1 FOCUSED FACTORIES: A STAKEHOLDER POINT OF VIEW
by
MAIKEL HOEKSTRA
Student number: s1900463 e-mail: m.hoekstra.19@student.rug.nl
Rijksuniversiteit Groningen Faculty of Economics and Business
Department of Operations MSc Supply Chain Management
Nettelbosje 2 Groningen, 9752 LM
Tel: +31 50 3638900
Keywords: focused factories, stakeholder theory/analysis, healthcare, supply chain management, case study
Supervisor: Drs. Ing J. Drupsteen Co-assessor: Dr. J.T. van der Vaart
Theme: Supply chain integration in a scattered healthcare system Word count: 11,281
2 Abstract
The concept of focus – which is closely related to efficiency gains and attractive in a context of high levels of specialization – has made its appearance into the healthcare sector. The principle of focused factories has been introduced into healthcare as a tool to find a balance between cost control and the quality concerns. However, the (un)favourable consequences of focused factories influencing specific stakeholders, or the healthcare sector as a whole are yet to be fully discovered. A multiple case study has been conducted in order to uncover the impact of focus on key healthcare stakeholders. Data is collected with the use of (semi)-structured interviews among the key stakeholders. Various
perceptions towards focused factories have come to light through the conducted stakeholder analysis.
Stakeholders agree that the concept of focus provide added-value over hospitals in operational
performance, efficiency, and service. This study has several limitations. The stakeholder analysis does not incorporate all key stakeholders due to various reasons. As a result, two perspectives were fully covered within this research, supplemented by the perspective of focused factories.
Acknowledgement
First of all, I would like to thank several people who were involved in this research. I would like to thank all the representatives of the organizations who were willing to participate in the data collection.
Furthermore, I would like to thank my supervisor Dr. Ing. J. Drupsteen for the effort he put into providing feedback to all of us during the past six months. Lastly, I would like to thank my five fellow MSc thesis students who were involved in the data collection and for the many helpful discussions we had over the past months.
3
Table of Contents
Introduction ... 4
Theoretical background ... 6
Methodology... 12
Stakeholder analysis ... 15
Discussion ... 25
Conclusions ... 27
References ... 30
Appendices ... 35
4
Introduction
The healthcare sector has been and will be struggling with rising costs and unsatisfactory quality.
(Porter & Lee, 2013). The OECD has recognized the issue and stated in their latest report regarding the sustainability of health systems: “The healthcare costs are rising so fast in the advanced economies that they will become unaffordable by the mid-century without reforms” (OECD, 2015).
As a result, hospitals have been looking into cost-reducing models and other opportunities provided by the principles from business and operations management (Barro, Huckman, & Kessler, 2006; Capkun, Messner, & Rissbacher, 2012; de Vries & Huijsman, 2011; Huckman & Zinner, 2008; Hyer,
Wemmerlöv, & Morris, 2009; McDermott, Stock, & Shah, 2011). Hospitals try to find a balance between cost control while improving the quality and efficiency of care. On the one hand, healthcare has been striving for efficiency which is characterized by an increasing amount specialization (Greenwald et al., 2006; Huckman & Zinner, 2008; Hyer et al., 2009; McDermott et al., 2011).
On the other hand, integration and collaboration between healthcare organizations are proposed as ways to improve healthcare (de Vries & Huijsman, 2011; Meijboom, Saskia Schmidt‐Bakx, &
Westert, 2011). Due to specialization, particular healthcare organizations are operating autonomously in which they treat certain patient groups in an isolated manner. As most of these organizations provide only a limited part of the total care process of the patient, there is a need for collaboration to ensure a smooth transition between one organization to the next. The implementation of specialization, which could impede the collaboration between organisations, provides opportunities to conduct research into the preferences of healthcare organizations and other stakeholders regarding the different principles implemented into the healthcare sector.
The concept of focus – which is closely related to efficiency gains and attractive in a context of high levels of specialization – has made its appearance into the healthcare sector, and can be seen as an impediment towards the collaboration between the involved organizations. The principle of focused factories has been introduced as a tool to find the balance between cost control and the quality concerns. Implementing focus, aimed at specific treatments or diseases, is proposed as a way to increase the efficiency of healthcare (Hacker, 1997; Meyer, 1998). The concept of focused factories implies that an organization or plant can reduce its complexity by focusing on limited and concise processes (Skinner, 1974). The reduced complexity enables the organization to perform fewer things better.
Still, the consequences of focused factories in a broader perspective were yet to be fully discovered as the principle entails potential integration impediments. Research has emphasized the impact of focus on the quality and cost criteria for healthcare organizations. Yet, research hardly considers the (un)favourable consequences of focused factories influencing specific stakeholders, or the healthcare sector as a whole (Capkun et al., 2012; McDermott et al., 2011).
5 Critics argue that focused factories are responsible for creating situations of unfair competition
towards general hospitals by offering their services to specific patients. This so-called ‘cherry-picking’
has resulted in loss of revenues to general hospitals (Casalino, Devers, & Brewster, 2003; Shactman, 2005a). Due to the loss of these patients, general hospitals will not be able to cover for the expenses of more complex surgeries. Competition among the distinct healthcare providers could have adverse effects on the entire healthcare system when looking from a supply chain perspective. This stems from the idea that performance maximization of one specific organization may lead to less than optimal performance for the entire sector (Lummus & Vokurka, 1999). As a result, a field of tension has emerged between the different healthcare providers and stakeholders involved in the sector such as hospitals and general practitioners. It seems that the strategy of focus is primarily used by
organizations for their own benefit. However, according to stakeholder theory the interests of every stakeholder affected by the organization are to be taken into account (Freeman, 2010).
Therefore, the following research question has been chosen in order to gain more insight in the key stakeholders affected by focused factories.
“How do stakeholders perceive the concept of focused factories in a healthcare context seen from a supply chain perspective?”
Up until this point research has demonstrated efficiency consequences seen from the focused factory perspective. The contribution of this research is to gain more insight into the stakeholders which criticize the consequences of focused factories, and the stakeholders which favour these consequences.
This broadened perspective will entail both the favourable and the unfavourable outcomes affecting the key stakeholders, but will furthermore entail the supply chain perspective in which organizations must engage in collaboration to ensure continuous patient transitions between one organization to the next. Firstly, stakeholder theory has been used to determine how the key stakeholders are affected by the practices of focused factories. Secondly, an analysis of these stakeholders has covered the viewpoints of the different stakeholders on focus when looking from a supply chain perspective.
