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Business Strategy - St. John's University


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									I. Introduction
A. Executive Summary
Company Description

RR Donnelley is a premier printing and business service provider that serves multinational
clients in publishing, advertising, retail, technology, healthcare, and other industries.

Healthcare Industry Analysis

The healthcare industry as a whole is a major contributor to the economy. Hospitals account for
a significant portion of the healthcare industries total contribution to the United State’s GDP.
Due to current economic conditions, hospitals are facing major difficulties. Traditional sources
of credit and revenue such as: financial loans, patient revenue, and charitable donations, have
become very limited. Due to the financial difficulties that the hospitals are currently facing, we
feel that this is the perfect time for RR Donnelley to penetrate this market, especially if they
offer products and services in a manner different from their competitors.


The objective of this report is to provide a strategic plan for RR Donnelley to penetrate the
healthcare industry in the NY/Long Island region. In this report, we will first evaluate your
current position in this market, and then make three recommendations that will help RR you
increase your sales and market share in this industry. By the end of the report, we will illustrate
how the implementation of these recommendations will improve your overall sales and
visibility in the targeted healthcare market.

Recommendation #1:

When analyzing RR Donnelley’s mission and vision statements, we identified the importance of
building a foundation. The development of a Healthcare Business Unit (HCBU) will not only
create the foundation necessary for you to expand in the healthcare industry, but it will create
a niche market by serving hospitals and other potential healthcare sector clients in the future.
The HCBU is important because developing a niche within a large company like RR Donnelley,
will drive hospitals to hold long-term contracts that will allow them to customize their orders,
and ease their daily routines. Our main objectives with the HCBU are as follows:

   1)   Visibility
   2)   Quality assurance
   3)   Improve client relationships
   4)   Promote innovative hospital communications technology

This supportive group of 50 cross-trained professionals will be divided into four departments:
R&D, Marketing, Sales, and Document Management. They will be tasked with the responsibility

of: increasing sales and market share by obtaining healthcare accounts, sustaining superior
overall product and service quality, and maintaining client relationships

Recommendation #2:

After evaluating your website and comparing it to some of your current competitors we
realized that RR Donnelley does not offer enough information on the website that directly
targets healthcare clients. Therefore, for our second recommendation, we suggest that RR
Donnelley make certain changes to the current website. The changes that you would need to
implement as part of this recommendation would allow you to not only showcase your vast
resources and capabilities within the print industry, but also spotlight what your company can
offer to satisfy the needs of potential and current healthcare clients.

Recommendation #3

Since a number of hospitals are investing in information technology, and the print industry is
rapidly changing, our third recommendation is to acquire a California based company LifeMed,
Inc. By acquiring LifeMed, Inc., RR Donnelley will gain exclusive rights over their Smart Card
technology and software programs. This is a long term acquisition that will allow RR Donnelley
to provide easy access to Electronic Medical Records, decrease medical errors, surpass the
admission process, reduce medical identity and fraud, reduce healthcare costs, and provide
consolidated medical information.


As consultants, we believe that implementing all three of these recommendations will help RR
Donnelley increase sales by increasing hospital accounts and enhance visibility in the NY/Long
Island healthcare industry.

B. Overview of Business
Company Summary

RR Donnelley is a global provider of integrated communications. It was founded more than 144
years ago. It primarily offers print-related solutions to its customers and offers customization
for each and every company’s personal needs. It is the custom solutions that allow RR
Donnelley to reduce costs and find the best fit for every need. RR Donnelley uses all
technologies available to deliver these services as requested.1

Mission Statement

RR Donnelley will continue to earn its position as the world's premier provider of printed
products and business services. We will create value for our shareholders and opportunities for
employees by helping our customers to achieve their communications, transaction, logistics,

    "About Us". RR Donnelley. 10/1/09 <http://www.rrdonnelley.com/wwwRRD1/AboutUs/AboutUs.asp>.

compliance, marketing, merchandising, and other goals. We will work to deliver to our
customers the highest quality, the best cycle time, the most attractive return on investment
and the lowest total cost of ownership.2


RR Donnelley’s vision is to improve on our existing position as the world’s premier print and
print-related services company by providing our customers with the highest quality products
and services.3

Strategies and Objectives

Your company’s three main strategies and objectives are profitable growth, focusing on
productivity, and disciplined capital deployment.

I.          Profitable growth

                                                                           Use global
                                     Take advantage of
        Strategies                    global platform
                                                                        relationships as                Focus on printing

                                      Capture segment                  Leverage existing             Cost-saving solutions
        Objectives                         share                         relationships                  for customers

II.         Productivity

                                        Maintain cost                Productivity- focused
        Strategies                      management                     investment plans
                                                                                                    Standardize processes

                                   Economies of scale to              Integration of sales
        Objectives                    optimize value                    and operations
                                                                                                    Facility consolidations

III.        Disciplined Capital Deployment

                                       Maintain strong               Targeted mergers and
        Strategies                    financial position                  acquisitions

                                    Maintain liquidity in
                                                                        Meet changing                    Reduce capital
        Objectives                  uncertain economic
                                                                      customer demands                     spending

    “CSR Report”. RR Donnelley. Page 2. 10/1/09<http://www.rrd.com/wwwRRD1/Docs/AboutUs/2007CSRReport.pdf>.

 “10k Report”. RR Donnelley. Page 20. 10/1/09<http://files.shareholder.com/downloads/RRD/731317391x0xS1193125-09-

Figure 1: Strategies and Objectives
RR Donnelley’s long-term strategy is to generate profitable growth through investments in new
business, using your global platform as leverage. Your global platform offers many solutions for
clients through the company’s wide selection of print-services, logistic capabilities, and
technology. Current plans include investing in information technology projects that will improve
efficiency, such as digital printing, which allows for on demand printing. Plans also include
integrating sales efforts to service a new customer base and meet their demands.

RR Donnelley believes that it has to be competitive through cost reduction and productivity,
which will increase customer value. A prime example of this would be the use of digital printing
as opposed to traditional print methods. This allows many orders to be processed at a faster
rate, which in turn improves productivity and cuts down on costs. Processing jobs in
anticipations of large print orders would be unnecessary because of increased print capabilities.
This eliminates storage costs. The cost reduction allows the company to offer its clients a
competitive price. The more services and products RR Donnelley can handle, the better the
relationship that can be developed with the customer.

RR Donnelley will diversify its capital distribution in things such as dividends, share repurchases
and acquisitions. Due to the economic downturn there are increased prospects for acquisitions
which would enhance current capabilities and services. These enhancements would strengthen
capabilities, reduce costs, and reduce spending for future needs. An example of this would be
acquiring factories in different regions so transport costs are lowered.4

C. Project Topic
The purpose of this project is to expand RR Donnelley’s presence in the New York/Long Island
healthcare market. The objective is to obtain increased market share as well as find
opportunities for growth. Within this scope, RR Donnelley’s focus has been involved in other
industries that were more attainable. However, the present is an ideal time for RR Donnelley to
engage the market. There is an increasing potential for growth and profitability. Just one
hospital requires dozens of different forms and other print-related services.

