UNIVERSITY OF CALIFORNIA, BERKELEY

SCHOOL OF PUBLIC HEALTH AND HAAS SCHOOL OF BUSINESS

DIVISION OF HEALTH POLICY AND MANAGEMENT
PH223C AND BA299H: STRATEGIC MANAGEMENT AND THE ORGANIZATION OF
HEALTH SERVICES

Spring Semester 2006

Fridays 9 a.m. to 12 Noon
125C Cheit

Professors:

Stephen M. Shortell, Ph.D., M.P.H. Jeff Oxendine, M.B.A., M.P.H.

417E, University Hall 19 Warren Hall
Phone: (510) 643-8451 Phone: (510) 642-2414
E-mail: shortell@berkeley.edu E-mail: oxendine@berkeley.edu
Fax: (510) 643-5056 Fax: (510) 642-9891

Office Hours:

Fridays Noon – 1 p.m. or by appointment

Required Reading Materials:

1. Course Reader and Syllabus

(to be purchased on Study.Net through Catalyst at http://catalyst.haas.berkeley.edu)

2. Shortell S.M. and A. Kaluzny, Health Care Management: Organization Design and Behavior,
5th Edition, Delmar, 2006.
Referred to as “Shortell and Kaluzny” (S and K)

Supplemental Reading Materials (on reserve at SPH and Haas Libraries):

1. Swayne, L., Duncan, W.J., Ginter, P., Strategic Management of Health Care Organizations,
(5th Edition) Blackwell Publishers:Cambridge, MA 2006.

2. Shortell, S.M., Gillies R., Anderson D., et al., Remaking Healthcare in America: The
Evolution of Organized Delivery Systems (2nd Edition), Jossey Bass:San Francisco
2000.

3. Burns, L.R. The Business of Healthcare Innovation. Cambridge University Press, New York
2005.

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Additional Resource

HealthLeaders.com publishes daily and weekly electronic newsletters on healthcare business news.
Free subscriptions are available through the HealthLeaders.com web site. These and other newsletters
may help students keep up to date on developments in the health care sector and provide grist for class
discussions.

Course Description and Objectives:

The overall purpose of this course is to assist you in leading health sector organizations from a
strategic perspective. This is accomplished by systematically addressing system, organization, group,
and individual level issues in strategy formulation, content, implementation, and performance.
Emphasis is placed upon the executive's role in simultaneously taking into account a wide variety of
internal and external factors to improve organization and system performance in meeting the health
needs of individuals and communities. Emphasis is also placed on the development and
implementation of strategies to meet multiple stakeholder demands with particular attention given to
Continuous Quality Improvement/Total Quality Management approaches. The course will cover a
wide variety of health care organizations including community health centers, physician group
practices, health systems, hospitals, HMOs, suppliers, pharmaceutical, biotech, and medical device
companies. Students are expected to have had at least one course dealing with the health care system
or relevant work-related experience. Students are required to have general background knowledge of
the health system. Upon successful completion of the course you should be able to:

THINK STRATEGICALLY

1. By understanding the major different perspectives on organizations and their relevance

to the management of organizations in the health care sector.

2. By understanding the variety and complexity of the executive's role in guiding the
organization, particularly in regard to establishing its mission, culture, strategic
direction, and implementing its value system.

3. By developing your ability to analyze external environmental and competitive forces

influencing the organization

4. By developing alternative strategies for effectively positioning the organization to deal

with its environment.

SUCCESSFULLY IMPLEMENT STRATEGIES

5. By understanding the process of change and innovation and developing alternative

strategies for successfully implementing change and innovation.

6. By understanding the motivations of professionals and working effectively with

professionals to implement strategies.
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 7. By understanding and being able to apply the philosophy, principles and tools behind
continuous quality improvement/total quality management.

BETTER PROMOTE ACCOUNTABILITY

8. By understanding the different approaches to assessing organizational performance and

developing performance measures and accountability systems, which maximize their
usefulness to the organization and to external stakeholders while recognizing their
limitations.

AND

9. Leap tall buildings in a single bound! (Just a check to see if you're still reading.)

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Course Methods:

To accomplish the above, we will, like good leaders and managers, take an eclectic approach. This
will involve: 1) reading the course materials to familiarize ourselves with the issues and various
approaches to them; 2) participating in group case debates; 3) participating in classroom lecture and
discussion to probe the issues in greater depth; 4) applying new skills, insights and ideas in developing
mission statements, competitor analyses, and strategic plans; and 5) reflecting and evaluating what we
have learned from the experience. Leaders from various segments of the health care sector will
participate in some class sessions to share with us their insights and experience about the issues that we
will be addressing.

