International Business Analysis: Baltimore Region Analysis
Baltimore Region Analysis
Prepared by:
March 3rd, 2014
International Business Strategy
EXECUTIVE SUMMARY
After discussing and identifying industries in Baltimore region for our project analysis, we chose higher education and healthcare as the industries for our analysis. As both of these industries are prominent worldwide with dynamic synergy and strategic alliances between the two, we felt higher education and healthcare would be a strong choice for the potential of global business expansion.
With Baltimore 's long history of higher education, coupled with one of the highest healthcare industry concentrations among major metropolitan Unites States, Baltimore …show more content…
is highly ranked globally as one of the top regions for healthcare (Economic Alliance of Greater Baltimore, n.d.). With Baltimore 's close proximity to Washington, DC and Philadelphia, the metropolitan region of Baltimore has a growing national economy supported by world class healthcare and education industries. The Greater Baltimore region has a very strong philanthropic community supporting the healthcare and education industries with private grants, which coupled with federal and state grants, provide a strong base for expansion and global strategic alliances.
Many of Baltimore 's healthcare industry strengths are deeply rooted in the some of the finest academic education industries. According to U.S. News & World Report LP (U.S. News & World Report LP., 2014), Baltimore has the third and thirty-seventh ranked medical schools in the country, allowing Baltimore to become one of the most prominent healthcare industries in the world. Leading Baltimore medical education, healthcare facilities and research colleges and hospitals include Johns Hopkins, and the University of Maryland Medical Center.
The Baltimore region 's thriving healthcare industry is not limited to private healthcare or academic medical colleges with hospitals associations.
Located in the proximity of Baltimore are many federal and state healthcare organizations. With Baltimore 's close proximity to Washington, DC, the Greater Baltimore and the metropolitan areas between Washington, DC corridor has several federal organizations including Department of Health and Human Services (DHHS), Centers for Medicare and Medicaid (CMS), and the National Institute of Health (NIH). NIH is the largest source of medical research funding in the world with 27 research facilities specializing in medical research. CMS located in Woodlawn, employs over five thousand employees, and has a large federal budget, including the administration of the Affordable Care Act (ACA), Medicare, Medicaid, and other healthcare federal …show more content…
groups.
According to the Economic Alliance of Greater Baltimore (Economic Alliance of Greater Baltimore, n.d.), the Greater Baltimore area is a global center for healthcare services. With 184,100 employed in the healthcare services industry, Baltimore has world class institutions and practitioners and is experiencing funding and expansion within the industry 's infrastructure. As both of these industries are prominent worldwide with dynamic synergy and strategic alliances between the two, therefore we felt higher education and healthcare would be a strong choice for the potential of global business expansion.
ANALYSIS
Baltimore Industry 1: Higher Education According to the Maryland Higher Education Commission, Maryland has 58 institutions of higher education.
These consist of a conglomerate of four year public and private colleges/universities, community colleges, and two year independent colleges. The oldest university in Maryland is St. John’s University founded in 1696 (A brief history of St. John 's College, n.d.). Washington College was founded in 1782 (College history, n.d.). Johns Hopkins University was added to the growing number of higher education facilities in Maryland in 1876 (A brief history of JHU, n.d.). Coppin State University was opened in 1900 specifically targeted at African American students (CSU history, n.d.). The Baltimore area’s rich higher education history has led it it’s being ranked number 4 in the country for the top metro areas with greatest number of advanced degrees and number 8 in metro areas with the most bachelor’s degrees according to the Economic Alliance of Greater
Baltimore. In this report, higher education industry will be defined as four year public and private colleges/universities, community colleges, and two year independent colleges in keeping with the higher education commission. Some the largest institutions in Baltimore are Johns Hopkins University, Loyola University of Maryland, Towson University, University of Maryland, University of Maryland University College (UMUC), and University of Maryland, Baltimore County (UMBC). With some of the leading names in higher education located in its confines, it is safe to say that Baltimore is one of the leaders in the higher education industry. According to U.S. News & World Report LP, Johns Hopkins University is ranked number 12 of all national universities. University of Maryland is ranked number 62 of all national universities. United States Naval Academy is ranked number 12 out of all national liberal arts colleges. Loyola University Maryland is ranked 5th of the northern regional universities. Mount St. Mary 's is ranked 20th of the northern regional universities. The University of Baltimore is ranked 26th of all national part-time law programs. U.S. News & World Report LP also lists the industry leaders. The top 5 out of all national universities are Princeton, Harvard, Yale, Columbia, and Sanford. The top 5 out of all national liberal arts colleges are Williams, Amherst, Swarthmore, Bowdoin, and Middlebury. The top 5 of the northern regional universities are Villanova, Providence College, Fairfield, Bentley, and the College of New Jersey. The top 5 out of all national part-time law programs are Georgetown, George Washington, Fordham, George Mason and the University of Connecticut.
Strengths of the industry are apparent from its statistics. Higher education is a large employer in Maryland. From 1995 to 2005 the number of full and part-time faculty at just community colleges and public universities increased from 13,898 to 18,480 (33%) according to the Maryland Higher Education Commission. Higher education institutions non-faculty employees increased from 14,813 to 18, 137 (22%) in the same time frame. Higher education is growing. Another sign that higher education is growing is the number of students in the system. Enrollment in higher education institutions has increased from 267, 097 (1995) to 310,720 (2005) which is 16% growth in students according to the Maryland Higher Education Commission. The commission also specifically list a 29% increase in full time undergrad program enrolment and a 37% increase in full time graduate program enrollment from 1995-2005. Some other Baltimore area strengths in higher education are the industries’ focus on military and higher education. At least 10 Baltimore area institutions have Veterans Resource Centers on campus. These centers tailor information specific to the needs of current military/veterans on campus. This could be information from how to fill out financial aid paper work, how to work with universities if you are deployed during a semester, or even finding housing or work in the area. Statistics also reveal some of the weaknesses of the Baltimore’s higher education system. In just the in state tuition of public 4 year institutions, the Maryland Higher Education Commission sites an increase in tuition from 1996-2006 of $3,587 to $6,876. This is a 92% increase in only ten years. While tuition all over the country has risen, Baltimore has a significant weakness in that its tuition is generally higher than the national average compared to other schools of the same status. The national average for 1996 was only $2,860 while the average for 2006 was only $5,491 according to, the Maryland Higher Education Commission. This 25.22% higher cost will deter some potential students while totally prohibiting others. In general, one of the weaknesses of higher education is that it can be very costly to provide higher education services; which in turn means that it is also very expensive for the consumer to receive higher education services. Another very important weakness is that it is nearly impossible for an entrepreneur to just start their own institution. This industry is highly regulated both internally, through educational organizations at a state level, and even at a federal level.