As a company with a 144 year history, RR Donnelley has the visibility to effectively branch into
the healthcare sector in the NY/LI area. Group Purchasing Organizations (GPOs) have opened
access to direct contact with hospital administration. However, it is still RR Donnelley’s
responsibility to pursue individual contracts with the hospital facilities.

The possibility of Nationalized Healthcare is an opportunity, since the increase in patient intake
will increase hospital demand for print and print related services. Despite the possibility of
electronic medical records and other healthcare related communications technologies, paper
products will still be in demand. With this in mind, RR Donnelley is looking to capture more of
the healthcare printing industry, which shows a lot of promise because if more people have

 “10k Report”. RR Donnelley. Page 21. 10/1/09

healthcare, more printing will be necessary for hospitals. They will need print for not only forms
and labels but also for advertising, such as direct mail, to tell people more about the hospitals.
RR Donnelley may even be able to handle numerous printing services if they are able to prove
their value, which is RR Donnelley’s goal.

II. Analysis

A. Market/ Industry Analysis

Industry Analysis: Porter’s-5 Forces

The print communication industry includes developments primarily engaged in printing text and
images on to paper, metal, glass, apparel and other materials. Printing products go through 3
stages: (1) the preparation of printing (R&D, marketing, cost, planning), (2) the actual printing
process, and (3) the output of products in their final form.

Products and Services:

Aside from our daily experience in printing products—magazines, books, newspapers—other
products produced in large volumes are manuals, labels, marketing materials,
forms/applications, and direct mail. The industry has also developed quick printing of
documents and other related support services. With technological advances, we have seen
digital printing as the fastest growing segment in the past several years. Most commercial
printers offer digital printing as an alternative to the traditional printing process. To continue
providing further value to clients, most companies directly ship finished products to clients.
Other services include print management, database management, warehousing, and
prefabricated design for online ordering.

Introducing Print in Healthcare Industry

Major players in the printing industry provide their products and services to large industries,
such as entertainment, banking, and healthcare, to list a few. For purposes of the strategy
developed in this report, we are looking to analyze present and future trends for printing in the
healthcare industry.

The nature of this industry combines technology and human health care. Hospitals, being a
single sector of the healthcare industry, provide complete medical care ranging from diagnostic
services to surgery to continuous nursing care and much more. As hospitals work to improve
efficiencies in every aspect, care continues to expand. Just as technological advances have
made healthcare expansion easier, the printing industry is doing the same for their clients in all

I.        Competitive Rivalry 5

     Figure 2: Rivalry
The above chart describes 6 companies that provide print and print related products and
services for the healthcare industry. Competition in this industry is high and the market is
narrowing as digital technology and e-commerce become more prevalent. Companies are
taking advantage of the opportunity to cater to niche markets, in this case the healthcare
industry, and technology delivering labor efficiencies.

 Information from each competitive rivalry in chart acquired from companies websites : www.RRD.com,
www.Cenveo.com, www.Bowne.com, www.standardregister.com, www.inwk.com, www.workflowone.com.

Factors of High Competition:
   i. There is a high barrier of entry and exit due to high cost of investment for products and
       capital when expanding in the healthcare industry
  ii. There is a high competition in price differentiation considering there is low product
 iii. This area of the printing industry can be distinguished as medium-highly concentrated
 iv. It is highly fragmented because companies vary in the types of printing they perform,
       volume, niche, and competitive advantage

A common theme throughout the industry, especially with current economic conditions, is
lowering prices to gain advantage over consumers. Companies are also seeking to develop
innovations in the manufacturing process and products. Players are also exploring the
“Greener/eco-friendly” process to gain more competitive advantage.

Risks in High Competition:
   i. Highly competitive market for products may lead to pricing pressure
        a. Excess capacity causes downward pricing, a possible continuous trend.
        b. Once a competitor lowers its price, the rest follow.
  ii. Lower demand in current economic downturn.
        a. Printing industry continues to be over-supplied and highly price competitive, which
        may reduce gross margins in the companies.
 iii. Since firms sell large quantities of products, high levels of production leads to a fight for
        market share in the industry and the results increase rivalry.

II.    Barriers to Entry
Referring to the below measures, as a way to determine the level of difficulty when expanding
printing products and services to the healthcare industry, we can identify a need of large capital
requirements or the need to obtain economies of scale, strong brand preferences and customer
loyalty, and to limit certain distribution channels and access to raw materials. More specifically,
large investments dedicated to employees performing R&D, product availability and volume,
technological advances and software and time-value of creating relationships with clients to
gain their trust in RR Donnelley’s services.

Considering the large investment made in expanding printing in the healthcare industry, it is
almost inevitable to imagine the difficulties of exiting the industry. Time and monetary-value of
this transition will be on the top of the list when taking into account the cost of exiting this

Figure 3: Barriers to entry and exit

Threats and opportunities brought by digital technology may not be successful. This has forced
many companies to remove groups due to failure of expanding business. This industry is subject
to rules and regulations involving product safety, environmental, health, and welfare benefit
regulations (regulations may vary by country, state, city…), involving a lot of time and money.
Changes in regulations may lead to an increase in company’s workforce, cost of benefits for
workers, and/or investments replacing obsolete equipments.

A major risk of entering this market is our current market condition. Business can be adversely
affected by changes in national or global economic conditions; inflation, interest rates,
accessibility of capital markets, consumer spending rates, and the effects of governmental plans
to manage economic conditions. In this economic downturn, players may not be able to reduce
costs enough to sustain margins, which may affect the ability to pay, reinvest, and satisfy

III.    Threats of Substitute:
When considering the printing industry, we can always think of technology as a substitute and
all documents as web-based. However, the majority of players in this industry are using
technology as an opportunity to expand their printing abilities by introducing digital printing,

customized online printing, and different software and programs to manage supply chain. This
provides evidence that technology is a low substitution threat in the printing industry.

Risk: Electronics

     i.   Technological distribution of information and documents is considered an alternative
          from the old-fashioned printing ways.
  ii.     Consumer replacing traditional books with online reading.
 iii.     Products (i.e. books, statement printings and forms) may be unfavorably affected.

IV.       Buyer Power

                                  Figure 4: Buyer Power

Most print buyers in the healthcare industry are healthcare institutions, hospitals and
pharmacies. We consider buyers as powerful due to their purchasing power of significant
proportions of companies’ outputs.