Data has been collected from key stakeholders active in the Dutch healthcare sector. These key stakeholders include representatives of a general hospital, a general practitioner, and focused factories.
All stakeholders have been interviewed with the use of (semi)-structured interviews, and a combined dataset has been created in cooperation with fellow MSc Supply Chain students of the University of Groningen writing their master’s thesis regarding the subject of scattered integration in healthcare:
Focused factories.
The paper is structured as follows. First, in the theoretical background section, the concepts of focused factories and supply chain management will be explained based on the reviewed literature.
Subsequently, it is clarified why stakeholder theory and a stakeholder analysis are applicable and of
6 importance to this research. This is followed by a section in which the case study methods are
explained. In the results section the findings of the stakeholder analysis will be discussed, followed by the discussion section in which the results will be interpreted. Lastly, the conclusions will be
presented, alongside with recommendations and limitations of this research.
Theoretical background
Within this section the concepts of focused factories and supply chain management are being
evaluated based on the literature reviewed. Subsequently, the reasoning is built upon why stakeholder theory and a stakeholder analysis are applicable to the field of healthcare concerning the concept of focused factories.
Focused factories
One of the principles proposed by operations management to improve healthcare are the so-called focused factories. Implementing focused factories, aimed at specific treatments or diseases, is proposed as a way to increase the efficiency of hospital- or healthcare (Hacker, 1997; Meyer, 1998).
The concept of focused factories originates from manufacturing practises, and can be defined as “A plant established to focus the entire manufacturing system on a limited, concise, manageable set of products, technologies, volumes, and markets precisely defined by the company’s strategy, its
technology and its economics” (Skinner, 1974). This concept thus implies that an organization or plant can reduce its complexity by focusing on limited and concise processes. As a result of the reduced complexity the organization enables itself to perform fewer things better. Healthcare organizations can implement such a limitation of processes to reduce complexity in different configurations.
Manifestation of focused factories in healthcare Configuration of Focused Factories
Within the field of healthcare the term focused factory can be described as an organization which either treats patients with specific medical conditions, or it treats patients with the need for a specific procedure or treatment (Schneider et al., 2008). The concept of focused factories has been given a variety of names such as specialty hospitals, focused hospital unit, ambulatory surgery centres or physician-owned specialty facilities (Casalino et al., 2003; Hyer et al., 2009; Shactman, 2005b). It is argued that the term focused factories is unclear as it covers a wide range of types of organizations.
Researchers on the one hand argue that these focused organizations must be independent entities, while other researchers reason that hospitals should also create such entities for themselves (Schneider et al., 2008). Based on literature three configurations of focused factories can be distinguished based on their location and structure.
The first configuration of focused factory is the so-called focused hospital unit (FHU) and can be regarded as an independent department located within a general hospital, and can been regarded as a plant within a plant. Because the FHU is operating separately and only performing a limited amount of
7 treatments, it enables itself to reduce the complexity of the overarching general hospital (Hyer et al., 2009). The second configuration of focused factories is the specialty hospital. Such hospitals are characterized by their specialization on one specific disease. By specializing on one treatment, the speciality hospitals are able to provide more efficient and functional care to its patients (Barro et al., 2006). Lastly, the third configuration of focused factories is the ambulatory service centre (ASC). The ASC is regarded as a standalone entity with a focus on providing a limited amount of services to its patients, and can be seen as a pure focused factory (Carey, Burgess, & Young, 2011). An important difference with the other two configurations of focused factories is that patients which are being treated by the ASC do not require an overnight stay. Still, the general assumption behind the three configurations of focused factories is that they claim to provide increased quality of care to its patients while at the same time lower cost. Next to offering more efficient and specialized care, the focused factories will also stimulate general hospitals to become more responsive and up-to-date in their everyday practices in order to cope with the increased competition (Barro et al., 2006).
Type of Focus
A distinction between the different types of focused factories is introduced by Bredenhoff et al. (2010) in which the location of the focused factory is not detrimental. This lead to the distinction of three types of focus in hospital care, based on the idea that focus relates to providing of a limited range of services and to a limited patient group. Organizations providing focused healthcare either have a product focus, a process focus, or a combination of product and process focus. Organizations
belonging to product focus are treating a certain type of patient, related to their specialty. The process orientated focused factories provide an efficient delivery of specific types of treatments, namely low- complex and low risk elective surgeries offered by various specialties. Lastly, the combination of the two, a product-process orientation, are treating single groups of patients by performing a single type of treatment (Bredenhoff, van Lent, & van Harten, 2010). According to Bredenhoff et al. (2010)
differentiating in the types of focused factories has led to better insights into the organization its relations between degrees of focus, operational choices, and performance. Better results in
productivity and utilization can be achieved, only if clear strategic decisions concerning the focus are made.
Performance effects
Although results emanating from research on the performance effects of focused factories in
healthcare are not unified, the concept of focus is considered to have a positive impact on operational performance (Capkun et al., 2012). Furthermore, decreasing numbers for length of stay, lower costs, and an increase in quality and efficiency are recognized to be outcomes resulting from the
implementation of focused factories in healthcare (Hyer et al., 2009; Kc & Terwiesch, 2011; Kumar &
Nunne, 2008). Lastly, McDermott et al. (2011) have indicated that focus is associated with better cost performance and but also with improved clinical outcomes. While the concept of focus seems to
8 benefit specific organizations implementing this strategy, the overall consequences of focused
factories on the entire healthcare system seem to be questionable. Criticism towards the concept of focus is the belief that focused factories are accountable for the so-called ‘cherry-picking’ (Casalino et al., 2003; Shactman, 2005a). Explicitly the ASC’s and physician-owned specialty hospitals have been accused by general hospitals of selecting profitable services and relatively healthier patients in order to gain the most profits. Due to the loss of these patients, the general hospitals will not be able to cover for the significantly higher expenses of more complex surgeries. In other words, the general hospitals are dependent on more routine surgeries to compensate for the high risk and complex procedures. The healthcare sector as a whole could thus be harmed as these separate and very distinct organizations are performing services without taking the overarching consequences into consideration. This potential danger touches upon the practices of supply chain management as organizations have recognized the potential benefits of collaborative relationships within and beyond their own organization (Lummus &
Vokurka, 1999).