Baltimore Industry 2: Healthcare Some of the strengths that Baltimore’s healthcare industry possesses ties back to its strengths in the higher education industry. Baltimore has the 3rd and the 37th ranked medical schools in the country according to U.S. News & World Report LP. Having access to some of the country (if not the world’s) leading medical education and research allows the medical facilities in the Baltimore area to be the leaders in the healthcare industry.
Baltimore is home to the best hospital in the country- Johns Hopkins (Economic Alliance of Greater Baltimore, n.d.). The Economic Alliance of Greater Baltimore states that “Johns Hopkins has been ranked the nation’s top hospital 21 years in a row, propelled by number 1 rankings in 5 different specializations and top 5 rankings in 10 others.” Baltimore possesses the industry leader in healthcare with regards to hospitals. Seemingly, Baltimore’s healthcare industry has grown 24.7% since 2000 (Economic Alliance of Greater Baltimore, n.d.). Baltimore hospitals show some of their strengths by categories that they are national ranked in according to U.S. News & World Report LP. Shepard and Enoch Pratt Hospital is ranked at number 6 in the nation in the specialty area of psychiatry. MedStar Union Memorial Hospital is ranked at number 31 in the nation in the specialty area of orthopedics. MedStar Franklin Square Medical Center is ranked at number 31 in the nation in the specialty area of gastroenterology & GI surgery. University of Maryland Medical Center is ranked at number 39 in the nation in the specialty area of cancer, number 43 in ear, nose & throat, number 50 in gynecology, number 15 in nephrology, and number 27 in urology. Johns Hopkins is ranked at number 4 in the nation in the specialty area of cancer, number 4 in cardiology & heart surgery, number 4 in diabetes & endocrinology, number 1in ear, nose & throat, number 3 in gastroenterology & GI surgery, number 1 in geriatric, number 5 in gynecology, number 4 in nephrology, number 1 in neurology & neurosurgery, number 3 in ophthalmology, number 6 in orthopedics, number 2 in psychiatry, number 6 in pulmonology, number 1in rheumatology, and lastly number1 in urology. Baltimore is also home to Shock Trauma, the country’s first and only integrated trauma hospital to date. Shock Trauma was founded by Dr. Cowley who is viewed by many as the father of trauma care and coined the term “the Golden Hour” (About, 2014).
Baltimore’s strengths in healthcare are so obvious to the entire world that positions in these leading hospitals are highly desired. To get a residency or fellowship at Hopkins is the opportunity of a lifetime, and people come from all over the country and world to work in our hospitals.
That said, that revenue statistics of Baltimore are hospitals are at best bleak. Maryland is the only state in which all hospitals are state regulated. Reports claim that 42% of Maryland hospitals are losing money (Maryland Hospital Association, 2013). From 1998-2013, the aggregate hospital operating margins for Maryland dropped from 3.2% to 0.80% while the benchmark remained 2.75% (Maryland Hospital Association, 2013). However, the actual cost of treating a patient in a Maryland hospital in 4% below the national average (Maryland Hospital Association, 2013). In tandem these two statistics do not mesh and show potential ineffective operations. Maryland may have the best treatment capacities but the industry is spending money it is not able to recoup.
PORTER’S DIAMOND MODEL
Baltimore Industry 1: Higher Education
Factor conditions:
There are several factors that are contributing to the success of higher education in Baltimore area. The concentration of higher education institutions, research, and other institutions creates specialized skills and technology. Baltimore metropolitan area offer great opportunity for potential source of completive advantage and new join research and new projects developments. The world-renowned institution that is very successful in its research and advances is Johns Hopkins Medicine together with Johns Hopkins University. The combined resources of these diverse institutions enhance the quality of higher educational programs and services.
According to the Maryland Higher Education Commission “…one-third of its residents 25 and older have a bachelor’s degree or higher, which is the 4th highest percentage among all states.” The Johns Hopkins University is a world – renowned medical school and an affiliation with a prestigious music conservatory, the Peabody Institute. Loyola College offers a joint program in medical technology with Baltimore 's Mercy Medical Center. University of Baltimore and Towson University both on campus and online MBA program is the only AACSB-accredited MBA program in Baltimore. The Towson university is one the oldest and largest in the area, offering bachelor 's degrees in 57 fields and master 's degrees in 29 fields.
The University of Maryland offers professional programs in health and medical fields, social work, and law, and many more. At Morgan State University students can earn advanced degrees in architecture, city and regional planning, and urban education
Baltimore has one of the highest health care industry concentrations among major US metros with its with short distance to Washington DC and to the major states in the east coast of the United States.
Demand conditions:
Metropolitan Baltimore area is changing with the growing national economy. The greater Baltimore area is ranked in the top 20 in the nations key retail categories spurred by a revitalization of the City 's Inner Harbor as well as new shopping locations designed for a higher end clientele. This includes Harbor East, a shopping destination that includes high-end hotels and a thriving restaurant scene. The increasing number of new businesses have resulted not just increased revenues from 2013-2014 but also the awareness from surrounding areas. With a major casino business nearby and one opening next year Baltimore continues to establish itself as a major player in the entertainment scene. The increased revenues from these casinos and associated businesses will increase tax revenues and growth in the number of jobs.
