SWOT Analysis
This weeks assignment will allow you to generate content that you will incorporate into the Market Analysis section of your Final Project. To prepare for this assignment, read Chapter 4 of the course text and the article by Simoneaux and Stroud (2011). You may also want to review the recommended article by Valentin (2001).
During the analysis stage, you consider external factors that pose possible threats to or provide opportunities for your organization and compare these factors against your HCOs internal operation to diagnose its strengths and weaknesses. Many HCOs have found it useful to conduct a SWOT analysis. SWOT is an acronym for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses refer to elements that are internal to the organization; opportunities and threats are external to the organization. An effective SWOT analysis helps the marketing team determine the healthcare organizations position in a particular market place as well as the positions of its competitors. By analyzing the current market and the deficiencies of the HCOs competitors, and by assessing the HCOs internal strengths and weaknesses, the marketing team can reposition the organization to meet and exceed the needs of its customers.
For this assignment, you will conduct a detailed SWOT analysis of your chosen healthcare organization for your Final Project. Discuss your selected organizations strengths, weaknesses, opportunities, and possible threats.
The SWOT analysis should include the following five components:
Strengths An organizations resources and capabilities that can be used as a basis for developing a competitive advantage.
Weaknesses Limitations of an organization to meet the needs of its determined customer base.
Opportunities External conditions that may reveal certain new opportunities regarding profit and growth.
Threats Factors or changes in the external environment that may present threats to the organization.
Summary/Recommendations – After conducting your SWOT analysis, write a paragraph in which you provide your recommendations to the CEO of your chosen healthcare organization. Also state how you will use this information to create a marketing plan that will ensure the following:
The organizations resources are not wasted
Time is well spent
Marketing efficiently is improved
The assignment
Must be four to five double-spaced pages in length (not including the title page and references page) and formatted according to APA style as outlined in the Ashford Writing Center.
Must include a separate title page with the following:
Title of paper
Students name
Course name and number
Instructors name
Date submitted
Must use at least three scholarly sources in addition to the course text.
Must document all sources in APA style as outlined in the Ashford Writing Center.
Must include a separate references page that is formatted according to APA style as outlined in the Ashford Writing Center.
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Ch 4: Environmental Analysis
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4
EnvironmentalAnalysis
CharlesDharapak/AssociatedPress
Organisationsdon’texistinavacuum.Theyareintricatelyconnectedtoanoutsideworldwithaconstantlychanginglandscape.
TheHappyManager
LearningOutcomes
Afterreadingthischapter,youshouldbeabletodothefollowing:
DescribetheenvironmentalforcesthatcreatechangeandcaninfluenceanHCO’sstrategicplanning.
DiscusstheimpactoflegislationonHCOoperationsandstrategicplanning.
Identifythemainforcesreferredtointhefiveforcesmodelofindustryanalysis.
ExplainwhyanHCOshouldcontinuetoassessexternalopportunitiesandthreats.
ListdifferentbenchmarksthatcanidentifyanHCO’sinternalstrengthsandweaknesses.
ExplaintheconnectionsbetweenanHCO’sstrengths,weaknesses,anddistinctivecompetencies.
NametheadvantagesoftheIntegratedPracticeUnit(IPU)asahealthcaredeliverymethod.
Introduction
ThischapterdiscussestheimportanceandthecomponentsofanenvironmentalanalysisaspartofthestrategicplanningprocessforanHCO.ThischapterintroducesanexternalanalysisthatusesaPESTLEframeworkforidentifyingtheelementsoftheexternalenvironment.Thischapterthenreviewslegislationandgovernmentalinitiatives,whichhaveadramaticimpactonHCOs.Next,”Porter’sfiveforces”model,whichalsoisknownasthefiveforcesmodelofindustryanalysis,isexplainedandappliedtoanHCO.Finally,thischapterdiscussesinternalandexternalanalysesandtheuseofaSWOTanalysis,followedbyanexaminationofhowresources,costs,anddistinctivecompetenciesaffectstrategicplanningefforts.
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4.1 External Analysis of Dominant Enviro
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4.1ExternalAnalysisofDominantEnvironmentalDrivingForces
ItisvitalforanHCOtogaugetheexternalenvironmentwithinwhichitoperates.This,infact,shouldbestandardpracticeforallorganizations.Virtuallyanythingthatcanhappenprobablywillhappen,eventually.Wetrulyhavenocertaintyaboutwhatthingswillbelikeinthefuture,inspiteofourattemptstomakepredictionsorforecasts.Still,anHCOcannotaffordtoletgeneralizedeventualitiesanduncertaintieskeepitfrombeingactiveinstrategicplanning,andchanginginresponsetoenvironmentaldemands.
