Corporate Strategy for United Kingdom National Health Services - Coursework Example

Order No. 154481 Academia Research No. 7080 7th March 2007. Management Report Addressed to the UK National Health Services TABLE OF CONTENTS Introduction... .. . .1 Overview of the UK National Health Service...2 Application of the PESTEL Framework in the UK NHS......4 Key Change Drivers Affecting the UK NHS.....7 Conclusion......8 LIST OF FIGURES Layout of the PESTEL Framework....5 1 Introduction Public sector organisations are organisations that provide responses to the needs of society that are not covered by the private sector. These organisations differ greatly from the private sector at both organisational and functional levels. They also differ in their specific goals, policies, objectives, target products and services. In particular, Public sector organisations pursue political and social goals rather than simple commercial objectives. (Ramos et al, 2007) Unlike the private sector, public sector organisations do not focus their interest on profit maximisation and income generation. In addition, there is no benchmark for measuring financial performance. (Ramos et al, 2007) Public sector organisations also differ from private sector organisations in their mode of fundraising and reporting. Most public sector organisations are still financed by the state with revenue generated from taxes. Common types of public sector organisations include: Central and local Government Departments, Agencies, Trading Funds and Public Corporations. (Ramos et al, 2007). Public sector organisations like all other organisations have stakeholders who expect the organisation to satisfy their unique needs. The major stakeholders in public sector organisations include: Barrows and Mclnerney identifies taxpayers, government Ministries, customers, Trade Unions, social responsibility interest groups, local government and other government ministries as major stakeholders of a public sector organisation. This report is aimed at evaluating the evolving business environment of the UK National Health Services and providing guidelines to the top management of this organisation. The rest of the report is organised as follows: Section 2 provides and overview of the UK National Health Services, when it was formed, the rationale for its formation and how it has been financed. Section 3 provides some major problems faced by the UK National Health Services, and proposes a Strategic Management tool to solve the problems. It also explains how the management tool can be put into practice within the context of the UK National Health Services. Section 4 prioritises the major change drivers and gives recommendations on how to tackle each change driver to achieve organisational efficiency. Section 5 concludes the paper. 2 Overview of the UK National Health Services: Mission and Main Issues The UK National Health Services (NHS) remains one of the largest public sector bodies in the world and the largest public sector organisation in the United Kingdom. The NHS was established in 1948 by the post-war labour government and it was the first health system in any western society to offer free medical care to the entire population. (Goodwin, 2000). Its objective was to be universal in its coverage and comprehensive in terms of the services to be provided, available on the basis of clinical need and not based on income. It has been financed through taxation. (Goodwin, 2000) Unfortunately, however, funding crises have resulted in the introduction of prescription, dental and ophthalmic charges. The social conception of health care has lost and two issues have dominated the UK NHS ever since. These include financial resources and politics. (Goodwin, 2000). Major challenges for the NHS include the persistent push for structural reform in state health provision, within the UK. The NHS operates today in an economic climate that is faced with escalating costs thus making it difficult for it to meet diverse patient and community needs. (Hill et al, 2001). According to Chang et al, (2006) other challenges for the UK Health Services today include: keeping a long-term health and well being perspective as a priority across all policies; managing and paying for patient and public expectations, planning workforce issues in the context of social, economic and technical change. Despite large increases in the NHS's budget in 2002, only 2.5 to 3% is realised as surplus funding taking into consideration the increases in costs of goods and services (Chang et al, 2006). There are also debates over the impact of the increased funds considering the fact that productivity did not increase between 1997 and 2003. (Chang et al, 2006). It is also believed that increases in health service productivity as evidenced in increased life expectancy, reduced infant mortality, reduction in circulatory disease, cancers and respiratory diseases are attributed to other factors and not to efforts by the NHS. (Chang et al, 2006). The NHS's external environment is constantly changing. For example, there is an increase in the number of women in the labour market today, family values and