Higher education in Maryland is highly supported by the number of educational grand programs, special funds, and either federal or state funds. These funds are design to support the higher education programs in the Baltimore metropolitan area.
Firm strategy, structure and rivalry:
The draw of higher education in Baltimore versus the surrounding areas can also be attributed to the lower cost of living. With a metropolitan area that rivals the neighbor to the south, Washington, D.C., Baltimore offers the same attractions and high quality of life at a reduced cost. According to its cost-of-living index, the website Expatistan shows that Baltimore is 27% less costly to live than Washington, D.C. with major expenses such as transportation and housing lower than 29% and 20% respectively in 2014. This lower living expense draws a younger crowd who, with their higher education, can establish roots within the City.
Related and supporting industries:
The key component for the higher education organization is the presence of supporting companies, organizations, and businesses. Some of the companies in the Baltimore area are on the Fortune 500 list of the largest companies in the United States. These companies include the U.S. Foodservice Inc., food distributor company; Black & Decker Corp., power tool company; and Constellation Energy, the utility holding company that owns Baltimore Gas & Electric Co.
Another very important component that is not just related but also very close connected to the higher education in the Baltimore area are health care industry and medical technology industry. There are 31 hospitals in the Baltimore, Maryland metropolitan area, which 17 of them are top ranked by the U.S. News Bet Hospitals 2013-14. University of Maryland Bio park is part of the growing community of high growth science companies and translational research centers. It offers sophisticated laboratory and office environment. In a last fiscal year, organization received $ 479.8 million in extramural funding, and more than $2 billion in the last four years, in areas including cancer, genomics, vaccines, neuroscience, vascular biology, HIV/AIDS, and regenerative medicine. The bio park is situated in the midst of a large regional bioscience cluster with a great location at the mid-point of the U.S East Coast life science corridor.
Baltimore Industry 2: Healthcare
Factor conditions:
The most prominent factor condition that leads to the continued success of the health service industry is the institutionalized development of highly specialized PHDs, medical doctors and professional nurses. Both Johns Hopkins School of Medicine and University of Maryland School of Medicine are located within Baltimore City limits and groom students to become residents, researchers and future doctors. This high concentration of medical knowledge makes Baltimore a natural candidate for a leading health services industry. In addition, to providing world class care, the Baltimore-Washington Metropolitan area is home to top tier research facilities sponsored by leading medical institutions. These competitive facilities develop innovative medical care tools, techniques and procedures that address the most pressing medical concerns both today and in the future.
As a result of highly competitive research environment and an abundance of scientists and medical professionals, Baltimore has been able to capitalize on its close proximity to the federal government in the form of research funding. The National Institute of Health (Bethesda, Maryland) is the largest source of medical research funding in the world. The organization is made up of 27 research installations that specialize in all areas of medical research, including but not limited to, general medical sciences (NIGMS), diabetes and digestive and kidney diseases (NIDDK) and Allergy and Infectious Diseases. (NIAID) In addition to grant funding, these research installations partner with local universities and private medical research firms to conduct basic, translational, and clinical research to develop new vaccines, therapeutics, and diagnostics.
The area is also home the Department of Health and Human Services (Woodlawn, Maryland) whose primary mission is providing health coverage for Americans via the Medicare program and The Affordable Health Care Act. As Maryland and the nation embarks upon the grand experiment that is nationalized health care, this agency will be front and center in policy making decisions as they relate to question such as who gets care, what services are provided, medical costs and insurance coverage. Additionally, the agency conducts its own public heath, biomedical and human services research to improve care. The agency also partners with local universities and research facilities through research grants.
Similarly there are several other federal agencies headquartered locally that promote public health via research grants and partnerships, such as the Food and Drug Administration, Center for Disease Control, Centers for Medicare & Medicaid, Administration for Children and Families and the National Cancer institute.
Demand condition:
Baltimore’s health care industry has an exacting client constituency. Global demand for expert care is pulled to the Baltimore region because of our world class institutions. Baltimore based facilities rank globally in the top three in several medical specializations including but not limited to Ear Nose Throat, Gastroenterology & GI Surgery, Geriatrics, Neurology & Neurosurgery, Ophthalmology, Psychiatry, Rheumatology and Urology. International patients travel to Baltimore from South America, Asia, Europe and the Middle East making Baltimore one of the most popular global destinations for health care services. Wealthy patients come from around the world come to Baltimore hospitals because they are best in class. Johns Hopkins created Johns Hopkins International, a specialized culturally sensitive division that deals exclusively with foreign patients. Johns Hopkins International employees speak up to 20 languages are trained in intercultural relations to provide the best care to these cash paying clients. . For example consider the following excerpt from a Baltimore Magazine interview with Raffaella Molteni, the chief administrative officer at JHI:
“…there are times where you cannot use the word ‘cancer’ right away, particularly with patients from the Middle East. “At one point, the patient has to know, to make appropriate decisions regarding the care, but when is the time to let the patient know? You need to be a cultural broker between the physicians and medical staff and the family.”
This increased sensitivity to the cultural needs of international patients gives Johns Hopkins International a competitive advantage beyond the excellent care they provide. The firm strategy, structure and rivalry:
Health services firms can source capital, goods, information and technology from all over the world, however, the economic clustering of the industry in the greater Baltimore Washington Metropolitan area has made our health industry world class. Public-private partnerships, at the state and federal level, contribute to the increased competitiveness of the industry. The health care industry employees more people in the Maryland than any other industry. The top ten employers are Johns Hopkins, National Institutes of Health, MedStar Heath, University of Maryland Medical System, Adventist Health Care, Life Bridge, National Naval Medical Center, GBMC, Washington CO Health System, Peninsula Regional Medical Center, Quest Diagnostics. These medical service firms attract top talent from around the world and compete on the basis of specialized services and advanced research.