PESTLEisanacronymtodescribetheelementsoftheexternalenvironmentthatimpactanHCO’splanningprocess.Theseelementsrequirespecificanalysisabouttheircurrentorpotentialimpactontheorganization’splanningandoperations.PESTLEstandsforpolitical,economic,sociocultural,technological,legalandeco-environmentalforces,whichexertstronginfluencesonhowanHCOcraftsandexecutesstrategicplans.Figure4.1showstheelementsofPESTLE.
Figure4.1:PESTLEframeworkforexternalanalysis
SeveralexternalforcesinfluencehowanHCOcraftsandexecutesastrategicplan.Theforcesaregroupedbycategory.
Theseelementsalsointeractwitheachothertocreateadditionalramifications.Considermedicalwaste.Medicalwastefirstcametotheattentionofthegeneralpublic,yearsago,whenitwasheduponNewJerseybeaches.Becauseofthemediaexposureofthisandothereventspertainingtoundesirabledisposalpractices,aswellasthefearofAIDS,publichysteriaresultedandregulatoryofficialswereunderpressuretodevelopcomprehensiveregulationstoprohibitsuchoccurrences.TheMedicalWasteTrackingActof1988waspassed,requiringthefederalEnvironmentalProtectionAgency(EPA)tobeginaninvestigationtodeterminewhetherfederallegislationwasnecessary.In1991theEPAprovidedtheirfindings,whichledtofederalregulationsonmedicalwastedisposal.
TheOccupationalSafety&HealthAdministration(OSHA)begantofinewastegeneratorsforimproperdisposalpracticeswithintheirfacilities,andmoststateshaveadoptedsometypeofregulationpertainingtoinfectious-wastedisposalrequirements.This,inturn,ledtoanexaminationofwaste-disposalmethodstechnology,suchasautoclaveandincineration,andthedocumentationneededtoshowthatwasteswerebeingdisposedofproperly.Thisalsocreatedtheneedforstate-of-theartincinerationtechniquesandfacilities.Atanygiventime,someorseveraloftheforcesmaybedrivingchangeinthehealthcareindustry.Itisimportanttodeterminewhichforceisthedrivingforceincreatingachangeintheenvironment.
Theonlywaywecanmanagechangeistoconstantlymonitortheenvironmentwithinwhichanorganizationoperates.OtherexamplesofPESTLEforcesforanHCOincludetrendsinMedicareorMedicaidfunding;theAffordableCareAct;governmentalregulationsonfundingretirementprograms;thelaborsupplyforhealthcareprofessionals;interestratesforcapitalimprovements;better-educatedclients/patients,whoexpecttobeincludedindecisionsontheirhealthcare;greateremphasisonthemarketingofhealthcareservices;thefastpaceoftechnologicalchange;andsoforth.
TheexternalanalysisiswherewelookatpastandcurrentdevelopmentsexternaltoanHCO’soperations.Fromthisanalysis,weidentifytrendsand,ineffect,takethepulseoftheenvironmentinwhichtheHCOoperates.AnHCOmustbeawareofcharacteristicsofenvironmentalconditionsaffectingit,andbevigilantaboutchangesthatmayoccurinthisenvironment.Numerouspossibleshiftscanoccurtoaffecttheorganizationincategoriessuchaspatients/clients;thegeneraleconomy;governmentalregulationsatfederal,state,andlocallevels;andsocioculturaltrendsindemographicsandlifestyles,amongothers.ManyHCOadministratorshavediscoveredtheirfailuretounderstandandheedtheimplicationsoftheenvironmentontheirorganization’sactions,evenwhenthoseimplicationswereobvious,suchasashiftinpopulationandbusinessesfromtheorganization’scurrenturbanlocationtosuburbanareas.Evenwithoutaformalorganizationalsystemtomonitortheenvironmentandthechangeshappeningwithinit,HCOexecutivesmustexercisevigilancetodetectanduseinformationfromtheenvironmentinformulatingstrategy.
Manyoftheenvironmentalfactorsinfluencingtheorganizationanditsadministrationwillchange.Thisisagiven.Fewfactorsstandstillforlong,soconstantstudyoftheenvironmentisnecessary.Thus,theHCOadministratorshouldexpectchangeandbereceptivetoit.Manyotherdrivingforcesarepresent.Variousindustrieswillhavedifferentforcesthathelpdeterminethedirectionoftheindustryandtheseforceswillhavedifferentmagnitudesofimportancefromoneindustrytoanother.Table4.1providesasampleenvironmentalanalysisasitmightapplywithinanHCO.
