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Intrapreneurship At DaVita HealthCare Partners

Solution Id Length Case Author Case Publisher
2032 1020 Words (5 Pages) Joseph B. Fuller, David J. Collis, Matthew Preble Harvard Business School : 315046
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DaVita is a parent company that operates businesses in the healthcare industry. DaVita Rx is one of the most prominent business ventures of DaVita. DaVita Rx is the market leader in the dialysis sector of the United States. The parent company has learned valuable lessons from the success of and the challenges faced by DaVita Rx. The management of the parent company is considering the transference of the learning from one company to another one. The case study analysis aims to answer these questions for the management. The report evaluates the key assumptions made by DaVita’s top management in devising and launching the business strategy. The case study analysis also takes into account the positive and negative reactions of venture capitalists concerning DaVita Rx’s performance. Finally, a performance evaluation of Rx is carried out taking concrete factors into account, as well as, key attributes of Paladina’s business model are discussed.

Following questions are answered in this case study solution:

  1. Introduction 

  2. Key Assumptions in Launching the Strategy 

  3. Venture Capitalists’ Reaction to Rx’s Performance

  4. Evaluation of Rx’s Performance 

  5. Attributes of Paladina’s Business Model 

  6. Conclusion 

Case Study Questions Answers

2. Key Assumptions in Launching the Strategy 

The management of Rx made four key assumptions while devising and launching the strategy:

  1. The first assumption is made by the administration is that improving access to the population during the early stage of the disease will drive down healthcare costs. The management of the company found a large proportion of the patients do not receive attention from their physician until their condition has grown in severity. Thus, improving early access to better healthcare will reduce the overall cost of the treatment. 

  2. The second assumption is the provision of the physician’s time can be improved by delegating the paperwork. The management of the company discovered an average doctor spend more significant time in filling the paperwork rather than looking after the patients. They assumed freeing up the time of the doctor from paperwork will increase the attention paid by a doctor to the patients. 

  3. The management assumed that improving the service provider will enable the new company to gain a significant market share. The administration reasoned patients are not happy with the quality of the service they receive with their current healthcare providers, and they would be eager to adopt a new service provider that will give greater attention. 

  4. The management also assumed the doctors would agree to a variable compensation in which a proportion of the payment will be calculated by a specific matrix; for instance, Net Promoter Score. 

3. Venture Capitalists’ Reaction to Rx’s Performance

There are three factors that venture capitalists would like about Rx’s performance and three factors they would fear. The three factors that investors would like are:

  1. The very rapid growth rate during the initial phase after launch

  2. High customer loyalty and customer satisfaction with the service. Customer churn is less than 1% which is very impressive for a healthcare service

  3. A homogenous organizational culture based around customer-service which makes for a sustainable competitive advantage 

The three factors that investors would fear are:

  1. There are losses on operations despite high revenues. In one year, Rx reported a loss of $1.3 billion

  2. The scalability of the services is weak. On rapid expansion, the profitability of the company turns into losses

  3. The key management positions in the company are held by employees from other established big healthcare companies. It is doubtful whether they can perform well at a startup  

4. Evaluation of Rx’s Performance 

DaVita Rx is a prominent business success based on key factors:

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