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  • July 1996 (Revised August 2024)
  • Case
  • HBS Case Collection

Innovative Opportunities to Manage Health Care Delivery

By: Regina E. Herzlinger and D. Scott Lurding
  • Format:Print
  • | Language:English
  • | Pages:20
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Abstract

The purpose of this case is: To familiarize the students with the changing landscape of health care delivery, through chains of retail medical centers and those offering value-based care (VBC).

To discuss fundamental managerial decisions about their viability through the Framework used In Innovation in Health Care: What type of innovation is this? How well aligned is each with the Six Factors of Structure, Financing, Consumers, Accountability, Public Policy, and Technology?

With the answers to the two questions above, what are the critical elements of their business model? The case features pre-class polls that essentially ask the students to rate the startups on a scale ranging from bankruptcy to success in five years.

This case specifically discusses how the recent changes in the organization of health care delivery affect the job choices of a newly graduated MBA. He can join a new chain of retail medical centers (RMCs), which has raised $62 million in venture capital from a firm intrigued by the idea and the team. The idea is to attract patients who cannot see their regular Primary Care Physician (PCP) because he or she is not available or they do not have one.

The RMCs are located in convenient locations ( eg. next to a supermarket with a large parking lot ) in middle-class towns in Massachusetts. They are open 8-8, seven days a week, and staffed by a PCP, nurse, additional personnel, and equipped with labs and X-ray equipment. They offer attractive benefits to this staff. Although they cannot handle emergency care, they can stabilize the patients and send them to a hospital. Their prices are like those of other PCPs and far lower than an Emergency Room. The RMCs face competition from existing PCPs in that locale, urgent care centers, and nearby hospitals.

He has another job offer from a chain that manages Physicians through a one-year agreement with a prominent AMC (academic medical center) to capitate payment to the MDs. The opening of their own VBC firm, replete with an RMC and the network of its affiliated PCPS. They face challenges in introducing capitation to the MDs; dealing with a large bureaucratic hospital; and building their firm. Should they continue to provide services to other AMCs, build their own firm, do both, or do neither?

Keywords

Managed Care; Capitation; Strategy

Citation

Herzlinger, Regina E., and D. Scott Lurding. "Innovative Opportunities to Manage Health Care Delivery." Harvard Business School Case 197-011, July 1996. (Revised August 2024.)
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About The Author

Regina E. Herzlinger

General Management
→More Publications

More from the Authors

    • 10 Dec 2024
    • Faculty Research

    A New Model for Funding Healthcare Innovation

    By: Regina E. Herzlinger and Duke Rohlen
    • October 2024
    • Faculty Research

    Parexel: Scaling Up and Industry Dynamics

    By: Regina E. Herzlinger and Ben Creo
    • September 2024 (Revised March 2025)
    • Faculty Research

    Epic: The Future of Health Information Technology

    By: Regina E. Herzlinger and Brian L. Walker
More from the Authors
  • A New Model for Funding Healthcare Innovation By: Regina E. Herzlinger and Duke Rohlen
  • Parexel: Scaling Up and Industry Dynamics By: Regina E. Herzlinger and Ben Creo
  • Epic: The Future of Health Information Technology By: Regina E. Herzlinger and Brian L. Walker
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