Table4.1:SamplePESTLEimpactanalysisforanHCO
Political
Economic
Medicare/Medicaidreimbursementeligibilityandreimbursementamounts
Economictrendsincreasedordecreasedemploymentandincreasedordecreasedinsurancecoverage
ZoningregulationsthetypesofbusinesseslocatedneartheHCO
Taxationchangesintaxstructuresandchangingdisposableincomeforelectiveprocedures
Governmentalrelationsthelobbyingeffectsofvarioushealthcaregroups
Marketanddistributiontrendsincreasedavailabilityofurgentcarecentersandsatelliteunits
Sociocultural
Technological
Lifestyletrendshealthierlifestyleswithmoreemphasisonprevention
Electronichealthrecordsincreasedneedfortrainingandrecordkeeping
AgingpopulationincreaseingeriatricpatientsandgreaterdependenceonMedicare/Medicaidreimbursements
Value-enhancingITplatformmoreandbettertechnologyavailabilityandincreasedcost
Patienteducationbetter-educatedpatientsaskingmorepertinentquestionsanddoingresearchontreatmentoptions
Newdiagnosticdevicesbetterpatientcareandincreasedusagecost
LegalandHealthcareLegislation
Eco-Environmental
AffordableCareActnewmandatesandinformationrequirements
Wastedisposalverificationofhazardouswastedisposal
HealthInsurancePortabilityandAccountabilityAct(HIPAA)patients’abilitytokeepcurrentcoverage
Energyconsumptionhigherenergyconsumptionleadingtohigheroperatingcosts
StateChildren’sHealthInsuranceProgram(CHIP)eligibilityandreimbursementschedules
Sustainabilityabilitytomaintainexistingandfutureoperations
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4.2 Legislative Processes and Implementa
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4.2LegislativeProcessesandImplementationIssues
Howlegislationaffectsbothplanningandoperationsisanexternalfactorthatrequirescontinuousmonitoring.Federalandstateprocessesmayvary,dependingonindividualstaterulesandregulationsconcerninglegislation.
TheFederalLegislativeProcess
Atthenationallevel,thelegislativeprocesstypicallyinvolvesthefollowingstepsandpolicymakers:
1. Abillisintroducedbyacongressmember.
2. Thebillgoestotheappropriatecommitteeforreviewandhearings.Themajorcommitteeswithjurisdictionoverhealthissuesarethefollowing:
ii. SenateFinance:Medicare,Medicaid,andtheChildren’sHealthInsuranceProgram(CHIP)
ii. SenateHealth,Education,Labor,&Pensions:MostagenciesinHHS;publichealthandhealthinsurancestatutes
ii. HouseWaysandMeans:Medicare
ii. HouseEnergyandCommerce:Medicare(PartsB,C,D),Medicaid,CHIP,publichealth
1. OncethecommitteeapprovesthebillitissenttotheflooroftheHouseandSenateforavote,anditmustpassinbothchamberstobecomelaw.
1. Ifthebillpassesbothchambers,thePresidenthas10daystosignthebillorvetoit.IfthePresidentdoesnothing,itbecomeslaw.
Federalregulations,alsoknownasrules,areissuedbyagenciesandtheseregulationshavetheforceoflaw.Agenciesissueanoticeofaproposedruletoadd,change,ordeleteregulatorytext,whichisfollowedbyseveralstagesofreview,includingapubliccommentperiod.Thefinalrevisedrulebasedonpubliccommentmustallow60daystopassbeforetheruletakeseffect(Aetna,2013).
LandmarkHealthLegislationintheUnitedStates
LegislationpertainingtohealthcarehasalonghistoryintheUnitedStates(TheAssociatedPress,2010).Federalinvolvementinhealthcarebeganwith”AnActfortheReliefofSickandDisabledSeamen”in1798.Sincethen,healthcarelegislationhasbeenpassedatthefederallevel,providingcareforNativeAmericans,maternalandchildservices,andveterans.Themostnotableoftheseactsandtheonesthathavethemosteffectonhealthcareplanningincludethefollowing:
MedicareandMedicaid(1965)Medicareisafederalprogramthatprovideshealthinsuranceforthoseoverage65.MedicareisoneofthelargestpurchasersofhealthcareintheUnitedStates.ThecoverageandreimbursementdecisionsmadebyMedicareaffectthewaysprovidersoperateandhaveamajorimpactonthehealthservicesindustry.SomeMedicarecoverageandreimbursementdecisions(suchasdiagnosis-relatedgroups,orDRGs)havebeenadoptedbytheprivatesector.
