated market, softening its competitive prowess, but not its commitment to quality, thanks to Timothy’s philosophy of delivering the highest
quality medical care possible.
Whereas some institutions would use this isolation to provide second-rate services, taking advantage of the captive market, Timothy has always
believed in delivering the best and striving to outdo past efforts at every opportunity. He, too, demands this commitment from all employees.
For this reason, Scarlet Hospital has maintained standards of excellence in care delivery that rival those of institutions in much larger cities, giving
him confidence that the hospital will be able to compete in the quickly
approaching, more competitive environment.
When the highway extension was announced 1 year ago, Timothy
called a meeting with Scarlet Hospital’s senior management team and outlined the situation, stating that the team would need to devise a defen-
sive plan for deployment no later than 6 months in advance of the opening of the highway. He also advised everyone to keep a watchful eye on
the marketplace, reporting any indication of competitive activity immediately. He noted that, just as in any market, some outshopping will occur,
with patients looking to external markets for institutions to address their
healthcare wants and needs, but that the increased accessibility to Salem
would likely hasten such. Their job, Timothy insisted, was to ensure that
outshopping did not become epidemic.
Timothy’s points were well taken by all. Scarlet Hospital’s senior managers each knew the risks of doing nothing as many hospitals in smaller
cities over the years have watched their patient bases dwindle at the hands of more aggressive competitors in larger cities, effectively skimming given
communities of their most valuable and profitable patients. Those patients
with few or no resources are left, as they simply do not have the means
to look to other markets for healthcare services. As a result, cost shifting opportunities become more limited, with threatened financial viability
and closure being worst case scenarios. The team dedicated themselves to ensuring that this did not occur. At the 6-month point, Scarlet Hospital’s senior management team had
developed a defensive plan that primarily increased the hospital’s advertising
efforts, securing more billboards than it had in previous years, introducing
radio advertisements for the first time in many years, and bolstering other
forms of marketing communication. Scarlet Hospital was fortunate in that
its commitment to quality over the years meant that the physical plant,
clinical and administrative staff members, and quality of care rendered all
were top notch, meaning that upgrades, other than those that naturally
occur within any progressive entity, were not necessary to gain parity with
larger institutions. The team felt confident that their actions would protect
Scarlet Hospital’s market share and the plan was immediately initiated.
Three months prior to the opening of the highway, Timothy and his
staff members began noticing local advertisements—mostly billboard and newspaper ads, and a few radio spots—promoting healthcare institutions in Salem. Much as they anticipated, Salem’s healthcare institutions
viewed Walnut Grove’s population as a source of growth, given upcoming improvements in accessibility. The advertisements generally stressed that Salem would soon be within easy reach of Walnut Grove. That was troubling enough to Timothy and his senior managers, but perhaps the most disturbing aspect pertained to overtones in the advertisements that health
care delivered in the “big city” is better.
Timothy’s greatest concern was that the advertisements were creating the
perception that care is perhaps less effective at Scarlet Hospital. Given this,
it was very clear that Scarlet Hospital, whose advertisements served primarily as reminders of the excellent quality and care delivered by the hos-
pital, would need to be more aggressive in its marketing communications,
as it was apparent that the battlefront would be one of perception. Waging war on this front would no doubt require intensive planning, something Timothy vowed to initiate immediately in an effort to address the most significant threat that Scarlet Hospital has witnessed in many years.
Write a four to six (4-6) page paper in which you:
Based on the textbook’s summary of Timothy’s philosophy of continually striving for excellence, determine whether or not Scarlet Hospital was prepared to compete with the establishment in Salem even before the highway improvement mandated such an upgrade in delivery health care services.
Examine the potential lessons that the “Stopping Outshopping” case could teach health care executives about complacency.
Evaluate the potential value of Michael Porter’s Five Forces analysis and SWOT Analysis for effective decision making, in its ability to help Scarlet Hospital protect its market share and thus decrease the chance of losing patients to other institutions in Salem.
Appraise the value of the Balanced Scorecard model in its ability to help Scarlet Hospital executives reinforce its defensive marketing strategy.
Propose a one (1) page offensive marketing strategy (i.e. communication, branding, innovation, etc.) that Scarlet Hospital should deploy in order to turn the table on Salam-based health care providers and improve its competitive marketing position.
Use at least five (5) quality academic resources. Note: Wikipedia and other Websites do not qualify as academic resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
Examine the marketing research process and market segmentation strategies in the health care industry.
Integrate the SWOT Analysis into viable recommendations to meet the health care services organization’s operating requirements.
Analyze the components of the balanced scorecard and conduct trend and ratio analysis to assess health strategic marketing.
Apply Michael Porter’s Five Forces analysis for effective decision making to efficiently utilize health services resources and achieve organizational goals.
Explain the impact that the population and societal, competitive, and financial forces have on health care services.
Use technology and information resources to research issues in health services strategic marketing.
Write clearly and concisely about health services strategic marketing using proper writing mechanics.