Long-term Objectives, Strategic Analysis and Choice

Table II Long-Term Objective Options Objective Aspire to be the community hospital of choice in terms of revenue. Measurement Revenue Balanced scorecard Patient mix Timelin e 2-5 years

Opportunity/Threat Improve operating margins and efficiencies. Self-pay and co-pay bad debt.

Improve operating margins and efficiencies.

Aspire to be the community hospital of choice in terms of insured customers. Aspire to be the community hospital of choice for registered nurses.

Revenue Operational statistics Balanced scorecard Turnover Employee satisfaction survey results Recruitment costs Benchmarking Balanced scorecard Balanced scorecard

2-5 years

Nurse turnover High use of agency nurses National nurse shortage Competition for nurses Re-entry of registered nurses over the age of 50

2-5 years

Increase in obesity Aging population

Aspire to be the community leader in terms of community wellness education and chronic condition management. Aspire to be the community leader in comprehensive services for mens health. Aspire to be the community hospital leader in terms of valueadded services and exemplary customer service. Aspire to be the community hospital leader in terms of a learning organization.

3-5 years

Mens health

Number of programs/services offered Balanced scorecard Market share Balanced scorecard

3-5 years

Major competitor is low-cost provider

3-5 years

Management group lacks formal management training and competencies

Balanced scorecard Turnover exceeds benchmark standards. Recruitment and retention metrics meet or exceed benchmark standards. Employee satisfaction survey

2-5 years

Increase in out-patient substitutes

Aspire to be the community hospital of choice for outpatient

Balanced scorecard

3-5 years

Trend toward outpatient surgery Aging population

procedures. Aspire to be the community hospital of choice for cardiology, neurology, orthopedics, and vascular services. Continue to be the community hospital of choice in terms of technology for earlydetection, prevention, and treatment. Balanced scorecard 3-5 years

Aging population Growing demands on healthcare

Balanced scorecard

3-5 years

As Bachrodt and Smith (2004, p. 61) point out, [t]he future market scenarioand strategic advantage/vulnerability assessment serve as a catalyst forestablishing a hospitals business objectives A thorough environmental analysis of <C>s internal and external environment revealed several potential long-term objectives and strategies with the potential to address profitability, productivity, competitiveness, employee development and relations, technical leadership and public responsibility. In addition, all of the long-term objectives are traceable to the results of the environmental analysis as can be seen in the strengths, weaknesses, opportunities and threats quadrants of the Matched Pair Analysis Matrix in Figure 2. For example, the environmental analysis indicates an increase in consumer directed healthcare that creates an opportunity for <C> to improve total revenue by targeting insured consumers. A growing demand on healthcare is another potential long-term objective identified as a threat. Public responsibility is especially critical to hospitals as community healthcare providers. Faltermayer points out [o] ne of the most promising ways to reduce health care costs is by push[ing] prevention to the limits (1994, Push Prevention). <C> is well respected as a leader in community education, and an objective of providing leadership in

preventative and early-detection technology provides <C> with an opportunity to enhance their current position and minimize future costs. One threat identified with the potential to constitute a sustainable competitive advantage is a lack of management competencies. According to one author, the only truly sustainable competitive advantage is to build an organization that is so alert and so agile that it will always be able to find an advantage, no matter what changes occur. (My Wise Owl, 2002). According to Pearce and Robinson, strategic leaders can themselves be a source of competitive advantage. This can only be achieved if their work is valuable, rare, costly to imitate, and nonsubstitutable (2004, p. 397). Opportunity exists for <C> to become a learning organization thereby creating a sustainable and nonsubstitutable competitive advantage. The most significant long-term objective option identified in the environmental analysis involves the threat of a national nursing shortage. Several of the opportunities and threats relate to the nursing shortage to a great degree placing aspiring to be the community hospital of choice for registered nurses high on the list of potential long-term objectives. Without sufficient nurses, <C> will be unable to achieve any of the objectives. Matched Pairs Analysis The SWOT and the TOWS contained with in the Matched Pair Analysis Matrix identify <C>s internal strengths and weaknesses, and the opportunities and threats derived from the external environmental analysis. The process of using the Matched Pair Analysis tool expanded the scope of the SWOT analysis and enabled the generation of an optimum number of alternative strategies for achieving the long-term objectives.

Figure 2 Matched Pair Analysis Matrix

Opportunities (O) O1 Improve operating margins and efficiency O2 Emphasis on customer service O3 Mens health O4 Consumers sharing increased healthcare costs O5 Re-entry of RNs into workforce O6 High number of nurses nearing retirement O7 Dynamic future environment O8 Trend toward outpatient surgery O9 Increase in aging population S/O/Matches S5/O5, O6 Develop recruitment and retention plan for nurses S2/O3 Provide comprehensive services for mens healthcare S6/O2 Differentiate with customer service S7/O9 Expand cardiology, neurology, orthopedics and vascular services W/O Matches W1/O1 Create payment review process W2/O5, O6 Develop recruitment and retention plan for nurses W4/

Threats (T) T1 Major competitor is lowcost provider T2 Dependence on reimbursement T3 Competition for nurses T4 Out-patient substitutes T5 Growing demand on healthcare

O/T Matches O2/T1 Differentiate with customer service O5, O6/T3 Develop recruitment and retention plan for nurses O1/T3 Pursue process redesign to improve operational efficiency O9/T5 increase capital expenditure on technology for early-detection and prevention