Medicaidisaprogramrunjointlybythefederalandstategovernmentstoprovidehealthinsuranceforlow-incomeindividualswhomeeteligibilityrequirements.ArecenttrendinMedicaidisforthefederalgovernmenttoturnallauthorityandresponsibilityfortheprogramtothestates.
ConsolidatedOmnibusBudgetReconciliationActof1985(COBRA).Thisactgivesemployeestherighttocontinuethehealthinsurancecoveragetheiremployerprovidesafterleavingthejob.ItalsomadehospicecareapermanentpartofMedicareandMedicaid.
HealthInsurancePortabilityandAccountabilityActof1996(HIPAA).ThislawstrengthenedtheportabilityofhealthinsurancethatwasfirstauthorizedunderCOBRA.Thislawalsoencouragedtheuseofmedicalsavingsaccounts,improvedaccesstolong-termmedicalcare,andstrengthenedprivacylawsconcerninghealthrecords.
StateChildren’sHealthInsuranceProgramof1997(CHIP).Thisprogramhelpsprovidemedicalcaretochildreninlow-incomefamiliesthatarenoteligibleforMedicaid.
PatientProtectionandAffordableCareActof2010.KnownastheAffordableCareAct,thislawprovidesanarrayofchangesinhealthcare,includingcoveragemandates,acceptanceforinsuranceregardlessofmedicalhistory,reductioninspendingonMedicare,andmorerestrictionsonhealthinsuranceproviders.However,manypartsoftheactarebeingchallengedanddelaysinimplementationhavebeengiventosomeorganizations.Thisactwillhaveamajorimpactonwhoreceiveshealthcareandhowitisadministeredforyearstocome.Thechangesbeingbroughtaboutbythisactareprofoundandoccurringrapidlywithrespecttothemethodbywhichproviderswillbepaidandtheimperativetoimprovethevalueofservicesprovided.
TheEffectsofReformonHCOStrategy
HCOsmustbecomefamiliarwiththefollowingfourkeyconceptsofcurrenthealthcarereformthatwillaffectstrategicplanning:
1. Value-basedpayment
2. Accountablecareorganizations(ACOs)
3. Bundledpayment
4. Bendingthecostcurve
Value-basedPayment
Historically,themodelofreimbursementfortheprovisionofhealthcareserviceshasbeenfee-for-service:ahealthprovider(anorganizationorindividual)ispaidbythevolumeofproceduresorservicesprovided.Thispaymentmechanismtendstoincentproviderstoordermoretests,procedures,andhospitalizationsthanmaybenecessarytoappropriatelycareforpatients.Thefee-for-servicemodelhasbeenblamedfortherapidincreasesinhealthcarecostswithoutaconcomitantimprovementinqualityofcare.Akeycomponentofhealthreformisreplacingthefee-for-servicemodelofpaymentwithvalue-basedpayment.
Undervalue-basedpayment,whichalsoisknownaspay-for-performance(P4P),providersreceivepaymentforservicebasedontheirperformanceorthepotentialoutcomesoftheservice.Tyingpaymenttomeasurableoutcomesinreducingcostsandimprovingqualityisthe”value”propositionsoughtbyhealthcarereform.Thoseproviderswhocanlowercostsandimprovequalityofoutcomes,resultinginimprovedcommunityhealth,willbedistinguishedasvalue-basedproviders.Insomepayerarrangements,beneficiarieswillexperiencehigherout-of-pocketcostsiftheyreceivecarefromaproviderthatisnotdesignatedasvalue-based.Therewillalsobepenaltiesforfailuretomeetperformancetargets;forexample,thewithholdingofpaymentstoacute-carehospitalsthatreadmitapatientwithin30dayswiththesamecomplaint.
Asvalue-basedpaymentmethodsevolve,everyprovidertypewilllikelybeaffectedbysomeformofvalue-basedpayment.Understandingtheplansoflocal,state,andfederalpayerorganizationstoimplementsomeformofvalue-basedpaymentandanalyzinghowthoseplanswillaffecttheHCOwillbecriticalinthestrategicplanningprocess(HealthCareIncentivesImprovementInstitute,2012).
AccountableCareOrganizations
AlthoughACOstakemanyformsandinvolvemanydifferentproviders,allarebasedonagroupofprovidersthatworktogethertointegrate,coordinate,anddeliverafullcontinuumofcaretoadefinedpopulationofpatients.Theseprovidersareaccountabletoboththepatientsandthepayerorganizationfordeliveringqualitycareinacost-effectivemanner.
