HSAD 7302 / PBHL 7203 HEALTH ADMINISTRATION

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HSAD 7302 / PBHL 7203HEALTH ADMINISTRATION

• STRATEGIC MANAGEMENT

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THREE BASIC STRATEGIC MANAGEMENT QUESTIONS

• Where are we going and why?
• How are we going to get there?
• How will we know if we have arrived?
• Strategic Assumption Resources are limited

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10 STEP STRATEGIC PLANNING PROCESS

• 1. EXTERNAL ENVIRONMENTAL ASSESSMENT
• What are the key external changes
  impacting on the
• organization?
• 2. INTERNAL ENVIRONMENTAL ANALYSIS
• SWOT analysis
• 3. DEVELOP THE ORGANIZATIONAL MISSION, VISION AND
• VALUES
• What are the values of the organization?
• What will we look like in 5-10 years?
• How will we impact on the community we
  serve?

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SWOT ANALYSIS

• STRENGTHS OF ORGANIZATION
• WEAKNESSES OF ORGANIZATION
• OPPORTUNITIES FOR THE ORGANIZATION
• THREATS TO THE ORGANIZATION

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MISSION, VISION, VALUES

• MISSION
• GENERAL STATEMENT OF THE PURPOSE AND FUNCTION
  OF THE
• ORGAIZATION IN THE COMMUNITY IT SERVES
• VISION
• GENERAL STATEMENT OF WHAT THE ORGANIZATION IS
  TRYING TO
• BECOME
• VALUES
• GENERAL STATEMENT OF THE MORAL BASIS FOR DECISION
  MAKING
• AND BEHAVIOR WITHIN THE ORGANIZATION

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SAMPLE MISSION STATEMENTS

• St. Vincent, Little Rock
• The mission of St. Vincent Health System and
  Catholic Health Initiatives (CHI)
• is to nurture the healing ministry of the Church
  by bringing it new life, energy
• and viability in the 21st Century.
• Baptist Health System, Little Rock
• Baptist Health exists to provide quality
  patient-centered services, promote and protect
  the
• voluntary not-for-profit healthcare system,
  provide quality health education and respond
• to changing needs of the citizens of Arkansas
  with Christian compassion and personal
• concern consistent with our charitable purpose.
• Methodist Health Care System, Houston, Texas
• To provide high quality, cost-effective health
  care that delivers the best value to
• the people we serve in a spiritual environment
  of caring in association with
• internationally recognized teaching and
  research.
• Texas Health Resources, Dallas, Texas

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SAMPLE MISSION STATEMENTS

• Southwest Regional Medical Center, Little Rock
• To meet and, whenever possible, exceed the
  healthcare expectations of our customers.
• To provide excellence in healthcare
• To provide an environment in which our people
  work together towards continuously improving the
  quality of services for patients, physicians and
  employees.
• To support continuing education activities
  and training of staff to maintain a high level of
  performance.
• Henry Ford Health System, Detroit
• To improve human health through excellence in
  the science and art of health care and healing.
• Saline Memorial Medical Center, Benton
• Saline County Medical Center is the health
  care leader for Saline County that provides
  quality services for our customers to enhance
  health and quality of life.
• Rebsamen Medical Center, Jacksonville
• To promote good health in our community and
  support healthcare expectations of our
  customers.

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SAMPLE VALUE STATEMENTS

• St. Vincent, Little Rock
• Reverence, Integrity, Compassion, Excellence
• Baptist Health System, Little Rock
• Service, Honesty, Respect, Stewardship,
  Performance
• Methodist Health System, Houston, Texas
• Integrity, Compassion, Accountability,
  Respect, Excellence
• Henry Ford Health System, Detroit
• Respect for people, High performance, Learning
  and continuous improvement, A social conscience
• Rebsamen Medical Center, Jacksonville
• Do the right thing for the right reason,
  Operational
• excellence, Value to the health system, Equal
  respect
• among team members, Serve our customers.