The general format outlined above will be facilitated by your participation in a group of approximately
five people each. The groups will be involved in case analyses and discussions. These groups will be
established in class.

GROUP STRATEGIC PLANNING PROJECTS

You will be assigned to a group of approximately five people for purposes of developing a written
strategic plan for a health care organization of your choice. This assignment will be made based on
your interests and class diversity. Each group will make an in-class oral presentation of its plan. See
subsequent description entitled "Written Strategic Plan Guidelines." This group is likely to be different
from the case analysis groups.

Grading and Evaluation:

You will be evaluated on the basis of the following criteria:

1. Written Mission Statement (group) 10 points

2. Written Case Analysis (Individual) 20 points
3. Group Written Strategic Plan and Oral Presentation 50 points
4. Class discussion of cases and completion of 20 points
Required Readings (Individual)
__________

TOTAL 100 points

Pre-requisites:

PH223A (Introduction to the Health Care System), equivalent introductory course, or consent of the
instructor.

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SPECIAL NOTE #1:

Students must always be prepared to discuss the readings and cases for each session. To ensure that
all students have the opportunity to participate, we will call on students whose hands are not raised.
(Please let us know before class if some emergency has made it impossible for you to be adequately
prepared for class that day).

SPECIAL NOTE #2:

Full participation in this class is required. The case discussions and group projects around which the
class is organized require regular attendance and participation. Students who have more than one
unexcused absence will have their grade lowered one letter (e.g.: A to B; B to C; etc.)

SPECIAL NOTE #3:

If at all possible, please do not schedule interviews for jobs or internships on Fridays so that you are
always able to attend class.

SPECIAL NOTE #4:

For the written group strategic planning project paper, each student is to evaluate every member of the
group including you by assigning 80 to 120 points reflecting each person's relative contribution to the
group's paper. Overall, each group must average 100 points per member.

Example #1
Group member A = 100
Group member B = 95
Group member C = 105
300/3 = 100

Example # 2
Group member A = 110
Group member B = 105
Group member C = 85
300/3 = 100

Grading Policies:

In all written work, attention will be given to the quality of presentation - clarity of ideas,
sentence and paragraph construction, linkage of paragraphs, etc. Points will be taken off
for lack of a clearly written, well-organized response as well as deficiencies in content.
If an assignment is more than two days late, one point will be taken off for each day the
assignment is late.

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CLASS AND TOPIC ASSIGNMENTS

Week 1: January 20th

COURSE OVERVIEW

i. Review Syllabus and Reading List

ii. Form Case Discussion Groups
iii. Set Expectations

KEY DRIVERS OF CHANGE IN HEALTHCARE AND THEIR STRATEGY IMPLICATIONS

S and K, Chapters 15 and Chapter 1

THE MANAGER'S ROLE IN IMPROVING HEALTH AND HEALTH CARE

ORGANIZATION MISSION, VALUES, VISION, AND CULTURE

1. A.M. Zuckerman, “Creating a Vision for the Twenty-First Century Healthcare Organization,”
Journal of Healthcare Management, September/October 2000, pp. 294-306.
2. J.C. Collins and J.I. Porras, “Building Your Company’s Vision,” Harvard Business Review,
September/October 1996, pp. 65-77.
3. J.A. Chatman and S.E. Cha, “Leading by Leveraging Culture,” California Management Review,
Summer 2003, pp 20-34.
4. D. Brady, “The Immelt Revolution,” Business Week, March 28, 2005, pp. 64-71.
__________________________________________________________________________

Week 2: January 27th

POSITIONING THE ORGANIZATION

S and K, Chapter 14

5. M. Porter, "Operational Effectiveness is Not Strategy," Harvard Business Review, November-

December, 1996, 61-78.
6. R. Winslow, “How a Breakthrough Quickly Broke Down for Johnson & Johnson,” The Wall Street
Journal, September 18, 1998.
7. P. Landers and J.S. Lublin, “Under a Microscope: Merck’s Big Bet on Research by Its Scientists
Comes up Short,” The Wall Street Journal, November 28, 2003.
_____________________________________________________________________________

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Week 3: February 3rd

POSITIONING THE ORGANIZATION – Continued

Group mission statements are due via e-mail.