Strengths (S) S1 Market share 48.4 % S2 Expanding facilities and services S3 Financial health S4 Extensive purchasing alliances S5 Human resources (HR) department S6 Performance improvement department S7 Diverse services

S/T/Matches S5/T3 Develop recruitment and retention plan for nurses S6/T4 Differentiate with customer service S2/T4 Expand outpatient services

S/O/T Matches S5/O5, O6/T3 Develop recruitment and retention plan for nurses S6/O2/T4 Differentiate with customer service

Weaknesses (W) W1 Self-pay and co-pay bad debt W2 High use of agency nurses W3 Nurse turnover W4 Changing adverse business mix W5 Management group lacks management competencies

W/T Matches W1/T2 Create payment review process W3/T3 Develop recruitment and retention plan for nurses W5/T5 Create comprehensive management development program

W/O/T Matches W1/O1/T2 Create payment review process to improve cash collections, accounts receivable days, and reduce cost to collect W2/O5, O6/T3 Develop recruitment and retention plan for nurses

S/W Matches S5/W3 Develop recruitment and retention plan for nurses S3/W1 Create payment review process

S/W/O Matches S5/W3/O5, O6 Develop recruitment and retention plan for nurses S3/W1/O1 Create payment review process

S/W/T Matches S3/W1/T2 Create payment review process S5/W3/T3 Develop recruitment and retention plan for nurses S6/W4/T4 Differentiate with customer service

S/W/O/T Matches S3/W1/O1/T2 Create payment review process S5/W3/O5,O6/T3 Develop recruitment and retention plan for nurses S6/W4/O2/T4 Differentiate with customer service

Strategic Analysis and Choice Generic strategies Porter (1980; 1991) offers three generic strategic options for responding to competitive forces. His classification scheme includes: (a) a differentiation strategy whereby institutions charge more for high-quality services because of their distinctiveness; (b) an overall-cost leadership strategy where cost control allows for charging less than competitors;and (c) a focus strategy in which institutions target specific services/ buyers using either a differentiation focus or a low-cost focus (Carson & Carson, 1994, Strategy Options). Hospitals that select a low cost strategy run the risk of giving customers the perception of lower overall care. In addition, <C>s main competitor, a Catholic hospital of the same size, has a generic strategy based on low-cost and charity care. <C>s generic strategy is differentiation defined as a higher level of value, and customer and service excellence. Re-engineering, total quality improvement, scorecards, and system integration are among the internal strategies that <C> has adopted to achieve differentiation. Grand Strategies According to Pearce and Robinson (2004), a grand strategy can be defined as a comprehensive general approach that guides a firms actions (p. 200). <C> hospital is positioned in Quadrant I (strong competitive position in a rapidly growing market) of the Grand Strategy Clusters Matrix. The Model of Grand Strategy Clusters shown in Figure 3 serves as a guide to selecting a promising grand strategy (p. 250). The quadrant <C> is in places the hospital in an excellent strategic position. Quadrant I provides support that

<C> should pursue long-term objectives and strategies that focus on concentrated growth to grow and sustain the hospitals competitive advantage.

Figure 3 Model of Grand Strategy Clusters (Pearce and Robinson, 2004, p. 250).

Action Plan Action plans translate generic and grand strategies into action by incorporating specific functional tactics and actions to be undertaken ina clear time frame for completion, [that] create accountability [and in which] each actionhas one or more specific, immediate objective outcomes that action should generate (Pearce and Robinson, 2004, p. 14-15). The action plan In Table III shows a sample of some of the goals and resources that will enable <C> to achieve their strategy.
Table III Action Plan

LTO Aspire to be the community hospital of choice in terms of revenue.

Goal

Resources

Accountability

Increase outpatient services by 20% by 2009

Outpatient managers Marketing

Finance director

Aspire to be the community hospital of choice in terms of insured customers.

Create a payment process to improve cash collections and reduce cost to collect by 2007

Computer program Billing manager

Finance director

Advertising funds Marketing Finance personnel Aspire to be the community hospital of choice for registered nurses. Create incentives to delay retirement Nurse Managers Human resources

Finance director

Human Resources Nurse executives

Develop nurse refresher course

Nurse educators Community college

Education director

Aspire to be the community leader in terms of community wellness education and chronic condition management.

Develop a program to improve health of seniors

Senior services director Marketing Advertising funds

Marketing director

Statistical analysis Aspire to be the community leader in comprehensive services for mens health.

Market analysis Financial analysis

Physical space Funds Physicians Marketing Finance

Finance director

Aspire to be the community hospital leader in terms of value-added services and exemplary customer service.

Develop operational goals

Committee Time Scheduling Employee training Scheduling

Performance improvement director

Aspire to be the community hospital leader in terms of a learning organization.

Develop program designed to develop core competencies for managers Identify key competencies required for managers Perform analysis of current competencies Develop individual improvement plans

Human resources Time Materials Intranet capacity

Human resources

Develop succession plan Identify critical management positions Identify future vacancies in those positions Identify employees with potential to fit into the positions Aspire to be the community hospital of choice for cardiology, neurology, orthopedics, and vascular services.

Develop cardiovascular advisory committee Market outreach program

Physicians Cardiovascular director Cardiology nurses Scheduling changes Medical records Marketing funds

Cardiovascular director

Completing this process provides a wide variety of viable options of long-term objectives and strategies with the potential to create and sustain <C>s competitive advantage.