Distributions of products are offered as part of service in most companies, giving buyers the
facility to purchase large volumes at cost-effective prices. Buyers highly influence price,
products, and strategies, because in order for companies to enter the healthcare industry,
they must research buyers’ needs and wants, and mold their strategy, prices and products
offered to their target audience.

Downturn in global economy and uncertain economic lookout reduce demand for printing
and other related services. As mentioned in ‘Rivalry analysis’, this results in a decrease in
revenue, gross margin, difficulties in managing inventory and collecting accounts receivables.
These companies don’t have a single client or group that accounts for X% of total
consolidated revenue.

V.        Supplier Power
                                 Figure 5: Supplier Power

Majority of players have acquired a company with experience in the healthcare industry and
this allows for most of their printing to be done through acquired company’s facility. This would
allow for medium-ratings supplier power, as they manufacture their own products for
distribution to buyers.

There are fluctuations in the cost of paper, ink, energy, and other raw materials. Purchases of
these materials are large portion of these printing companies’ costs. As analyzed in previous
areas of industry, it is difficult to remain competitive in prices while not being able to pass these
costs of input onto products.

I.          Healthcare Industry Trends

Employment and Economical Contribution

Hospitals are the most vital part of the Healthcare Industry as a whole, employing more than
5.3 million people in 2007. The Healthcare Industry accounted for 16.2% of 2007 GDP. This
number equates to a staggering $2.2 trillion with hospital revenue of $697 billion. Hospitals also
have a direct affect on other industries which rely on their business. In 2007 hospitals spent
nearly $304 billion to purchase goods and services from other industries.

As the second largest source of private sector jobs, the overall reach and scope of hospitals is
undeniable. “…each hospital job supports about two more jobs and every dollar spent by a
hospital supports roughly $2.30 of additional business activity.” 6

 "Beyond Healthcare: The Economic Contribution of Hospitals". American Hospital Association. September 16, 2009

                                                      Figure 6: (Provided by American Hospital Association)
Sources of Revenue

Traditional sources of hospital revenue include; medical insurance in the form of Medicare,
Medicaid, and private insurance. Other sources are funds borrowed from financial institutions,
donations from philanthropists for fundraising or charitable giving, and federal and state
government grants.

                                                                            Distribution of Revenue by Source for
                                                                            Federally-Funded Federally Qualified
Figure 1 shows that in 2007, the national                                           Health Centers, 2007
distribution of revenue by source was as follows:
                                                                                                   NY         US
Federal Grants: $1,884,585,487; State and Local
                                                                                                   %          %
Grants/Contracts: $886,402,060;
Foundation/Private Grants/Contracts:                                     Federal Grants          14.80% 20.7%1
$378,384,064; Medicaid: $3,320,438,823;                                  State & Local
Medicare: $548,357,016; Other Public Insurance:                          Grants/ Contracts       9.50%      9.8%1
$238,597,215; Private Insurance: $666,521,498;                           Foundation/Private
Patients Self-Pay: $597,170,297; Other Revenue:                          Grants/ Contracts       1.80%      4.2%1
$569,581,082. 7                                                          Medicaid                51.60% 36.5%1
                                                                         Medicare                4.90%      6.0%1
                                                                         Other Public
                                                                         Insurance               1.80%      2.6%1
                                                                         Private Insurance       7.90%      7.3%1
                                                                         Patient Self-Pay        3.30%      6.6%1
                                 Figure 7: Provided by Kaiser            Other Revenue           4.30%      6.3%1
                                           Family Foundation             Total                  100.00% 100.0%1

 "FQHC Revenue by Source". Kaiser Family Foundation. October 1, 2009


Hospitals have always invested in new technologies that focus on improving patient care. This
viewpoint is still very strong as more hospitals implement better information technology (IT) to
facilitate the flow of information. Although most hospitals have cut spending in other areas of
operation, spending on IT is up.

A survey conducted by the American Hospital Association in 2006 found that 46% of hospitals
nationally were using IT. This number was up from 37% in 2005.8 IT is used for a number of
                                                           Figure 2 (Provided by Kaiser reviewing test
hospital functions to include; processing lab orders, ordering medications, andFamily Foundation)
results. More medications were ordered electronically byFamily))Foundation) than ever before.
                                                            physicians in 2009
This process minimizes the time it takes for a patient to receive their meds, and also alerting
the doctor when there is a conflict with medications the patient is receiving. Surveys show that
hospitals which implement IT infrastructures that reduce medical mistakes have the highest
rates of customer satisfaction.

Because of the cost of implementing IT infrastructures, some smaller hospitals are unable to
update their communications technology. Military facilities, children, academic and large
hospitals, in urban settings with significant populations tend to be more advanced than their

II.      Procurement


Hospitals partner with GPOs because this relationship allows them to purchase the same top
quality products that they would normally purchase, for less. More often than not, GPO prices
are used as a benchmark so that hospitals can determine if they are receiving a good deal or
not. Vendors acquire contracts with GPOs who then open access to hospitals and hospital
systems. There are over 600 GPOs nationwide but only a very small percentage make up most
of the industry. Most GPOs operate regionally. Many smaller GPOs are owned or partly owned
by larger groups of GPOs.

To promote fairness, GPOs contract with more than one vendor of an item. This not only
creates competition to get the best prices, but also gives the hospitals a selection of choices.

Hospital Health Systems

A hospital system can include one hospital or many. In the NY/LI area there are numerous
hospital systems, to include: North Shore LIJ, which consists of 32 hospitals and long term care
facilities, NY Presbyterian, which operates 5 main facilities, Continuum Health Partners, which

 "Continued Progress: Hospital Use of Information Technology". American Hospital Association. September 21, 2009

also maintains 5 facilities, and many more. These hospital systems are a collection of hospitals
that are managed by a parent group. The parent group is the one responsible for vendor
contracts and they are often partnered with one or more GPOs.

III.        Current Financial Situation

The healthcare industry, like many others, saw significant decline in revenue as a result of the
economic crisis. Traditional sources of revenue such as borrowing became very narrow. The
cost of borrowing from financial institutions has gone up as banks are charging higher interest
rates to lend money. From 2007 to 2008 interest on borrowed funds were up 15%.9

Hospitals are seeing a decline in patient intake as well as a decline in elective procedures. There
is, however, an increase in Medicaid and Medicare. Majority of patients are only going to
hospitals on emergency basis and avoid going for routine checkups.

 Many hospitals were engaged in investing and saw the value of their investment go from gains
to losses. Hospital reserves fell drastically and many found they were unprepared to deal with
the loss of revenue and had to adjust operations to meet their new realities. 90% of hospitals
report that they have made changes to the way they operate in order to cut costs. 48% of
hospitals have reduced staff, 80% have cut administrative expenses, and 22 % have reduced
services. 10

As hospitals struggle to recover, a number of them are finding it extremely difficult to procure
funds needed to sustain or complete projects that were underway. These projects range from
information technology to facility additions or upgrades.

