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)
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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
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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
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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

• SPECIALIZATION / NICHE BY SERVICE/PRODUCT, BY
  MARKET OR BOTH
• VERTICAL INTEGRATION, BOTH BACKWARD AND FORWARD
• HORIZONTAL INTEGRATION
• DIVERSIFICATION ( CONCENTRIC OR CONGLOMERATE)
• RETRENCHMENT OR DIVESTITURE
• 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