As noted, profit margins in the health services industry are slim. In part, this could be due to the high degree of regulation in the industry. Historically, Maryland was the first state to and only state to move to an all-payer hospital payment system. Meaning that hospitals can compete on price by setting their own pricing for serveries provided, however, they are not able to vary the price charged on a per patient basis. Due to overwhelming increases health care costs relative to incomes, many hospitals struggle to recoup costs as patients rarely have the ability to pay for the full costs of services. These losses are cushioned by federal and state benefit programs.
While regulation may be financially constraining, it is not without its benefits. In a position paper entitled Completion V Regulation that appeared in Project HOPE’s monthly publication, Health Affairs, “regulation has had a greater impact on hospital production processes, primarily by controlling expenditures per discharge and per day, while the impact of competition has been greater on utilization, primarily through lowering the number of discharges per capita.” This would lead one to conclude that regulation forces hospitals to treat patients more efficiently whereby forgoing unnecessary testing as well as reducing hospital stays is given priority over profits.
Related and supporting industries:
The most important and directly related and supporting industry to the health services industry can be attributed to the higher education infrastructure that supports critical research initiatives and produces the highest concentration of PhDs working in health, biological and mathematical sciences. However, because the industry is so dominate in the area, the level of market integration that has developed to support the health services industry is much deeper and extends beyond mere education. The Baltimore Washington Metropolitan area boasts a thriving market that includes innovative industries such as medical technology, biomedical research, device manufacturing, health care support & outpatient facilities and uniform servicing companies.
According to manta.com, Maryland is home to 25 medical equipment companies with revenues in excess of $20 Million. Allegiance Healthcare Group is a privately owned Columbia Maryland base wholesaler of medical equipment and supplies. Maryland is home to one hundred and two (102) biopharmaceutical companies that are developing new innovative treatments and devices that range from advanced respiratory therapy to microbial genome analysis.
The market relationships extend beyond the healthcare industry. For example, Chase Street Properties is a firm located in Baltimore Maryland that was created to support Johns Hopkins International. The firm contracts with JHI to provide the family members of sick international patients with temporary lodging in fully furnished executive apartments downtown. This premium services includes commentary transportation to and from Baltimore Washington International Airports as well as car services around town and errands.
INDUSTRY WITH GREATEST POTENTIAL
After great group discussion, hypothesizing, and analysis our group is going to take a unique stance on the industry. We feel that the need for better medical care goes hand in hand with the need for education. A hospital cannot run without trained and licensed professionals. The demand exists already, the physical resources of buildings and equipment are not hard to supply, however the human capital will be vital to this marriage. Universities provide that human capital in doctors, techs, accountants, nurses, pharmacists, managers, etc. In short, we would propose a merging of two industries together given their previous connections in Maryland- i.e. Hopkins Hospital and University or University of Maryland Hospital and University.
CONCLUSIONS AND THOUGHTS Healthcare and education industries have spurred creativity, innovation, and growth in the Greater Baltimore area. With the strong and innovative healthcare and education industries, Baltimore has attracted and supported industries such as biosciences, health insurance, Information Technology, and healthcare finance. Innovative industries such as medical technology including the manufacturing of medical devices have been supported by the healthcare and education industries. Cyber security is another industry that is supported by the two industries, as cyber crime and security of personal banking and health information is of international concern.
What other questions at this point in your three-part project to move forward Further questions that we feel we need to answer to move forward in our analysis of another country of the world include a focused analysis of Chile. In discussing our thoughts about a country/region for our team to study for part two of the diagnostic report, we decided to chose Chile, with the main location of Santiago.
The interest in Chile was due to Jennifer and Greta having participated in the University of Baltimore, Santiago, Chile Global Field Study program in January, 2014. We focused on the growth potentials for industries in the U.S. and Chile. While Chile still has an emerging economy, it has one of the more stable governments in South America.
Would we pursue a joint venture with the industries counterpart in Chile? This is a question we are researching at this point. During our Chile field study, we visited several successful Chile businesses including SODIMAC Chile, Oracle, DuPont, StartUpChile, Wal-Mart Chile, and Santa Rita Winery. Additionally, we toured Puerto Valparaiso, meeting with the port authority officials. Puerto Valparaiso is Chile 's major seaport and toured the large shipping import and export facilities. The company executives shared their personal and corporate business strategies, successes and challenges. At the University of Fini Terre, we met several prominent professors, prominent university administrators, and business executives.
We are researching the feasibility of a startup venture on our own. Greta and Jennifer have met the key executives of StartUpChile, a Chile sponsored organization promoting entrepreneurial start-up companies in Chile. Pricing strategies would be an important part of our research. We will be researching whether the education industry would offer certificates as well as/instead of degrees, and if a higher education system in Chile such as the graduate education online platform would be feasible. The concept of a teaching medical facility was of interest to our team. The Johns Hopkins Hospital has long been associated with the Johns Hopkins University as a medical teaching hospital with the university, offering a highly sought after medical degrees by students. The University of Maryland Medical Center in association with the University of Maryland university system of colleges also supports as a medical teaching school. Additionally, local Greater Baltimore four year colleges including Stevenson University and two year community colleges offer programs in medical careers including premed and nursing. Greta and Jennifer had the unique opportunity to see firsthand the overwhelming humanitarian need for a better healthcare system and affordable education system in Chile. While there is a very wealthy population in Chile, there are many challenges for those underserved populations. Santiago has a large population of six million people and will need a strong education system coupled with an efficient healthcare system for continued economic growth. We feel the best way to raise people out of poverty is through higher education and good healthcare.
What are our thoughts about a country/region to study for part two of the diagnostic report In discussing our thoughts about a country/region for our team to study for part two of the diagnostic report, our team decided to study Chile, with the main location of Santiago. In traveling to Chile, Jennifer and Greta had several meetings with prominent Chile company executives as part of the field study program
Our team is interested in the potential for merging these two industries together given their previous connections in Maryland, such as Johns Hopkins hospital with the Johns Hopkins University. There are several dynamic synergies and competitive advantages between the Greater Baltimore 's healthcare and education industries that may offer a robust and economic strategic business alliance with Chile.
