Conducting an Environmental Analysis: Jims Care Center - Case Study Example

Conducting an Environmental Analysis: Jim’s Care Center Corey Sutton Dr. Kadrie Health Service Administration Capstone Date of Submission: Table of Contents Table of Contents 2 External forces affecting Jim’s Care Center 3 Declining coverage from medical insurance providers 3 Legislative changes in health care policy 4 Internal factors to be considered for Jim’s Care Center 4 Maintaining good relations with employees 4 Adaption of new technology 5 Impact of the external and internal forces on Jim’s Care Center’s strategies 6 Recommended strategy that would aid strategic management of Jim’s Care Center 7 References 9 External forces affecting Jim’s Care Center Declining coverage from medical insurance providers One of the most important forces of the external environment is the declining reimbursements from health insurance providers due to the ongoing global economic slump, which has also had its effects in the US market. This is to be considered during strategic planning of Jim’s Care Center. Medical insurance in the US can either be available through an employer, a government insurance program such as, the Medicaid, or private insurance companies (Obama Care Facts, n.d.). Due to the economic crisis, unemployment in the US has increased by a large percentage, resulting in additional burden for the medical insurance providers. Since employer-assisted medical insurance, like, the Social Security Income fund, is collected from the monthly income of US citizens, it has led to a falling number of contributors and a rising number of claimants. As per a market research, the government expenditure on insurance programs, such as, Medicaid, has increased by around $3.5 billion in the year 2008 alone, owing to increasing number of claimants. This has led to many of the states opting out of the PPACA program that mandates them to increase spending on health insurance of citizens (Kaiser Family Foundation, 2008). The economic crisis has also had adverse impact on the financial performance of private insurance companies, in the form of less number of citizens opting for private insurers and higher operational costs due to rising inflation. This has also led them to take severe measures such as, initiating reductions in the extent of coverage and reimbursement of health expenses. Legislative changes in health care policy Another major factor to be considered, during strategic planning of Jim’s Care Center, is the health care policy of the government. There has been a significant shift in the federal policy since the Patient Protection and Affordable Care Act (PPACA). Under this act, both insured and uninsured American citizens are guaranteed rights to receive treatment and medical attention at lower rates. This has created a stir in the medical industry, since operational costs are incrementally rising, amidst an economic crisis. The PPACA act has also mandated state governments to increase spending towards medical care of citizens, who belong to the lower income bracket and cannot afford to bear personal health expenditures (Odom, Owen, Valley and Burrell, 2011). Since the implementation of the PPACA act, it has created a huge uproar among states as they are already cash-starved due to increasing unemployment and decreasing income. It led to participating in PPACA being an option. Consequently, 21 states have opted out of the act, including Alaska, Florida, Alabama, North Carolina, Louisiana, Georgia, Texas, Maine, Utah and Wisconsin (Kaiser Family Foundation, 2014). The split opinion on PPACA and legal challenges to the act has created a shroud of mystery and uncertainty over the direction of the US government’s national health care policy (Cowley, 2014; Associated Press, 2014; Picchi, n.d.). Internal factors to be considered for Jim’s Care Center Maintaining good relations with employees One important internal factor that the management of Jim’s Care Center needs to consider in strategic planning for the future is to acquire and retain a talented pool of employees. An important objective of organizations, belonging to the health care sector, is to aid and treat people ailing from illnesses. To do this, every organization must acquire kind-hearted, considerate and concerned individuals, who regard taking care of their patients as a part of their life and not simply a duty. Such employees must also possess sound theoretical background and practical experience of what they do, since wrong treatment of a patient can have drastic consequences on the patient’s family, the employee concerned and the organization (American Hospital Association, 2014). In a three-year survey, concluded by the Economic Policy Institute in 1998, the importance of employee relations was scrutinized. It was observed that a greater degree of understanding between the management and employees facilitated a higher level of engagement and self-driven participation from the employees and resulted in higher revenues. It was also observed that the sharing of patient data, among the management, doctors and nurses, was critical to faster cure and well-being of patients (Robert Wood Johnson Foundation, 2014). The results imply that fostering favorable employee relations is a very important tool for serving patients, earning brand equity and maintaining profitability. To summarize, in order to acquire, maintain and retain a talented pool of employees, Jim’s Care Center incorporated maintaining good employee relations in its strategic planning. Adaption of new technology Some of the avenues of health care where technology plays a huge role are remote operating tools, drug delivery system of medicines, real time communication systems, hygiene and sanitation equipments, surgical tools and equipments and advanced diagnosing equipments. The relationship between technology and health care is dynamic, where life-saving processes and machines are constantly invented to enable treatments that were never possible. Technology also gives sufficient leverage to an organization against its competitors. While an objective of research on new technology in the health care sector is to introduce previously undoable treatments, the other objective is to attain cost-effectiveness. Thus, migrating towards the latest technology also saves an organization sufficient operating costs. Technology will define the future of health care sector and in order to equip for the future, Jim’s Care Center strategic thinking and planning should