Supply chain perspective
The main goal for organizations to engage in supply chain management (SCM) is to gain potential benefits of the collaboration with and beyond the organization. A general definition is needed to clarify the term, and within this research the definition of Hopp (2011) is chosen: “A supply chain is a goal-orientated network of processes and stock points used to deliver goods and services to
customers” (Hopp, 2011). In which the processes represent the activities required to produce and deliver goods and services, while stock points represent the location in the supply chain where inventories are kept. The network entails the various paths by which goods and services can flow throughout the chain. One key point addressed by SCM is that organizations must acknowledge that the entire network of processes and stock points must be viewed as one integral system. In order to pursue overall performance optimization, an organization must ensure to manage its entire chain. Any inefficiencies within one of the involved organizations will obstruct the entire supply chain from performing to its fullest capabilities (Lummus & Vokurka, 1999). To avoid inefficiencies
organizations must further realize that they are dependent on the functioning of the other organizations involved in the same supply chain. A particular pitfall of this dependability is that striving for maximal performance within one organization or department may lead to less optimal performance for the whole supply chain. This suboptimal overall performance of the entire sector can be traced back to the criticism towards focused factories. Based on these statements, it could be argued that due to the nature of focused factories, the concept of focus might not necessarily fit to a supply chain perspective. As earlier mentioned, focused factories are accused of providing services to the most profitable patients in order to maximize their own profits (Casalino et al., 2003; Shactman, 2005a).
This leads to less optimal performance of the whole healthcare supply chain as other healthcare
9 providers and other stakeholders have to cope with the unfavourable consequences such as the loss of patients and decreasing revenues.
The application of SCM practices in healthcare encompasses both the delivery of goods and services.
Physical goods such as medicine, pharmaceuticals, and medical equipment flow from one organization to another. While the flow of patients and the provided treatments are considered to belong to the delivery of services (Beier, 1995). The dependability between organizations is also apparent within healthcare, and is often referred to as chain care, or care chains (Ahgren & Axelsson, 2007; Huijsman
& Vissers, 2004). Within chain care, various interconnected, but independent organizations are jointly contributing to the provision of care to a patient. When looking from a SCM perspective, the treatment of patients seems to require input from multiple healthcare providers. Literature does identify several challenges in providing such joint care. The present level of specialization of medical practitioners, information asymmetries, and the lacking collaboration between the care providers are for instance causers of problems in providing optimal chain care (de Vries, Huijsman, Meijboom, Schmidt-Bakx,
& Westert, 2011). Furthermore, the existence of various stakeholders with different interests participating in the healthcare sector has been identified as barrier to successfully implement SCM practices within healthcare. The different levels of power, influence, and interest between these stakeholders could potentially prevent or hinder the integration and co-ordination of processes
throughout the healthcare supply chain (de Vries & Huijsman, 2011; McCutcheon & Stuart, 2000). De Vries and Huijsman (2011) argue in their work that the influence of different stakeholders on
establishing SCM relationships within, and between healthcare providers is rather unknown.
As the concepts of focused factories and supply chain management have been reviewed, it can be concluded that both concepts are taking the interests and influences of stakeholders only into account to a certain extent. This is seen as ground reason why it is of importance to incorporate key
stakeholders when assessing the practices of the different healthcare providers. The following section will first outline the implications behind stakeholder theory, followed by the reasoning to perform stakeholder analysis within the healthcare setting.
Stakeholder theory
Stakeholder theory (Freeman, 2010) indicates the importance of the relationships between the organization and its stakeholders in both the external and internal environment. The organizations which are capable of managing their stakeholder relationships effectively will outperform and survive longer than its competitors. Stakeholder theory is descriptive as it tries to explain characteristics of an organization. It can help managers in identifying the relationship, or the lack of such a relationship, between stakeholder management and the achievement of traditional business objectives such as profitability, cost reduction, or growth.
10 One misconception concerning stakeholder theory that it is assumed organizations have to treat each and every stakeholder equally (Jensen, 2001; Sternberg, 1997). As it is not feasible for an organization to treat every stakeholder in an equal manner, stakeholder theory suggests that organizations must create a distinction between normative and derivative stakeholders (Phillips, Freeman, & Wicks, 2003). Normative stakeholders are the stakeholders to which the organization has direct moral obligation and accountability to. Derivative stakeholders can be considered as subordinate
stakeholders. Still, these stakeholders are able to either harm or benefit from the organization, but the organization in this case has no direct moral obligation nor accountability to. Phillips (2003) states exemplary normative stakeholders to be suppliers, customers, and employees while derivative stakeholders can entail competitors or the media. A similar distinction between stakeholders is provided by Clarkson (1995) in which primary and secondary stakeholders are distinguished. Primary stakeholders are the ones who are essential to the wellbeing and survival of the organization, whereas secondary are the ones not essential to its survival but do interact with the organization. The latter can be related to derivative stakeholders, while the former can be related to normative stakeholders.
The impact of stakeholders is considered to have changed the traditional input-output perspective of an organization (Donaldson & Preston, 1995). The traditional input-output perspective describes the situation in which investors, suppliers, and employees are transferring inputs into the firm.
Subsequently, the firm processes these inputs into outputs for the benefit of the customer. However, stakeholder theory argues that such an input and output model is incomplete as the relations between the firm and its stakeholders are ought not to be unilateral. Furthermore, various other stakeholders besides the investors, suppliers and employees, are affecting the firm. Based in the incompleteness of the traditional input-output perspective, Donaldson and Preston (1995) have established an extensive perspective which includes possible, but not all, stakeholders of importance to a firm. As mentioned earlier, possible other stakeholders may include governments, trade associations, customers, political groups, or communities. Stakeholder theory thus argues that all parties or actors with legitimate interest are influencing a firm in order to gain benefits. Moreover, the relation between stakeholders and the organization are bi-lateral as there are no apparent priorities of interests and benefits of one stakeholder over another (Donaldson & Preston, 1995).
As stated before, focused factories tend to aim for value maximization when purposely selecting the most profitable services and the relatively healthier patients in order to gain the most profits (Casalino et al., 2003; Shactman, 2005a). From the SCM perspective this could harm the healthcare sector as a whole. Furthermore, stakeholder theory has been considered to be another contender to value maximization. Still, theorists such as Jensen (2009), do not consider stakeholder theory to be a true contender to value maximization as is does not provide an organization with a clear corporate purpose, whereas value maximization does so. Resulting in organizations which pursue the implications of stakeholder theory to be stuck in the middle, or as Michael Jensen formulates: “stakeholder theory
11 directs corporate managers to serve many masters” (Jensen, 2001). Organizations embracing
stakeholder theory will encounter inefficiencies, conflict, and perhaps even competitive failure as a result of the attempt to satisfy an excessive amount of stakeholders.
