Strategic Planning Insights for Kaiser Permanente's Success

1 Week 2 Strategic Plan Week 2 Strategic Plan UMGC 02/24/24

2 Week 2 Strategic Plan The company that I work for is Kaiser Permanente, which is a popular Healthcare organization in DC, Maryland, and Virginia. These kinds of reports help me understand more about my company and how project management principles are used in the real world. I will discuss Kaiser Permanente’s business model, vision, and mission in this paper. Additionally, I will provide proof of how the organization's goals, purpose, and vision complement its strategy and assist it in maintaining a sustainable competitive edge. Strategic planning is important to every company because it creates the foundation of the organization's vision, execution, and progression of goals. According to Harvard Business School, strategic planning is defined as "an ongoing organization process of using available knowledge to document a business's intended direction." (Harvard Business School, 2020). Kaiser's business model is composed of a "value-based care model which emphasizes and rewards healthy outcomes while making care more affordable" (Kaiser, 2023). Among the many health organizations that are found within DC, Maryland, and Virginia include John Hopkins Hospital, University of Maryland Medical System, and many more. Kaiser's business model utilizes "prepaid care" which allows their patients to have affordable healthcare and integrates their health insurance for patients who do not have access to care. Although they serve various purposes, mission and vision statements are all components of the strategic planning process. (SHRM, 2023). According to SHRM, a mission statement is a "concise explanation of an organization's reason for existence and describes its purpose, intention, and overall objectives." (SHRM, 2023). Kaiser's mission statement is to ultimately provide their patients with affordable healthcare services and to improve the health of their members and community. (Kaiser, 2023). A vision statement is defined as the "mental image of the ideal state that the organization wishes to achieve.” (SHRM, 2023). The vision statement at

3 Week 2 Strategic Plan Kaiser is to “become a leader in total health by making lives better.” (Kaiser, 2023). Kaiser's main prerogative is to ensure that its members are achieving the highest form of health care while ensuring that patients can afford healthcare services. This allows members who are outside of Kaiser to see an outside perspective of what Kaiser members face. An organization has a sustainable competitive advantage if it routinely beats its rivals in the same sector or domain. Businesses having this kind of edge typically provide a better value for their clients than other organizations do. (Indeed, 2022) Comparing profitability is one of the most popular ways a business may find a competitive advantage over its rivals. One business may have a long-term edge over rivals if it routinely outperforms them. There are many ways for an organization can strategically create an advantage over competitors which can include “Providing excellent customer service, continuing to innovate and to improve customer connections.” (Indeed, 2022). By providing excellent service, customers and even patients can leave competitors by resolving any issues that customers and patients may have. Continuing to consistently innovate allows the organization to overcome challenges in the market that can lead to better services or products. Kaiser shows multiple ways of gaining a competitive advantage over many medical systems within DC, Maryland, and Virginia. The best advantage is that Kaiser has coordinated care all within one roof. Many Kaiser facilities have multipurpose facilities which include pharmacy & lab services. They also provide patients with multiple services of physicians and specialists and hospital care all within one roof. The second advantage that Kaiser provides would be disease prevention and management. (Labor Partnership, 2024) Reports show that 75 to 80% of health care costs related to chronic illnesses are used to lower or prevent chronic conditions which can include asthma, heart disease, and diabetes. (Labor Partnership, 2024) The