focus on adoption of latest technology. Impact of the external and internal forces on Jim’s Care Center’s strategies Jim’s Care Center should engage in effective strategic thinking and planning for gaining sufficient long-term competitive advantage in the changing health care sector. To achieve good strategic thinking and planning, it must focus on its core values, mission and service experience extended to its patients; and assess the trends and developments in the competitive environment of business. Two of the most effective strategic thinking and planning tools are PESTEL Analysis (Jurevicius, 2013) and SWOT Analysis (JRC European Commission, 2007). PESTEL Analysis is a strategic planning tool to analyze the social, political, legal, economic, environmental and technological trends and changes in the industry. From Jim’s Care Center’s perspective, PPACA is a dominant element of legal and political factors; whereas declining insurance reimbursements is a dominant element of both social and economic factors, mainly due to increasing unemployment rate of claimants and poorly performing economy. Since Jim’s Care Center has to run profitably and serve patients, it not only cannot refuse to admit patients due to low income, but also cannot absorb losses from unreimbursed treatment expenses. Thus, these two external factors deserve prime consideration while formulating competitive strategies. SWOT Analysis is a strategic planning tool to study and improve the internal factors of an organization, by identifying the organization’s strengths, weaknesses, opportunities and threats. Since an organization’s internal environment is made by its people and business process, employees working in the organization and the technology and tools that they use, are of utmost importance. Maintaining good employee relations and latest technology would significantly increase the competitiveness of the organization and provide strategic advantages. On the contrary, failure to do so would first list these factors as the organization’s opportunities, then weaknesses and when competitors make significant use of them, the factors would figure as threats. Recommended strategy that would aid strategic management of Jim’s Care Center Strategic management is the process of managing the implementation and performance of strategies that have been formulated after intense strategic thinking and planning. Judging by the fact that an increasing number of patients are availing health care services and that the reimbursements provided by medical insurance companies are declining, the recommended strategy would be to achieve cost-minimization in operations and offering no-frills, but high quality treatment to patients, since quality is one of the most important aspects of health care services (Alavi and Yasin, 2008; Dey, Hariharan and Brookes, 2006). Cost minimization can be achieved by using energy-efficient lighting systems; contracting maintenance crew, instead of appointing them full time; replacing outdated medical equipments with new, cost effective technologies; orienting existing suppliers to supply cheaper resources or switching supplier base to a more cost-effective one; contracting doctors based on demand, instead of employing them permanently; and lastly, settling all outstanding employee issues and grievances to avoid legal hurdles. No-frills packages can be offered by using cost-effective solutions in standard packages, such as, basic beds, smaller rooms and low-cost meals. Entertainment options such as, digital and print media, can be made optional in suites, along with luxury beds and expensive meals. To avoid payment default, a person requiring immediate assistance may be admitted as part of a no-frills package, with transfer options to suite only upon an advance payment of five days. The advance payment would be non-refundable to the extent of number of days unused. The advantage from this strategy would be that cost of treatment would be lower and unbundling luxury options would make people sure of what they need and what they do not. Moreover, even if medical insurers refuse to reimburse treatment charges, the patients can pay them back on their own. References Alavi, J. and Yasin, M.M. (2008). The role of quality improvement initiatives in healthcare operational environments. International Journal of Health Care, 21(2), 133-145. American Hospital Association. (2014). Working with Employees. Retrieved from http://www.aha.org/advocacy-issues/employeerelations/index.shtml. Associated Press. (2014). Tennessee bill would make ObamaCare exchanges illegal. Retrieved from http://www.foxnews.com/politics/2014/01/15/tennessee-bill-would-make-obamacare-exchanges-illegal/. Cowley, G. (2014). Obamacare survives another court challenge. Retrieved from http://www.msnbc.com/msnbc/obamacare-survives-another-court-challenge. Dey, P.K., Hariharan, S. and Brookes, N. (2006). Managing healthcare quality using logical framework analysis. Managing Service Quality, 16(2), 203-222. JRC European Commission. (2007). SWOT (Strengths Weaknesses Opportunities and Threats) Analysis. Retrieved from http://forlearn.jrc.ec.europa.eu/guide/4_methodology/meth_swot-analysis.htm. Jurevicius, O. (2013). PEST & PESTEL Analysis. Retrieved from http://www.strategicmanagementinsight.com/tools/pest-pestel-analysis.html. Kaiser Family Foundation. (2008). Medicaid, SCHIP and Economic Downturn: Policy Challenges and Policy Responses. Retrieved from Retrieved from http://kaiserfamilyfoundation.files.wordpress.com/2013/01/7770es.pdf. Kaiser Family Foundation. (2014). State Decisions on Health Insurance Marketplaces and the Medicaid Expansion, as of December 11, 2013. Retrieved from http://kff.org/health-reform/state-indicator/state-decisions-for-creating-health-insurance-exchanges-and-expanding-medicaid/. Obama Care Facts. (No Date). ObamaCare Summary: A Summary of Obamas Health Care Reform. Retrieved from http://obamacarefacts.com/obamahealthcare-summary.php. Odom, L., Owen, R., Valley, A. and Burrell, P. (2011). Obamacare: an ethical analysis of his leadership and the health reform initiative. Leadership in Health Services, 24(4), 325-336. Picchi, A. (No Date). 13 states rebelling against Obamacare. Retrieved from http://money.msn.com/now/13-states-rebelling-against-obamacare. Robert Wood Johnson Foundation. (2014). Labor-Management Relations Affect Hospital Competitiveness, Financial Performance and Quality of Care. Retrieved from http://www.rwjf.org/reports/grr/024683s.htm#THEPROJECT. Read More