Expert answer:swot analysis
Solved by verified expert:Review the case: Community Blood Center of the Carolinas: Donations, Donations, Donations.Complete and Answer the following questions:Complete a traditional SWOT analysis for the situationWho is the decision maker in this case?What appears to be the problem and its significance?Why has the issue arisen and why is the decision maker involved now? Make sure that you include an introduction and conclusion to your post.the attached pdf can help alot . pg 14-22 Case 3
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Instructors’ Manual to Accompany Strategic Management of Health Care Organizations, Fifth Edition
CASE 1
The US Health Care System – Participants, Financing, and
Trends: An Industry Note
OVERVIEW
This case is actually an “industry note” that provides a snapshot of the current health care
system by describing the significant organizational and professional providers and the major
purchasers or “payors” for health care services. A background description of the key historical
events and their effects on health care services is included as well as a description of the rapidly
changing current environment.
Over the past 50 years, health services have been affected by three basic trends: growth in
scientific knowledge, growth in the financial resources allocated to health services, and
changed relationships among health care providers, payors, and health care consumers. A
number of significant events contributed to these trends (Exhibit 1/4 contains an excellent list).
As a result of these events, health care grew faster than any other segment of the US economy.
Thus, health care expenditures, measured as a percentage of gross domestic product (GDP),
that were 7.4 percent of GDP in 1970, now approximate 15 percent of GDP.
Although the health care sector grew dramatically, the growth was uneven. The percent of total
expenditures attributable to the hospital sector declined during the past 20 years. By 2002, the
figure stood at 31.3 percent (in 1980 hospitals accounted for 41 percent of health services). The
downward trend was related to a real decline in inpatient admissions over this 20-year period.
However, the most recent data suggests that although average length of stay for a hospitalized
patient continues to decline, the number of hospital admissions posted a small increase and the
total number of days of care delivered in the inpatient setting has also slightly increased. The
utilization of hospital outpatient services has increased dramatically during this period.
Physician services made up the largest single professional service component of the health
services sector. Payments to physicians accounted for 21.9 percent of total health services
expenditures in 2002, slightly less than what it was a decade earlier. Nursing home and home
health services accounted for 9 percent of national health care expenditures in 2002 (a
significant increase over 1960 when nursing home care used 3.4 percent of the health care
dollar).
Between 1960 and 1990, the portion of the domestic health care dollar devoted to products
from pharmaceutical companies and other medical suppliers actually declined. In 1960, drugs
and other medical products accounted for 18.5 percent of health care expenditures. By 1990,
the proportion had decreased to 10.5 percent; however, by 2002 the proportion was 13.7
percent and projected to continue to increase. Increasing expenditures on prescription drugs
accounted for much of this increase.
This teaching note was written by Stuart A. Capper, Tulane University. It is intended as a
basis for classroom discussion rather than to illustrate either effective of ineffective
handling of an administrative situation. Used with permission from Stuart Capper.
Instructors’ Manual to Accompany Strategic Management of Health Care Organizations, Fifth Edition
In the past, households paid for most health services through direct out-of-pocket health
spending by individuals; premiums paid as employees (or the self-employed paid into the
Medicare hospital insurance trust fund); premiums paid by individuals to the Medicare
supplemental medical insurance trust fund; and individual health insurance policies. During the
1970s and 1980s employers assumed an increasing burden for the costs of health care, but the
burden was becoming too much for many of them. Using various managed care methods,
employers stabilized their share of health care expenditures; however, the share being paid by
governments continued to increase. Over the 30-year period from 1970 to 2000, while health
care expenditures increased, individual households were paying a decreasing proportion of the
total bill. In dollar terms, all payors faced increasingly larger health care bills. However,
individual household expenditures were increasing much more slowly than government or
private business. During this same period, medical technology was increasing at a very rapid
rate. Therefore, although individuals were paying more, they saw increasing benefits from their
expenditures. Consumers were paying more, but in their eyes, the additional dollars they
allocated to health services was buying quite a lot. The subsidies for individual health services
provided by government and business help explain why it has been difficult to gain national
consensus on the extent of the health care cost and access problem.