Stakeholder analysis
Closely related to stakeholder theory is the analysis of the relevant stakeholders. The implementation of stakeholder analyses has seen an increase in popularity as organizations are recognizing how characteristics of individuals and groups could influence decision-making processes. As stated by stakeholder theory, stakeholders have the potential to influence the actions and aims of an
organization, a project or policy direction (Brugha & Varvasovszky, 2000). Because of the ability to influence processes it is argued that it is important to acquire knowledge about the relevant
stakeholders within an organization its business environment. Stakeholder analysis can be used to gain more insight in the behaviour, intentions, interests, and knowledge possessed by these stakeholders.
The acquired information can and should be used to get a better understanding of the needs and expectations of certain stakeholders. In addition, strategies for managing such stakeholders can be developed (Brugha & Varvasovszky, 2000). According to Blair et al. (1996) the stakeholder analysis is often used within the healthcare sector as a tool for hospitals or other healthcare related
organizations to accomplish specific advantages and goals, while dealing with competing or collaborating organizations. Increasingly, the tool has been applied by healthcare organizations to determine their long term strategic planning and stakeholder management (Blair & Fottler, 1990). The analysis enables organizations to identify potential alliances with other parties, or it can weaken or diminish potential threats (Blair, Fottler, & Whitehead, 1996). Furthermore, stakeholder analysis can be performed to either determine success rates of particular projects or collaborations between medical centres and groups of physicians (Blair & Fottler, 1990). It is expected to find varying perceptions among the key stakeholders when assessing the concept of focused factories.
As far as expectations of this research are admissible, the stakeholders whom have to cope with the unfavourable consequences of focused factories will manifest themselves against such organizations.
Expectations are that general hospitals are negatively affected by the practices of focused factories.
The stakeholders benefitting from the practices of focused might not want to change the current situation as these stakeholders prefer the efficiency and quality benefits of specialization. Expectations are that patients, insurance companies, and general practitioners are among the stakeholders who favour focus.
12
Methodology
Research approach
As mentioned before, this research is interested in determining how the concept of focused factories is manifested among its most important stakeholders, looking from a supply chain perspective. Given that little knowledge exists on the broadened perspective, an exploratory case study will be opted for.
A case study as the chosen research design is considered to be very helpful in answering broader
‘how’ or ‘why’ research questions (Yin, 2013). Thus, a case study protocol has been created in cooperation with MSc SCM students from the University of Groningen. The protocol includes the two interview guides in which the research topic has been covered. A multi-case study has been
established as the data is gathered among various parties involved in the Dutch healthcare sector.
Moreover, the choice of a multi-case study is often preferred over single cases as the gathered evidence is often more compelling (Yin, 2013). Furthermore, making use of multi-case study will improve the external validity (Voss, Tsikriktsis, & Frohlich, 2002).
Research setting
The Dutch healthcare sector has been appointed to be the setting in which this research has been executed, as the geographic scope of this study is limited to the Netherlands. After the reformation in 2006, the Dutch healthcare system is based on a universal private insurance system. Patients are obligated, based on their own preferences, to be covered by a single insurance for their healthcare (van Weel, Schers, & Timmermans, 2012). The Netherlands is considered to have one of the best healthcare systems in Europe according to the Euro Health Consumer Index (EHCI).
The Dutch healthcare sector lends itself as an appropriate setting for exploratory and further research into focused factories when looking at the total number of focused factories and taking into
consideration that the Dutch healthcare sector is one of the best in Europe. Based on a report by the trade association for healthcare (NVZ), Table 1 shows a steady increase of independent treatment centres (ZBC’s) as well as private clinics. These numbers are in accordance with a recently published report by the Nederlandse Zorgautoriteit (NZA) which states that 198 independent treatment centres were active in the Netherlands in 2015 (Homan, 2012)
2009 2010 2011 2012 2013
ZBC’s Private clinics
125 104
153 95
180 87
213 106
214 114
Total 229 248 267 319 328
Table 3.1: The amount of independent treatment centres (ZBC’s) and private clinics.
Source: Inspectie voor de Gezondheidszorg (Inspection for Dutch Healthcare)
13 Case selection
In order to select the correct cases, the most important stakeholders had to be determined first. The stakeholders were selected based on the criterion if the stakeholder is directly or indirectly affected by the practices of focused factories. Table 2 show the stakeholders which fit the scope of this study, and which have been approached to participate. These stakeholders have legitimate interest in focused factories based on the Dutch healthcare system. However, the majority of the initially determined stakeholders were not willing to participate to this research due to a variety of reasons. Government institutions and insurance companies for instance did not have time for an interview, or various trade associations simply were not interested in this research. As primary data could not be collected, secondary data has been used if the missing stakeholders have given a public view on the topic of focused factories. Due to the constraints, this research will incorporate a general hospital and a general practitioner as stakeholders on which primary data has been collected.
Incorporated stakeholders Not incorporated stakeholders
Primary data: Trade associations
Hospital Insurance companies
General practitioner Governments Focused factories
Secondary data:
Patient association
Dutch healthcare association
Table 3.2: Stakeholders of focused factories in healthcare
The case selection process should be done carefully by ensuring that each additional case adds value to the theoretical insight of the study (Eisenhardt & Graebner, 2007). Furthermore, the ideal number of cases has been determined to vary between 4 and 10 (Eisenhardt, 1989). Therefore, at least four cases were selected when conducting this research. As only two cases could be selected due to the lack of cooperating stakeholders, the decision was made to incorporate focused factories as cases. A total of ten representatives of focused factories have been included. Case selection using replication logic has been used in order to build theory and improve generalization. Cases were selected so that they either predict similar results (literal replication), or produces contrary although predicted results (theoretical replication) (Karlsson, 2010). Literal replication is expected to be found among the stakeholders which suffer the unfavourable consequences of focused factories, while theoretical replication is expected to be found among beneficiaries of focused factories. By covering the required amount of cases and both types of replication, the external validity of this research is increased.
Table 2 has functioned as the foundation for the selected cases. Case 1 and case 2 represent the
perspectives of stakeholders which are affected by the practices of focused factories. Case 3 represents
14 an aggregated case of all representatives of the ten the focused factories which have been interviewed.
All these representatives are grouped into one perspective, namely the perspective of the focused factories.
