Strategic Choice and Evaluation for
Abrazo Community Health Network
Abrazo Community Health Network
Abrazo Community Health Network (aka Abrazo or Abrazo Healthcare) is a network of hospitals, primary care services, urgent cares and emergency care services that serves the greater Phoenix metro area (Abrazo Community Health Network, 2015)” and was recently purchased by a large for-profit national hospital system, Tenet Healthcare (THC). Abrazo’s closest competitor is HonorHealth is also a for-profit system and which recently claimed the 3rd biggest market share for the phoenix metro area; pushing Abrazo down to the number 4 slot. Since most of Abrazo Community Health ...view middle of the document...
Lower Cost of Operation
Nonprofit health systems have a variety of tax breaks and pricing opportunities that can give them the upper hand when it comes to the cost of operations (Horwitz 2005). Two of the top three competitors for Abrazo are nonprofits systems (Milville, 2013) meaning to stay relevant, Abrazo Healthcare must implement cost saving measures. Reportedly in 2009 alone, 30 percent of all health care spending was wasteful due to unnecessary or poorly delivered healthcare (The New York Times Editorial, September 10, 2012). This creates an opportunity for Abrazo Healthcare to evaluate their processes and health delivery mechanism and identify areas where they can cut unnecessary spending.
During the recent recession, Arizona’s healthcare industry responded by slowing investments and growth activities, although they remained profitable and healthy (Katz et.al 2011). With recent mergers such as Banner Health System and University of Arizona Health System and formation of HonorHealth, it seems to be the time for Abrazo to look at potential areas to grow as well. Most of Abrazo’s major competitors are diversely vested in different areas of the healthcare such as cancer treatment and long term care centers. Mayo Clinic which is regarded as the top quality health system in Arizona by the U.S. News (Rau 2015) has recently started construction in building a cancer center. Abrazo’s core competency to manage cost and productivity, along with Tenet Health’s purchasing power to get discounts on supplies, has created a great opportunity to acquisition smaller but preestablished health systems with focus on cancer treatment and long term care. This would put Abrazo in a position to be able to have a complete service line without having to build them from the ground up.
Abrazo Community Health Network must recognize the opportunities it has in the Phoenix market to better position itself as a formidable competition in healthcare delivery of the greater Phoenix area. It has the opportunity to compete in this market by using variety of strategies that can improve their customer satisfaction, which would lead to better scores from the CMS and contracting bargain power. Being part of one of the largest hospital systems in the U.S., Abrazo Healthcare has the resources such as great buying power and purchasing abilities to reduce cost and address productivity challenges as a generic strategy. Meanwhile, considering that the competitors have started to invest and expand in this market; the company should expand their service lines to match those of its top competitors, so they can achieve the same level of diversity and competitiveness. This can be done by acquisition of a smaller but established system which is focused on the areas where Abrazo lacks service line resulting in the smaller system benefiting from the core strengths of Abrazo Healthcare in cost reduction and...