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SAMPLE VISION STATEMENTS

• Baptist Health System, Little Rock
• Shared Christian values of service, honesty,
  respect, stewardship and performance, combined
  with a
• commitment to customers satisfaction through
  continuous improvement, allows Baptist Health to
  unite
• Physicians, Nurses, Employees, Technology and
  Access into the most comprehensive healthcare
• provider, delivering total health services to the
  citizens of Arkansas. Serving the spiritual,
  emotional
• and physical needs of patients from the
  inception of life to support at lifes end means
• compassionately providing total health from
  prevention to long-term care.
• SALINE MEMORIAL HOSPITAL, BENTON
• Saline County Medical Center, while maintaining a
  sense of community and as a partner in a health
• care system, commits its resources to meet the
  needs of our community, which includes education,
  
• state-of-the art service in a caring environment
  and promotion of wellness and quality of life.
• HENRY FORD HEALTH SYSTEM, DETROIT
• To put patients first by providing each patient
  the quality of care and comfort we want for our
  families
• and for ourselves.

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10 STEP STRATEGIC PLANNING PROCESS

• 4. DEVELOP AND EVALUATE A SET OF GOALS AND
  OBJECTIVES TO IMPLEMENT THE VISION AND MISSION.
• GOALS BROAD STATEMENTS
• GOAL 1 EXPAND HOME HEALTH SERVICES
• OBJECTIVES QUANTIFIED GOALS
• OBJECTIVE 1.1 ADD FIVE RNS BY 12/31/04
• OBJECTIVE 1.2 CONTRACT WITH TWO
• ADDITIONAL
  MANAGED CARE
• ORGANIZATION
  BY 12/31/04.

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BOSTON CONSULTING GROUP(RESOURCE PRODUCING OR
RESOURCE CONSUMING PRODUCTS AND SERVICES)
MARKET GROWTH HIGH STARS QUESTION MARKS
MARKET GROWTH LOW CASH COWS DOGS (HOGS)
HIGH LOW
MARKET SHARE MARKET SHARE
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10 STEP STRATEGIC PLANNING PROCESS

• 5. DEVELOP AND EVALUATE A SET OF ALTERNATIVE
  STRATEGIES (TACTICS) TO IMPLEMENT THE
  OBJECTIVES.
• Objective 1.1 ADD FIVE RNS BY 12/31/04
• Alternatives
• STRATEGY1. Hire new RNs
• STRATEGY2. Agency staffing
• STRATEGY3. Part-time contracts
• STRATEGY4. Move current employees

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OFFENSIVE-DEFENSIVE STRATEGIES SPORTS GAMES

• BASKETBALL
• FOOTBALL
• SOCCER
• CHECKERS
• POKER
• AUTO RACING
• BASEBALL
• WATER POLO
• MONOPOLY

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10 STEP STRATEGIC PLANNING PROCESS

• 6. SELECT THE BEST ALTERNATIVE
• DEFINE YOUR DECISION RULES FOR SELECTING
• ALTERNATIVES AND APPLY TO ALTERNATIVES.
• 7. DEVELOP AN IMPLEMENTATION PLAN
• OBJECTIVE 1.1 HIRE 5 NEW RNS BY 12/31/04
• STRATEGY 1 HIRE RNS
• ACTION 1 ADVERTISE IN REGIONAL MEDIA
• ACTION 2 PROVIDE RECRUITMENT BONUS FOR
• CURRENT STAFF
• 8. IMPLEMENT THE PLAN
• WHO? WHEN? HOW? FROM IMPLEMENTATION
  PLAN

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10 STEP STRATEGIC PLANNING PROCESS

• 9. EVALUATE PERFORMANCE TOWARDS THE VISION,
  MISSION, GOALS AND OBJECTIVES.
• HOW WILL WE KNOW IF WE HAVE ARRIVED?
• DID WE HIRE THE 5 NEW RNS BY 12/31/04?
• 10. REVIEW AND REVISE PLAN AS NEEDED

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Strategy Approaches

• PRESCRIPTIVE APPROACH
• Design School CEO can design the strategic plan
• Planning School Department of Planning designs
  the strategic plan
• Positioning School Focus of planning is on
  positioning organization in market
• DESCRIPTIVE APPROACH
• Strategy is the outcome of organizational
  learning rather than careful planning

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STRATEGY TERMS

• COMPETITIVE ADVANTAGE
• Achieve market advantage as provider of first
  choice
• COOPERATIVE ADVANTAGE
• Achieve market advantage by the network of
  relationships formed
• VALUE ADDED
• For customers, outcomes are greater than costs
  