IV.          Future Health Care Reform

If universal health care is passed, hospitals will have to be prepared. Currently there are 47
million people who do not have health insurance. This equates to 47 million potential patients.
Many hospitals may be understaffed; many others may not have enough beds to meet the
influx of patient admittance. This means that hospitals will need to invest even more into
facility upgrades, doctors and nurses, and newer technologies that will help them meet the new

A number of healthcare institutions are already in the process of implementing EMR technology
within their networks. With the health reform bill, the government will issue $1.2 billion in
grants to financially assist in the switch to electronic medical records.

 "Report on the Economic Crisis: Initial Impact on Hospitals". American Hospital Association. September 21, 2009

  "Report on the Economic Crisis: Initial Impact on Hospitals". American Hospital Association. September 21, 2009

                                            Exponential Growth in
                                                Patient Base:

                                              Facility upgrade,
                                              addition of beds,

                                                Health Reform:

                                             Universal Healthcare,
                                               EMR Technology
             New Demands on
                                                                                 Increasing Pressure on
                Hospital IT
                                                                                 Existing Hospital Staff:
                                                                                     Hire additional
           EMRs, labs, pharmacy,
                                                                                   doctors, nurses, and

        Figure 8: Health Reform’s impact on today’s hospitals

                    Strengths                                                  Weaknesses
      Current position as the print industry                       Current website is not healthcare friendly
       leader                                                       Lack of exposure in NY healthcare market
      Financial stability and flexibility
      Visibility

                 Opportunities                                                    Threats
      Healthcare Business Unit                                     Healthcare reform
      Environmentally friendly technology/e-                       Small business
       documents                                                    Macroeconomic conditions
      Macroeconomic conditions

Figure 9: SWOT Analysis

B. SWOT Analysis

With 2008 revenues of $11,586.1 billion, RR Donnelley still outperformed its closest
competitors. Current cash and short term investments total $470.9 million. Appropriate
operational management and cost control has allowed RR Donnelley to remain liquid during the
economic downturn. By matching costs to revenues, and with proper allocation of funds, the
company has maximized liquidity, allowing more flexibility for future operational strategies.
This flexibility can be utilized in areas, such as research and development, in acquiring
revolutionary healthcare communications technology, such as Electronic Medical Records
(EMR) or bar-coding. This also strengthens shareholder confidence in the company’s overall
stability and ability to compete long term.

As a company that has a 144 year history, RR Donnelley is highly visible. This is a competitive
advantage. Favorable brand recognition allows for easy transition into the healthcare sector
without much work into creating awareness in the NY/Long Island area. In addition to that, RR
Donnelley already has national recognition in the healthcare sector.

RR Donnelley’s national healthcare experience can lend to expansion and growth in the
NY/Long Island area by driving efficiency and quality service. By building upon proven methods
of operations and sales from other sectors of RR Donnelley’s healthcare business, the NY/Long
Island area can identify trends in hospital purchasing. Also, existing relationships can be built
upon to strengthen recognition. This can be accomplished through a number of GPO’s that RR
Donnelley already has relationships with, who operate or have affiliates and subsidiaries in the
NY/Long Island area.


There are very limited channels of communication between RR Donnelley and the NY/Long
Island hospital arena. The lack of adequate communication makes it almost impossible to get
the message from the company to its potential clients. RR Donnelley should open new segways
and improve existing channels of communication to clients. We believe that in order for long
term customer relationships to be established, RR Donnelley must actively engage the market,
and network. This will allow potential clients the opportunity to acquaint themselves with the
company’s customer sales representatives and also the products and services that the company

The current website serves a general purpose for clients, prospective clients, and investors.
However, we feel that the section dedicated to healthcare is inadequate and may not
effectively showcase RR Donnelley’s healthcare products and services. There is not enough
information available detailing the variety of healthcare products that RR Donnelley has the
capability of producing for healthcare clients. The website should also be directly linked to
Custom Point and United Ad Labels so that potential clients can familiarize themselves with the
options that are available to them.


Hospitals don’t want a vendor who will provide a list of services written down in a contract.
They want to build relationships with sales representatives who are accessible and focused on
their needs. A business unit focused directly on the NY/Long Island healthcare sector would
extend a bridge that would allow RR Donnelley to engage the medical audience in this
immediate area. A specialized workforce can keep abreast of changes in the industry, facilitate
and maintain RR Donnelley’s relationships with the healthcare sector, and organize and sponsor
functions that would expand visibility in the market.

“Going green” is the way of the future. RR Donnelley has already made significant strides in this
area through various initiatives and operational management that conserves resources.
However, there is still vast opportunity to expand this idea beyond conventional print and print
related products. Technology is one aspect of healthcare that must be strongly observed
because newer technologies are constantly emerging and changing the way we view

Healthcare reform can be looked at as both an opportunity and a threat. The deciding factor
will be RR Donnelley’s response to healthcare reform. If the company starts investing in
technology that will meet the new requirements stated in the Healthcare Reform Bill, RR
Donnelley will be ahead of competitors and will not lose competitive advantage. This will
launch RR Donnelley even further as the market leader in the industry.

Hospitals are currently focused on two main objectives: how to generate revenue, and how to
cut costs. RR Donnelley’s financial strength places them in a position to offer hospitals the best
deals possible through economies of scale. The healthcare industry was greatly affected by the
economic crisis. There is a decline in income from patient revenue, philanthropy donations, and
loans from financial institutions, which have been hospitals traditional sources of revenue. By
partnering with RR Donnelley for charitable or fund raising events, hospitals will also benefit
from the exposure by attracting potential sources of revenue.

Majority of industries are currently taking losses in revenues and are being forced to adjust
their operations management. Even though economic conditions have taken a toll on business
in general, there are still a few companies who have been extremely successful at management,
leaving them in better shape to prepare for future market conditions. RR Donnelley is among
that group. This would be an opportune for RR Donnelley to position itself for any merger or
acquisition that will enable the company to enter into the 21 st century healthcare market. With
or without healthcare reform, EMR technology will improve and expand. Through the
acquisition of LifeMed, Inc., RR Donnelley will not only be making a smart investment into the
future of healthcare, but also the future of integrated communications, via economies of scope.


The Healthcare Reform Bill would expand the use of EMR communications throughout the
healthcare industry. EMRs are already being used by a number of hospitals in the New York

area.11 Currently the only hospital systems that will make this move are those who have enough
financial stability to make such large investments. However, if health reform is approved, the
federal government will mandate all facilities to invest in EMRs and will provide $1.2 billion in
grant assistance.

