New strategy for a long-term care group
A healthcare group with decades of history as a hub for social initiatives across the country is faced with the question: what next? Historically, the various organizations were brought together under a single umbrella to support one another, but recent years have shown just how complex it is to capitalize on the potential benefits of economies of scale. This is precisely because proximity and regional networks centered around clients are so important in long-term care.
After years of building a strong central support service, the group now faces important decisions. Despite all its efforts, the group has failed to improve the difficult financial position of one care organization in its portfolio. The group is struggling to make progress. The uncertain situation is a constant source of discussion; an undesirable situation from the perspective of staff and clients. An expiring loan is adding further pressure to the situation.
The approach: an active role for the Executive Board, preparation behind the scenes
The group asked Gupta for support with complex strategic issues. To explore far-reaching options without causing internal unrest, the Executive Board and Supervisory Board opted for an approach whereby a small project team conducts research behind the scenes and maps out the options. In weekly working sessions, the Executive Board itself helps shape the process and the directions to be explored for the group.
First, analyses of financial and market performance were carried out and collated to paint a clear picture of the starting point: how are the individual organizations and the group as a whole faring, and where is the overlap in clients, staff and property? Subsequently, five strategic development directions were developed for the group: ranging from splitting up the organization, focusing on regions or sectors, to strengthening the current structure. These options were elaborated and compared with one another in a structured manner.
The conclusion: unbundling is the best solution
The results of these analyses point to two extremes as the best options: either splitting up the healthcare organizations or intensifying cooperation between them. After careful consideration, the Executive Board considers preparing for future unbundling to be the most realistic course of action, given the current context. The long-term vision is the legal independence of the healthcare organizations, whereby the healthcare organizations procure services from a shared service center (SSC). This course of action enables the healthcare organizations to better fulfill their social mission, in collaboration with their own regional partners and based on their own strengths in healthcare provision. It also offers the healthcare organizations the synergy benefits of jointly carrying out a number of support processes, such as IT, property and administration.
Insights from the analysis phase that were decisive in the decision-making process included:
- The limited overlap in regional operating areas, client groups and job categories between healthcare organizations
- The breadth and depth of the mismatch between the primary care processes of each healthcare organization and central support
- The ambiguities in the group’s governance
- The significant amount of work involved in intensifying cooperation between healthcare organizations
The result: great relief among the management and employee representative bodies following a controversial decision
The decision to implement the break-up of the group over the next few years was taken with unanimous support from the management, employee representative bodies and the supervisory board. The clear statement to work toward a split was appreciated. Recognizing each other’s strengths and acknowledging that they are not fully compatible brought a sense of relief. The group staff are now working on the details of the separation of assets. The healthcare companies are preparing for an independent future.