household structures are constantly changing, the number of people over the age of 16 living alone has increased from 26.3% in 1991 to 31% between 1991 and 2002 and half of the people living alone are elderly pensioners (Chang et al, 2006). Income inequality is at the rise. An income gender gap continues to exist in the United Kingdom with the poorest tenth of the population experiencing minimal enhancement in real income levels compared to 25 years ago. (Chang et al, 2006). Chang et al (2006) specifically notes that 2 million children live in households with no jobs, single parent families and couple households where both parents are jobless are particularly at risk, about 6% of the population accommodate houses with no heating and 12.3% live in an overcrowded house. More than 1 million people of working age earned wages below 4.4 per hour in 2002, unemployment rate among young adults aged 16 to 24 years was 10% in 2003, which is double the rate among older workers. In addition, the UK is witnessing an ageing population which might have a significant impact on the UK NHS. The number of people above 60 years has since 2001 outweighed that below 16 years and the dependency ratio is constantly rising thus implying a decreasing workforce. (Chang et al, 2006). This has led to an increase in the number of health and care workers sourced from abroad. For example two thirds of the new registrants on the general medical council (GMC) register were from abroad. (Chang et al, 2006). This might have significant impacts on the services delivered by these workers considering the fact that they are foreign-trained and as a result might not be able to properly understand the needs of patients in the UK. This in the long-run will result to inefficiencies. 3 Application of the PESTEL Framework In The UK NHS. The above findings make us to belief that the UK National health services needs a new management structures to better develop solutions so as to provide the requirements of its stakeholders effectively and efficiently. The strategic management tool we would recommend for the NHS is the PESTEL. Another framework that could be used is the five forces framework but the PESTEL framework is used here because the analysis is concerned with the Macro-environmental influences which can better be analysed by use of the PESTEL framework. The Five forces framework is best suited for analysing the environment of strategic business units (SBUs). Johnson et al (2006) states that the PESTEL framework is a framework that can be used to categorise the factors that influence the business environment of an organisation into six main types including: Political influences; Economic influences; Technological influences; Social influences; Environmental influences; and Legal influences. Figure 1 below presents a layout of the PESTEL framework according to Johnson et al (2006). Figure 1: LAYOUT OF THE PESTEL FRAMEWORK Johnson et al (2006) also reiterates that the PESTEL framework can only be used to look at the future impact of environmental factors and that this impact might be different from the past. Thus an understanding of how the factors in the above framework may drive change is only a starting point. There is a need for an understanding of the key change drivers and this will be explained in section 4 below. Looking at the PESTEL framework shown above one can observe that the UK National Health Services is affected by all the environmental factors in the framework. Under political the NHS is affected by both taxation and social welfare policies. Given the fact that the NHS is financed through taxation, it is evident that its finances might either increase or reduce depending on the taxation policies adopted by the government. Social welfare policies will affect the NHS in that increased social welfare to the public will mean a greater burden on the NHS. Under environmental factors I consider waste disposal, energy consumption and environmental protection laws to have an impact on the NHS. Under the legal factors I identify employment law, health and safety and product safety laws as having potential impacts on the NHS. All the economic factors can be regarded to have an impact on the NHS. For example, high unemployment rate, high inflation rates, low GNP trends and slumps in the business cycle will imply low disposable income, more dependence by the citizens on public funds and thus the services delivered through the NHS. Social factors and Technological factors are not left out. The NHS is affected by almost all the social and technological factors. Under the social factors for example, population demographics have a great impact on the future of the NHS. This will be elaborated more in the next section. Also given the fact that medicine has embraced a great deal of technology, the NHS is also highly affected by technological changes. However, as earlier mentioned, for an organisation to better understand how it is affected by the external environment, there is the need for it to prioritise its key change drivers. Although there will be many changes occurring in the macro-environment of most organisations, it will be the combined effect of just some of these factors that will be so important. (Johnson et al, 2006, pp. 69). To better understand the key change drivers for the NHS section 4 below prioritises the principal change drivers and provide recommendations on how to react to each change driver. 