23 Aug Read the below article and write a 3-4 page es
Read the below article and write a 3-4 page essay in APA format (not including the cover page and reference page) answering the below question. Do not make this a question and answer but an essay paper.
Note that you must conduct research and your paper must have 3 scholarly references. This means that you must locate peer-reviewed articles. Please be sure that you write an essay and do not use a question and answer format.
Questions
How would you characterize DaVita’s strategy?
2. What advice would you give Kent Thiry in terms of leading and managing the integration of the Gambro organization?
3. What would be included in your “first 100 days” action plan?
4. How could you preserve DaVita’s culture in the face of an acquisition that includes Thiry’s former organization, Vivra
Selected Cases LEADING STRATEGIC CHANGE AT DAVITA: THE INTEGRATION OF THE GAMBRO ACQUISITION
In the summer of 2005, Kent Thiry, a 49-year-old Harvard MBA, ex-Bain consultant, and now the CEO of DaVita, thought about how he and his management team should address a set of emerging and important challenges. DaVita (publicly traded on the New York Stock Exchange under the symbol DVA) was a $2.2 billion annual revenue operator of free-standing and in-hospital kidney dialysis centers.
Thiry and his senior team were meeting to discuss the next steps the company should take to continue its organizational development and strategic evolution. They were especially focused on how to manage several looming challenges. DaVita was just in the process of completing a $3.1 billion purchase of Gambro, a large competitor. The acquisition would nearly double its size, from 700 to more than 1,200 dialysis centers and from 13,000 to 25,000 people. As such, it would cement its position as the second largest operator of kidney dialysis centers in the United States.
When Thiry came to lead the company in October 1999, the organization had been beset with financial, operational, regulatory, and morale difficulties. “The company was technically bankrupt,” he said. “It was being investigated by the SEC, sued by shareholders, had turnover at over twice our current levels, was almost out of cash, and, in general, wasn’t the happiest of places.”1 By 2005, the new management team had achieved a complete turnaround. The company’s market capitalization had grown from $200 million to more than $5 billion, the clinical outcomes had become the best in the industry, the company’s organic growth was the highest in the industry, and employee retention had improved dramatically, with a 50% reduction in turnover.
However, this had not been a typical turnaround. Instead, a closer look at DaVita’s culture and leadership showed that the DaVita management team’s focus had been on creating a strong and positive values-based organization where all levels of the organization had an emotional commitment to its success. The foundation was the Mission and Values, first created by 700 of the company’s managers in 2000 and now widely practiced throughout the company. To the management team, the company’s rebirth strategy was based on the belief that they had to create something larger than themselves in order to be successful. Thiry commented:
· At Vivra [another kidney dialysis company where many of DaVita’s senior leaders had worked together], we implemented many people, team, and culture-friendly policies. They were consistent with my basic values, but the extra energy I brought to them was because they were a means to the end of having a successful company. This time it is different. This time the building of a successful company is a means to the end of building a healthy community. Because humans spend more waking hours at work than anywhere else, if you are a leader who purports to care about your team, it makes no sense to create a paradigm which concedes all that time needs to be spent in [a] relatively vanilla values or sterile emotional commitment environment.2
Because of this, Thiry and his team flagged several important challenges they believed needed to be addressed if DaVita was to continue its successful evolution of both operations and culture. The question was, How could they use the culture to achieve even greater operational excellence?
THE GAMBRO INTEGRATION
One immediate task entailed integrating Gambro into the DaVita way of managing and its culture. Gambro was significantly more hierarchical and formal than DaVita, and did not have a strong people-oriented culture. Prior to the merger, DaVita had been disparaged inside Gambro, with Thiry described as “a compliance maverick, reckless, and egotistical.” Ironically, Gambro had itself purchased Vivra in 1997, then a smaller, publicly traded dialysis company led and transformed by Thiry during the 1990s. As the leader of the combined organization, Thiry’s goal was to be respectful of Gambro, its people, and its capabilities, while maintaining DaVita’s unique culture and way of management.
PERSONAL TOUCH IN A GROWING ORGANIZATION
Prior to the Gambro integration, DaVita operated in 37 states. Its growth, size, and diverse locations made it increasingly difficult for Thiry to personally touch the many teammates on a regular basis. This presented a key challenge: How to personally impact teammates as he had during his first five years at the helm? Affectionately called “KT” by many teammates in the company, Thiry was, by everyone’s estimation, extremely charismatic and energetic. More than that, Thiry was the primary architect of and cheerleader for DaVita’s unique culture and values. The company reflected the vision shared by Thiry, Joe Mello, and a few others such as Doug Vlchek. Mello, DaVita’s COO, and Vlchek, DaVita’s chief wisdom officer, had worked with Thiry before and had joined DaVita in 1999 to help drive the organizational change initiative.
TEAMMATE MORALE AND COMPENSATION
Maintaining the culture and sense of community within DaVita was not easy, even before the acquisition of Gambro. Taking care of dialysis patients is a difficult job. One out of every five dialysis patients dies each year, creating not only a difficult work environment but also a lot of emotional strain. With the company’s turnaround receding into the past, numerous employees—or “teammates” as all are called at DaVita—had rising expectations for wages and working conditions. The company’s ability to raise salaries was constrained by the high volume of patients—about 79%3—who were covered by government programs such as Medicare and Medicaid but whose reimbursement rate did not cover the cost of treatment.
Because of financial constraints, dialysis providers could not afford to pay high overtime rates. As a result, many of DaVita’s patient care technicians, who typically earned between $11 and $14 per hour, worked two jobs in order to generate sufficient income. One manifestation of the pay challenge was the barrage of questions that Thiry and Mello would get as they traveled the country conducting “town hall meetings.” Town hall meetings were an opportunity for teammates to ask questions of senior leadership, in person. It was quite common for teammates to ask why their wages were not higher and why productivity expectations were so high and always rising. Moreover, DaVita competed for nurses in labor markets with nursing shortages. Many other organizations had chosen to just throw money at the problem of attracting and keeping nurses, something DaVita could not afford to do.
OPERATIONAL EFFICIENCIES AND PRODUCTIVITY IMPROVEMENT
The fifth challenge was to continue to drive productivity improvement and to think about ways to fundamentally reengineer the business. As Mello noted, the company had made great strides in enhancing labor productivity over the past several years. But there was always the looming threat of reduced reimbursement from the government for dialysis services. This revenue stream represented approximately 60% of total company revenue.4 Mello talked about the challenge of doing things that would materially and fundamentally enhance the company’s cost structure so DaVita could be largely impervious to what might happen in its environment.
As Thiry prepared for the meeting with his executive team, he thought about what the company should do about these challenges and maintaining the culture his senior team had worked so hard to build. He wanted the team to come up with some ideas about how to address the challenges facing the company, and of course, to do so in a way that was consistent with its values and culture.
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