business strategy case: regis

Cao Yiqi

Kim Bruce

Honza Borysek

Kyle Starain Han

Benjamin Chavernac

Conquering Australian Aged Care by Digitalizing the Industry REGIS

CEMS6003: Advanced Strategy / 16 October 2015

Business Strategy Case

Executive summary

Regis is striving to be a dynamic, creative and innovative leader in the Australian aged care industry. As a premium

aged care provider, Regis builds its competitive advantage on developing and operating premium aged care residences.

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The aged care industry is growing and provides great opportunities to both leading incumbents and potential new entrants.

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Ageing population sees the value in customized and premium solutions for their health care needs with more independence in choice.

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Regis needs to leverage its current strength and capabilities to take advantage of the potential of the market and establish its position as an innovative industry leader.

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To achieve sustainable competitive advantage, Regis should focus on new technologies through two different strategic options: Smart Residential Care or Digitalized Home Care.

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Digitalizing Home Care is more promising considering its possibilities and opportunities for now and for the future in comparison with Smart Residential Care.

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Learning launch of developing the Beta version and testing the platform for one month will allow Regis to test key assumptions.

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Investing in new technology, Regis will improve health and wellbeing of old people, while doing social good.

Executive Summary Regis Overview Analysis Strategy Conclusions Appendices

EXECUTIVE SUMMARY

DYNAMIC VISION

To be a dynamic, innovative and creative industry leader.

Provide premium quality aged care, through effective management by dedicated professionals.

HUMAN CENTRED MISSION

Promote and enhance the quality of life of residents.

Achieve an environment which fosters empowerment, sense of belonging, respect and dignity.

Create a reputation for delivering a high standard of care and continuous quality improvement.

REGIS

Dementia

Care Palliative

Care

Respite

Care

Transitional

Care

Community

Care

Home Care

Residential

Care

Regis is striving to be a dynamic, creative and innovative leader in the Australian aged care industry.

REGIS OVERVIEW

Offering: premium residential aged care provider

Financial structure: for-profit, privately owned, listed

Strategy: build, own and operate

Size: owns and operates 47 residential facilities, offering over 5,000 operational places

Key stakeholders: residents, government, stuff

REGIS IN SHORT1


REGIS’ COMPETITORS

There are 8% of governmental, 58% of non-for-profit and 36% of for-profit actors2. In terms of for-profit, there are 5 big players including Regis:

See Appendix 3 and 7 1 Regis 2015d 2 Regis 2014 p.21

EXTERNAL ANALYSES

POLITICAL

•  Extensive governmental funding •  Community care encouraged •  Well establish pension system

SOCIAL

•  Significant shift in demography as more people are entering retirement stage

ECONOMICAL

•  6% expected annual industry growth between 2016 and 20211

LEGAL

•  Extensive government regulation in facility accreditation

•  Reporting requirements, fees and charges

TECHNOLOGICAL

•  Technology undeveloped industry •  National electronic health record •  Management software increases staff

efficiency

LABOUR is a mayor increasing expense and

key success factor.

DEMAND is increasing, which implies

more diversity in services and offering.

59.6%

NEW ENTRANTS High regulatory and strict industry

environment, growing number of private for-profits.

Life cycle stage: Growth Revenue volatility: Low Capital intensity: Low Industry support: High Concentration level: Low

INDUSTRY RIVALRY Market concentration is low, but there is a trend towards

consolidation.

20%

The aged care industry is growing and provides great opportunities to both leading incumbents and potential new entrants.

Regulation level: High Technology change: Low Barriers to entry: High Industry globalization: Low Competition level: Low

DISRUPTION Technology enabled industry

innovation.


of industry costs are constituted by wages3

aged care industry revenue is generated by top four operators2 SUBSTITUTION

There is no significant possible threat of

substitution.

See Appendix 1, 2, 3 1 Ibisworld 2015 p.2 2 Ibisworld 2015 p.20 3 Ibisworld 2015 p.21

Ageing population sees the value in customized and premium solutions for their health care needs with more independence in choice.

