Asian Health Services: Rediscovering a Blue Ocean
Too Many Ideas for the Future In a brief pause during a meeting with her direct reports to prepare
proposals for the summer board meeting, Sherry Hirota, chief executive officer at Asian Health Services (AHS), a not-for profit community health center in Oakland, California, glanced out the window at the container ships embarking on travel across the Pacific Ocean. “What was that book you read about blue and red oceans?” Hirota asked her chief operating officer Deepak Maitra.
Maitra explained, “In 2015, authors Kim and Mauborgne named their idea Blue Ocean Strategy. The blue ocean is a metaphor for the desire to create large, wide open, and uncontested markets in contrast to red oceans that are bloodied from markets that are intensely competitive and characterized by losses and participants who get hurt. The objective is to shape corporate strategy to create markets where customers believe there is only one best provider, and in so doing, the business avoids costly incentives to match competitors’ offers.”
Hirota reflected on the idea after she heard reports of AHS’s major achievements over the past year. AHS had secured a $3 million anonymous donation to expand primary care services. They decided to expand a few new programs and services such as pediatric dental, a bilingual Burmese patient care team, and cemented a partnership with a local community development agency to build a new dental clinic.
Her executive staff made various proposals for new or enhanced efforts to better serve their constituents (see Exhibit 1 for the AHS organization chart). Customer services needed more multilingual staff. The chief medical officer made a plea to improve incentives to retain physicians and other providers, as well as expansion of medical and dental clinics. There was no shortage of good ideas from others for new advocacy campaigns and additional health services.
Although everyone was relieved that their first full year was profitable after the Affordable Care Act (ACA) came into effect, no one believed that the challenges ahead were less threatening (see Exhibit 2 for AHS’s Income Statements from 2010 to 2015 and Exhibit 3 for AHS’s Balance Sheets from 2010 to 2015). The chief financial officer was adamant that a plan needed to be in place to better manage expenses to meet ever-decreasing reimbursements. Maitra was
concerned about the changing mix and character of their members, suspecting that gentrification might be displacing and harming them.
Hirota’s attention returned to the task at hand: she needed to decide what proposals to include in a coherent strategy to present at the upcoming board meeting. She had to ensure that the proposals addressed the challenges that were ahead and confirmed a well-articulated strategy that was consistent with AHS’ dual mission of service and advocacy while generating sufficient revenue (see Exhibit 4 for the AHS mission statement).
Background on Asian Health Services
Founded in 1974 by a group of Asian American college students from the community, AHS drew inspiration from national and international efforts to change the world during the 1960s, such as the civil rights movement and student movement at University of California at Berkeley against the war in Vietnam. In particular, they lamented the lack of health care in the Oakland Chinatown area, and that “the existing health bureaucracy felt there was no problem in the Asian American community” (Zia, p. 3).
“Our purpose wasn’t to replace Kaiser Hospital or the public health system, but rather to provide a model of basic health care that wasn’t being delivered and to do it in a way that was bilingual and culturally sensitive. Our plan was to use that as an entry to get into people’s lives and help organize something bigger” (Zia, p. 4).
Initially a one-office operation with all volunteers, in 2014 AHS offered primary health care services through more than 66 exam rooms in five sites, two dental clinics with 9 chairs, and served over 27,000 patients totaling over 117,000 patient visits annually. AHS was a federally qualified health center (FQHC) that required 51 percent of its board members to be patients. Its staff was fluent in English and over eleven Asian languages, including Cantonese, Vietnamese, Mandarin, Korean, Khmer (Cambodian), Mien, Mongolian, Tagalog, Lao, Burmese, and Karen (see Exhibit 5 for language preferences of AHS patients). Its annual budget of nearly $40 million included a unionized workforce of about 300 employees. AHS had seven office sites and three owned and operated properties. As part of 1,600 other community health centers throughout the United States, AHS was a member of a variety of regional and national networks.
Impact of the Affordable Care Act Five years after the historic passage of President Obama’s Affordable Care
Act (also referred to as “Obamacare” or the ACA) that required all US legal residents to have health coverage, the law had wide ranging impacts on health clinics. ACA ushered in a new era of health care: launching a primary care revolution, reinventing the delivery system to emphasize prevention and primary care, and pushing the health care system to deliver more accessible, patient- centered, and comprehensive care. FQHCs were projected to serve 40 million patients (Rosenbaum et al, 2010), save $122 billion in total health care costs, generate $54 billion in total economic activity, and create 284,000 new full-time equivalent jobs in local communities (NACHC, 2011).