Case in Point: Developing a Unique Healthcare Model

Karen Pellegrin

Karen Pellegrin, Director of Continuing Education & Strategic Planning and Founding Director of the Center for Rural Health Science at the University of Hawaii at Hilo, Daniel K. Inouye College of Pharmacy

When the Patient Protection and Affordable Care Act (aka “Obamacare”) went into effect, the healthcare industry experienced the largest expansion of US government involvement since Medicare and Medicaid. This shift in government involvement created a ripe environment for government-subsidized clinics to flourish; but they weren’t the only clinics to do so. Mango Medical, a small business in rural Hawaii that does not rely on government subsidies, experienced enormous success in 2015 due to its unique primary care model that pays doctors for value of service over volume.

Karen Pellegrin & Timothy Duerler wrote a case study for SAGE Business Cases called Mango Medical: Growing a Fresh Healthcare Model. The case follows the creation and success of Mango Medical and allows students to gain a deeper understanding of healthcare trends, markets, systems, and strategies used in the US.

Highlighting the case in this latest installment of our Case In Point series, we caught up with Karen to learn more about the rise of the Mango Medical and the current healthcare environment. Karen provided some helpful insight for any instructor teaching about healthcare in business and management or organizational courses. Read the interview below.

  1. Your case describes the growth of a for-profit healthcare corporation in rural Hawaii, where the market seemed more primed for government-subsidized clinics after the passage of the Affordable Care Act. What would you say are the top three takeaways from this case for those learning about different healthcare models?

 Assumptions about subsidies, both the need and the amount, are typically based on current or traditional models of care; if you don’t question those assumptions, you conclude subsidies are required and easy to quantify.  If you question those assumptions, you might be able to create a more efficient model, as Dr. Duerler has.  There are many inefficiencies in our healthcare system, and we need new models to deliver better, more cost-effective care.

The healthcare industry is highly regulated and complex, which makes it tough to navigate; but where most see obstacles, entrepreneurs find opportunities.

In some ways, you could argue that rural Hawaii is such a unique market that the Mango model wouldn’t succeed in other markets.  I would argue that there is more in the model that translates than not.

  1. After the 2016 election, it seems likely we’ll be seeing some changes in government-subsidized health care. How do you see any potential changes affecting a business like Mango Medical?

 Passing the Affordable Care Act was difficult; changing it is proving to be even more difficult despite the known problems.  In general, the Republicans are focused on eliminating federal mandates that reduce choice and eliminating or changing subsidies.  Assuming fewer people would have health insurance or subsidies to cover the cost of care under a Republican replacement, this could affect Mango’s revenue.  However, because of their operating efficiency, Mango might be an attractive option to those without insurance or with high deductibles who are paying out of pocket.  Businesses focused on value and adaptability, like Mango Medical, will likely maintain a competitive advantage in a dynamic market.

  1. What are some of the marketing challenges faced when a new, growing company like Mango Medical has to adapt to a unique, rural setting?

 Communicating with target audiences is always key.  Our research has found that traditional formal marketing approaches are far less effective (and more expensive) than informal methods in reaching target audiences in rural Hawaii – specifically community members and clinicians.  Getting the message across about a new product or service can be done very efficiently and effectively by understanding the local landscape and leveraging existing communication networks.

Learn more by reading the full case study, Mango Medical: Growing a Fresh Healthcare Model, from SAGE Business Cases, open to the public for a limited time. To learn more about SAGE Business Cases and to find out how to submit a case to the collection, please contact Rachel Taliaferro, Associate Editor: rachel.taliaferro@sagepub.com.

     
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