CourseCode:MKT501 CourseTitle:Marketing Management

Course Instructor:Rajesh Dorbala

Academic Task No.: 1 Academic Task Title: Company Product Analysis

Date ofAllotment: 26 Jan 2016 Date ofsubmission:23 Feb 2016

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1. INTRODUCTIONTenet Healthcare Corporation is a multinational investor-owned healthcare services company based in Dallas, Texas. Through its brands, subsidiaries, joint ventures, and partnerships, as of June 2015 Tenet operates nine facilities in the United Kingdom and over 400 outpatient centers in 16 states. Also in the US, Tenet operates 20 "short-stay" surgical hospitals and 87 general acute-care hospitals in 14 states, primarily in California, Florida, Michigan and Texas. Tenet has more than 20,000 licensed beds and 130,000 employees, and the company’s hospitals offer acute, coronary and critical; operating and recoveryrooms; clinicallaboratories and pharmacies; and radiology, respiratory, oncology, orthopedic, physical therapy and organ transplant services. Tenet also operates six health plans and 12 accountable care networks.

Since its founding in 1967, Tenet has launched a number of brands and acquired several large health care companies. In 2008 Tenet founded Conifer Health Solutions, which serves more than 700 clients in the healthcare industry, including nearly 300 hospitals. As of 2015, Conifer processes $25 billion in net revenue annually and operates in 42 states. Tenet launched MedPost Urgent Care in May 2014, which is a network of urgent care centers based in the lower United States. In 2013, Tenet completed its acquisition of Vanguard Health Systems, Inc., an investor-owned hospital company whose operations complemented Tenet's existing business. The acquisition created the third-largest investor-owned hospital company in the U.S. in terms of revenue and the third-largest in number of hospitals owned. In June 2015, Tenet acquired United Surgical Partners International (USPI), which made Tenet the largest operator of outpatient surgery centers in the United States. Shortly after, Tenet moved from No. 229 to No. 170 on the Fortune 500.

Tenet Healthcare is here to spread the doctrine of good health. The for-profit company operates 80 acute care hospitals with more than 20,800 beds in 14 US states, including California, Florida, and Texas. They range from small community facilities offering basic care to major hospitals, such as the 650-bed Brookwood Medical Center in Birmingham, Alabama. In addition to its acute care holdings, Tenet also operates specialty hospitals, skilled nursing facilities, physician practices, outpatient centers, imaging centers, health plans, and other health care units that form regional networks around its main hospitals. It also operates Conifer Health Solutions, a patient billing and communications company.

2. PRODUCTS & SERVICES OFFERED2.1 HOSPITALS

Tenet Healthcare is here to spread the doctrine of good health. The for-profit company operates 80 acute care hospitals with more than 20,800 beds in 14 US states, including California, Florida, and Texas. They range from small community facilities offering basic care to major hospitals, such as the 650-bed Brookwood Medical Center in Birmingham, Alabama. In addition to its acute care holdings, Tenet also operates specialty hospitals, skilled nursing facilities, physician practices, outpatient centers, imaging centers, health plans, and other health care units that form regional networks around its main hospitals. It also operates Conifer Health Solutions, a patient billing and communications company.

2.1.1SERVICES

ER Check-in Online: When you have a non-life threatening emergency, there's no need to spend time waiting in the ER when you could wait at home. Use our online registration tool, and check in to the ER online.

My Health Record: Managing the details of your health history can seem hard, but it doesn't have to be. With My Health Record, you can access your health records, share information with doctors, and save time paying bills — all from the comfort and privacy of your home.

Symptom Checker: Think you might have a cold? Or could it be the flu? Use their online symptom checker to find out what's going on — fast.

Health Library: If you have questions or concerns about your health, a source of trusted information is the best place to start. Use their Health Library to check your symptoms, research common conditions, read recent health news or find your new favorite recipe.

Share your story: Patients can share their story as well as read others stories to know they have been treated at the hospital.

Here is a list of Acute Care Hospitals and the services they offer :

PALM BEACH GARDENS MEDICAL CENTER

Palm Beach Gardens Medical Center is a 199-bed acute care hospital serving the residents of Palm Beach County and the Treasure Coast. They offer a wide range of treatments, from heart care to advanced brain and neurological services.