Perspective 1 2 3
Stakeholder General hospital General practitioner Focused factory
Research aim
The aim of the research is to investigate how the concept of focused factories is manifested among its most important stakeholders, looking from a supply chain perspective. More insights were gained on how focused factories are perceived by other parties based on their opinions, judgements, and experiences. Which (un)favourable consequences of the practices of focused factories have been identified among the key stakeholders, or among the healthcare sector as a whole. Topics regarding the financial consequences, patient outcomes, and the need for integration have been addressed throughout the research. A distinction between the different types of focused factories and their services offered has been created as stakeholders might perceive the consequences of one type of focused factory differently in regard to another type of focused factory. Furthermore, is has aided as clarification to the stakeholders when explaining the term focused factory. The distinction of the different types of focused factories is depicted in figure 3.1.
Figure 3.1: Configuration of focused factories & Service Offered
15 Data sources
The primary source of data for this research are semi-structured interviews conducted among various key stakeholders and focused factories active in the Dutch healthcare system. The intention of the interviews was to gain more insight on how key healthcare stakeholders perceive the concept of focused factories. Interviews among representatives of focused factories were conducted to cover all the perspectives available to this research. More knowledge was gained on the (un)favourable consequences caused by the practices of focused factories. In order to enhance reliability and validity of the conducted case research data, two well-designed research protocols have been used. The first protocol (Appendix A) was designed to interview the key stakeholders active in the Dutch Healthcare system, while the second protocol (Appendix B) was designed to interview representatives of the focused factories. The first research protocol was created solely by myself. As earlier mentioned, the latter protocol was created in cooperation with other MSc SCM students from the University of Groningen. The same research protocol (Research protocol A) has been used to conduct every
interview among the key stakeholders, and the same research protocol (Research protocol B) has been used to conduct the interviews among the focused factories. Therefore, this data used throughout this research is considered to be primary data. Secondary data has been used to supplement the covered perspectives where possible. This data consists out of publicly published reports concerning focused factories by other parties. All of the interviews have been recorded in order to create interview transcriptions, which were used to analyse the data and to derive possible results. The data has been collected during the last two months of this research. Due to the forced decision to narrow down the amount of stakeholders, the interviews of representatives of one general hospital and one general practitioner have been used as primary data sources. Furthermore, primary data has been collected among ten representatives of different focused factories.
Stakeholder analysis
Within this section the perceptions of the most important stakeholders regarding the consequences of focused factories will be analysed and discussed. Stakeholders were asked to determine possible strengths, weaknesses, opportunities, and threats when assessing the practices of focused factories. In addition, the perceptions of focused factories are incorporated as well, to be able to provide a
comprehensive perspective on the (un)favourable consequences of focused factories. Two sub- questions were key at determining the perception of the focused factories:
1. How do you see the current role of focused factories in Dutch healthcare?
2. What will the ideal situation in Dutch healthcare look like regarding focused factories?
Firstly, a table (table 4.1) is presented covering every focused factory that was included as aggregated perspective of the focused factory in the stakeholder analysis. Descriptions of each focused factory can be found in Appendix C.
16 Table 4.1: Aggregation of ten focused factories into one perspective
SWOT Analysis Strengths
Various strengths are being recognized by the stakeholders when they were asked to assess the practices of focused factories. Generally, strengths concerning quality and patient flows are appointed as benefits that focused factories are able to provide while other healthcare providers struggle with such concerns. Focused factories are believed to provide a particular part of healthcare more
efficiently by focussing on one treatment or one patient group. In addition, they can offer treatments more service-orientated compared to hospitals.
‘Focused factories are able to provide better service and faster throughput times; the patient feels more appreciated within a focused factory.’ – General practitioner –
The smaller business structure of focused factories is also recognized as a strength. Hospitals
continuously have to put effort in assembling the various specialists into one team in order to perform the treatment. Within a focused factory, the same group of specialists belong to one smaller
organization or team, and this enables them to operate within the same team on a daily basis. Such a structure often leads to better communication with the patients, and could also decrease waiting times.
‘Focused factories often operate with smaller groups of people which tend to work together every day, and these channels are shorter than ours. Focused factories are certainly able to compete with us looking at their level of service.’ – Management general hospital –
One of the focused factories assess their core strength to be able to provide specific care which a hospital cannot provide, while also possessing all the knowledge on one specific disease. Whereas Focused Factory Number of
specialists (FTE)
Number of support staff
(FTE)
Number of annual patients
Number of locations
Configuration
Focused factory 1 3 15 700 1 FHU
Focused factory 2 11 70 35,000 1 FHU
Focused factory 3 - - 7,500 13 ASC
Focused factory 4 1 - 250 1 ASC
Focused factory 5 2 8 3,000 1 Specialty
hospital
Focused factory 6 25 150 7,000 8 Specialty
hospital
Focused factory 7 6 19 7,500 9 ASC
Focused factory 8 40 39 - 14 ASC
Focused factory 9 5 44 31,000 1 ASC
Focused factory 10 4 10 700 2 FHU
17 hospitals might only possess lesser knowledge of every disease. They are able to continuously
improve the process and treatment because the organization is permitted to specifically focus on one disease. The alleged advantage of focus is ability to have a lot more knowledge on a specific disease, which allows such organizations to manage the results and outcomes in a better way.
‘What we in particular have seen and experienced in the past, is that our way of working with initial phases and aftercare, is impossible to carry out within a hospital setting.’ – Management focused factory –
Previously conducted research by the Dutch Healthcare Authority (Homan, 2012) confirms the aforementioned strengths of focused factories. Their conducted interviews with focused factories and health insurance companies show that focused factories do provide added-value over hospitals in certain areas of care. Focused factories are described as small scale environments which are logistically well-organized, operate patient friendly, and offer a substantial amount of service.
Furthermore, there tend to be improvements in waiting times, access times, and throughput times compared to hospitals. Yet, the representatives of insurance companies indicate in the report that the claim of focused factories providing greater quality of care cannot be proven. Not enough information is available to support this claim, nor are there any prospects on the long term effects.
Weaknesses
The strength of focusing on one disease or one type of patient group is also considered to be the main weakness. As stated before, focused factories are offering simple treatments to relatively healthy patient groups. Such organizations are restricted in the care they provide. Whenever a patient requires more complex care than initially anticipated upon, focused factories are generally forced to refer such patients to hospitals as they lack the resources to provide the necessary treatment.
‘Once a patient has various other diseases, such as diabetes, or is considerably old, then this type of patient is no longer of interest for a focused factory’ – General practitioner –
‘Whenever the situation becomes more complex, the treatment opportunities for focused factories cease to exist, and a referral to a hospital has to take place.’ – Management hospital – Another disadvantage of focus is recognized by various representatives of focused factories. The focused factories intending to treat patients as quickly as possible, while attempting to gain the most profits, tend to give less attention to patients in comparison with the traditional healthcare providers.