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Prepared by:
March 3rd, 2014
International Business Strategy
EXECUTIVE SUMMARY
After discussing and identifying industries in Baltimore region for our project analysis, we chose higher education and healthcare as the industries for our analysis. As both of these industries are prominent worldwide with dynamic synergy and strategic alliances between the two, we felt higher education and healthcare would be a strong choice for the potential of global business expansion.
With Baltimore 's long history of higher education, coupled with one of the highest healthcare industry concentrations among major metropolitan Unites States, Baltimore …show more content…
is highly ranked globally as one of the top regions for healthcare (Economic Alliance of Greater Baltimore, n.d.). With Baltimore 's close proximity to Washington, DC and Philadelphia, the metropolitan region of Baltimore has a growing national economy supported by world class healthcare and education industries. The Greater Baltimore region has a very strong philanthropic community supporting the healthcare and education industries with private grants, which coupled with federal and state grants, provide a strong base for expansion and global strategic alliances.
Many of Baltimore 's healthcare industry strengths are deeply rooted in the some of the finest academic education industries. According to U.S. News & World Report LP (U.S. News & World Report LP., 2014), Baltimore has the third and thirty-seventh ranked medical schools in the country, allowing Baltimore to become one of the most prominent healthcare industries in the world. Leading Baltimore medical education, healthcare facilities and research colleges and hospitals include Johns Hopkins, and the University of Maryland Medical Center.
The Baltimore region 's thriving healthcare industry is not limited to private healthcare or academic medical colleges with hospitals associations.
Located in the proximity of Baltimore are many federal and state healthcare organizations. With Baltimore 's close proximity to Washington, DC, the Greater Baltimore and the metropolitan areas between Washington, DC corridor has several federal organizations including Department of Health and Human Services (DHHS), Centers for Medicare and Medicaid (CMS), and the National Institute of Health (NIH). NIH is the largest source of medical research funding in the world with 27 research facilities specializing in medical research. CMS located in Woodlawn, employs over five thousand employees, and has a large federal budget, including the administration of the Affordable Care Act (ACA), Medicare, Medicaid, and other healthcare federal …show more content…
groups.
According to the Economic Alliance of Greater Baltimore (Economic Alliance of Greater Baltimore, n.d.), the Greater Baltimore area is a global center for healthcare services. With 184,100 employed in the healthcare services industry, Baltimore has world class institutions and practitioners and is experiencing funding and expansion within the industry 's infrastructure. As both of these industries are prominent worldwide with dynamic synergy and strategic alliances between the two, therefore we felt higher education and healthcare would be a strong choice for the potential of global business expansion.
ANALYSIS
Baltimore Industry 1: Higher Education According to the Maryland Higher Education Commission, Maryland has 58 institutions of higher education.
These consist of a conglomerate of four year public and private colleges/universities, community colleges, and two year independent colleges. The oldest university in Maryland is St. John’s University founded in 1696 (A brief history of St. John 's College, n.d.). Washington College was founded in 1782 (College history, n.d.). Johns Hopkins University was added to the growing number of higher education facilities in Maryland in 1876 (A brief history of JHU, n.d.). Coppin State University was opened in 1900 specifically targeted at African American students (CSU history, n.d.). The Baltimore area’s rich higher education history has led it it’s being ranked number 4 in the country for the top metro areas with greatest number of advanced degrees and number 8 in metro areas with the most bachelor’s degrees according to the Economic Alliance of Greater
Baltimore. In this report, higher education industry will be defined as four year public and private colleges/universities, community colleges, and two year independent colleges in keeping with the higher education commission. Some the largest institutions in Baltimore are Johns Hopkins University, Loyola University of Maryland, Towson University, University of Maryland, University of Maryland University College (UMUC), and University of Maryland, Baltimore County (UMBC). With some of the leading names in higher education located in its confines, it is safe to say that Baltimore is one of the leaders in the higher education industry. According to U.S. News & World Report LP, Johns Hopkins University is ranked number 12 of all national universities. University of Maryland is ranked number 62 of all national universities. United States Naval Academy is ranked number 12 out of all national liberal arts colleges. Loyola University Maryland is ranked 5th of the northern regional universities. Mount St. Mary 's is ranked 20th of the northern regional universities. The University of Baltimore is ranked 26th of all national part-time law programs. U.S. News & World Report LP also lists the industry leaders. The top 5 out of all national universities are Princeton, Harvard, Yale, Columbia, and Sanford. The top 5 out of all national liberal arts colleges are Williams, Amherst, Swarthmore, Bowdoin, and Middlebury. The top 5 of the northern regional universities are Villanova, Providence College, Fairfield, Bentley, and the College of New Jersey. The top 5 out of all national part-time law programs are Georgetown, George Washington, Fordham, George Mason and the University of Connecticut.
Strengths of the industry are apparent from its statistics. Higher education is a large employer in Maryland. From 1995 to 2005 the number of full and part-time faculty at just community colleges and public universities increased from 13,898 to 18,480 (33%) according to the Maryland Higher Education Commission. Higher education institutions non-faculty employees increased from 14,813 to 18, 137 (22%) in the same time frame. Higher education is growing. Another sign that higher education is growing is the number of students in the system. Enrollment in higher education institutions has increased from 267, 097 (1995) to 310,720 (2005) which is 16% growth in students according to the Maryland Higher Education Commission. The commission also specifically list a 29% increase in full time undergrad program enrolment and a 37% increase in full time graduate program enrollment from 1995-2005. Some other Baltimore area strengths in higher education are the industries’ focus on military and higher education. At least 10 Baltimore area institutions have Veterans Resource Centers on campus. These centers tailor information specific to the needs of current military/veterans on campus. This could be information from how to fill out financial aid paper work, how to work with universities if you are deployed during a semester, or even finding housing or work in the area. Statistics also reveal some of the weaknesses of the Baltimore’s higher education system. In just the in state tuition of public 4 year institutions, the Maryland Higher Education Commission sites an increase in tuition from 1996-2006 of $3,587 to $6,876. This is a 92% increase in only ten years. While tuition all over the country has risen, Baltimore has a significant weakness in that its tuition is generally higher than the national average compared to other schools of the same status. The national average for 1996 was only $2,860 while the average for 2006 was only $5,491 according to, the Maryland Higher Education Commission. This 25.22% higher cost will deter some potential students while totally prohibiting others. In general, one of the weaknesses of higher education is that it can be very costly to provide higher education services; which in turn means that it is also very expensive for the consumer to receive higher education services. Another very important weakness is that it is nearly impossible for an entrepreneur to just start their own institution. This industry is highly regulated both internally, through educational organizations at a state level, and even at a federal level.