KeyfeaturesofanACOaretheaggressiveuseofprimarycarephysicianstodistributepreventivecare;careplanning;andpatientmanagementpracticesthatminimizehigh-costhospitalstaysthroughbettercoordinationofcommunityandoutpatientsettings.Thisisanimportantdevelopmentinthedrivetocuthealthcarecostsandcreatesmoreemphasisonprevention.AlthoughanACOcanreceivepaymentthroughavarietyofmethods,paymentformostwillbelinkedtoqualityimprovementsthatalsoreduceoverallcosts.Paymentwillbebasedonreliableandprogressivelymoresophisticatedperformancemeasuresthatsupportimprovementandsavings.
AsignificantconsiderationbyanHCOinthestrategicplanningprocesswillbeparticipationinACOsandothercollaborativearrangementsthatimprovequalityandreducecosts,whetherthesearrangementsaredevelopedbythatHCO,acompetingHCO,acollectionofphysicians,orapayerorganization.Providersacrossthecontinuummustmaintainadegreeofflexibilitytoremainviableandcompetitive(CentersforMedicare&MedicaidServices,March2013).
BundledPayment
Bundledpayment(alsoknownasanepisodicorepisode-basedpayment)isamethodofpaymentinwhichasinglelumpsumispaidforallservicesrelatedtoaparticulartreatmentorcondition(episodeofcare),suchasahipreplacementoracoronaryarterialbypass.Servicesincludedinthesinglepaymentmayencompassphysiciancharges,hospitalcharges,ancillarycharges,outpatient,andevenpre-andpost-acuteservices.
Bundledpaymentisanalternativetocapitationandfee-for-servicepaymentmodels,asitisdesignedtoreducethelackofcoordinationamonghealthcareprovidersandtheduplicationofcareprevalentwithfee-for-serviceandcapitationarrangements.Underabundledpaymentmethod,theorganizationthatreceivesthepaymentmustnegotiatefeesandcostswiththerespectiveparticipantsandservicesinthebundle.Thisresultsinanincreasedemphasisonimprovedcoordination,reductionofredundantservices,andreductionofcostsbecausetheorganizationmaybeatfinancialriskforamountsthatexceedthebundledpayment.Qualitymeasureswillpayanimportantroleindeterminingthevalueofthebundledpaymentprogram.
BundledpaymentisseenbytheCentersforMedicareandMedicaidServices(CMS)asthemosteffectivepaymentmethodtoreduceoverallhealthcarespending.PreparingforbundledpaymentwillbeessentialasanHCOdevelopsastrategicplan.BundledpaymentrepresentsafundamentalshiftinpaymentsbecausethismethodtransfersagreatdealofriskdirectlytotheHCO.ThismethodwillchallengeanHCOtoexamineitsinternaloperations,identifycost-effectivebehaviors,embraceevidence-basedmedicine,andworkcollaborativelywithphysiciansandotherHCOstoreduceredundancyandimprovepatientoutcomes(CentersforMedicare&MedicaidServices,2013).
BendingtheCostCurve
Forthelast20years,healthcarecostshaverisenatafairlysteadyrateof9%peryearanunsustainableascent(TheWashingtonPost,2012).Theobjectofthebending-the-cost-curvepaymentmethodologyistoalterthecurrenttrajectoryofhealthcarecostsnationwide.Changesinpaymentmethodologiessuchasvalue-basedreimbursement,bundledpayment,andcaredeliverymethodsencompassingbettercoordinationandpreventivestrategieswillbeessentialincontrollingcostsoverthelongterm.
Nomatterwhereaproviderfallsalongthehealthcarecontinuum,eachwillbeexpectedtodelivervalue.Foracute-carehospitals,thatcouldmeandecreasingreadmissionsandreducingduplicateandunnecessarytestsandprocedures.Forskillednursingfacilitiesorhomehealthcareagencies,thatmightmeanbettermanagementofunnecessaryhospitaladmissionsorcollaboratingwithacute-carehospitalstoaddresstheirreadmissionandredundantservicesissue.Forpatients,itmaymeanfewercontactswithaphysicianbutgreatercontactwithateamofhealthcareprofessionalsthatworkunderaphysician’ssupervision.Teamsmaybemadeupofphysicianassistants,RNs,pharmacists,nutritionists,physicaltherapists,andmentalhealthprofessionals.Providerswillplacegreateremphasisonpreventivecare,andcarenavigators(alsoreferredtoaspatientcaremanagersorcarecoordinators)willbeinregularcontactwithpatientstoadviseandencouragepreventivecareandhealthierlifestyles.Theresultoftheseeffortswillultimatelybemeasuredintermsofoutcomesbecauseoutcomeswillinevitablydictatepayment.
