VITAS Innovative Hospice Care Case Study Solution
The case illustrates an importance of identifying the successful integration and acquisition of the hospices in the healthcare industry. Where, Vitas Healthcare Corporation was in practice to perform these acquisitions.Initially, it was a non-profit organization but gradually from the commitment of Hugh West Brook vitas Trans consider itself into profit organization. They initially provided hospice service in Miami and an area near to it. Vitas currently has hospice operation in 27 offices and 19 markets throughout the seven states including California, Texas, Ohio, Illinois and Pennsylvania. It has a daily average census of 4900 patients. A typical vitas hospice had a count of approximately 300. Vitas was still looking for a further expansion of its business through acquisition as it would increase its revenues line streams and a potential of targeting a large pool of customers will also be achieved. Such integration process would allow increasing the chances to become a market giant shortly. So, it shows that if Vitas would continue to maintain the standards, then it can be said that it could manage to stand in a competitive position within a particular market (VITAS Mission).
Current Situation Analysis for Vitas
Vitas should look towards the market trend and opportunities that would enable to cover the process suitable for the company’s long-term growth considerations.As, the most of the people are getting aware of hospice day by day so there should be a vast expansion in the market for hospice services.
So the market credibility shows that there should be a process to revamp and perform the expansion opportunities for the future because almost 40 million people were a senior citizen in America which were the target market for hospice activities. Vitas has funds to acquire other hospice centers and team of experienced individuals who are well known for their quality of service and the care that they do in performing those duties.
As, the Market of hospice is increasing gradually so the new hospice center should need to improve the financial structure and operational concerns in order to become profitable rather than the non-profit which would ultimately threat the existence of not profit hospice centers.The Nonprofit organizations are not showing significant expenses due to the nature of steady operational flows but have lower earnings subjected to the distribution not for the company’s retain earnings. Therefore, due to the expansion of the healthcare industry, a switch towards the profit organization would be preferable because it would be able to increase the cash flows and reinvest in the acquisition activities. Thus the concept of Vitas is same to increase the size of operations through expansion and acquisitions.
VITAS: Innovative Hospice Care Harvard Case Solution & Analysis
Industry Analysis
Porter’s five forces
Bargaining power of customer-high
In the healthcare industry, people are conscious about their health condition and prefer any hospice for their treatment. So, within a particular situation, it is likely that the customers would switch towards others if the services are not adequately provided within time. Therefore, VITAS should consider a customer satisfaction to retain them for long-term.
Bargaining power of supplier-moderate
The bargaining power of the suppliers is moderate in a sense that some suppliers of healthcare products are connected with the successful organizations. Whereas, few suppliers are linked with the companies under lower profit margin because they would have the potential to grow their profit margins for some period. In contrast to it, some suppliers tend to switch towards other healthcare organizations if the existing one is not providing sufficient services.
Threat of new entry-high
As far as the business under the particular industry increased gradually through acquisitions increase in the competition. So, it is likely that VITAS would face the intense competition in the future because the particular industry is in the growing stage which allows every new player to enter the market.
Threat of substitution-Low
The products in the healthcare industry are sensitive to use. So, it is unexpected to increase the substitute products because the healthcare customers could not change the perception towards other products due to sensitivity in nature. Therefore, it is expected that the threat of substitute would always be small in such particular industry.
Industry rivalry-High
With the increase in the new players in the market, the competition is growing gradually and allowing every participant to compete against each other on switching the customers and increase the product’s quality. Thus, it can be said that for VITAS, the competition is high and makes it difficult to survive if the expansion process would not incur in the future.
Accept the proposed acquisition
VITAS should make the acquisition as it would help to gain a significant market share. As the market has been growing quite impressively and people who have awareness regarding services like hospice want to get themselves registered for spending their last days in comfort. Therefore, the acquisition would provide VITAS a chance to expand their services in more regions as more centers can provide services................
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