In 2009 Children’s Hospital of Philadelphia (CHOP) had been recognized as the best children’s hospital in the country for six years in a row; but leadership saw CHOP as more than the large main campus in western Philadelphia. Beginning in the 1990s, CHOP had created a large network of Primary Care Providers, Specialty Care Centers, Ambulatory Surgery Centers, and community hospital affiliations.
After reading the case study “Children’s Hospital of Philadelphia: Network Strategy”, why did CHOP spread too thin across the market? did this network add value for patients? was the hospital able to achieve a reasonable profit margin?
TO BE RE-WRITTEN FROM THE SCRATCH
Children’s Hospital of Philadelphia: Network Strategy
Children’s Hospital of Philadelphia (CHOP) spread too thin in a bid to enhance its network connection and communication among its physicians. Yet this did not add much value because of increased competition especially for high-margin health services coupled with strong allegiance to local pediatricians. There was also a change in government funding of hospitals, changes in employer-based benefits and payer consolidation. Expansion into Pennsylvania and New Jersey was also not easy despite huge initial investment outlay due to payer negotiations. Further, patients became stumped by the many departments, divisions and disease condition centers at CHOP. Tis led to patients not consulting specialists optimally due to increased wait times. However, the increased transparency meant healthcare customers could make choices based on quality, cost and reputation.
While the profit margins year on year was generally positive and reasonable, 2008-09 saw a drop in gross revenue and profit margins. This could be attributed to the 2008 onetime payment of royalty for the vaccine Rotateq. It is also because the expenses in 2009 were expectedly higher than in 2008.
Reference
Porter, M. E., Daly, C. A. and Dervan, A. (2011).“Children’s Hospital of Philadelphia: Network Strategy.” Harvard Business School, March 23, 2011………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
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