1

1.5

2

2.5

3

3.5

07 09 11 13 15 17 19 21

Mill

ion

of p

eopl

e

Year

70+ year old Australian segment will grow 3.9% per year through 2020-2021 1

INCREASE IN DEMAND

Due to aging population and

longer life expectancy Increase in

chronic

DISEASES AND

DISABILITIES Higher level of INCOME AND

WEALTH

Greater

ETHIC DIVERSITY

MAYOR CUSTOMER

TRENDS

Autonomy, choice and involvement in tailoring services to personal needs and preferences Independent living arrangements, as close as possible to family and in own home when feasible2

Premium quality, hotel style options Culturally fitting aged-care in terms of e.g. religion, language Technology, increasing awareness and openness to existing technology.

CUSTOMER ANALYSES

Increasing diversity of

PREFERENCES AND PERSONAL CARE

NEEDS


See Appendix 2, 4 1 IbisWorld 2015 p.8 2 IbisWorld 2015 p.23

GAINS

Sense of safety, reduced stress

Own development: skilled team experienced in real estate enables to develop and operate premium properties

Premium: residential aged care provider, urban and coastal areas, modern facilities, focused on high acuity care Vision: aspiring to be dynamic, innovative and creative

Good reputation

Technology: friendly, e.g. IT system centralizing rostering functions and robotic harp seal

Reliable staff: Professional development and recruitment programs

As a premium aged care provider, Regis builds its competitive advantage on developing and operating premium aged care residences.

Long-term growth and gain of market share through Greenfield developments and acquisitions

Scale advantage vs. smaller actors

Governmental accreditation: maximizing entitled Government and Resident operating funding

1 Prime location è higher RAD revenue

2 High acuity care è higher government revenue

3 Extra services è higher margins

INTERNAL ANALYSES

VALUE PROPOSITION

COMPETITIVE ADVANTAGE & KEY CAPABILITIES ECONOMIC LOGIC

CUSTOMER JOBS

daily task, social interaction,

advisory

PAINS

Loneliness, home sickness, package deal

expenses 68%

28%

4%

2015 REVENUE STREAMS1

Government revenue

Resident revenue

Other income


See Appendix 4, 5, 6, 7 1 Regis 2015c p.74

SUMMARY OF ANALYSES

Regis needs to leverage its current strength and capabilities to take advantage of the potential of the market and establish its position as an innovative industry leader.

MAIN FACTORS FOR BUSINESS INNOVATION1

S •  Good reputation

•  Innovative vision

•  Government support

•  Strong cash generation

W •  Weight of staff expenses

•  Lack of skilled labor

•  High reliance on government

O •  Expected market growth

•  Use of technology

•  Internet of Things2 solution

•  Opportunity for consolidation

T •  Global competitors’ entry

•  Increasing demand for home care solutions4

•  Supply constraint

KEY INSIGHTS OF ANALYSES

•  Regis is ready and keen to take part in innovation the aged care industry.

•  The current business model would become unsustainable in following years considering the growing diversity of housing preferences and needs among existing and future customers.

•  As aging population is creating a huge opportunity for all the market players, Regis needs to focus now on developing a new competitive advantage.

•  Technological solutions are perfect tool for enabling industry innovation and solving the lack of skilled and available aged care labor in the market.

SMART RESIDENTIAL CARE or DIGITALIZED HOME CARE


1 See Appendix 8 2 Chui, Loffler and Roberts 2010 3 Ibisworld 2015 p.7 4 IbisWorld 2015 p.23

STRATEGIC OPTIONS

ISSUES

3 millions elderly (age of 65+) in Australia, estimated to double in following fifteen years

Lack of skilled labor in the industry People are emphasizing on health checking, on quicker, higher quality and more precise help in both casual and emergency

situations. Never-ending need of managing their facilities, data and customer

relationships more effectively and easily.

To achieve sustainable competitive advantage, Regis should consider focusing on new technologies: Smart Residential Care or Digitalized Home Care.

SOLUTION

Benefits both sides of the industry: Regis and customers. Regis would 1) reduce the threats of lacking skilled labor and 2)

supply the increasing demand on aged care market. Provides superior customer health check and analytics with fast

and precise casual and emergency care through smart home solutions and Internet of Things technology.

Helps Regis to manage and improve their facilities and services (big data gathered using the smart system).

1. SMART RESIDENTIAL CARE 2. DIGITALIZED HOME CARE

CURRENT DEMAND

What customers need: 1. A help with daily tasks that they are not able to do anymore (grocery shopping, medication, laundry, showering). 2. Socializing and having a feeling of belonging in

the society (friends in same age or with same interests).