Gastroenterology Heart And Vascular Neurosciences Orthopedics Rehabilitation Surgery Women's Health

ST MARY’S MEDICAL CENTER Emergency/ Trauma Heart And Vascular Mother And Baby Neurosciences/ Stroke Orthopedics/Spine Rehabilitation Surgical Weight Loss

PALM BEACH CHILDREN’S HOSPITAL Cancer Heart And Vascular Neurosciences Orthopedics Rehabilitation Support Services Surgical Weight Loss

GOOD SAMARITAN MEDICAL CENTER Cancer Digestive Disease Institute Heart And Vascular Luxury Patient Suites Midtown Imagining Mother And Baby Neurosciences Orthopedics Sleep Disorder Center Surgery My New Self Surgical Weight Loss The Palms Medical DetoxDELRAY MEDICAL CENTER Cancer

Heart And Vascular Neurological Surgery Neurosciences Orthopaedics Rehabilitation Sleep Center Surgery Surgical Weight Loss Wound Care

WEST BOCA MEDICAL CENTER Heart And Vascular Mother And Baby Neurosciences Orthopaedics Outpatient Services Pediatrics Rehabilitation Surgery Urology Women's Health

FLORIDA MEDICAL CENTER Heart And Vascular Neurosciences Orthopaedics Rehabilitation Robotic Surgery Surgery Urology Surgical Weight Loss Center Of Excellence

2.2 HEALTH PLANS

2.2.1 PHOENIX HEALTH PLAN

Serving Arizona Families Since 1983

Phoenix Health Plan (PHP) is a contracted health plan with the Arizona Health Care Cost Containment System (AHCCCS). Phoenix Health Plan (PHP) is committed to providing exceptional health care and customer service to our members in partnership with the Arizona Health Care Cost Containment System (AHCCCS).

PHP Members Can Expect:

A health plan that respects values, customs and traditions. Access to quality and convenient health care services through our large network of

providers. Friendly customer service representatives who speak more than 140 languages. Help when members need it through our 24-Hour Nurse Advice Line and Urgent Care

Centers. Educational resources on healthy eating and staying healthy Assistance with Transportation Case Management Services Continuity of care

Phoenix Health Plan members can count on more than 3,780 physicians and providers, nearly 28 hospitals, urgent care centers, a 24-hour Nurse Advice Line and transportation services.

PHP members receive health care delivered by providers who work hard to understand our members' values, customs, attitudes and behaviors within a cultural context. The results are better health outcomes and patient satisfaction. At PHP, we offer translation services and bilingual customer service representatives, but we go beyond the very basics of communication.

PHP celebrates the health of every individual involved with our organization. Below is a list of things we consider when meeting the health care needs of our diverse .

2.2.2 HARBOUR MEDICARE PLAN

Serving Michigan Residents in Wayne, Macomb and Oakland Counties.

Benefits at a Glance

Maximum Out-of-Pocket (MOOP)

$3,400 Annual Limit

Primary Care Visit

$10 Co-Pay

Specialist

$45 Co-Pay

Inpatient Hospitalization

$245/Day (Days 1-7)   |   $0/Day (Days 8-90) Annually

Urgently Needed Care

$60 Co-Pay

Emergency Care

$75 Co-Pay

Vision

$15 Co-Pay for Routine Eye Exam

Transportation

$0 Co-Pay for up to 10 round trips per year to your medical appointments

Silver & Fit Fitness Program

$50 Deductible

2.2.3 GOLDEN STATE MEDICARE HEALTH PLAN

Golden State Medicare Health Plan is an HMO plan with a Medicare contract. Enrollment in Golden State Medicare Health Plan depends on contract renewal.

Golden State Medicare Health Plan, Golden (HMO) has a network of doctors, hospitals, pharmacies, and other providers. If you use the providers that are not in our network, the plan may not pay for these services. You must generally use network pharmacies to fill your prescriptions for covered Part D drugs.

Our plan members get all of the benefits covered by Original Medicare. For some of these benefits, you may pay more in our plan than you would in Original Medicare. For others, you may pay less. • Our plan members also get more than what is covered by Original Medicare. Some of the extra benefits are outlined in this booklet.

2.3 MEDPOST URGENT CARE CENTERS

Tenet Healthcare operates MedPost Urgent Care locations across the country, treating patients for a wide range of medical needs and providing immediate attention and treatment at lower costs than emergency room visits.

These urgent care centers are ideal for the treatment of infections, seasonal allergies and sports injuries, and they offer referral options and coordination for specialty care when necessary.

MedPost Urgent Care centers are one way that Tenet is increasing access to healthcare for everyone by providing a place for high-quality, convenient, walk-in care at affordable costs. Patients can even check in to MedPost facilities online or by phone prior to their visits to secure places in line and avoid long waits.

2.4 United Surgical Partners International (USPI)

United Surgical Partners International (USPI) is an experienced and trusted partner to more than 50 health systems and 4,000 physicians across the United States, delivering high-quality surgical and imaging services in more than 200 facilities across the country.   