‘For the past 10 years many small organizations have arisen focussing on profit and making sure they can treat patients as quickly as possible, but with less attention for the patients. Patients are more seen as entities to be processed for money.’ – Management FHU –
18 Opportunities
Opportunities recognized by interviewees are aimed at improvement possibilities that can be gained by focused factories and other healthcare providers. Healthcare is becoming more complex and hospitals are focusing to a greater extent on the more complex care pathways as their added value is grounded in providing complex treatments which require the input of various specialists. By doing so, hospitals increasingly create the opportunity for other organizations to focus on the less complex treatments.
More market share is to be captured by organizations specialized on the provision of simple
treatments. Ideally the hospitals would want to preserve these simple treatments, but the competitive opportunities are expanding for focused factories to carry out the such low complex care instead.
‘As a result there do emerge opportunities for single and simple treatments. We would like to preserve this care as well within our hospital. However, it does present competitive opportunities towards focused factories’ – Management hospital –
Learning opportunities provided by the practices of focused factories are also recognized by
stakeholders. Such focused organizations are capable of demonstrating to other healthcare providers that it is possible to provide superior service to certain groups of patients.
‘Hospitals should learn from focused factories. The concept of focused factories works well, but you should somehow find a way to incorporate this concept into hospitals. Then we can provide quick and simple care which is focused on service.’ – General practitioner –
Threats
Stakeholders do not seem to recognize immediate threats concerning the practices of focused factories.
Healthcare providers should be cautious towards focused factories which tend to perform similar treatments, or when new focused factories are established within the region close to the healthcare providers. Stakeholders emphasize that the existing healthcare providers should be able to avert these threats by increasing capacity or restructuring their current processes.
‘Focused factories are challenging us, and we have to ensure that we are capable of finding the appropriate response to this matter’ – Management hospital –
However, the subject of cherry-picking is recognized as a practice carried out by focused factories Yet, opinions on the matter are distinct among the stakeholders as some judge the practise as unfair
competition towards hospitals. Other stakeholders argue that hospitals should take precautions
regarding the low complex treatments, and should prevent focused factories from taking over patients.
One stakeholder warns for the inevitable increase in costs that a hospital will incur when the low complex treatments are being transferred to focused factories. The complex care that remains within the hospitals will on average become more expensive as the ability to spread the total costs over a higher volume of treatments is diminishing.
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‘If a hospital only receives elderly patients, which could end up within the IC for weeks, then the average price per product will be much higher without a doubt. I do not believe that this will result in cost savings in the healthcare sector. – General practitioner –
Another stakeholder is more nuanced towards cherry-picking, and argues that it is the responsibility of hospitals themselves to maintain their level of competitiveness towards focused factories. The
provision of low complex care should not be considered to inherently belong to hospitals. Other organizations, such as focused factories, are allowed to capture the available market share regarding the low complex care. Hospitals could prevent the loss of patients by for instance implementing forms of focus themselves, and ensuring that waiting times and access times are decreased.
‘Hospitals might believe that they possess the right to perform simple treatments. However, no one has the exclusive rights to perform low complex care.’ – Management hospital –
‘If we think that focused factories are being responsible of unfair competition or taking away patients from hospitals, then we should have bested this competitive threat beforehand.’
– Management hospital –
Two out of the ten the representatives of focused factories also disprove the process of purposively selecting low risk patients in order to gain highest profits. Another representative indicates that a significant amount of focused factories is not cherry-picking patients from hospitals as they are offering care processes which hospitals are unable to offer to patients.
‘It should be noted that most focused factories are cherry picking in which they take the easy patients and send the difficult and more complex patients back to the hospital.’ – Management focused factory –
‘The focused factories are filling in the gap. They ensure that healthcare remains payable, and strive for high numbers with low complexity to reduce costs. Yet, some focused factories do aim towards cash cows to ensure that their investments can be returned’ – Project manager focused factory –
Current role of focused factories
The majority of the stakeholders agree that the healthcare system has changed with the trend of more focused factories arising in the Netherlands. Furthermore, the increase of such independent treatment centres is ought to increase even more as healthcare is becoming more commercial. Focused factories will become more important due to their abilities to keep healthcare affordable and available. The focused factories are thus seen as an addition to the Dutch healthcare as they tend to be cost effective, efficient and of a higher quality. This statement is supported by the patient association. According to secondary data provided by the patient association, focused factories are considered to be an addition
20 to the current provision of healthcare. The entrance of focused factories into healthcare is further argued to be much needed as general hospitals are not capable of delivering every treatment as efficient and effective as they opt for.
‘Focused factories are the necessary evil. It is the incompetency of hospitals that made ASC come in to play. Hospitals are required to perform all treatments which are ranging in such a variety that the outcome will become mediocre as a limited number of specialists cannot comprehend all the treatments.’ – Medical specialist ASC –
‘Focused factories are able to provide a certain part of healthcare more efficiently, while also offering this in a more service orientated way compared to general hospitals’ – General practitioner – Focused factories are considered to be the drivers for innovation, and could be the much needed innovators which force hospitals to change their working protocols. The concept of focus could become the game changer with regard to waiting times and service levels. In many cases focused factories are better awareness of their own costs compared to a hospital. The total view on business processes tends to be much greater in focused factories. It should encourage and/or force other healthcare providers to rethink about what kind of product they are offering to their customers.
‘The entry of focused factories actually served as a wake-up call for the regular healthcare providers. Take action to improve your service, make sure that your processes run faster and smoother’ – General practitioner –
‘Focused factories are getting more important: They allow innovations to take place to ensure that healthcare stays affordable and available. This is difficult for general hospitals as they have to keep their other specializations in mind.’ – Management focused factory –
Ideal situation regarding focused factories
The ideal situation on how the Dutch healthcare system should be structured regarding focused factories is reasonably similar among the various stakeholders. The general consensus is that, to a certain degree, focused factories should become responsible for the treatment of uncomplicated, and low risk patients. By doing so, the general hospitals are put into a position to fully commit to the treatment of complicated and higher risk patients. This proposed division of treatments among focused factories and hospitals aims to maximize the added-value of such organizations to healthcare sector as a whole. Hospitals should be aiming towards the top of the healthcare market, the complex care- pathways, in which all the different disciplines and specializations are required. Focused factories are not able to provide such complicated care-pathways as they might not have the required resources.
