In Taiwan, many clinics and hospitals have struggled to survive since the implementation of nationalized health care insurance. According to the recent health care insurance policy, a hospitals¡¦ revenue is based on the number of patients treated. For small-scale clinics and hospitals, it is hard to compete with the large medical centers because: first, the clinics are limited to its financial strength, staff, and equipment; second, the co-payment of medical service in mid and small-scale hospitals is not much more inexpensive than in the large medical centers; third, the patient¡¦s referral program is not well established. In order to survive, some small clinics start to form an alliance and provide more versatile service to their patients. By doing so, the hospitals are able to cut down cost, operate more efficiently, and ease the financial crisis. In this research, we focus on local hospitals and their strategic partners to study the limitations and difficulties that the hospitals confront in the current health care environment; the hospitals¡¦ advantages and opportunities, the disadvantage and potential crisis of the hospitals; and the key factors of success of the hospitals. The results show that without changing the ownership and management team, the hospitals adopt vertical alliance. Such alliance includes patient¡¦s referral program, staff training, technical support, information exchanging and sharing, and centralized purchasing of medical products and equipment. Above all, the patient¡¦s referral program is the most important plan. The key factors of success of the hospitals are several. First, before the implementations of nationalized health care insurance, some types of alliances have existed among hospitals and clinics. Next, when setting up new clinics, they can become productive in a short period of time by obtaining resources from their own hospitals and duplicating their successful model based on past experiences. They form cross ownership and thus they are not only familiar with the operation but also share the same business version. Also, centralizing patients who need surgical operation in one hospital help cut down the cost. Finally, setting up new LASIK center especially for those LASIK patients prefer superior quality service and are willing to pay at their own expense.

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