Baltimore Industry 2: Healthcare Some of the strengths that Baltimore’s healthcare industry possesses ties back to its strengths in the higher education industry. Baltimore has the 3rd and the 37th ranked medical schools in the country according to U.S. News & World Report LP. Having access to some of the country (if not the world’s) leading medical education and research allows the medical facilities in the Baltimore area to be the leaders in the healthcare industry.
Baltimore is home to the best hospital in the country- Johns Hopkins (Economic Alliance of Greater Baltimore, n.d.). The Economic Alliance of Greater Baltimore states that “Johns Hopkins has been ranked the nation’s top hospital 21 years in a row, propelled by number 1 rankings in 5 different specializations and top 5 rankings in 10 others.” Baltimore possesses the industry leader in healthcare with regards to hospitals. Seemingly, Baltimore’s healthcare industry has grown 24.7% since 2000 (Economic Alliance of Greater Baltimore, n.d.). Baltimore hospitals show some of their strengths by categories that they are national ranked in according to U.S. News & World Report LP. Shepard and Enoch Pratt Hospital is ranked at number 6 in the nation in the specialty area of psychiatry. MedStar Union Memorial Hospital is ranked at number 31 in the nation in the specialty area of orthopedics. MedStar Franklin Square Medical Center is ranked at number 31 in the nation in the specialty area of gastroenterology & GI surgery. University of Maryland Medical Center is ranked at number 39 in the nation in the specialty area of cancer, number 43 in ear, nose & throat, number 50 in gynecology, number 15 in nephrology, and number 27 in urology. Johns Hopkins is ranked at number 4 in the nation in the specialty area of cancer, number 4 in cardiology & heart surgery, number 4 in diabetes & endocrinology, number 1in ear, nose & throat, number 3 in gastroenterology & GI surgery, number 1 in geriatric, number 5 in gynecology, number 4 in nephrology, number 1 in neurology & neurosurgery, number 3 in ophthalmology, number 6 in orthopedics, number 2 in psychiatry, number 6 in pulmonology, number 1in rheumatology, and lastly number1 in urology. Baltimore is also home to Shock Trauma, the country’s first and only integrated trauma hospital to date. Shock Trauma was founded by Dr. Cowley who is viewed by many as the father of trauma care and coined the term “the Golden Hour” (About, 2014).
Baltimore’s strengths in healthcare are so obvious to the entire world that positions in these leading hospitals are highly desired. To get a residency or fellowship at Hopkins is the opportunity of a lifetime, and people come from all over the country and world to work in our hospitals.
That said, that revenue statistics of Baltimore are hospitals are at best bleak. Maryland is the only state in which all hospitals are state regulated. Reports claim that 42% of Maryland hospitals are losing money (Maryland Hospital Association, 2013). From 1998-2013, the aggregate hospital operating margins for Maryland dropped from 3.2% to 0.80% while the benchmark remained 2.75% (Maryland Hospital Association, 2013). However, the actual cost of treating a patient in a Maryland hospital in 4% below the national average (Maryland Hospital Association, 2013). In tandem these two statistics do not mesh and show potential ineffective operations. Maryland may have the best treatment capacities but the industry is spending money it is not able to recoup.
PORTER’S DIAMOND MODEL
Baltimore Industry 1: Higher Education
Factor conditions:
There are several factors that are contributing to the success of higher education in Baltimore area. The concentration of higher education institutions, research, and other institutions creates specialized skills and technology. Baltimore metropolitan area offer great opportunity for potential source of completive advantage and new join research and new projects developments. The world-renowned institution that is very successful in its research and advances is Johns Hopkins Medicine together with Johns Hopkins University. The combined resources of these diverse institutions enhance the quality of higher educational programs and services.
According to the Maryland Higher Education Commission “…one-third of its residents 25 and older have a bachelor’s degree or higher, which is the 4th highest percentage among all states.” The Johns Hopkins University is a world – renowned medical school and an affiliation with a prestigious music conservatory, the Peabody Institute. Loyola College offers a joint program in medical technology with Baltimore 's Mercy Medical Center. University of Baltimore and Towson University both on campus and online MBA program is the only AACSB-accredited MBA program in Baltimore. The Towson university is one the oldest and largest in the area, offering bachelor 's degrees in 57 fields and master 's degrees in 29 fields.
The University of Maryland offers professional programs in health and medical fields, social work, and law, and many more. At Morgan State University students can earn advanced degrees in architecture, city and regional planning, and urban education
Baltimore has one of the highest health care industry concentrations among major US metros with its with short distance to Washington DC and to the major states in the east coast of the United States.
Demand conditions:
Metropolitan Baltimore area is changing with the growing national economy. The greater Baltimore area is ranked in the top 20 in the nations key retail categories spurred by a revitalization of the City 's Inner Harbor as well as new shopping locations designed for a higher end clientele. This includes Harbor East, a shopping destination that includes high-end hotels and a thriving restaurant scene. The increasing number of new businesses have resulted not just increased revenues from 2013-2014 but also the awareness from surrounding areas. With a major casino business nearby and one opening next year Baltimore continues to establish itself as a major player in the entertainment scene. The increased revenues from these casinos and associated businesses will increase tax revenues and growth in the number of jobs.