Other sections of hospitals are being pressured because of the shift of attention towards complex care,
21 combined with their growth and financial limitations. This will provide opportunities for focused factories to further target such areas of care which hospitals are struggling with.
‘I foresee a great future for focused factories in the Netherlands. In order to maximize the added-value of hospitals, you actually just want to perform the production that you can only do within a hospital.’ – Management general hospital –
‘Uncomplicated care could be standardized and be done in the so called ASCs. Hospitals should become the central organ in terms of treating complex patients.’ – Management of focused factory –
In most cases however, full commitment of treating complex patients will only applicable to larger hospitals. In such an ideal situation, the smaller hospitals would be forced to fuse together in order to become policlinic in which they perform many low complex treatments. The more complicated and severe cases are referred to the main location of such fused hospitals.
Whether an increase in the amount of focused factories is wished for is debatable. Some belief that an increase would be preferable as focused factories are able to reduce costs and waiting times, and patients seems to favour the concept. On the other hand, certain stakeholders warn against a situation in which the market could become too fractured. If healthcare would exist out of an abundance of small healthcare providers, then it will weaken their position towards health insurance companies.
Negotiations concerning tariffs and prices could become troublesome if too many small healthcare providers would flood the market.
‘There should be more room for focused factories, however not for every focused factory. It should be carefully chosen which focus organization should receive stimulation and which ones do not deserve this attention.’ – CFO focused factory –
‘A lot of focused factories have been established during recent years, which are struggling to financially stay afloat due to negotiations with insurers. The business case of numerous focused factories is really fragile’. – General practitioner –
Furthermore, it is questioned by some stakeholders if the concept of focus would be suitable for any type of specialization. It is argued by these stakeholders that focused factories should only be established for treatments or care that is well-plannable in advance. For treatments which are less- plannable, the concept of focus should not be used. Care which consists out of an integral approach with pre-determined treatment steps does lend itself for the concept of focus. Solely performing one type of surgery or treatment is not seen as sufficient to establish a focused factory, as this can be performed by hospitals.
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‘Focus should be used for extraordinary treatments; you should not set up a centre which treats only inguinal hernias. I think it is a good thing to set up centres for the patients which need an integral approach requiring an initial preselection phase, but also the extended after care while continuously monitoring the patient.’ – Management of FHU –
‘Just performing one surgery or treatment is not sufficient enough to create a focused factory.
It will be sufficient if it requires a special approach, combined with particular guidance and assistance.’ – Management FHU –
Another point of interest which kept recurring among stakeholders has been the emphasis on quality improvements over cost control. Results show that it is agreed upon by all parties that healthcare organizations, especially focused factories, should focus on the quality of care instead of the costs of care.
‘I do think that these centres must strive towards providing the best quality, and the focus must lie on the patient as is the case with regular hospitals. Gaining financial benefits must never have the upper hand, and may not be the motive.’ – Management FHU –
The patient association its policy states that it sets the same quality requirements to focused factories as to hospitals. The patient association expects focused factories to provide appropriate after care if sudden calamities occur during the treatment of a patient. Furthermore, they expect focused factories to disclose their quality indicators. These indicators cover transparency and safety issues, the
availability, effectiveness, and continuity of treatments, and the provision of information. According to the Dutch Healthcare authority (Homan, 2012), health insurance companies are indicating that quality concerns should be leading when contracting focused factories. However, health insurers also indicate that they lack the capacity to periodically visit focused factories to evaluate their quality.
As the amount of focused factories is expected to increase as healthcare is becoming more
commercial, these independent organizations should place their focus on the patient, as is the case with hospitals.
‘These organizations should focus on quality instead of costs. On the long term the quality will always win over costs. Costs are important and processes should be cost efficient but the starting point of every healthcare organization should be quality.’ – Management of focused factory – The need for integration
Stakeholders recognize the need for integration among the different parties. Some argue that they are satisfied with the current state of integration as it is important that every organization has to maintain their own individual role within healthcare. Others argue that improvement in integration would remove potential barriers that impede the communication flows between parties. One stakeholder
23 stresses the importance of being able to use each other knowledge and expertise when determining what is best for the patient. Improvements in the sharing of patient records and working within the same patient records by multiple parties is seen by this stakeholder as a driver for the need for increased integration. Difficulties occur when a patient requires care from a whole range of different healthcare providers. It will become increasingly difficult to keep patient records compact. Integration improvements could be made regarding joint patient records and the ability to share knowledge among the involved parties. Within hospitals, employees are already working with joint patient records while collective knowledge is also shared among specialists or departments. However, integration with focused factories is still in its early stages as they are considered to operate independently. According to the following stakeholder improvements in the need for integration is required.
‘Focused factories are considered to be independent units which are doing their own thing and that is it. Such an approach truly is undesirable for certain patients.’ – General practitioner – Improvements in the collaboration among focused factories and other healthcare providers is desired.
As the rise of focused factories is expected to continue there will be an increase in contact with other healthcare providers. Stakeholders think that better collaboration and integration with focused factories is needed as more referrals will occur. In increase in collaboration between these organizations is expected to be needed in order to determine what is best for the patient.
‘I am convinced that the Dutch healthcare sector can improve if it would strive for better collaboration. If more focused factories would be established, then you will get into contact with each other more often’. – Management hospital –
Distinction between focused factories
The interviewed stakeholders do not seem to distinguish focused factories based on their
configuration. Stakeholders however, do make a distinction based on whether the focused factory is considered to be a preferred partner or not. This distinction can be based on previous experiences and collaborations. It can also be based on whether or not a focused factory provides the same treatment.
The deciding factor is still the patient; he or she decides where the treatment will take place.
Stakeholders will influence a patient its decision if he or she is in doubt where to be referred to.
Whether a focused factory belongs to a product, a process, or a product-process configuration does not play a role when stakeholders are asked to explain their distinction criteria.
‘We do not distinguish between different categories, but we do consider some focused factories as preferred partners while others as non-preferred partners as they might intervene with our ambition’ – Management hospital –
24 The role of healthcare insurance companies
A recurring topic which has been mentioned by nearly every interviewee, has been the role that healthcare insurance companies play within this sector. The role that such an insurer might have, seems to include a variety of influences. First of all, the healthcare insurance companies are partially in charge of the division of money distributed among the various healthcare providers. Certain stakeholders argue that the bargaining power between insurer and healthcare provider plays an important role in the distribution of money. Hospitals tend to have a superior bargaining position towards insurance companies as there is a mutual dependence between the two parties. Focused factories do not experience such an interdependent relationship with insurance companies. If a regional focused factory would disappear, it would have little to no consequences for the healthcare insurance companies which is active in the region. The loss of one focused factory can be
compensated by another focused factory or organization. The disappearance of a large hospital cannot be easily compensated, and would have great impact on the insurance companies.