Current environmental trends that are affecting health care delivery include:
1.
2.
3.
Declining hospital utilization resulted in beds being taken out of service (equivalent to
closing seventeen 200-bed community hospitals in every state since 1985). The most
recent data suggest that after a 15- to 20-year period of reductions in hospital beds, we
may be seeing a slight increase in the number of community hospital beds in active
service.
Managed care in the private and public sector was increasing throughout much of the
decade of the 1990s including Medicare and Medicaid efforts to move enrollees into
managed care organizations (MCO). Increasing enrollment but decreasing numbers of
managed care organizations resulted in fewer MCOs with larger numbers of enrollees
in each MCO. Such a trend suggested increasing bargaining power for managed care
organizations when they negotiated with providers such as physicians and hospitals.
By the end of the decade the trend was less certain. Support for traditional managed
care approaches of cost containment by private business was decreasing. Businesses
were experimenting with a broad range of interventions to control employee health
care costs.
The physician workforce was changing as the availability of active physicians increased
from 190 per 100,000 population in 1980 to 274 per 100,000 in 2001. In addition, other
professionals, including nurse practitioners and physicians’ assistants, were serving
patients’ needs and, in some cases, allowing individual physicians to manage more
patients.
With this overview of the health services sector, students should have a better grasp of the
issues facing health care leaders.
KEY ISSUES
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Instructors’ Manual to Accompany Strategic Management of Health Care Organizations, Fifth Edition
Discussions of the strategic issues that will broaden the student’s perspective include:
1. Allocation of health care resources in the United States. Will there be significant changes to
the methods we currently use to allocate resources? If so, what are the changes likely to be?
How quickly will they take place?
2. Identification of health care trends. What are the trends that have occurred in health care
over time? Which of these trends are likely to continue? Which are likely to change? What
assumptions are made that lead to the conclusions reached?
3. Impact of the changing health care environment on payor groups. How are private
businesses and government (federal and state) impacted by the changes in resource
allocation methods in health care? How might these changes affect consumer choices about
their health care?
4. Impact of health care inflation on various consumer segments. Will employment status
continue to provide access to health care? Will the elderly continue to have access
(Medicare)? The poor and infirmed (Medicaid)?
5. The competitiveness of the health care system. How has competition in the health care
industry changed over the past few decades? Have these competitive changes been “good”
for health care?
6. The changing nature of health care cost allocations. How have health care expenditures
changed over the past 20 years? What impacts, if any, are these changing allocations
having on patient care?
7. The role of regulation in a competitive health care environment. Should regulation in the
health care industry be focused on allocating health care resources or perfecting the
competitive market and allowing market forces to allocate resources?
8. Advances in electronic medical records and health informatics. Will hospitals and
physicians readily adopt electronic medical records? What impact will the digital
information revolution have on health care?
TEACHING OBJECTIVES
1.
2.
3.
4.
5.
To provide background information for the analysis of health care cases that helps to
“level the playing field” among students.
To provide a “snapshot” of the health care system as it exists today in terms of major
provider categories, payor categories, users of health care goods and services, and
environmental trends.
To identify and analyze changes most likely to occur in the health care system over
the near term.
To understand historical trends in the health care environment and to speculate on the
likely future course of these trends.
To foster strategic thinking.
