Why is external environmental analysis important for a health care organization’s strategic planning process? Provide several specific examples of the importance to support your answer.
External environmental analysis is essential for healthcare institutions because it provides an avenue to understand and adapt to forces beyond the management’s control. These forces/influences dictate and affect productivity of the healthcare facility in terms of strategic planning. The four components of analysis include competitors, suppliers/providers, clients/patients, and owners (Ledlow, & Coppola, 2011).
Client: The healthcare institution must consider the socio-economic and other demographic factors to determine what procedures and expansion processes will be able to sustain the population. This involves studying the growing needs and levels of service that would sufficiently match growth in population (Ledlow & Coppola, 2011). An example would be expanding the maternity ward or other wards to contain the increasing cases of in-house treatment. This should resonate with an increase in specialized medical practitioners to manage the influx of patients in an area, thus maintaining the quality of service.
Competitors: These have to be critically evaluated to ascertain distinct characteristics that set them apart from the institution. This may be in terms of hiring policies, affiliation to healthcare institutions such as universities/ colleges for capacity building and management of costs in terms of charges. This is an identification of weaknesses/ strengths in relation to competitors and how this influences service delivery.
Providers: Differentiation of suppliers based on their unique characteristics such as price, delivery quality/quantity/ frequency, timeliness and reliability is essential in maintaining control of productivity (Ledlow, & Coppola, 2011). This can occasionally call for a partnership that reduces overheads and extra staff hiring for the institution. Some institutions sub-contract the purchases and supply functions to experts to increase efficiency and maintain focus on primary healthcare service provision.
Owners: whether the government, regulators, or private individuals determine capitalization and general funding of the institution. Understanding their motives, timing and decisions can help customize an institution’s priorities and maintain productivity. Such is the situation where the owners desire to establish a heart surgery unit based on a returning long-serving member who has just qualified to run the department. This may not be in the interest of the healthcare institution due to the inability to sustain the department based on the low population in the area.
Environmental analysis is not perfect, in fact far from it. What are the limitations of external environmental analysis in health care?
Changes in the external environment are not absolutely predictable despite thorough scrutiny because they result from a versatile environment economically, politically and regulatory among other aspects (Fallon, Begun, & Riley, 2013). The rate of change is another element that throws off strong prediction from an excellent environmental analysis process. The speed of change rarely provides room to consider developments that may affect performance in the future. Most analysts will use simplified data to make decisions that is generalized. Due to the speed of change, analysts’ data that was detailed will often be scanty or obsolete because the data can only serve present decisions. Furthermore, for any data or information to suffice, there is a need to engage different people with different perceptions to carry out reviews. This includes competitor agents and disgruntled stakeholders. Most organizations would prefer to hide under the ‘confidentiality’ clause to rely on a small circle of assessors thus breed familiarity, leading to compromise of integrity.
Environmental analysis is supposed to be constant and vigorous in order to achieve maximum accuracy in prediction and strategic planning for the future. However, most organizations cannot maintain a fully supported department because the research is a cost center. The amount of budget required to access external environment sources of data is enormous due to the time consumed and quality requirement. Most organizations fall for secondary data that is easily accessed on websites, news media, and hearsay rather than fund active research projects (Fallon, Begun, & Riley, 2013). The preferred trend is dependency on limited analysis consultants who share clients thus raising an issue of bias. The tough economic times have ensured organizations rely on general trends and play within common grounds as regulated by authorities to save on consultancy. Therefore, an oversight is developed on the important elements of external environment analysis leading to laxity. Therefore, the results of these studies fail to make an impact due to the lack of enforcement by experts or unwilling users who cannot absolutely interpret the facts provided from such analysis.
Most external environment analysis efforts are intensified when a crisis is approaching or is suspected to loom in the near future. Therefore, lack of prior preparation and clarity of the problem often yields excess data that may be good or irrelevant. Therefore, there is a probability of eliminating the right data/ information and retaining the wrong data/ information. This raises the problem of paralysis by analysis because of having the wrong tools for the right job (Ledlow, & Coppola, 2011). Therefore, the preferred data from the short listing and elimination process may be based on assumptions that are unfounded but necessary due to time and budget constraints.
When analyzing competition, organizations base their decisions on the financial strengths and existing data on their activities. However, it is impossible to quantify the extent of intangible resources at their disposal including manpower and fresh acquisitions. It is impossible to carry out an absolute assessment of preferred options of rivals and in their correct order of execution (Fallon, Begun, & Riley, 2013). New entries into the market are a factor that often affects existing market demographics and can render useless existing data and trends of productivity exhibited by the current players. Finally, the client has a hold through his/ her purchasing power that can be manipulated by personal preferences. The analysts can only consume what they pick during the study and cannot hold consumers against their change in preferences.
Scenario One: Speaks of improving primary care through shifting payment systems to favor patients. Reduction of costs of primary healthcare is possible through paying close attention to preventive care and using more of un-specialized healthcare and community members to ensure compliance. Such a shift was made through the use of Electronic Medical Reports as well as the Patient Protection and Affordable Care Act of 2010 (Ginter, Duncan, & Swayne, 2013). Employers were relieved off the duty of providing medical insurance that was shifted to health insurance agents.
Scenario Two: Persistent challenges in the economy have seen a decline in government spending on healthcare thus compromising the quality of healthcare or necessitating a rise in unregulated practices beyond legal/ insurance requirements. This exposes patients to a high risk of medical malfunctions without proper corrective/ recovery programs. Costs of insurance cover will therefore be split into three categories; on premium fee targeting high quality, Low-cost fees demanding out-of-pocket settlement and Integrated/ Semi-integrated services that combine the first two options (Ginter, Duncan, & Swayne, 2013).
Scenario Three: Community Care Health Homes (CCHHs) are the vehicle preferred to capture over 85% of the population and promote the use of Electronic Medical Records (Ginter, Duncan, & Swayne, 2013). The social aspect of health especially education can be effectively regulated through engaging this system while keeping the cost of medical care at manageable levels. Economic models that cover medical insurance as well as costs can be launched here since majority of the payment is done through fee-for-service system. It is much easier to launch such campaign models in the established structures of the CCHHs.
Scenario Four: Encourages the use of technology to distribute healthcare tips and guidance to individuals. Individuals at various levels of interests and incomes, including simple applications on the internet or phones, having avatars for simulations as well as organized sessions with actual physicians termed as concierge services, can now manage primary care (Ginter, Duncan, & Swayne, 2013).
Decision: I prefer scenario one because the only way to enhance responsibility in the community is through empowering them to afford healthcare. Furthermore, preventive health care is educational and easy to manage by individuals. If the regulators/ government run the program into the year 2025, we would experience delays in implementations and more money will be spend discussing rather than funding self/community initiatives. Shifting power to preventive measures lifts the burden from the already overburdened practitioners. The healthcare institutions enrollment statistics are on the decline, a worrying trend indicating sever healthcare staff shortages in the future (Ledlow, & Coppola, 2011). I would initiate preventive care certification and constantly research on reward systems that would support the livelihoods of participants in my community.
Fallon, L., Begun, J. & Riley, W. (2013). Managing health organizations for quality and performance. Burlington, Mass.: Jones & Bartlett Learning.
Ginter, P. M., Duncan, W. J., & Swayne, L. E. (2013). Strategic Management of Healthcare Orgnizations (7th ed.). San Fransisco, CA: Jossey-Bass.
Ledlow, G. & Coppola, N. (2011). Leadership for health professionals: theory, skills, and applications. Sudbury, Mass.: Jones and Bartlett.