Higher education in Maryland is highly supported by the number of educational grand programs, special funds, and either federal or state funds. These funds are design to support the higher education programs in the Baltimore metropolitan area.
Firm strategy, structure and rivalry:
The draw of higher education in Baltimore versus the surrounding areas can also be attributed to the lower cost of living. With a metropolitan area that rivals the neighbor to the south, Washington, D.C., Baltimore offers the same attractions and high quality of life at a reduced cost. According to its cost-of-living index, the website Expatistan shows that Baltimore is 27% less costly to live than Washington, D.C. with major expenses such as transportation and housing lower than 29% and 20% respectively in 2014. This lower living expense draws a younger crowd who, with their higher education, can establish roots within the City.
Related and supporting industries:
The key component for the higher education organization is the presence of supporting companies, organizations, and businesses. Some of the companies in the Baltimore area are on the Fortune 500 list of the largest companies in the United States. These companies include the U.S. Foodservice Inc., food distributor company; Black & Decker Corp., power tool company; and Constellation Energy, the utility holding company that owns Baltimore Gas & Electric Co.
Another very important component that is not just related but also very close connected to the higher education in the Baltimore area are health care industry and medical technology industry. There are 31 hospitals in the Baltimore, Maryland metropolitan area, which 17 of them are top ranked by the U.S. News Bet Hospitals 2013-14. University of Maryland Bio park is part of the growing community of high growth science companies and translational research centers. It offers sophisticated laboratory and office environment. In a last fiscal year, organization received $ 479.8 million in extramural funding, and more than $2 billion in the last four years, in areas including cancer, genomics, vaccines, neuroscience, vascular biology, HIV/AIDS, and regenerative medicine. The bio park is situated in the midst of a large regional bioscience cluster with a great location at the mid-point of the U.S East Coast life science corridor.
Baltimore Industry 2: Healthcare
Factor conditions:
The most prominent factor condition that leads to the continued success of the health service industry is the institutionalized development of highly specialized PHDs, medical doctors and professional nurses. Both Johns Hopkins School of Medicine and University of Maryland School of Medicine are located within Baltimore City limits and groom students to become residents, researchers and future doctors. This high concentration of medical knowledge makes Baltimore a natural candidate for a leading health services industry. In addition, to providing world class care, the Baltimore-Washington Metropolitan area is home to top tier research facilities sponsored by leading medical institutions. These competitive facilities develop innovative medical care tools, techniques and procedures that address the most pressing medical concerns both today and in the future.
As a result of highly competitive research environment and an abundance of scientists and medical professionals, Baltimore has been able to capitalize on its close proximity to the federal government in the form of research funding. The National Institute of Health (Bethesda, Maryland) is the largest source of medical research funding in the world. The organization is made up of 27 research installations that specialize in all areas of medical research, including but not limited to, general medical sciences (NIGMS), diabetes and digestive and kidney diseases (NIDDK) and Allergy and Infectious Diseases. (NIAID) In addition to grant funding, these research installations partner with local universities and private medical research firms to conduct basic, translational, and clinical research to develop new vaccines, therapeutics, and diagnostics.
The area is also home the Department of Health and Human Services (Woodlawn, Maryland) whose primary mission is providing health coverage for Americans via the Medicare program and The Affordable Health Care Act. As Maryland and the nation embarks upon the grand experiment that is nationalized health care, this agency will be front and center in policy making decisions as they relate to question such as who gets care, what services are provided, medical costs and insurance coverage. Additionally, the agency conducts its own public heath, biomedical and human services research to improve care. The agency also partners with local universities and research facilities through research grants.
Similarly there are several other federal agencies headquartered locally that promote public health via research grants and partnerships, such as the Food and Drug Administration, Center for Disease Control, Centers for Medicare & Medicaid, Administration for Children and Families and the National Cancer institute.
Demand condition:
Baltimore’s health care industry has an exacting client constituency. Global demand for expert care is pulled to the Baltimore region because of our world class institutions. Baltimore based facilities rank globally in the top three in several medical specializations including but not limited to Ear Nose Throat, Gastroenterology & GI Surgery, Geriatrics, Neurology & Neurosurgery, Ophthalmology, Psychiatry, Rheumatology and Urology. International patients travel to Baltimore from South America, Asia, Europe and the Middle East making Baltimore one of the most popular global destinations for health care services. Wealthy patients come from around the world come to Baltimore hospitals because they are best in class. Johns Hopkins created Johns Hopkins International, a specialized culturally sensitive division that deals exclusively with foreign patients. Johns Hopkins International employees speak up to 20 languages are trained in intercultural relations to provide the best care to these cash paying clients. . For example consider the following excerpt from a Baltimore Magazine interview with Raffaella Molteni, the chief administrative officer at JHI:
“…there are times where you cannot use the word ‘cancer’ right away, particularly with patients from the Middle East. “At one point, the patient has to know, to make appropriate decisions regarding the care, but when is the time to let the patient know? You need to be a cultural broker between the physicians and medical staff and the family.”
This increased sensitivity to the cultural needs of international patients gives Johns Hopkins International a competitive advantage beyond the excellent care they provide. The firm strategy, structure and rivalry:
Health services firms can source capital, goods, information and technology from all over the world, however, the economic clustering of the industry in the greater Baltimore Washington Metropolitan area has made our health industry world class. Public-private partnerships, at the state and federal level, contribute to the increased competitiveness of the industry. The health care industry employees more people in the Maryland than any other industry. The top ten employers are Johns Hopkins, National Institutes of Health, MedStar Heath, University of Maryland Medical System, Adventist Health Care, Life Bridge, National Naval Medical Center, GBMC, Washington CO Health System, Peninsula Regional Medical Center, Quest Diagnostics. These medical service firms attract top talent from around the world and compete on the basis of specialized services and advanced research.