SUGGESTIONS FOR EFFECTIVE TEACHING
At the time this Industry Note was being written, the ongoing national policy debate over
health care was somewhat subdued. On September 11, 2001, the World Trade Center tragedy
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Instructors’ Manual to Accompany Strategic Management of Health Care Organizations, Fifth Edition
in New York City focused much of the attention of US citizens and our national leadership
on terrorism and the resulting war. Managed care attempted to better control rapidly
escalating health care costs and change the way health care resources were allocated. And,
for a time, managed care did lower costs. But then, a combination of factors, including
stronger competition from physicians and some hospital groups, the perception by consumers
of abuses by managed care companies, and the continuing advancement of medical
technology, began to weaken managed care cost control efforts. The national debate over
health care cost, access, and quality will not go away and will likely intensify as employers,
state and local governments, and the federal government attempt to stabilize their escalating
health care costs with a variety of methods to raise consumer consciousness of costs and to
increase use of services to prevent illness and better manage existing medical conditions.
There are several ways to use this Industry Note. The first approach is to assign the Note
prior to assigning any of the other health care cases. This approach ensures a common frame
of reference for students. It is a method to “level the playing field” for those students who do
not have as much background or experience in the health care field. We have found that
using the Note in this way greatly enriches class discussions and improves the quality of
analysis for all subsequent cases.
Alternatively, the Industry Note may be used as a case study. If this approach is selected, it is
useful to orient the students to the advisor or consultant role. Using individuals or small
groups, the students should consider whether they would advise a health care organization to
expand, contract, or maintain its scope in the industry. In this orientation, the students must
explore the issues underlying the use of expansion, contraction, and maintenance strategies.
Such strategic alternatives relate to the major industry issues cited in the Key Issues section
of this note. In addition, students may identify particular market niches for which they see
substantial opportunities or threats.
Another alternative approach is to assign students the task of updating specific sections of the
Industry Note. The publication process is slow and the health care environment is undergoing
rapid change. By the time this book was printed late in 2005, a number of significant changes
probably have already occurred.
QUESTIONS FOR CLASS DISCUSSION
1.
What will the health care industry be like five years from now?
Early in the class discussion, we ask the students this question. The best answers have been
fairly specific and well structured with a clear rationale for the description. Though the
approaches vary widely, students typically examine the industry through market sectors
(acute hospital care, physicians services, nursing home care, or rehabilitation services);
categories of key health care organizations (for profit and not-for-profit hospital systems,
health maintenance organizations, preferred provider organizations, or medical and allied
health education); or key industry trends (growth in supply of physician services, reduction
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Instructors’ Manual to Accompany Strategic Management of Health Care Organizations, Fifth Edition
in supply of inpatient hospital beds, growth of ambulatory services, consolidation of the
managed care market, and so forth).
2.
Consider an increasing supply of physicians, a decreasing ratio of people per
active physician, an aging US population, and increasing medical technology.
Over the next decade, what impact might this have on other health
professions such as nursing, health administration, and public health? What
impact might this have on how physicians make judgments about patient
care?
This question requires that the students consider history to some degree. How did the health
professions change when the trends cited in the question were different? What happened to
nursing, health administration, and other health professions when we had a physician
shortage and demand for specialty care was rapidly increasing? How did the way we paid for
health care at that time influence the historical picture? How will the changing payment
environment influence the future? Cost-based reimbursement in the 1960s, 1970s, and early
1980s allowed providers to differentiate jobs and rapidly expand the workforce. Current
trends increasing the use of capitated payments and pre-negotiated fixed fees encourage other
types of provider behavior. Induce the students to consider the changing environment for
physician’s services and what opportunities and threats this creates for other health
professions. Will increasing competition for patients and incentives to treat more patients
have an impact on how physician practice? Which specialties will be in demand and which
will see competition for limited numbers of patients?
3.
What are the approaches for conducting external environmental analysis?
What are the advantages and disadvantages of each? Choose one approach
and apply it to a health care organization in your community.
Environmental analysis attempts to surface the issues that will be important to health care
organizations. A number of approaches can be used to scan, monitor, forecast, and assess the
health care environment. These approaches are summarized in the table below.
Rather than everyone suggesting the local hospital, encourage students to select from a
variety of organizations (a local long-term care facility, a large clinic, the local public health
department, an urgent care center) to discuss a response to this question. Most any of the
techniques can be applied. Thus, the rationale that the student provides for why he or she
chose that particular technique should enhance the discussion and learning environment.