• VALUE OUTCOME/COST

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HEALTH CARE MARKET STRUCTURE

• ATOMISTIC - MANY SMALL SELLERS
• OLIGOPOLISTIC FEW LARGE
• SELLERS
• MONOPOLISTIC MAJOR SELLER

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MARKET SHARE

• BREATH OF MARKET SHARE
• 15 MARKET
  SHARE IN THE
• 
  TARGETED MARKET
• DEPTH OF MARKET SHARE
• 
  80 MARKET SHARE FOR
• 
  HEALTH SERVICES USED BY
• 
  THE 15 MARKET SHARE

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STAGES OF MARKET GROWTH

• Emerging Growth Mature Decline

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STAGES OF MARKET GROWTH
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STAGES OF MARKET GROWTH
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MILES AND SNOW TYPOLOGY
PROSPECTORS Frequently search for new market opportunities and regularly engage in experimentation and innovation. May not be the most efficient competitors. ANALYZERS Maintain stable operations in some areas, usually their core product or business, but also search for new opportunities and engage in market innovations. Characteristically they watch competitors and rapidly adopt those strategic ideas that appear to have the greatest potential.
DEFENDERS Organizations that engage in little search for additional opportunities for growth and seldom make adjustments in existing technologies, structures or strategies. They devote primary attention to improving the efficiencies of existing operations. REACTORS Organizations that perceive opportunities and turbulence but are not able to adapt effectively. They lack consistent approaches to strategy and structure and make changes primarily in response to environmental pressures.
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MICHAEL PORTER COMPETITIVE ADVANTAGE

• DEGREE OF COMPETITIVENESS IN A MARKET

NEW ENTRANTS IN MARKET
INDUSTRY COMPETITORS INTENSITY OF RIVALRY
BUYERS
SUPPLIERS
SUBSTITUTES
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INTENSITY OF RIVALRY

• NUMEROUS COMPETITORS
• EQUALLY BALANCED
• DIVERSE
• LIMITED DIFFERENTIATION
• HIGH FIXED COST
• SLOW INDUSTRY GROWTH
• HIGH EXIT BARRIERS
• LACK SWITCHING COST

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NEW ENTRANTS IN MARKET

• MAJOR ENTRY BARRIERS
• REGULATORY REQUIREMENTS
• CAPITAL REQUIREMENTS
• BRAND IDENTITY
• ECONOMIES OF SCALE
• PRODUCT DIFFERENCES
• COST ADVANTAGE

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BUYER(HEALTH INSURANCE, EMPLOYER, PATIENT,
HOSPITALS)

• MAJOR BUYER FACTORS
• BUYER CONCENTRATION
• PRICE SENSITIVITY
• BUYER SWITCHING COST
• BUYER INFORMATION
• BRAND IDENTITY
• BUYER LEVERAGE

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SUPPLIER FACTORS(INPUTS FOR PRODUCTION OF HEALTH
SERVICES)

• MAJOR SUPPLIER FACTORS
• SUPPLIER CONCENTRATION
• SWITCHING COST
• IMPORTANCE OF VOLUME
• FEW SUBSTITUTES
• DIFFERENTIATION OF INPUTS

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SUBSTITUTES(CAN REPLACE EXISTING CARE MODALITY)

• SUBSTITUTE THREATS
• TECHNOLOGICAL DEVELOPMENT
• PRICE
• SWITCHING COST LOW
• BUYER PROPENSITY TO SUBSTITUTE
• PROXIMITY

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MICHAEL PORTER

• GENERIC STRATEGIES
• COST
• DIFFERENTIATION
• FOCUSED COST
• FOCUSED DIFFERENTIATION

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PORTERS COMPETITIVE ADVANTAGE
LOWER COST DIFFERENTIATION
BROAD TARGET MARKET COST LEADERSHIP DIFFERENTIATION
NARROW TARGET MARKET COST FOCUS DIFFERENTIATION FOCUS
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PORTERS VALUE CHAIN FRAMEWORK
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MICHAEL PORTER