CURRENT SUPPLY

What customers receive: 1. In residential care, customers receive professional care but might experience a sense of

isolation from the society, lack of belonging and feeling of last stop destination. 2. Staying home, there is lack of proper care

and also not much human interaction possibilities.

SOLUTION

Online platform matching demand with appropriate supply. In seamless and intuitive design, elderly would be able to

request task, select the best offer, let supplier perform the task, pay and rate the service.

The platform also has a socializing dimension to facilitate people interaction and connection with similar people.


supply for demand aspect

socializing aspect

See Appendix 9

See Appendix 10, 11

EVALUATION AND COMPARISON OF STRATEGIC OPTIONS

Digitalizing Home Care is more promising considering its possibilities and opportunities for now and for the future in comparison with Smart Residential Care.

1. SMART RESIDENTIAL CARE 2. DIGITALIZING HOME CARE

The strategic options were evaluated based on following criteria: positive outcome, necessary inputs, estimated expenses, estimated income, reaction of competition (0 – against the implementation / 5 – in favor of the implementation). (See Appendix 12)

0 1 2 3 4 5

positive outcome

necessary input

estimated expenses

estimated income

reaction of competition 0

1 2 3 4 5

positive outcome

necessary input

estimated expenses

estimated income

reaction of competition

MAJOR

POINTS

•  Enabling elderly to make their residential care experience easier

•  Requires massive investments to change the residential infrastructure

•  Makes a slight change in income •  If becomes trendy wouldn’t be hard for

competition to copy

MAJOR

POINTS

•  Enabling elderly to stay in society and get their needs be done

•  technological requirements •  reasonable expense, possibility of huge income •  new solution for existing customer segment,

competition doesn’t see the opportunity •  after implementing, it would be late to follow

the pace and growth.

è The platform DIGITALIZING HOME CARE solves home care customers’ need and enables them to remain a part of society seems to be MORE PROMISING BUSINESS STRATEGY

for both Regis and aged care customers for now and the future. ç


LEARNING LAUNCH OF DIGITALIZED HOME CARE

Developing the beta version and testing the platform for one month will allow Regis to test key assumptions.

DEVELOP THE 1.0 VERSION OF THE PLATFORM WITH

MINIMAL VARIABLE PROPOSITION

CREATE SUPPLY AND CARERS NETWORK IN

ONE GEOGRAPHIC AREA

CONTINUOUS EVALUATION

GENERATE DEMAND AMONG EXISTING HOME

CARE CUSTOMERS

TEST THE PLATFORM BETWEEN LIMITED

SUPPLY AND DEMAND

DROP / CHANGE / LAUNCH

LEARNING LAUNCH DETAILS ASSUMPTIONS TESTED

In-house development of a beta version of the platform tested among

existing base of customers

Customers’ ability to use technology

Easy-to-use platform

Target a nursing school in a dense populated urban area

Rely on workforce already engaged with Regis Home Care

Staff expectations for flexible schedule solutions

Staff mobility and involvement

Suppliers willingness to participate

Target customers in the same area as target supply

Educate existing home care customers to use the platform

Need for customized, on-demand pay-per-use services (Home Care)

1-month test among existing base of home care customers and both existing and increasing supplier

network

Efficient match between supply and demand

Need for more human interaction (social side of the platform)


See Appendix 13, 14, 15, 16

è

CONCLUSIONS

Investing in new technology, Regis will improve health and wellbeing of old people while doing social good.

HORIZON 1 Solution: Platform matching

supply and demand Key benefits: Daily tasks, simple health care, social

interaction

HORIZON 2 Solution: Introduce more professionals (e.g. doctors) and “face time” enabling distance communication Key benefits: Advanced

health care

HORIZON 3 Solution: Integration of the

platform with the smart home market standards Key benefits: The care receiver won´t have to actively ask for help,

information is automatically extracted and

acted on.

Switch in service offerings from residential care towards home care

Change in business model, from performing the service to enabling a match of supply and demand. From striving for an integrated value chain to using more partnerships.

New payment structure, from package payment and government funding to pay per use and commission

Elderly: Improved health care, increased independence, flexibility and choice.

Government: Budget savings

Society: More flexible job opportunities, better understanding between generations

Relatives: Can keep informed about their dear one´s health condition, reduced stress

IMPLICATIONS FOR REGIS

IMPLICATIONS FOR INDUSTRY STAKEHOLDERS

Value

Tim

e


business strategy case: regis

Healthcare