8. J. Gilbert, P. Henske, and A. Singh, “Rebuilding Big Pharma’s Business Model,” The Business and
Medicine Report, November 2003.
9. D. Ulrich and N. Smallwood, “Capitalizing on Capabilities,” Harvard Business Review, June 2004,
pp 119-127.
______________________________________________________________________________

Week 4: February 10th

POSITIONING THE ORGANIZATION – Continued

* 1St Group Case Debate: “Cooper Green Hospital and the Community Care Plan (A) and (B).”

10. G. Hamel and L. Valikangas, “The Quest for Resilience,” Harvard Business Review, September
2003, 52 – 63.

Special Note – Finalize your group’s selection of organization for your strategic plan.
______________________________________________________________________________

Week 5: February 17th

POSITIONING THE ORGANIZATION—Continued

* Lloyd Dean, President and CEO, Catholic Health Care West (CHCW)

THE PROCESS OF DEVELOPING STRATEGY AND BUY-IN

______________________________________________________________________________

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Week 6: February 24th

THE PROCESS OF DEVELOPING STRATEGY AND BUY-IN- CONTINUED

IMPLEMENTING STRATEGY – CQI Approaches, Concepts, Methods, and Applications

11. P. Plsek, “Innovative Thinking for the Improvement of Medical Systems,” Annals of Internal
Medicine, 131 (6): 438-444.
12. M. Hume, "Changing Hospital Culture and Systems Reduces Drug Errors and Adverse Events," in
Quality Letter for Health Care Leaders, March 1999, pp. 2-12.
13. D.J. Shulkin, “Commentary: Why Quality Improvement Efforts in Health Care Fail and What Can
Be Done About it,” American Journal of Medical Quality, March/April, 2000, Vol. 15, No. 2, 49-
53.
14. Reeder, L, “Case Study: Award-Winning Benchmark for Technology Implementation,” Disease
Management and Quality Improvement Report, September, 2003.
15. Begley, S, “Too Many Patients Never Reap Benefits of Great Research,” The Wall Street Journal,
2003.
16. Landro, L, “Six Prescriptions to Ease Rationing in U.S. Health Care”, The Wall Street Journal,
December 21, 2003.

Week 7: March 3rd

IMPLEMENTING STRATEGY – CQI - Continued

* Ian Morrison, PhD, President Emeritus, Institute for the Future, and Founding Partner,
Strategic Health Perspectives, 10:30 a.m. to 12:00 pm

S and K, Chapter 12

17. Institute of Medicine, Crossing the Quality Chasm: A New Health System for the 21st Century,
Chapter 5, “Building Organizational Supports for Change,” 119-154, Washington, D.C., 2001, pp.
119-154.
18. N. Nohria, W. Joyce, W, and B. Roberson, “What Really Works,” Harvard Business Review, July
2003, 42 – 52.
__________________________________________________________________________

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Week 8: March 10th

IMPLEMENTING STRATEGY – CULTURAL COMPETENCE AND DIVERSITY

* 2nd group case debate: “Strategic Deal-Making at Millennium Pharmaceuticals.”

19. J. Betancourt, et al, “A Framework for Cultural Competency,” Public Health Reports, August
2003, pp. 293-302.
20. T.D. Goode and V.H. Jackson, ‘Getting Started . . . and Moving On . . .Planning, Implementing
and evaluating Cultural and Linguistic Competency for Comprehensive Community Mental Health
Services for Children and Families, Washington, DC: Georgetown University, National Center for
Cultural Competence, Summer 2003

_____________________________________________________________________________

Week 9: March 17th

IMPLEMENTING STRATEGY – TECHNOLOGY ADOPTION AND KNOWLEDGE

MANAGEMENT/TRANSFER

• Written Case due – either Sunrise Medical or Intermountain Health Care

• Kaiser EMR implementation case, in class discussion

21. J.C. Goldsmith, “The Healthcare Information Technology Sector,” in Burns, The Business of
Health Care Innovation, Chapter 7, pp. 322-347, Cambridge University Press, 2005.
22. M.T. Hansen, N. Nohria, and T. Tierney, “What’s Your Strategy for Managing Knowledge,”
Harvard Business Review, March-April, 1999, 106-116.
23. C. O’Dell, C.J. Grayson, “If Only We Knew What We Know: Identification and Transfer of
Internal Best Practices,” California Management Review Reprint Series, Spring 1998, Vol. 40, No.
3, 154-174.
24. D. Leonard-Barton and W.A. Kraus, “Implementing New Technology,” Harvard Business Review,
1985, pp 102-110.
25. J Tim Scott, Thomas G. Rundall, et al. “Kaiser Permanente’s experience of implementing an
electronic medical record: a qualitative study, BMJ, doi:10.38638.497477.68 (3 Nov. 2005)
26. Studer, M, “The Effect of Organizational Factors on the Effectiveness of EMR System
Implementation: What have we learned”, Healthcare Quarterly, Vol 8, Number 4, 2005
______________________________________________________________________________

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Week 10: March 24th

IMPLEMENTING STRATEGY – MANAGING WITH PROFESSIONALS AND NURTURING

CREATIVITY

* 3rd group case debate – “Development of a Neurosciences Center of Excellence, Boston

Scientific.”