As noted, profit margins in the health services industry are slim. In part, this could be due to the high degree of regulation in the industry. Historically, Maryland was the first state to and only state to move to an all-payer hospital payment system. Meaning that hospitals can compete on price by setting their own pricing for serveries provided, however, they are not able to vary the price charged on a per patient basis. Due to overwhelming increases health care costs relative to incomes, many hospitals struggle to recoup costs as patients rarely have the ability to pay for the full costs of services. These losses are cushioned by federal and state benefit programs.
While regulation may be financially constraining, it is not without its benefits. In a position paper entitled Completion V Regulation that appeared in Project HOPE’s monthly publication, Health Affairs, “regulation has had a greater impact on hospital production processes, primarily by controlling expenditures per discharge and per day, while the impact of competition has been greater on utilization, primarily through lowering the number of discharges per capita.” This would lead one to conclude that regulation forces hospitals to treat patients more efficiently whereby forgoing unnecessary testing as well as reducing hospital stays is given priority over profits.
Related and supporting industries:
The most important and directly related and supporting industry to the health services industry can be attributed to the higher education infrastructure that supports critical research initiatives and produces the highest concentration of PhDs working in health, biological and mathematical sciences. However, because the industry is so dominate in the area, the level of market integration that has developed to support the health services industry is much deeper and extends beyond mere education. The Baltimore Washington Metropolitan area boasts a thriving market that includes innovative industries such as medical technology, biomedical research, device manufacturing, health care support & outpatient facilities and uniform servicing companies.
According to manta.com, Maryland is home to 25 medical equipment companies with revenues in excess of $20 Million. Allegiance Healthcare Group is a privately owned Columbia Maryland base wholesaler of medical equipment and supplies. Maryland is home to one hundred and two (102) biopharmaceutical companies that are developing new innovative treatments and devices that range from advanced respiratory therapy to microbial genome analysis.
The market relationships extend beyond the healthcare industry. For example, Chase Street Properties is a firm located in Baltimore Maryland that was created to support Johns Hopkins International. The firm contracts with JHI to provide the family members of sick international patients with temporary lodging in fully furnished executive apartments downtown. This premium services includes commentary transportation to and from Baltimore Washington International Airports as well as car services around town and errands.
INDUSTRY WITH GREATEST POTENTIAL
After great group discussion, hypothesizing, and analysis our group is going to take a unique stance on the industry. We feel that the need for better medical care goes hand in hand with the need for education. A hospital cannot run without trained and licensed professionals. The demand exists already, the physical resources of buildings and equipment are not hard to supply, however the human capital will be vital to this marriage. Universities provide that human capital in doctors, techs, accountants, nurses, pharmacists, managers, etc. In short, we would propose a merging of two industries together given their previous connections in Maryland- i.e. Hopkins Hospital and University or University of Maryland Hospital and University.
CONCLUSIONS AND THOUGHTS Healthcare and education industries have spurred creativity, innovation, and growth in the Greater Baltimore area. With the strong and innovative healthcare and education industries, Baltimore has attracted and supported industries such as biosciences, health insurance, Information Technology, and healthcare finance. Innovative industries such as medical technology including the manufacturing of medical devices have been supported by the healthcare and education industries. Cyber security is another industry that is supported by the two industries, as cyber crime and security of personal banking and health information is of international concern.
What other questions at this point in your three-part project to move forward Further questions that we feel we need to answer to move forward in our analysis of another country of the world include a focused analysis of Chile. In discussing our thoughts about a country/region for our team to study for part two of the diagnostic report, we decided to chose Chile, with the main location of Santiago.
The interest in Chile was due to Jennifer and Greta having participated in the University of Baltimore, Santiago, Chile Global Field Study program in January, 2014. We focused on the growth potentials for industries in the U.S. and Chile. While Chile still has an emerging economy, it has one of the more stable governments in South America.
Would we pursue a joint venture with the industries counterpart in Chile? This is a question we are researching at this point. During our Chile field study, we visited several successful Chile businesses including SODIMAC Chile, Oracle, DuPont, StartUpChile, Wal-Mart Chile, and Santa Rita Winery. Additionally, we toured Puerto Valparaiso, meeting with the port authority officials. Puerto Valparaiso is Chile 's major seaport and toured the large shipping import and export facilities. The company executives shared their personal and corporate business strategies, successes and challenges. At the University of Fini Terre, we met several prominent professors, prominent university administrators, and business executives.
We are researching the feasibility of a startup venture on our own. Greta and Jennifer have met the key executives of StartUpChile, a Chile sponsored organization promoting entrepreneurial start-up companies in Chile. Pricing strategies would be an important part of our research. We will be researching whether the education industry would offer certificates as well as/instead of degrees, and if a higher education system in Chile such as the graduate education online platform would be feasible. The concept of a teaching medical facility was of interest to our team. The Johns Hopkins Hospital has long been associated with the Johns Hopkins University as a medical teaching hospital with the university, offering a highly sought after medical degrees by students. The University of Maryland Medical Center in association with the University of Maryland university system of colleges also supports as a medical teaching school. Additionally, local Greater Baltimore four year colleges including Stevenson University and two year community colleges offer programs in medical careers including premed and nursing. Greta and Jennifer had the unique opportunity to see firsthand the overwhelming humanitarian need for a better healthcare system and affordable education system in Chile. While there is a very wealthy population in Chile, there are many challenges for those underserved populations. Santiago has a large population of six million people and will need a strong education system coupled with an efficient healthcare system for continued economic growth. We feel the best way to raise people out of poverty is through higher education and good healthcare.
What are our thoughts about a country/region to study for part two of the diagnostic report In discussing our thoughts about a country/region for our team to study for part two of the diagnostic report, our team decided to study Chile, with the main location of Santiago. In traveling to Chile, Jennifer and Greta had several meetings with prominent Chile company executives as part of the field study program
Our team is interested in the potential for merging these two industries together given their previous connections in Maryland, such as Johns Hopkins hospital with the Johns Hopkins University. There are several dynamic synergies and competitive advantages between the Greater Baltimore 's healthcare and education industries that may offer a robust and economic strategic business alliance with Chile.
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