Smaller businesses, such as LifeMed, Inc., are smaller companies that can specialize in a
particular item. The advantage for them is that they are able to perfect their products and
services because they offer such a specialized selection. The size of the company means that
they have very little overhead costs. They may be able to offer a hospital cutting edge
communications technology such as EMRs or bar-coding systems at a reasonable price. Also,
because they are so specialized in the product they offer, they will be better able to service
their clients and meet client needs.

For the most part, there is a general consensus that the worst part of the financial crisis has
passed and we are on our way to economic recovery. However, there is great uncertainty as to
how long it will take for full recovery. Sluggish macroeconomic conditions will continue to affect
both the healthcare and print industry in the immediate future.

C. Competitive Analysis
Competitive Description

RR Donnelley is a premier printing and business service provider. It serves multinational clients,
in publishing, advertising, retail, technology, healthcare, and other industries in the United
States. Since 2006, RR Donnelley’s growth has been driven by targeted acquisitions of related
companies, which has enabled them to provide more complete and flexible communications
service offerings. Challenged by intense price competition in the highly fragmented and
competitive commercial printing industry, R.R. Donnelley has increasingly been focusing its
attention on lowering costs through internal restructuring. To better understand the idea
behind RR Donnelley’s current strategy, it would help to understand the companies they’re
competing against. The three companies that our analysis will focus on are WorkflowOne,
Standard Register Co., and Cenveo, Inc. In our analysis we will show the strengths and
weaknesses of each company in comparison to RRD.

I. WorkflowOne

    A. Company Description
WorkflowOne is one of the largest and fastest growing providers of managed services for print,
print-related and promotional marketing. They have been in existence for over 140 years, in the

  Zieger, Anne. "Case Study: New York Hospital Group Plans $400 million in EMR Subsidies for MDs". Fierce Health Finance. October 15, 2009

North American region. They are a subsidiary of Workflow Management, Inc., and as a unit they
contribute $100 million in total revenues, which represents less than 15% of Workflow
Management’s total figures.12 They now have 22 production facilities in their Manufacturing
Network, 25 business centers across the United States, and 42 distribution centers nationwide.
The Company currently employs more than 3,300 people all over North America, and has over
24,000 customers in the following sectors: healthcare, financial services, manufacturing, retail,
non-profit, and leisure and gaming industries.13 In their effort to offer unparalleled flexibility
and scalability, WorkflowOne has built and is continuing to develop a robust technology

    B. Role in the Healthcare Industry
WorkflowOne is considered to be the nation’s leading name in healthcare document
management. The company serves nearly 800 U.S. hospitals and three out of five healthcare
General Purchasing Organizations. They have agreements with Novation, Premier and
Broadlane. The products and services they offer to the healthcare industry include: patient-
friendly billing, secure prescription pads, boards, patient identification systems, promotional
marketing programs, appointment reminders and print shop replacement, labels, patient
admission solutions, patient communication boards, patient identification systems,
promotional marketing programs, appointment reminders and print shop replacement.15

    C. WorkflowOne vs. RR Donnelley
Although WorkflowOne is relatively small in comparison to RR Donnelley, it is still a company
that has more of the healthcare market share than RR Donnelley does. It services 800 hospitals,
a significant number, and three GPOs. They are also known as a leading name in the healthcare
industry. Other than that, RR Donnelley is doing much better financially, and can outperform
WorkflowOne in this or any other market anytime.

II. Cenveo, Inc.
About Us". RR Donnelley. 10/1/09 <http://www.rrdonnelley.com/wwwRRD1/AboutUs/AboutUs.asp>.
    A. Company Description
Cenveo, Inc. is the third largest graphics communication company in North America. They
provide print and visual communication services, from design to fulfillment. Their portfolio of
services and products include commercial printing, envelopes, labels, packaging, publishing and
business documents. Cenveo works to understand clients needs, and generates solutions to fit
those needs. For over 125 years, they have provided end-to-end, integrated graphic
communications services to professional publishers, not-for-profit societies, associations and
corporations. They are focused on high-growth areas of the printing industry, such as

     “Overview”. WorkflowOne. 10/2/09 <http://premium.hoovers.com/subscribe/co/factsheet.xhtml?ID=109513>

     “About Us”. WorkflowOne. 10/2/09 <http://www.workflowone.com/our_company/aboutus.html>

     “History”. WorkflowOne. 10/2/09 <http://www.workflowone.com/our_company/history.html>

     “Vertical Industries” WorkflowOne. 10/2/09 <http://www.workflowone.com/clients_industries/vert_healthcare.html>

pharmaceutical labels, packaging, and scientific, technical and medical journals. They can
globally produce any publication against any set of specifications for composition, print, binding
and distribution.16

    B. Healthcare
Cenveo provides a range of products from brochures to packaging, by partnering with leading
Healthcare and Consumer Product companies, as well as Pharmacies. When Cenveo
communicates or prints packaging for medication and other health related products, they stress
the importance of quality printing that stands up to uncommon wear and tear. Despite serving
the healthcare market for over 20 years, Cenveo continues to be a cost-effective producer that
delivers unsurpassed quality. Their Healthcare product customers rely on them for design and
brand management to inventory and distribution. They have a web-based tool that provides
customers with an easy and efficient way of accessing files, managing products, and obtaining
inventory.17 On July 12, 2006, Cenveo acquired a company called Rx Label Technology
Corporation. Rx Label is considered a market leader in the production of pressure sensitive
prescription labels to the U.S. retail pharmacy market.18 By acquiring this company, Cenveo was
able to further expand into the healthcare market.

    C. Cenveo vs. RR Donnelley
Although Cenveo has served the healthcare market for more years than RR Donnelley, their
finances are not as sound as RR Donnelley’s. Cenveo, therefore, doesn’t pose a threat to RR
Donnelley now, or anytime in the future, unless it merges with another company.