4 Key Change Drivers Affecting the UK NHS. In this section I present key change drivers for each of the environmental factors identified in section 3 above. Under political factors taxation policy and social welfare can be regarded as key change drivers. As earlier mentioned, the UK NHS is financed through taxation. Therefore, the taxation policy adopted by the Inland Revenue will greatly affect the amount of taxes collected and thus the amount of funding devoted towards expenditure by the UK NHS. It is therefore necessary for the NHS to have experts in tax policies represented in parliament and in the Inland Revenue so as to design good taxation policies that will generate enough revenue to secure enough funds for the NHS. Under environmental factors, the UK NHS should be concerned with environmental protection laws. If good environmental protection laws are put in place, they will take care of waste disposal and energy consumption. This will reduce the amount of environmental contamination and thus reduce the number of diseases contracted through environmental hazards. This will in turn cut costs for the NHS. NHS staff should therefore take part in making laws that protect the environment. Technological development will depend on government spending on research and development and speed of technological transfer. The UK government needs to embrace new health technologies and invest more on research and development in the health sector. This will enable the NHS to better compete with other countries in delivering quality health care services to patients. Another key change driver is the case of the ageing population sited earlier. This has got a strong impact on the NHS in that the demand for health care is increasing whereas staff to provide such care is reducing. In response to this problem, there has been an increase in the number of foreign-sourced health workers in the UK. Chang et al (2006) however, points out that this is affecting the NHS negatively as these workers are not trained in the UK and therefore treat patients differently. I belief that the solution to this problem is to encourage the immigration of intelligent young people and provide them with training in the United Kingdom. In this way they will be able to deliver quality services to patients old people. The government also has to take measures to prevent UK trained health staff from moving to different countries. They should also provide scholarship programs for UK students to study medicine, nursing and other health care related education. 5 Conclusion The aim of this paper was to analyse the business environment of the UK National Health Service and Prioritise the key change drivers. in the course of the analysis there is evidence that the UK NHS is affected by almost all the factors outlined in the PESTEL framework with particular emphasis on Taxation, Demographics, Environment, socio-cultural and technological developments. The paper therefore recommends The NHS's participation in policy developments concerning taxation, social welfare, and environmental protection laws. The paper also recommends education and training for foreign and domestic health care staff in the UK and the embracement of technology in the development and provision of health care services. Also persistent push for more accountability by stakeholders should be taken into consideration by the Management of NHS. This means that the NHS should be able to provide stakeholders with more reliable and relevant information concerning its financing, operating and investing activities. This will enable stakeholders analyse the outcomes of the NHS in relation to their expectations and thus provide guidelines and recommendations for improvement. BIBLIOGRAPHY Chang L. R., Garside P., Wait S., Morris Z. S. (2006). Policy Futures For Uk Health. The Nuffield Trust For Research and Policy Studies In Health Services. Downloaded from http://books.google.com/booksvid=ISBN1846190037&id=ME4wtnKmmywC&pg=PA37&lpg=PA37&ots=POFk7Og6Jb&dq=business+environment+of+the+UK+health+Services&sig=Xlkvh6-qJ2D4p_P31oZC1e7j3vk#PPP1,M1. Godwin N. (2000). Leadership and the UK Health Service. Health Policy. Vol. 51 Pp 49-60. Hill W. Y., Fraser I., Cotton P. (2001). On patients' interests and accountability: Reflecting on some dilemmas in social audit in primary health care. Critical Perspective on Accounting. Vol. 12, Pp 453-469. Johnson G., Scholes K.,Whittington R. (2006). Exploring Corporate Strategy 7th Enhanced Media Edition. Prentice Hall. Pollitt, Christopher.Bouckaert, Geert. (2000). Public Management Reform: A Comparative Analysis byOxford University Press. Ramos T.B., Alves I., Melo J. J. (2007). Environmental performance policy indicators for the public sector: The case of the defence sector. Journal of Environmental Management. Vol. 82 Pp 410-432. Read More