Valuewillnotbeachievedinisolation.Improvingqualityandreducingcostswillrequirecooperationandcollaborationthathasbeenlargelyabsentfromthisindustry.Thehistoricalpracticeofdischargingfromonevenuetothenextwithlittleregardforoutcomesorperformanceoftheadmittingorganizationwill,inevitably,bereplacedbycaremanagementviaanintegratedcontinuum(Antos,etal.,2013).
Asyoubeginyourstrategicplanningprocess,itwillbeimportantforyoutoknowwhattheprovidersoneithersideofyou,alongthecontinuum,fromlowacuitytohighacuity,aredoing(PromiseHealthcare,2012).Whatreforminitiativesarebeingexploredinyourcommunityandbyyourstate?WhatcollaborationswillbenecessaryforyourHCOtoimproveinternalcapacityandbefinanciallyrewardedundervalue-basedpayment?AseveryHCOisuniqueandnocookie-cutterapproachwillworkforeveryone,puttingBand-Aidsonexistingprocedureswillnotbeenough.Thevoyageforeveryhealthcareproviderwillbetowardgreatervalue.
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4.3 The Five Forces Model of Industry An
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4.3TheFiveForcesModelofIndustryAnalysis
Theforcesofcompetitiongreatlyinfluencethestrategyformationandmarket-opportunitydecisionsofanorganization.Althougheachindustryhasitsownuniquecharacteristics,fivemainforcesarerepresentativeoftheactualdrivingmechanismsofanygivenindustryandareoftenreferredtoasthefiveforcesmodelofindustryanalysis.Thesefiveforces,showninFigure4.2,includethefollowing:
1. Theindustryitselfandthecompetitivedecisionsandactivitiesengagedinbyeachcompany
2. Consumer/buyercomposition
3. Suppliercomposition
4. Thepossibilityofnewentrants
5. Availabilityofgoodproductsubstitutes
Figure4.2:Thefiveforcesmodelofindustryanalysis
Thoughthereareuniquecharacteristicsinanyindustry,fivemainforcesdriveallindustries.
Source:AdaptedfromMichaelE.Porter,Howcompetitiveforcesshapestrategy.HarvardBusinessReview,57,No.2(MarchApril1979),p.141.
Theindustryitselfandtheindividualcompanieswithintheindustryareconstantlyinvolvedindynamicinterplayinanattempttobuildasuccessfulcompetitiveedgeoveroneanother.Thesuccessofoneorganization’sstrategyinaccomplishingthisisbasedinlargemeasureonthestrategiesoftheotherorganizations.Constantmonitoringoftheseinterdependentstrategicmaneuversisrequiredtomaketheadjustmentsnecessarytoimprovecompetitivepositionandachievemarketsuccess.Multipleviewsoftheindustryarenecessary.
Consumer/buyercompositioncanrangefromafew,high-volumepurchaserstoalargenumberoflow-volumepurchasers.Inoneinstance,losingafewcustomerscanbethedifferencebetweensuccessandfailure,while,attheotherextreme,losingthesamenumberofcustomershasessentiallynoimpact.Mostfirmstrytominimizethenumberofcustomerswhocanexertanadverseeffectontheirbusiness.
Suppliercompositionalsohasanimportantinfluenceonthecompetingpositionofindividualorganizations.Therelativeimportanceofthegoodsorservicestheysupplywilldeterminethestrengthoftheircompetitiveinfluenceoverfirmsintheindustry.Theycanhaveapositiveornegativeimpactonprofitmargins,inventorylevels,productquality,andprices.
Thepossibilityofnewentrantsintothemarketisaconstantthreattoalteringmarketshare,productioncapacity,andsupplydistributionwithintheindustry.Thisthreatcanbeminimalwhentherearestrongbarrierstoentry,suchasstrongcustomerloyalty,largecapitalrequirements,difficultyinestablishingdistributionchannels,andstrongresponseofcurrentmarketparticipants.Whenentrybarriersareweakortheexpectedresponseofexistingfirmsisweak,thenthepossibilityofentryisstronger.
Thefifthforceinthemodelistheavailabilityofgoodproductsubstitutes.Thisisamajorthreattoexistingfirmswhenhigh-qualitysubstitutesexistinamplequantityatcompetitiveorcomparableprices.Anexampleofsuchasubstituteinhealthcaremightbeacupunctureformoretraditionalmedicaltreatments.