III. Standard Register Company

    A. Company Description
The Standard Register Company is a publicly traded company that began operating in 1912 in
Dayton, Ohio. They service the following organizations; healthcare, industrial manufacturing,
financial services, government, and retail.19 They create innovative solutions for their clients, by
leveraging their manufacturing, technology development and sourcing expertise. They do
everything from consulting to technology and design, to printing and staffing services. Their
solution for print management, marketing and customer communications, specialized print,
and training material administration help organizations increase efficiency, reduce costs,
mitigate risks, grow revenue and meet the demands of globalization.20

     “About Us”. Cenveo. 10/2/09 <http://www.cenveo.com/company-about-us.htm>

 “Consumer products”. Cenveo. 10/2/09 < http://www.cenveo.com/markets-consumer-products.htm>

 “10K Report”. Pages 2-10. 10/2/09 <http://www.cenveo.com/Collateral/Documents/English-US/CENVEO08AR.pdf>

  “10k Report”. Pages 1-5. 10/2/09 <http://library.corporate-ir.net/library/95/958/95849/Items/328108/61552C5E-B765-4573-A0FD-

     “About Standard Register”. Standard Register 10/2/09 <http://www.standardregister.com/company/default.asp>

    B. Role in the Healthcare Industry
Standard register provides document management and workflow technology solutions to the
Healthcare industry, for over 50 years. Their mission is to help the health systems enhance their
efficiency and patient safety, mitigate risks, address compliance requirements, improve
revenue realization and reduce costs. They have a whole business unit focused on the needs of
Healthcare. This business unit consists of 230 healthcare sales and marketing professionals.
They service 3,138 Healthcare clients, 62% of which includes United States hospitals. This
Company supplies to 6 large GPOs and has more than 310 integrations with 22 HIS vendors.
They offer their team a disciplined curriculum, called SR MED U, to educate them on
Healthcare’s changing needs. Their market is focused on anticipating their clients’ needs and
drive innovation. They are committed to making a measurable difference in their clients’
business and clinical outcomes.21

    C. Standard Register Co. vs. RR Donnelley
Standard Register Co. has the solutions in customer communications, marketing, workflow
Technology and great leadership to execute and provide global services for customers. From
the three analyzed companies Standard Register is the only company that is a competitive
threat to RR Donnelley. Both, Standard Register Co. and RR Donnelley, provide great solutions
for business, industrial manufacturing, financial services, and both have strong core values and
mission to provide customer satisfaction. With low-cost efficient growth in revenue to meet
challenges of globalization, Standard Register does it all, and when compared to RRD, Standard
Register has more experience in the healthcare industry. They also not only have an informative
website that describes their involvement in the healthcare industry, but also a separate
business unit dedicated to providing quality products and services to customers in this industry.

How Does RR Donnelley Match Up

When compared to the three companies above, RR Donnelley has stronger finances and greater
prospects. However, despite this strength, the other companies have a larger share of the
healthcare market than RR Donnelley does. Where RR Donnelley has zero sales in this market
and practically no visibility, the other companies have million dollars worth of sales and high
visibility. To change that, RR Donnelley needs to make some changes, and implement new
strategies. The graph below shows RR Donnelley on the bottom, and the three other companies
on the top. Hopefully by making the necessary changes RR Donnelley can rise to the top of the
chart, and beat the other competitors.

     “About Us”. Standard Register 10/2/09 < http://www.standardregister.com/healthcare/about.asp>

Figure 9: RR Donnelley comparison to healthcare competitors

III. Recommendations

A. Recommendation #1: Healthcare Business Unit


RR Donnelley’s (RRD) culture and business thrives with the theme of “Prepare, Produce,
Deliver, and Process.” Not only is RRD prepared to be true to its goals and mission statement,
but as financial advisors we are willing to offer that and more with our development of an RRD
Healthcare Business Unit (HCBU). When representing RRD’s values and the importance in
creating a foundation, we have come to the conclusion that no hospital is willing to invest its
time or money for their printing services to a company that is distracted by the large spectrum
of industry it serves. That is why this business unit will approach the healthcare industry and
prepares with the specific needs of each hospital it targets. Investing in a business unit will
dedicate itself to R&D, marketing, and sales/orders within the healthcare industry—specifically


   5)   Visibility
   6)   Quality assurance
   7)   Improve customer relationship
   8)   Create innovative technological advances

With identifying our objectives comes the description of what the HCBU will consist of:

       A supportive group of ~50 trained professionals (whom will work on marketing, sales,
        R&D, other organizational tasks) that will accomplish the end goal of increasing sales,
        accounts, market share, and the company’s value. The HCBU will be in charge of:

        i) Developing technological advances that will continue to facilitate hospitals printing
        ii) Market products, innovations, processes through our renovated website (RRD-HCBU
             tab), and through fundraisers with hospitals in NY, Long Island area.
        iii) Have a reference sales group that will involve RRD’s salespeople in the process of
             creating relationships and contracts with hospitals.
        iv) A ‘Document Management’ team that will go through Six Sigma and Balance
             Scorecard procedures in order to diminish failures with the printing process in

       Develop a niche within this large capital company that will allow for hospitals to feel
        comfortable with holding a long-term contract that allows them to customize their
        orders, and ease their daily routines.


When considering the development of a new team that will strengthen RRD’s presence in the
healthcare industry, we often wonder the time this strategy will consume. While keeping up
with the fast pace of competitors growing by the minute in the healthcare industry, we want to
provide the same advantage for RRD by maintaining the following timeline: Figure 1

Figure 10

Our employees for the HCBU will consist of existing RRD employees interested in training for
studying markets and expanding in the healthcare industry. All groups will simultaneously take
6-months of training and preparation and another 6 months to start up.

Our HCBU Team Will Offer

    A. Technological advances that will facilitate workflow:
HCBU will utilize CustomPoint technology to computerize hospital forms to an electronic state.
This will help to restructure the printing process and allow for print on demand if necessary. It
will provide: Reducing paperwork while releasing more time for health care, simplifying
compliance, shortening the path to payments if needed, providing online-catalogs of labels,
forms, and any other paper products available for hospitals, and on-time orders.

You can rely on CustomPoint to fill the gaps that are not addressed by their vendors or other
electronic forms providers. With an HBCU, our marketing and R&D professionals will provide
and continue to develop this clear understanding of printing and technology processes.22

   B. Document Management:
RRD HCBU allows for a more holistic view of your department’s order and discloses all costs of
orders and spending control. This is where our document management team within the HCBU
comes in with six sigma methodologies. Our document management team will analyze the
process of your order to identify costs, risks and efficiency difficulties. We look to inspect those
areas where documents and print most commonly occur for hospitals.

    C. Marketing Communications:
RRD HCBU will provide cost-effective service of printing through the combination of the paper
printing process and technology, customized printing communications to attract hospitals and
other healthcare institutions, and educate clients about RR Donnelley’s services and

We want to begin with a NY/Long Island organization of print centers that can provide hospitals
with digital printing of forms, labels and other items, kitting, direct mailing services, plus and a
certified supplier network to help hospitals get the most price-friendly on high quality printing

          Fundraisers & event kits
          Posters, banners & signs
          Marketing brochures
          Direct mail campaigns
          Patient educational pamphlets
          Recruiting/ Employee orientation kits
          Business cards and stationery
          Customized forms

     Information about CustomPoint obtained from www.rrd.com.

