SECA 7

    * How comprehensive is your organization's cost leadership strategy?

Kaiser Permenante cost leadership strategy is somewhat comprehensive. In the healthcare industry, employers and payors are interested in reducing cost more than anything.  With Kaiser, their core competency is acute care and preventive medicine.  In order to accomplish this, Kaiser has to provide better and less expensive acute and preventive care than competitors.  In the past, hospitals were trying to broaden themselves to become an integrated delivery system; however it is clear that has become a failed strategy.  Kaiser, on the other hand,  has not focused their cost leadership strategy on costly in patient treatment. Many feel that the high in patient cost stem from outpatient activities that are not controlled by the hospital.

    * Why has the organization adopted this particular strategy?

Kaiser has developed this particular strategy due to the reimbursements of medicare and Medicaid.   With the sickest patients requiring large intensive-care units and large expenses, the hospital usually takes a lose are the government issues reimbursements.  The financial capital of hospital is strained severely by the severely ill patient who comes to through the ER and needs expensive imaging, surgery, and expensive prescriptions.  By focusing on acute care and preventive care, Kaiser is able to eliminate these huge hospital cost.

    * What is strategy's impact on profitability (or organizational sustainability)?

This strategy has worked very well for Kaiser. This strategy has allowed the hospital to spend lower cost on preventive medicine, which in turn reduces the high hospital cost. Kaiser strategy attempts to minimize the time a patient spends in high cost hospital by carefully planning their stay and by shifting care to outpatient clinics.  This practice results in lower costs for the member, cost savings for Kaiser, and greater physician attention to patients.