Managing Healthcare Alliance Portfolios: A Theory-Based Typology

IntroductionOrganizations operating in dynamic industries are faced with a large amount of uncertainty regarding strategic options, and thus, must maintain the flexibility to respond to changes in the external environment and capitalize on the opportunities they provide (Teece, Pisano, & Schuen, 1997). Increasingly, organizations are managing environmental uncertainty and achieving strategic organizational goals by forming alliances with partners who offer strengths not maintained by the primary organization (Schreiner, Kale, & Corsten, 2009). Healthcare organizations, in particular, operate in an extremely dynamic environment due to frequent changes in the regulatory demands. The dynamism has never been more evident than with the recent passage of the Affordable Care Act. This act promotes an accountable care organization (ACO) model that encourages hospitals, physicians and other healthcare providers to collaborate to ensure cost effective delivery of patient care. Creating and maintaining these ACO alliances in addition to the many other non-ACO alliances in a cohesive and efficient manner is challenging as managers must account for not only the dynamics of each alliance, but also for how each dyadic relationship influences the overall portfolio of alliances (Wassmer, 2010). Healthcare alliances have historically not been equipped to manage these types of portfolios and to date no specific insight to healthcare strategic alliance portfolio management has been proffered.In order to address this opening in the literature this paper sets out to examine the phenomenon of healthcare alliance portfolios from two perspectives. First, we utilize resource dependence theory (RDT) (Pfeffer & Salancik, 1978) to derive the options of strategic alliances that healthcare administrators can form based on the value and congruence of the resources that the alliance relationship could provide. Second, we use the resource-based view (RBV) (Barney, 1991) to explicate the options that administrators can use to manage the coordination, communication, and bonding of the formed strategic alliances. We then integrate these two perspectives and explain how effective management of the individual dyadic relationships and the overall alliance portfolio is important for establishing a competitive strategic position within the healthcare industry.Analyzing portfolios of alliances requires hospital management to step back from the day-to-day management of transactional contracts and adopt a broader perspective to ensure that the overall portfolio configuration is congruent with the organization's strategic goals (Gulati, Lavie, & Singh, 2009). Many organizations enter into alliance relationships without considering the impact of the relationship on the overall portfolio or how the specific alliance improves the alignment of the overall portfolio of alliances with the organization's strategic plan (Bamford & Ernst, 2002). Healthcare reform and the surrounding legislation suggests the need for real and significant changes to the way healthcare is delivered, yet leaves healthcare leaders in a quandary as to how to make the necessary changes. In addition to the changing definitions of reform itself there is "a lack of knowledge and experience on the part of providers" (McClellan, McKethan, Lewis, Roski & Fisher, 2010 p.987) on the structure of the organization and the essential relationships necessary to implement the changes required or encouraged by the reform legislation. Similar to other organizational leaders, healthcare administrators may not fully consider how newly forged ACO alliances may contribute to their current alliance portfolio. With the ever-changing dynamic of the healthcare industry, not only the composition of the portfolio but also the management of the relationships is increasingly difficult. The national strategy for healthcare reform calls on ACOs to continue to examine the effectiveness of the relationships they create both within and outside the patient care area with an eye on clinical care and economic responsibility. …