           In addition to the above, we will focus on: software, document design, printing distribution, and

           I.         Estimated Cost 23
        Groups within HCBU         # of Employees Managers in Group          Total Projected Cost of       Total Projected Cost of Projects Performed
                                                                            Employee and Manager
                                                                                 (1-yr time span)          (Time span of development of group)
        R&D                                      10                    1 Range: $605,000-660,000            $400,000- $500,000 for developments needed
                                                                                                                             in hospitals.
        Marketing                                10                    1 Range: $605,000-660,000           $1M for projects enhancing website and
                                                                                                           fundraising for hospitals in NY and LI
        Document Management                      10                    1 Range: $605,000-660,000           $300,000- $400,000 for analysis and training

        Sales-reference                          10                    1 Range: $605,000-660,000           $300,000- $400,000 for continuous building
                                                                                                           and reference of contracts with hospitals.
                                                 40                    4 Range: $2,420,000- $2,640,000     Range: $2,000,000- $2,300,000

                                                                                                           Total Budget Range: $4,500,000- 5,000,000

           Figure 11: Cost Estimates

           Our Employee-and-manager budget of $2.42 million to $2.64 million consists of internal RRD
           employees that will be working in the HCBU. An additional $2.0 million added to this budget
           for costs of projects and preparation within each team.

           II.        Future Projections
                     For every bed there is $1000 of sales
                     “In 2007, there were 193 licensed beds per 100,000 people in Queens (compared to 251
                      per 100,000 in Brooklyn). Boroughs increase about 3% each year”24

Borough/County Population 2008 Total hospital beds in each borough 2008                2009         2010       2011       2012       2013       2014       2015
QUEENS            2,300,000.00                                   4,600.00          4,738.00     4,880.14   5,026.54   5,177.34   5,332.66   5,492.64   5,657.42
BRONX             1,400,000.00                                   2,800.00          2,884.00     2,970.52   3,059.64   3,151.42   3,245.97   3,343.35   3,443.65
BROOKLYN          2,500,000.00                                   5,000.00          5,150.00     5,304.50   5,463.64   5,627.54   5,796.37   5,970.26   6,149.37
MANHATTAN         1,600,000.00                                   3,200.00          3,296.00     3,394.88   3,496.73   3,601.63   3,709.68   3,820.97   3,935.60
STATEN ISLAND       500,000.00                                   1,000.00          1,030.00     1,060.90   1,092.73   1,125.51   1,159.27   1,194.05   1,229.87
SUFFOLK           1,500,000.00                                   3,000.00          3,090.00     3,182.70   3,278.18   3,376.53   3,477.82   3,582.16   3,689.62
NASSAU            1,400,000.00                                   2,800.00          2,884.00     2,970.52   3,059.64   3,151.42   3,245.97   3,343.35   3,443.65
           Figure 12: Bed Projections

                Budget information supported by www.salary.com (10/1/2009)

                    (The above chart projects the number of beds in hospitals)

        Figure 13: Projected sales revenue

               Target % of total sales in yrs projected:                       2011             2012                    2013                  2014                  2015
                                                     5%              $ 764,054.00     $ 794,616.16          $     826,555.06      $     867,882.81      $     919,955.78
                                                    10%              $ 1,528,108.00   $ 1,589,232.32        $   1,653,110.12      $   1,735,765.62      $   1,839,911.56
                                                    15%              $ 2,292,162.00   $ 2,383,848.48        $   2,479,665.18      $   2,603,648.44      $   2,759,867.34
                                                    20%              $ 3,056,216.00   $ 3,178,464.64        $   3,306,220.24      $   2,603,648.44      $   3,679,823.12
                                                    30%              $ 4,584,324.00   $ 4,767,696.96        $   4,959,330.36      $   5,207,296.87      $   5,519,734.69

              2008- 2009                                                                             2011                2012            2013           2014           2015
              1 bed =$1000 SALES (based on above bed projections)
QUEENS         $                                      4,738,000.00                             $5,026,544           $5,177,341 $5,332,661 $5,492,641 $5,657,420
BRONX          $                                      2,884,000.00                             $3,059,636           $3,151,425 $3,245,967 $3,343,346 $3,443,647
BROOKLYN       $                                      5,150,000.00                             $5,463,635           $5,627,544 $5,796,370 $5,970,261 $6,149,369
MANHATTAN $                                           3,296,000.00                             $3,496,726           $3,601,628 $3,709,677 $3,820,967 $3,935,596
STATEN ISLAND $                                       1,030,000.00                             $1,092,727           $1,125,509 $1,159,274 $1,194,052 $1,229,874
SUFFOLK        $                                      3,090,000.00                             $3,278,181           $3,376,526 $3,477,822 $3,582,157 $3,689,622
NASSAU         $                                      2,884,000.00                             $3,059,636           $3,151,425 $3,245,967 $3,343,346 $3,443,647
TOTALS         $                                     23,072,000.00                            $24,477,085       $25,211,397.34 $25,967,739.26 $26,746,771.44 $27,549,174.59
        Figure 14: Projected sales per projected beds (The above projections depict the ratio of 1 bed =$1000 of sales from

        Our HCBU will target a larger spectrum of hospitals in the NY/Long Island area with access to
        the GPO’s that RRD already works with (Novation and Premier).

        The above chart projects total sales in beds/sales ratio per borough/county. If we are to set
        goals on the percentage of profit we can obtain from delivering our services to these hospitals,
        we can calculate the following shares of profits for the next five years.

        B. Recommendation #2: Refocus of Website

        The healthcare sector of RR Donnelley’s business has so much potential and there is limited
        concentration within RR Donnelley’s website on it. There is not enough website information
        focus given to the Healthcare industry dedicated to Healthcare Institutions. RR Donnelley does
        not brag about its capabilities and ability to service such large hospitals.



 Using existing Information technology teams and working with the Healthcare business unit
some simple modifications can be made to the current website to show RR Donnelley’s abilities
within the Healthcare Print sector. Costs are dependent on the current Information
Technology, employee salary and their productivity.


When evaluating RR Donnelley’s website, we did not have any apparent information on RR
Donnelley’s healthcare products and services. Once we located the products and services, we
realized there was very minimal information about what the company offered. Immediately
we knew that this was not only a problem for us, as consultants, but also for potential clients.

Figure 15: Proposed website menu

To start, the information technology team would modify the current website and add an
‘Industries’ tab. The industries tab would, similar to other competitors, show the industries
that RR Donnelley serves. The foremost industries are Education, Financial Services, Publishing
and of course the Healthcare industry.