Technique
Simple Trend
Identification and
Extension
Focus
Scanning
Monitoring
Forecasting
Assessing
Advantage
• Simple
• Logical
• Easy to
communicate
Disadvantage
• Need a good deal of
data to extend the
trend
• Limited to existing
trends
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Instructors’ Manual to Accompany Strategic Management of Health Care Organizations, Fifth Edition
• Does not foster
creative thinking
Delphi Technique
Scanning
Monitoring
Forecasting
Assessing
• Use of field experts
• Avoids intimidation
problems
• Eliminates
management’s
biases
• Members are
physically dispersed
• No direct interaction
of participants
• May take a long time
to complete
Focus Groups
Forecasting
Assessing
• Uses experts
• Management/expert
interaction
• Finding experts
• No specific structure
for reaching
conclusions
Nominal Group
Technique
Scanning
Monitoring
Forecasting
Assessing
• Everyone has equal
status and power
• Structure may limit
creativity
Brainstorming
Forecasting
Assessing
Dialectic Inquiry
Forecasting
Assessing
Stakeholder
Analysis
Scanning
Monitoring
Scenario Writing
Forecasting
Assessing
• No process for
• Fosters creativity
making decisions
• Develops many ideas
•
Sometimes gets off
and alternatives
track – ideas too
• Encourages
creative to be useful
communication
• Does not provide a
set of procedures for
deciding what is
important
• Considers only a
single issue at a time
• Considers major
• Emerging issues
interdependent
generated by other
groups and
organizations may
individuals
not be considered
• Assumes major needs • Does not consider
and wants of outside
the broader issues of
organizations are
the general
taken into account
environment
• Surfaces many subissues and factors
• Conclusions are
reached on issues
• Portrays alternative
futures
• Considers interrelated external
variables
• Requires generous
assumptions
• Always a question of
what to include
• Time consuming
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Instructors’ Manual to Accompany Strategic Management of Health Care Organizations, Fifth Edition
4.
Of the strategic issues facing health care organizations today, which ones are
likely to receive attention? Which ones should receive attention?
This question presents an opportunity for students to address strategic issue diagnosis (SID)
for the health care sector (or it can be limited to a particular type of health care organization
in your area where there are many emerging issues – physician practices, long-term care,
home care, or acute care). The issues provided under “Key Issues” in this note provide a list
that we feel will require addressing over the next several years for the health care sector. For
many of these issues, our society has not determined what we should do to ensure access and
quality at a cost that citizens can afford. For other issues, health care providers have not
decided how they will deal with the evolving trends. Have we reached a strategic pressure
point on any of these issues? As of the end of 2005, probably not; but, over time, they
continue to boil. For example, the use of electronic medical records and other digital
information processing techniques will have an impact on how health care is delivered. Will
these methods increase quality and reduce medical errors? How will the doctor/patient
relationship be affected? Will these methods increase or decrease costs? How will patient
privacy be maintained?
As the public has to pay for the increased costs of security in the United States, the
increasing costs of energy globally, and the increasing costs of imported goods and services,
will we also be able to pay for the increasing costs of Medicare and Medicaid? Pressures on
Medicare and Medicaid are likely to increase further given the impact of globalization on the
US workforce (outsourcing, manufacturing-based economy being replaced by services-based
economy, and so on) and the aging US population (heavy users). The pressures (issue
urgency) may force us to look at the issue, but at this time we do not have great capacity
(feasibility) to resolve the issue. Individuals may be called on to bear a greater burden of
health care costs as private business uses various financial incentives to increase consumer
consciousness of inefficient providers (cost shifting increases again). As more and more
businesses find themselves competing in a global marketplace, they may attempt to shift
more and more of the costs of employee health care to the individual.
Each of the many issues can be looked at an …
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