Through its partnership model, USPI works with health systems and physicians to expand their convenient ambulatory networks and enhance patient access to care.  With more than 11,000 employees, USPI is the largest provider of ambulatory surgeries in the United States. 

2.5 Aspen Healthcare

Aspen Healthcare operates nine private healthcare facilities in the United Kingdom, including four hospitals and five ambulatory clinics and surgery centers. The company offers patients a range of private healthcare and clinical services, including outpatient procedures, complex surgeries, diagnostic screening and specialized cancer treatments.

Aspen has 1,650 employees who are committed to providing superior service and high-quality care for patients and their families. The company was formerly owned by United Surgical Partners International from 2000-2012.

3. Product Mix

The complete range of products (goods or services) present within a company is known as the product mix.The collection of products and / or services the business decides to offer represents that business's product mix.

All of the components, such as product line, product length, product width, and product depth make up that mix. 

A product line is a group of these products associated by function, by consumer group, by distribution channel or by price range. A company could have one line or several lines, but all the products within this line or lines would be the product mix.In any multi brand organizations, there are numerous products present. None of the organizations wants to take the risk of being present in the market with a single product. If the company has only a single product, than the demand of the product will be too great or the company does not have the resources to expand the number of products it has.When establishing a product mix, a business must decide where it places itself in terms of its target market. 

The Product Line of TENET HEALTH is Hospitals, Health Plans, Urgent Care Centers, USPI and Aspen Health Care.

Product Mix has four different decisions:

1. Product Mix Width:It is the number of different product lines the company carries. There are five different product lines in tenet health , hence the product width of TENET HEALTH is 5.

2. Product Mix Length: It refers to the total number of items a company carries within the product lines. Tenet Health has 80 hospitals, 3 health plans , 50 medpost urgent care centers, 200 USPI and 9 Aspen Health care centers. Therefore, the product mix length for Tenet Health care is 342.

3. Product Mix Depth:  It refers to the number of versions offered for each product in the product line. Tenet Health has 80 hospitals, 3 health plans , 50 medpost urgent care centers, 200 USPI and 9 Aspen Health care centers.

4. Consistency: Consistency of a product mix refers to how closely relate the product lines are in terms of end use, production requirements, distribution channels or any other way. Tenet Health provides its health care services to its customers in a very organized manner and take care of its patients very responsibly. Therefore , the product mix of Tenet Health is consistent.

4. COMPETITORSUniversal Health care and HCA holdings are the biggest competitor to Tenet health care.

Universal Health Services Inc. is a fantastic health care stock that you should most definitely have on your radar. Sure you could choose from a competitor like Tenet Health Care or HCA Holdings but why bother? I say this because Universal Health Services is outpacing both Tenet Health Care and HCA Holdings in its margins and is pretty close on all related metrics.

The company itself owns and operates acute care hospitals, behavioral health centers, surgical hospitals, ambulatory surgery centers, and radiation oncology centers. Very similar business models to Tenet Health Care as well as HCA Holdings. The company’s hospitals offer various services, including general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services, and/or behavioral health services. It has operations in the United States, Puerto Rico, and the U.S. Virgin Islands. So why not but Tenet Health Care or HCA Holdings? The answer is that Universal Health Services is outperforming.

Tenet Healthcare Corporation provides health care services, primarily through the operation of general hospitals and related health care facilities. Though the company also owns other facilities including a specialty hospital and several skilled nursing facilities, such facilities are also operated by its competitors and do not account for a major portion of Tenet’s revenues. As such, our analysis will focus primarily on for profit hospital systems,not including psychiatric hospitals. Tenet’s competitors include HCA, Health Management Associates, Community Health Systems, Lifepoint Hospitals, Triad Hospitals, and Universal Health Services

4.1 Internal Rivalry

The For-Profit Managed Healthcare Industry is one characterized by very strong competition. Though hospitals today increasingly belong to chains, the vast majority of hospitals are small and independently owned. It is not clear that market share is important to profitability in the industry as there do not appear to be significant economies of scale in the operation of hospitals. Nevertheless, this is a very competitive industry with large operators fighting for market share. Due to the nature of the service provided, each individual hospital, whether it belongs to a chain or not, faces competition from other local hospitals. Though price elasticities of demand have increased as insurance companies have increasingly steered patients to the lowestpriced hospitals, medical care is still a needed service. Patients generally use those hospitals closest to them unless prevented by their insurance provider.

While firms in the industry compete fiercely with each other, players have become increasingly focused on challenges posed by external economic factors on the industry in recent years.

