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Health Industry and Kaiser Company Research Project

I would like to start by saying that Kaiser company operates in the healthcare realm providing managed health care for the US customers. Kaiser company has already an integrated healthcare model that offers hospital as well as physician care through Kaiser network of hospitals and physician practices provided under Kaiser Permanente name. Kaiser company at present provides its member with access to more than 400 health facilities which operate under Kaiser foundation and Permanente medical group both of which employ over 12 thousand doctors (Chalk, 2004). In the following essay, I will speak about the value chain and the significance of technology to business strategy as applied to Kaiser.

One should understand that value chain analysis is an essential tool for assessing the overall corporate efficiency and competitiveness which is vital in modern day business. By knowing the activities that company undertakes and adjusting them to costs (activity costs) the company then would be able to precisely trace the values and make a judgment on how to improve profits.

Speaking about the value chain of Kaiser I would like to make the following note:

  1. Inbound logistics are of the primary concern to Kaiser as the company strives to retain and hire the best professionals in the field of medicine such as doctors, pharmacists or nurses. It will help Kaiser to achieve a competitive advantage of lowering the number of medical errors and efficiently help the patients.
  2. Outbound logistics directly relates to inbound logistics, as Kaiser strives to efficiently place its human capital into the proper medical settings/hospitals/departments to assure maximum efficiency and effectiveness to the client.
  3. Operations at Kaiser involve the process of constant review to assure continuous improvement and benefit to the patients. By computerizing operations and lowering paperwork, Kaiser will efficiently save time, make a quick and accurate diagnosis, and make particular treatment easy at lower costs.
  4. Marketing and sales as a part of the value chain of Kaiser appear to be somewhat undervalued as the company does not engage in massive advertising compared to consumer goods companies, while doing a good job offering various healthcare plans, still without necessary advertising. The company appears to ignore the bad PR caused by deaths of patients due to Kaiser’s mistakes. Marketing and sales need to be revised and improved at Kaiser if the company wants to rebuild and enhance its image of a responsible and professional hospital.
  5. After sale service/follow-up is another area that Kaiser seems to have mastered with its follow up calls, regular checks, and appointment scheduling. The current use of Kaiser website for finding a personal physician, scheduling appointments, paying online or ordering refill prescriptions for pickup or home delivery certainly adds up to Kaiser’s strengths and competitive advantages.

I will add here that by reviewing the value chain, the management of Kaiser will be able to spot some inefficiencies and areas that need improvement. Once detected, it would be easy and possible to quickly ameliorate the situation and make an overall development within a company.

Kaiser should find out the strategic activities that make create corporate competitive advantage and focus on them. The company should determine non-strategic operations and reduce their costs whenever possible. The costs associated with strategic activities should also be reduced if possible yet without losing the competitive advantage of the firm formed by strategic activities (Herzlinger, 2003).

The firm should not always strive to get the short-term cost cuts but should evaluate the long-term effects of the cost minimization within a particular activity. If the competitive advantage/core competence of the firm is negatively impacted, one should never minimize costs in that area as it might jeopardize the firm’s competitiveness and existence.

Now please refer to some of the technologies that are useful for Kaiser as illustrated below:

  1. Computerization. This technology means that the communication at Kaiser is improved and shifted to the digital format. Each of the hospitals and representative offices has computers and it is a part of the Kaiser network which connects its offices to one another. Whenever there is a need for some particular treatment one can quickly inform the needed personnel and the department and assure that they are ready to serve the patients. Furthermore, technology allows Kaiser to select swiftly the current place to get the one that would meet the customer needs better and is at the closest location. The location of Kaiser facilities are a part of the fundamental value chain advances that allow Kaiser to serve the most significant areas with least facilities possible (Burns, 2004).Emergency care technology enables Kaiser to prepare all the needed equipment before the patient transported to the hospital. By the same token, when a customer gives a call to the Kaiser office with requests regarding some particular care, Kaiser can easily spot the right physician or other doctor and inform the customer about the time that he/she can be used to meet the customer needs. One-call services database as part of operating value chain activities allow Kaiser to keep an exhaustive database on all of its clients where all the sensitive information stored. The customers after each visit to Kaiser facilities have their database updated, and the personnel can keep track of all the health changes applicable to their patient. Doctors are promoted based on how efficiently they helped the patient. The database integration with decision support system facilitates the job of a doctor by providing the patient’s health history, point out to all the allergies or medication taken, let alone their condition at any given time with Kaiser. Now there is no need for a doctor to ask the patient what medicine they made, when and how they felt with it-all that information is stored in the database and is routinely updated. Therefore, doctors can spend time with the patients more productively. Investment in therapeutic/diagnostic technology will help Kaiser to make use of modern diagnostic equipment to assure that diagnosis went quickly, and accurately. The diagnostic kit is computerized and linked to the decision support system as well as the patient’s file in the database. Stem cells/ Genetic engineering. These two fields are still novel, and there is much debate regarding the ethics. Kaiser acts in compliance with the law and investigates the permitted areas to benefit the human health further. Such desire to invest in long-term technology is not new for the healthcare industry, yet Kaiser believes that its technological advances will help the company in the long run by providing the healthcare facilities with more tools to keep patients healthy (Beck, 2004).
  2. Cost-minimization/paperwork reduction. Since it was estimated that paperwork and manual work make up secondary activities of the hospital staff and consume a great portion of expenses, reducing paperwork and providing real-time paper-less activities will help Kaiser mitigate the costs as well as free some time for efficient operations of its staff. The establishment of the proper server-client system will allow Kaiser to keep all the necessary information on a secure server while the users (Kaiser personnel) will access and modify the needed parts of it based on their levels of access through portable hand-held devices such as PDAs or smart-phones in a real-time manner.


In conclusion, I would like to note that Kaiser despite being focused on improving the healthcare in the US communities does place pay much attention to efficiency of operations and long term planning. The company invests not only in internal activities by utilizing the modern technology to communicate, make decisions, and manage the information, but also in the modern healthcare advances by keeping track of the current healthcare trends. The company believes that keeping the costs to a minimum is a reasonable yet not superior practice for a healthcare institution. On the contrary, it is imperative to invest in long-term value creating opportunities, which for Kaiser are represented by proper management of information, and effective treatment of patients.

Burns, Lawton, 2004, The Health Care Value Chain: Producers, Purchasers, and Providers, NY Random House, pp. 56-59.
Herzlinger, Regina, 2003, Market-Driven Healthcare: Who Wins, Who Loses in the Transformation of America’s Largest Service Industry, Prentice Hall, pp. 211-215.
Beck, Bill, 2004, Keeping health care healthy. Indiana Business Magazine, vol. 34, 2003.
Chalk, Mary Beth, 2003, Using six sigma principles: using principles developed to eliminate defects in the manufacturing process, the behavioral healthcare industry can measure, Barrons books, pp. 176-180.