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4.4 Assessing Environmental Opportunitie
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4.4AssessingEnvironmentalOpportunitiesandThreats
Recall,fromChapter2,thataSWOTanalysisinvolvesanalyzinginternalstrengthsandweaknessesandexternalopportunitiesandthreats.Opportunitiesandthreatsrelatedtotheexternalenvironmentareanalyzedtodetermineifanyaction(strategy)isneededtodealwiththem.Forexample,anursingcentermaynoticethemovetowardhospiceprogramsfortheterminallyill.Whilethehospicephilosophyencouragesastay-at-homeapproachforthedying,thereareoftenneedsforshort-terminteriminstitutionalcaretomanagecomplicatedmedicationregimens.Thenursingcenter,recognizinganopportunityinthisarea,couldoffersuchinstitutionalservicesatlowercoststhanthetraditionalinpatient,acute-carehospital.Thepatientsbenefitfromthelowerchargesandthenursingcenter,fromincreasedusage.Alternatively,thenursingcentermaydecideitdoesnothavethestaffingexpertiseorpharmaceuticalservicestoextendtheservice,eventhoughtheopportunityexists.Ineithercase,opportunitiescannotbepursuediftheyarenotrecognizedandanalyzed.
Thesameistrueforthreats.AnHCOalreadyintroublefrominadequatefundingandinheavydebtwouldfaceevengreaterrisksifitlostakeyleadertoillnessordeathwithoutanypreparationforareplacement.TherippleeffectofbadpublicityregardingthemanagementandexpensesofotherHCOsmayalsobeathreattotheexistenceoratleasttheeffectivenessofanHCO.Uponrecognizingsuchthreats,andanalyzingthepossibleramificationsofevents,anHCOcanavoidmanycrisesbydevelopingthecontingencyplansfordealingeffectivelywithsuchsituations.Somehavereferredtothisprocessasthewhatifandwhatthenanalysis.Inotherwords,askingthequestionsWhatifthishappens?andWhatdowedoifthishappens?helpsanHCOdealbetterwithmajoreventsthatmightbedetrimentaltotheorganization.
Themoreyouknowaboutthepeoplebeingserved,thebetteryoucanmeettheirneeds.Thus,theHCO’spatient/clientbaseshouldbeaprimeelementforstudy.Here,buildingadatabaseisuseful.Manysuccessfulbusinesses,suchasWal-Mart,arecontinuallydoingresearchtolearnmoreabouttheircustomers.AnHCOshoulddothesamething.Informationcanbegatheredonsuchfactorsasmaritalstatus,familysize,ageoffamilymembers,occupations,housing,meansoftransportation,healthcareneeds,reasonsforusingtheHCO’sservices,andlengthoftimeusingtheHCO’sservices.Allofthesearegoodsubjectstogatherinformationaboutbyaskingquestions.
ScanningtheenvironmentofanHCO’soperationforsignificanttrends,especiallyinchangingtimes,isanongoingeffort.Thisstageintheplanningprocessisnotaboutgatheringdata,reportingthatdata,andthenforgettingaboutthedata.TheenvironmentmustbeconstantlymonitoredtohelpensurethattheHCOsurvivesandgrows.
HealthcareOrganizationsandStrategy:Past,Present,andFuture
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4.5 Conducting an Internal Analysis
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4.5ConductinganInternalAnalysis
AfteridentifyinganHCO’svisionandmissionandhavingconsideredtheenvironmentinwhichtheHCOoperates,strategyplannersmustobjectivelyassessthestrengthsandweaknessesoftheorganization’sinternaloperations.HCOadministratorscanlearnfromathleticcoachesinthisarea.Coachesconstantlyassessthestrengthsandweaknessesoftheirownteamaswellastheopponent.Thecoachestrytomaximizetheirteams’strengthsongameday,and,duringpractice,remedytheirteams’weaknesses.
Organizationshavecertainstrengthsthatmakethemuniquelysuitedtocarryouttheirtasks.Conversely,theyhavecertainweaknessesthatinhibittheirabilitiestofulfilltheirpurposes.HCOsthatseekgreatereffectivenessneedtocarefullyevaluatethestrengthsandweaknessesoftheirorganizations.
Identifyingstrengthsandweaknesseswithintheorganizationinvolvesathoroughinternalanalysis,orstrategicaudit,oftheorganization.AcompletestudyoftheHCO’semphasisonitsservicesandhowwelltheyaredeliveredisthegoal.InlookingforstrengthsandweaknessesinthefunctioningofanHCO,strengthrepresentssomesignificantoperationalaspectthatisdoneexceedinglywell,suchasaburncenter.AsignificantoperationalaspectisafundamentalactivitythatislikelytoaffecttheperformanceofanHCOinamajorway.Conversely,aweaknessissomeinadequacyinamajoractivityorresource,suchasfinancialresources,thatreducestheorganization’sabilitytoachieveitsgoals.