Once brought to the Healthcare Industries page, viewers would see the products and services
that RR Donnelley has to offer to the Healthcare companies. Information would include
statistics about RR Donnelley’s production capability, RR Donnelley’s staffing and general
information. Their ability to conform and mold around each individual healthcare institution
needs. A Demo Center would allow potential customers to experiment and customize
documents. The Demo Center can be used as a tool for sales members to show what RR
Donnelley can do; customizing forms, labels or anything else for a Healthcare institution. It is
important to demonstrate RR Donnelley’s strengths and we feel this is not being done under
the existing structure. Below is a sample navigation structure of how RRD’s industry tab would

Figure 16: Sitemap of Industries tab

The reasons are endless for why RR Donnelley should display more. Why would such large
hospitals with large purchasing power allow RR Donnelley to produce its communication
supplies if there were only a few paragraphs about RR Donnelley’s products and services? RR
Donnelley has many resources to boast about. Whether it’s production capability, to its healthy
balance sheets it means the difference. A hospital needs stability because of the nature of the
industry. A flaw in a document or a label produced incorrectly could imply the most severe
consequences, death. Such delicate institutions not only need an operational company with
the right products and services, but a company that is financially stable as well. RR Donnelley is
the most stable communication company among all of its competitors. Some companies are
unable to service such large organizations, however, RR Donnelley can not only perfect the
printing of a healthcare institution, but can offer several other products such as advance
medical record technology and marketing for fundraisers.

An important note in this recommendation is that it is not the primary selling point to hospitals.
It is a tool that can be used by the Healthcare business unit (HBU) and other sales members. Its
uses are endless and with the refocusing on RR Donnelley’s abilities and how they stretch
beyond their traditional target markets. This refocus should not be relied on to generate
significant amounts of revenue but to solidify the relationships created between the HBU and
healthcare institutions. It should be used to create an interest for RR Donnelley’s products and
services. A talented sales individual should be able to help the hospital come to a contract.

This is considered a minimal investment and this is a minor detail in our plan for success within
the healthcare industry.

C. Long-Term Investment: Recommendation #3
On August 20th, 2009, Joe Biden publicly announced the issuing of $1.2 billion dollars in grants
to allow health-care providers to switch to electronic medical records (EMR), beginning in
201026. With the government creating initiatives to hospitals, like the one previously stated, it is
important that RR Donnelley seizes this opportunity to become a part of this monumental
medical advancement.

It is inevitable that the print industry is changing and RR Donnelley, as a communications
company, should make the necessary technological changes to provide a full range of products
and services to suit their client’s needs. Therefore, our third and final recommendation is to
acquire California based company LifeMed, Inc. to gain exclusive rights over their developed
Smart Card technology and software programs.

                             Why Smart Card technology?

                                    Provides easy access to Electronic Medical Records
                                    Decreases medical errors
                                    Surpasses the admissions process
                                    Reduces medical identity theft and fraud
                                    Reduces healthcare costs
                                    Provides consolidated medical information
                                    Administration access both on and off-line
                             Figure 17: Provided by LifeMed, Inc.

There are currently five smart card programs across the United States, and of those five two of
them are using LifeMed technology. Memorial Hospital of New Hampshire adopted this
technology recently in May of 2009, while Lake Point Medical Center of Texas was the first
success in June of 2008. Although the application of LifeMed Smart Card has shown great
results, other hospitals are either hesitant or creating a software of their own. For example,
Mount Sinai and Queens Health Network have developed “personal health cards” using online

  McCormick, John. “Biden Announces Grants to Spur Electronic Medical Record Use.” 20 Aug. 2009 Bloomberg
Press. 5 Oct. 2009. http://www.bloomberg.com/apps/news?pid=20601103&sid=a3u54TnaUiss.

databases as their communication portal for both practitioners and patients. However with
LifeMed, operations can flow both on and offline which provides a more flexible environment
for the administrators.

Although the smart card technology may be new to the healthcare industry, smart cards have
been around for over two decades. International companies such as Bank of America, Intel,
IBM, and Visa are all users of the smart card technology and, along with LifeMed Card Inc., are
all members of the Smart Card Alliance. In addition to corporations, several divisions of the U.S.
government also use various forms of this product including: U.S. Department of State, U.S.
Treasury FMS, MTA New York City Transit, and Department of Homeland Security27. This is an
interesting point to keep in mind as the universal healthcare bill is being pushed through
congress. If the bill is signed, it would make logical sense for the government to continue using
software that has proven its effectiveness within the government system.

           Beyond the United States, Smart Cards are used for healthcare purposes in:

             Poland        Slovenia         Algeria        Austria       Australia   Belgium

             Spain          Taiwan          China          Finland         France    Germany

             Turkey                        Hungary           Italy         Jordan    Mexico

Figure 18: Table of current countries who use Smart Card technology

  “About the Alliance: Current Members.” Smart Card Alliance 2009. 7 Oct. 2009.

     Figure 18: Provided by LifeMed, Inc.

As medical centers convert to electronic medical records, it presents RR Donnelley the
opportunity to provide the “total communications package” to their future or pre-existing
clients. Once the previously suggested Healthcare Business Unit (HBU) is established within RR
Donnelley, the amount of marketing, implementation, maintenance, and expansion will
become a feasible part of their job. As of now, LifeMed Card Inc. has sales representatives
meeting with hospitals to promote their program, but considering RR Donnelley’s vast human
resource capital, the team would be able to acquire more customers in less time. However, it is
important to portray to the future customers how the medical center will benefit in every
aspect from this product.

                                                                             Figure 19

Cost of EMR

As Mount Sinai and Queens Health Network leads the way with Smart Card technology, EMR
initiatives are happening throughout the surround boroughs, including Nassau and Suffolk

       “North Shore LIJ Health System will spend as much as $400 million over the next five
       years to provide subsidized e-medical record systems to its 7,000 physicians…The health
       system serves five million people in the New York metro area, operating 14 hospitals, 18

             long-term care facilities, five home-health agencies, dozens of outpatient centers, and a
             hospice network.”28

            High initial acquisition and implementation costs
            Slow and uncertain financial payoffs for health care providers
            Disruptive effects on physician practices during implementation
            Payment systems that result in most HIT-enabled savings going to insurers and patients,
             while most adoption and care improvement costs are borne by providers.


Figure 20: Cost Estimates for EMR

As the overall potential revenue becomes apparent to hospital networks, they more capital
they are willing to allocate more capital to the implementation of EMR. The long-term influence
of EMR is constantly changes, but that is what will make this technological advancement
successful over time. LifeMed Card, Inc. has already begun the second phase of changes that
need to be made in order to remain competitive. Overall our three strategies will create endless
opportunities for RR Donnelley to become a progressive player in the healthcare industry.

  McGee, Marianne K. “New York Health System Launches $400 Million EMR Program.” Information Week 31 Sept. 2009. 15 Oct. 2009.

     EMR Records, Inc. “EMR ROI.” 2009. 15 Oct. 2009. http://www.emrexperts.com/emr-roi/index.php.

IV. Data

A. Appendices
1. Strategy Map

2.     HR Allocation

Figure 20: Health Care Business Unit Timeline


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