27. D. Leonard and S. Straus, "Putting Your Company's Whole Brain to Work," Harvard Business
Review, July-August 1997, pp. 111-121.
28. P. Neuhauser, Chapter 6: Tribal Thinking Patterns,” Identifying the Tribes in your Organization,
71-85.
29. R. King, "New Therapy for Chiron: Fiscal Austerity," The Wall Street Journal, November 2, 1999.
30. B. Martinez, “Now It’s Mass Medicine,” The Wall Street Journal, August 21, 2000.

PARTNERING WITH MD’S

S and K, Chapter 9

31. J. Silversin, “Culture and Compact,” Leading Physicians Through Change: How to Achieve and
Sustain Results, J. Silversin and M.J. Kornacki, eds., American College of Physician Executives,
2000, pp. 45-57.
______________________________________________________________________________

Week 11: March 31st

NO CLASS- SPRING RECESS

Week 12: April 7th

IMPLEMENTING STRATEGY – CONTROL AND ACCOUNTABILITY

* 4th group case debate – “ Merck Global Health Initiatives (B): Botswana.”

S and K, Chapter 23

32. R. Simons, “Chapter 14— Levers of Control for Implementing Strategy.” Performance
Measurement and Control Systems for Implementing Strategy, Prentice Hall, 2000, pp. 301-316.
33. R. Winslow, "Making the Grade: Improvements in Quality of Care Suggest Hospitals are Taking
Report Cards to Heart," The Wall Street Journal, October 18, 1998, R16.
34. T.M. Burton, "An HMO Checks Up On Its Doctors' Care and is Disturbed Itself," The Wall Street
Journal, July 1999.
35. J. Oliveira, “The Balanced Scorecard: An Integrative Approach to Performance Evaluation,”
Healthcare Financial Management, May 2001, pp 41-46.
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Week 13: April 14th

IMPLEMENTING STRATEGY – BUILDING EFFECTIVE STRATEGIC PARTNERSHIPS

* Susan Desmond Hellman, MD, PhD, Co-President, Genentech, South San Francisco, CA. 9:00
a.m. to 10:30 a.m. “Managing the Strategic Pipeline”

* In Class Case Discussion for All Students—UCSF-Stanford Merger

S and K, Chapter 11

36. L. Lagnado, "Hospital Mergers: Indications of Severe Trauma" in The Wall Street Journal, May
14, 1999, B1, B6.
37. L. Lagnado, "CEO Crisis Roils Merged Hospital, in The Wall Street Journal, B1, B4.
38. S. Madden, “The Merger of UCSF Medical Center and Stanford Health Services,” President and
Fellows of Harvard College. 2001.
39. L. Benko, “Meet the New Wellpoint,” Modern Healthcare. November 3, 2003.

Week 14: April 21st

IMPLEMENTING STRATEGY – EFFECTIVE PARTNERSHIPS CONTD

40. N.M. Kane, “Southcoast Health System—Part A,” President and Fellows of Harvard College.
2000.
41. N.M. Kane, “Southcoast Health System—Part B,” President and Fellows of Harvard College.
2000.
42. L. Burns, S. Nicholson, and J. Evans, “Mergers, Acquisitions, and the Advantages of Scale in the
Pharmaceutical Sector,” in Burns, The Business of Healthcare Innovations, Chapter 5, pp 223-268.

One strategic plan group presentations

Week 15: April 28th

FOUR STRATEGIC PLANNING GROUP PRESENATIONS

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Week 16: May 5th

Three STRATEGIC PLANNING GROUP PRESENTATIONS PLUS

COURSE WRAP UP AND EVALUATION

SPECIAL NOTE: Your group written strategic plans are due no later than Monday, May 8th at 5:00
pm. Please submit to 417E University Hall, or fax (510) 643-5056, or e-mail: shortell@berkeley.edu.
Thank you.

SPECIAL NOTE: Your group written strategic plans are due no later than Monday, May 8th at
5:00pm Please submit to 417E University Hall or fax (510) 643-5056, or email:
shortell@berkeley.edu.
Thank you.

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