Severaldifferentbenchmarkscanidentifywhetheranactivityshouldbeconsideredasastrengthorweakness.Oneinternalstandardishowwellthisactivitymeetsitsoperationalgoalswhencomparedtoothermajorfunctions.Thiscomparisoncanbemadeovertimetoestablishtrendsineffectiveness.AnotherstandardishowwellanHCOhandlesthisactivitywhenthisfunctioniscomparedtothesamefunctioninotherHCOsthatmightbeconsideredimmediatecompetitors.Thisiscalledastrategicgroupcomparison.Anotherimportantbenchmark,forHCOsinparticular,ishowwelltheactivitycontributestotheHCO’sabilitytosatisfytheexpectationsoffundingsponsors.Perhapsthemostfundamentalstandard,however,ishowwellthisactivitymeetstheimmediateandlong-termneedsandinterestsoftheHCO’spatients.
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4.6 Assessing Strengths and Weaknesses:
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4.6AssessingStrengthsandWeaknesses:TheSearchforaDistinctiveCompetence
Thedefinitivegoalofaninternalstrengths-and-weaknessesanalysisistoidentifyadistinctivecompetence.Acorecompetenceisanorganization’sproficiencyinperforminganinternalactivitythatisvitaltoacompany’sstrategyanditsabilitytocompete.Adistinctivecompetenceisafunctionthatanorganizationdoesextraordinarilywell.AdistinctivecompetencerepresentsalevelofmasterythatmakesanHCOextremelyeffectiveinmeetingclients’needs,particularlywhenweconsiderthetypicaleffectivenessofastrategicgroupinthisareaofoperation.Inotherwords,adistinctivecompetenceisa”superstrength”thatprovidesanedgeinservingpatients’needsanddeliveringpatientsatisfaction.Forexample,Nypro(2013)haspartneredinthelaunchofmanyoftheworld’sleadingdiagnostic,drugdelivery,andmedical/surgicalproducts.Itscorecompetenciesincludemanagement-designteamsaswellashigh-speedassemblyandprocessdevelopment.BecauseNyproperformstheseactivitiesextremelywell,theseactivitieshavebecomeadistinctivecompetencyforthecompany(Prahalad&Hamel,1990).
AsystematicwayofidentifyingstrengthsandweaknessesistodividetheHCO’soperationsintomajorsectorsforanalysis.Dependingonthespecificnatureofanorganization,somebasiccategoriesforinternalanalysisincludeoverallmanagementeffectivenessandcompanyresources,financialoperations,marketingoperations,andproductionoperationsorservicefunctions.AgoodplacetobeginiswiththemanagementoftheHCOanditsplanningsystems.
ManagementandPlanningSystems
Aspecifictargetofaninternalstrengths-and-weaknessesanalysisshouldbeastudyofthemanagementsystem.Management’swillingnesstotakerisksaswellasitsvalues,skills,ages,andexperiencesareallimportantaspectsofanorganization’sabilitytorespondtoopportunities.IdentifyingtheeffectivenessofanHCO’shumanresourcesmanagementisalsoanobjectiveofthisportionoftheanalysis.Thiscanincludeissuesofthefirm’sorganization,staffturnover,andtherecruitmentandmoraleofhealthcareprofessionals.
Forexample,thedemographicsofanHCO’sprofessionalstaffareimportantinunderstandingthepotentialeffectivenessofthatHCO’sservicecapabilities.Appropriatequestionsincludethefollowing:
Whatarethebasicstaffingcategoriesbyprofessionrequiringourattention?
Howmanyprofessionalsdowehaveineachcategorybyagegroup?
Whatpercentageofprofessionalstaffwillberetiringinthenearfuture?
Whatisthenatureofdemandandsupplyfortheseprofessionalsthatwillaffectthelevelofrecruitingcompetition?
Stillanothertargetforanalysisconcernstheorganization’sculture,orpersonality.ThefollowingquestionsconcerntheculturalprofileofanHCO:
Isourservicephilosophyconservativeorliberal?
Arewepatient/client-drivenordowefocusmoreonourthird-partypayers’orfinancialsponsors’expectations?
DoesourHCOcollaboratewithothercommunityagenciesandinstitutions?
AsanHCO,whatareourprimaryinterestsandsocialvalues?
WhatisthepowerstructureofourHCO?Whoreallymakesthedecisionsandbywhatprocess?
Italsoisimportanttoanalyzetheeffectivenessofpresentprograms.Whatarethey?Istheleadershipforeachprogrameffective?Howmuchinterestandsupportdoeseachprogramhave?Amanagementquestionnairecanbedevelopedthatprov