‘If our hospital would disappear from this region, then the healthcare insurer active in this region would also have a problem. Negotiations between the both parties are carried out on a partner level’. – Management hospital –
Furthermore, the healthcare sector has to be cautious in dividing the provision of care into too many small care providers. As earlier mentioned, one stakeholder argues that if such a division would happen, it will harm the bargaining position towards the insurance companies. According to this stakeholder an abundance of focused factories has entered the market which struggle to keep existing as their business case is vulnerable. This is partly due to their poor positioning towards the insurance companies.
Previously conducted research by the Dutch Healthcare Authority (Homan, 2012) confirms the issues perceived by focused factories regarding healthcare insurance companies. In their report they state that health insurance companies have a more critical stance towards contracting focused factories
compared to few years ago. These insurers are reluctant to invest in regional overcapacity of care providers and are increasingly focussing upon quality criteria. This has led to the result that majority of health insurance companies do not contract every focused factory anymore. Additionally, there are initiatives implemented by healthcare insurance companies that demand a minimum amount of treatments performed by focused factories in order to gain a contract.
Secondly, stakeholders argue that the reimbursement of treatments carried out by healthcare providers is based on a ‘one budget fits all’ principle. Which means that a healthcare provider would receive the same reimbursement for a simple treatment as for a complicated treatment. Stakeholders would like to change this policy in order to fairly divide the reimbursements over the different healthcare providers.
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‘The distribution of the money of the insurance companies should be redesigned to balance the price for different treatments. Complex cases are more expensive to carry out, yet hospitals do not receive more money to cover for these expenses. Hospital should receive the correct amount of money, which is not the case in the current situation.’ – Doctor & Co-owner FHU –
‘You get paid for the contact session in a one budget fits all. This results in getting the same amount of money for an easy operation and a difficult operation.’ – Medical specialist ASC –
Discussion
Within this section the results of the stakeholder analysis are discussed based their manifestation within the covered literature. The performance effects of focused factories and the relation to the supply chain perspective as proposed by literature are reviewed based on the findings stemming from the stakeholder analysis.
Overall, the findings of this research are consistent with the manifestations found in literature.
However, the consequences of the practices of focused factories are to be conceived in a more nuanced manner. The unfavourable consequences of focused factories are recognized and in some cases
disapproved by key stakeholders. On the other hand, the favourable consequences of focused factories are recognized as well, and are considered to be much needed to improve the Dutch healthcare. The three configurations of focused factories were applicable to the research setting as the stakeholders have recognized that there are distinctions to be made between focused factories. However, the different types of focus have been more difficult to differentiate among stakeholders. The general practitioner nor the representative of the hospital are distinguishing focused factories based on the three types of focus introduced by Bredenhoff et al. (2010). Instead, these stakeholders make a distinction based on if the focused factory is considered to be a preferred partner or not. Whether the focused factory belongs to a product, a process, or product-process type is not decisive in determining if it is considered a preferred partner.
Performance effects
According to literature the concept of focus is considered to have a positive impact on operational performance (Capkun et al., 2012), while it is associated with improvements in length of stay, costs, quality, and efficiency as well. (Hyer et al., 2009; Kc & Terwiesch, 2011; Kumar & Nunne, 2008).
These proposed improvements are partially supported by the findings of this research as the
stakeholders have recognized that focused factories are able to improve specific areas of healthcare.
Concerning the cost reducing capabilities of focused factories, it has been stated that the emphasis should be on quality improvement over cost control. Results of the stakeholder analysis show that healthcare organizations, especially focused factories, should focus on the quality of care instead of the costs of care. Striving for cost efficiency is considered to be very important, yet the starting point of every healthcare provider should remain to be quality concerns.
26 Focused factories are believed to provide a particular part of healthcare more efficiently, namely the low complex and low risk elective care. In addition, they can offer treatments more service-orientated compared to hospitals. Because of these reasons, stakeholders are of opinion that focused factories are able to provide added-value over hospitals and they have the ability to keep healthcare affordable and available. Stakeholders do emphasize that focused factories should solely be engaged in the provision of low complex care. This is in alignment with the ideas of Hacker (1997) and Meyer (1998) who propose that by aiming at specific treatments or diseases, the concept of focus can increase the efficiency of healthcare. Complex care should at no point in time be performed within focused factories as these organizations generally lack the resources and knowledge to perform treatments of higher complexity. According to the perspective of the focused factories this is also recognized as they would like themselves to become responsible for the standardization of uncomplicated care. As a result, general hospitals will be able to fully commit to the treatment of more complex patients. Such a division of care could prove to be necessary as the demand for complex care is increasing, while the age of the average patient is also increasing. An addition to the concept of focus aiming at specific treatments and diseases (Hacker, 1997; Meyer, 1998) is proposed based on the degree that care can be planned. It is argued by stakeholders that focused factories should only be established for treatments which are well-plannable in advance. The concept of focus should not be implemented for treatments which do not require an integral approach, and tend to be less-plannable.
Cherry-picking
As the concept of focus seemed to benefit the organizations implementing this strategy, the
unfavourable consequences affecting other stakeholders seemed to be undiscovered. Cherry-picking (Casalino et al., 2003; Shactman, 2005a) was recognized as a practise that focused factories are engaged in. However, the impact on hospitals proposed by literature is experienced to a substantial lesser extent by the incorporated stakeholders of this research. If the consequences of cherry-picking are more severe in countries in which healthcare is not funded by insurance or tax money is open for further research. In this research setting, hospitals are not considered to be dependent on more routine surgeries to compensate for the treatments of higher complexity. Other variables, such as the role of healthcare insurance companies, determine the way hospitals distribute or cover treatment costs. The principle of cherry-picking can however, be related to the increase in costs that hospitals will incur due to transfer of low complex treatment. The care that remains within the hospitals will on average become more expensive as the ability to spread the total costs over a higher volume of treatments is diminishing. Based on the stakeholder analysis, a more nuanced perspective towards cherry-picking can thus be discovered. Certain stakeholders believe that hospitals should take precautions to prevent losing patients to focused factories. The provision of low complex care should not be considered to inherently belong to hospitals. It should be the responsibility of hospitals to maintain their level of competitiveness towards focused factories. Findings of the stakeholder analysis show that hospitals