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4 Week 2 Strategic Plan third advantage that Kaiser has over competitors includes innovation in the workplace. (Labor Partnership, 2024) The biggest labor administration partnership in the nation is operated by Kaiser Permanente. According to analysts at MIT and Rutgers University, frontline staff members collaborate in organizations that have "produced positive and lasting benefits for patient, employee, and health care provider alike." (Labor Partnership, 2024). The last advantage that Kaiser has over their competitors is that they were ranked among the highest in health plans in every region that Kaiser is located in. (Labor Partnership, 2024). Kaiser Permanente's visions, mission, and objectives support the three tests of a winning strategy. The first test is the competitive advantage test, the strategy results in better strategic performance because they are leading health care organizations in integrated care. Kaiser Permanente meticulously arranges the tasks completed by experts, hospitals, pharmacies, labs, and general practitioners. This strategy has numerous benefits. It raises connectivity among all those delivering care, enhances the quality of care, and facilitates patients' access to care. It also makes it possible for us to identify inefficiencies that lower expenses, raise or preserve quality, and promote innovation. (McKinsey & Co, 2009). The second test is the goodness of fit test, the strategy fits the organization’s situation because of its integrated care system. This system provides patients with “primary care services which can even include basic health checkups to disease-management programs” (McKinsey & Co, 2009). This allows the company to retain its members and keep them consistent with their routine checkups and health services while maintaining affordable healthcare. Lastly, the performance test shows us how the company is providing better financial performance. In 2023, Kaiser Permanente reported a 2.3 billion profit in quarter 2 where they owned up to a loss that took place the same time last year in 2022.

5 Week 2 Strategic Plan The organization has had significant success as a result of Kaiser Permanente's strategic management. In addition to its numerous accolades, the firm is ranked as the tenth most admired in the world, was named the World’s Ethical Companies for the 5 th time, named the World's Best Hospitals in 2023, and the Best Employer for Women by Forbes Magazine. (Kaiser, 2023). It is reasonable to claim that Kaiser Permanente's strategic management satisfies the three tests of a successful strategy the Competitive Advantage Test, the Goodness of Fit Test, and the Performance Test based only on these few accolades, of which there are many more.

6 Week 2 Strategic Plan References: Awards & accolades . Kaiser Permanente. (n.d.). https://www.kaiserpermanentejobs.org/awards- and-accolades Kaiser Permanente beats the competition. (n.d.-a). https://www.lmpartnership.org/sites/default/files/tools_7ways_kp_beats_competition.pdf McKinsey & Company. (2009, July 1). What Health Systems can learn from Kaiser Permanente: An interview with Hal Wolf . McKinsey & Company. https://www.mckinsey.com/industries/healthcare/our-insights/what-health-systems-can- learn-from-kaiser-permanente-an-interview-with-hal-wolf Muoio, D. (2024, February 12). Kaiser Permanente reports a $4.1B profit, exceeding $100B in operating revenues in 2023 . Fierce Healthcare. https://www.fiercehealthcare.com/providers/kaiser-permanente-reports-41b-profit-exceeds- 100b-operating-revenues-2023#:~:text=Kaiser%20Permanente%20reports%20%244.1B,B %20operating%20revenues%20in%202023 Northwest Permanente. (n.d.). https://northwest.permanente.org/our-values Our model . Our Model | Kaiser Permanente. (2023). https://about.kaiserpermanente.org/commitments-and-impact/public-policy/integrated- care#:~:text=Kaiser%20Permanente%2C%20and%20our%20model,of%20our %20members%20and%20the

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7 Week 2 Strategic Plan Our vision . Our Vision | Kaiser Permanente. (n.d.). https://healthy.kaiserpermanente.org/maryland-virginia-washington-dc/pages/quality- safety#:~:text=Our%20vision%20at%20Kaiser%20Permanente,the%20safety%20of %20our%20members Person. (2023, December 21). What is the difference between mission, vision, and values statements? Welcome to SHRM. https://www.shrm.org/topics-tools/tools/hr-answers/difference-mission-vision-values- statements Sustainable competitive advantage: Definition and examples | ... (n.d.-b). https://www.indeed.com/career-advice/career-development/sustainable-competitive- advantage-examples Value-based care . Permanente Medicine. (2022, December 16). https://permanente.org/medical- excellence/value-based-care/#:~:text=Kaiser%20Permanente%27s%20model%20of %20prepaid,truly%20value%2Dbased%20care%20environments. Why is strategic planning important?: HBS Online . Business Insights Blog. (2020, October 6). https://online.hbs.edu/blog/post/why-is-strategic-planning-important

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