• FOUR CORPORATE STRATEGIES
• PORTFOLIO MANAGEMENT
• DIVERSIFICATION THROUGH ACQUISITION
• RESTRUCTURING
• RESTRUCTURE BUSINESS UNITS
• CHANGE MANAGEMENT, ADD TECHNOLOGY, TRIM FAT
• TRANSFERRING SKILLS
• DEVELOP INTERRELATIONSHIP AMONG UNITS
• TRANSFER SKILLS AMONG UNITS
• SHARING ACTIVITIES
• SHARE ACTIVITIES THAT ENHANCE THE PRODUCT
• COLLABORATION ENCOURAGED AND REINFORCED

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GENERIC STRATEGIES

1. SPECIALIZATION / NICHE BY SERVICE/PRODUCT, BY
   MARKET OR BOTH
2. VERTICAL INTEGRATION, BOTH BACKWARD AND FORWARD
3. HORIZONTAL INTEGRATION
4. DIVERSIFICATION ( CONCENTRIC OR CONGLOMERATE)
5. RETRENCHMENT OR DIVESTITURE
6. STRATEGIC ALLIANCES

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HORIZONTAL INTEGRATION

• LATERAL LINKING OF ORGANIZATIONS WITH SIMILAR
• FUNCTIONS TO
• IMPROVE OPERATING EFFICIENCY-ECONOMY OF SCALE
  (LOWER AVERAGE COST CURVE)
• JOINT PURCHASING POWER
• JOINT MARKETING-MARKET POWER
• MANAGEMENT EXPERTISE
• GEOGRAPHICAL INTEGRATION
• POLITICAL POWER -SIZE

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HORIZONTAL INTEGRATION
HOSPITAL A
HOSPITAL B
HOSPITAL C
NURSING HOME A
NURSING HOME C
NURSING HOME B
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VERTICAL INTEGRATION

• BACKWARD VERTICAL INTEGRATION
• INCORPORATING WITHIN THE ORGANIZATION THE
• STAGES OF PRODUCTION TO
• INCREASE OPERATING EFFICIENCY (REDUCE AVERAGE
  PRODUCTION COST)
• CAPTURE MARKETS
• INCREASE COORDINATION OF CARE

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BACKWARD VERTICAL INTEGRATION
HOSPITAL
MEDICAL GROUP
NURSING SCHOOL
ALLIED HEALTH SCHOOL
DURABLE MEDICAL EQUIPMENT
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FORWARD VERTICAL INTEGRATION

• FORWARD VERTICAL INTEGRATION
• (PRODUCTS OR SERVICES ARE INPUTS TO OR
• OUTPUTS FROM OTHER COMPONENTS OF THE
• ORGANIZATION)
• INCORPORATION OF CHANNELS OF DISTRIBUTION
• INTO THE ORGANIZATION TO
• INCREASE MARKET SHARE
• INCREASE COORDINATION OF CARE
• INCREASE OPERATING EFFICIENCIES
• INCREASE COMPREHENSIVENESS

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FORWARD VERTICAL INTEGRATION
HOSPICE
NURSING HOME
HOME HEALTH
REHAB FACILITY
HOSPITAL
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INTEGRATED DELIVERY SYSTEM

• A SINGLE ORGANIZATION THAT PROVIDES A
  COMPREHENSIVE RANGE OF HEALTH SERVICES AND
  PROVIDING INSURANCE/FINANCING FOR THOSE SERVICES.
  THE ORGANIZATION GENERALLY HAS ELEMENTS OF
  HORIZONTAL AND VERTICAL INTEGRATION.

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INTEGRATED DELIVERY SYSTEM
OUTPATIENT
MCO/HMO FINANCING
INFORMATION SYSTEM
HOSPITAL
HOME HEALTH
RURAL CLINICS
PHYSICIANS
SNF
DME
REHAB
MENTAL HEALTH
LAB
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ORGANIZATIONAL STRATEGIES

• MARKET SHARE BUILDING
• MARKET SHARE HOLDING
• DIVERSIFICATION/PORTFOLIO
• VERITICAL INTEGRATION
• HORIZONTAL INTEGRATION
• DIVESTITURE

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OWNERSHIP STRATEGIES

• PURCHASE
• LEASE
• JOINT VENTURE
• CONTRACT
• NETWORK
• ALLIANCE

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THREE BASIC STRATEGIC MANAGEMENT QUESTIONS

• Where are we going and why?
• How are we going to get there?
• How will we know if we have arrived?
• Strategic Assumption Resources are limited