Demand and profitability in the nation’s hospital industry have been affected by several variables outside the direct control of the participating firms.

There are two primary factors that may likely affect the growth rate of the uninsured population moving forward. Continued job growth is important in slowing increases in the uninsured population and may also curtail the recent rise in self-pay revenue.vi Selfpay revenue is revenue the hospital earns that patients must pay themselves rather than being covered by insurance; this includes deductibles and co-payments made byinsured patients as well as remittances by uninsured patients. .Though employment and payrolls have strengthened in recent years, a comparably powerful factor that has negatively affected the rise of the uninsured and hospital profitability is the decline in employer-sponsored health plans.

A continued rise in insurance premiums is forcing many employers, especially smaller businesses, to scale back or drop health coverage for their employees. Despite this negative trend, lower unemployment rates combined with a growing senior population may be able to sustain demand for hospital services in the near future. An important question is the profitability of the care that stems from that demand.

4.2 Problems and Solutions

As a healthcare provider, there is little Tenet can do with regard to the aforementioned macroeconomic challenges other than to endure them until they fade. One factor that may lessen these challenges as the economy improves is continued job growth. Job growth is important in reducing the proportion of the population that is uninsured and may stimulate growth in employee health plans. The decline in employer-sponsored health plans due to higher premiums in recent years has been a significant cause of the rise in the uninsured population and in the growth of self-pay revenue as well. Standard & Poor’s claims that the trend will continue in 2006, partially offsetting the benefits of lower unemployment rates and rising payrolls.xii Additionally, job growth may contribute to the supply of nurses, a source of rising costs for Tenet in recent years.

Favorable demographics, which include a growing senior population thanks to aging baby boomers, may also stimulate demand for hospital services. Regardless of the macroeconomic factors troubling Tenet, the company’s strategy for the near future should nevertheless be the same. It is important that Tenet take back some of the market share it has lost to competitors in recent years,as well as improving its profitability. Tenet has taken a step in the right direction by divesting its unprofitable hospitals rather than continuing to divert valuable resources to operate them.

But, there are two things Tenet must do to increase its admittance levels. The company should lower its prices to more competitive levels, giving self-pay patients and those who have not met their deductibles a greater incentive to choose Tenet. Tenet should also offer doctors greater fees as a percentage of revenue generated to induce them to admit more patients to Tenet hospitals than those of its competitors.Pandora group believes that once Tenet has restored confidence in

its business, the company should shift its focus to specialty hospitals. Specialty hospitals are able to provide higher quality care than acute care hospitals and in a more efficient manner through their specialization.

Specialty hospitals also do not face the same level of competition from nonprofit hospitals, a source of strong competitive pressure for Tenet and other for-profit acute care hospital operators. The higher quality care and focus on more profitable, complex procedures at specialty hospitals make nonprofit hospitals a less close substitute. To avoid cannibalizing its general hospitals, Tenet must look to acquire or build specialty hospitals in regions it does not currently operate. The company should gradually divest more of its less profitable acute care hospitals and shift its business focus to specialty hospitals.

It is Pandora’s firm belief that the most significant problem at Tenet is the poor reputation it has acquired in the eyes of doctors and investors. Tenet’s legal troubles make patients less likely to choose its services over those of a comparable local hospital and doctors less likely to admit patients to its hospitals. This in turn leads to lower bed occupancy and lower profitability for the company on a hospital-by-hospital basis. More than anything else, Tenet needs time to show it has cleaned up its act. The company has replaced its management team and refocused its resources on its 69 core hospitals. It is now in a position to rebuild its reputation within the medical community and trust with investors. An important step to convincing investors the company’s troubles are in the past is to resolve legal troubles. The sooner Tenet can reach settlement on the various lawsuits and investigations it is playing host to, the sooner the economic costs to the company will become known and the investor uncertainty can die down. Tenet should also restore its reputation through a public ad campaign that includes a code of ethics. Lastly, to ensure that the company continues to operate legitimately, it is important that Tenet increases oversight of its physicians’ operations. Administrators at individual hospitals must be held more accountable for the actions of their hospitals’ physicians.

5. REFERENCES1- http://www.tenethealth.com2- Strategic Report for Tenet HealthCare-Pandora Group3- http://www.hoovers.com/company-information/cs/company-

profile.TENET_HEALTHCARE_CORPORATION.9910d64d82410ec3.html4- http://www.tenetflorida.com/en-us/aboutus/pages/hospitals.aspx5- http://www.nasdaq.com/article/the-zacks-analyst-blog-highlights-hca-holdings-

tenet-healthcare-universal-health-services-and-lifepoint-health-press-releases-cm491644