Essentials_of_Strategic_Planning_in_Healthcare_Thi…_—-_Chapter_4_SWOT

Essentials_of_Strategic_Planning_in_Healthcare_Thi…_—-_Chapter_4_SWOT_Analysis.pdf

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L e a r n i n g O b j e c t i v e s

After you have studied this chapter, you should be able to

➤➤ integrate the various disciplines into a comprehensive framework to assess problems in

healthcare strategic planning,

➤➤ exercise strong managerial problem-solving skills using SWOT analysis,

➤➤ formulate strategy and implement change using gap analysis and force-field analysis, and

➤➤ discuss the multidisciplinary teamwork required to enable an organization’s leaders and

team members to efficiently implement change.

C H A P T E R 4

S W O T A N A LY S I S

I skate where the puck is going to be, not where it has been.

—Wayne Gretzky

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Harrison, Jeffrey P.. Essentials of Strategic Planning in Healthcare, Third Edition, Health Administration Press, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/apus/detail.action?docID=6349384.Created from apus on 2022-03-24 02:18:14.

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E s s e n t i a l s o f S t r a t e g i c P l a n n i n g i n H e a l t h c a r e1 0 8

K e y t e r m s a n d c O n c e p t s

➤➤ Bundled payment

➤➤ Churn rate

➤➤ Downstream value

➤➤ Force-field analysis

➤➤ Freestanding emergency department

➤➤ Opportunities

➤➤ Strengths

➤➤ SWOT analysis

➤➤ Threats

➤➤ Weaknesses

in t r O d u c t i O nHealthcare organizations must continually adjust to ensure optimal performance. The rapid, continuous, and unpredictable changes in the field accelerate the speed at which strategic planning must happen for healthcare organizations that are adapting to these changes (Johnson 2017). These organizations believe that strategic planning is critical and requires the short- and long-term allocation of resources, the integration of geographically separated organizations, and a team that can focus on a clear strategy. As a result, strategic planning is evolving into a more continuous and integrated process. Strategic teams can use a variety of techniques to determine where adjustments are needed. One essential technique involves a discussion of an organization’s strengths, weaknesses, opportunities, and threats (SWOT analysis). Originally designed for use in other industries, SWOT analysis is increasingly being used in the healthcare industry (Gurel and Tat 2017).

To get the most out of its planning efforts, an organization, before beginning its strategic planning, should have a panel of experts who can assess the organization from a critical perspective and conduct a SWOT analysis. This panel could comprise senior lead-ers, board members, employees, medical staff, patients, community leaders, and technical experts. The panel members would base their assessment on utilization rates, outcome measures, patient satisfaction statistics, organizational performance measures, and financial status. While based on data and other facts, the conclusions drawn from SWOT analysis are the expert opinion of the panel.

The annual strategic planning process should incorporate action planning and operational oversight into an ongoing cycle. Many of the elements discussed in SWOT analysis are a part of this process and include environmental factors, organizational structure, capital financing, operational planning, and financial performance.

st e p s i n sWOt an a Ly s i sThe primary aim of strategic planning is to bring an organization into balance with the external and internal environment and to maintain that balance over time. Organiza-tions accomplish this balance by evaluating new programs and services with the intent of

SWOT analysis

Examination of

an organization’s

internal strengths

and weaknesses,

its opportunities

for growth and

improvement, and the

threats the external

environment presents

to its survival.

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C h a p t e r 4 : S W O T A n a l y s i s 1 0 9

maximizing organizational performance. SWOT analysis is a preliminary decision-making tool that sets the stage for this work.

The first step of SWOT analysis involves the collection and evaluation of key data. Depending on the organization, the data might include population demographics, com-munity health status, sources of healthcare funding, and the status of medical technology in the organization. Organizational surveys are an effective means of gathering some of this information, such as data on an organization’s quality, finances, operations, and processes (Gurel and Tat 2017). Once the data has been collected and analyzed, the organization assesses its capabilities in these areas.

The team now takes step 2 of the analysis, sorting the data into four categories: strengths, weaknesses, opportunities, and threats. Strengths and weaknesses generally stem from factors in the organization, whereas opportunities and threats usually arise from external factors. Exhibit 4.1 illustrates step 2 of SWOT analysis in a hypothetical example of an outpatient clinic considering the value of adding magnetic resonance imaging (MRI) appointments on Saturdays in response to increasing demand.

Step 3 involves the development of a SWOT matrix for each business alternative under consideration. For example, say a hospital is evaluating the development of an ambulatory surgery center. It is looking at two options: The first is a wholly owned center, and the second is a joint venture with local physicians. The hospital’s expert panel would complete a separate SWOT matrix for each alternative.

In step 4, the panel uses the SWOT analysis to decide which business alternative best meets the organization’s overall strategic plan. The more comprehensive the SWOT

exhibit 4.1Sample SWOT Matrix

Strengths

• Worldwide reputation• Focus on patient care• Focus on quality and value• Experience in medical imaging• Location of hospital• High-tech facility and equipment• No capital expenditures

Weaknesses

• Some increase in staffing• Some dissatisfaction by employees working on Saturdays• Increased workload for radiologists already working at peak performance

Opportunities

• Local community targeted marketing• Improvements in payer mix• Improvements in integrated care

Threats

• Local competitors offering Saturday MRIs• Loss of potential market share and revenue to competitors• Unknown implications of healthcare reform

Helpful to Objective Harmful to Objective

Ext

ern

al O

rig

inIn

tern

al O

rig

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E s s e n t i a l s o f S t r a t e g i c P l a n n i n g i n H e a l t h c a r e1 1 0

review, the less likely the organization is to pursue inappropriate services or projects. As they conduct their analysis, the panel members might find that the four components of SWOT can interact with each other. For example, opportunities can sometimes be used to counter threats, and weaknesses can be managed through strengths. Strengths can also be used to respond to threats. Two criticisms of SWOT analysis are the subjectivity of the list and its lack of quantifiability. However, the panel can address those issues by engaging other stakeholders in a robust discussion and by combining the SWOT tool with other quantitative processes for prioritization (Gurel and Tat 2017).

s t r e n g t h s

Traditional SWOT analysis views strengths as current factors that have prompted out-standing organizational performance. Examples include the use of state-of-the-art medical equipment, investments in healthcare informatics, and a focus on community healthcare improvement projects.

To draw an example from real life, Mayo Clinic is a not-for-profit, integrated, multispecialty medical practice with more than 65,000 employees. This outstanding organization integrates the provision of healthcare through teamwork, the use of real-time patient healthcare information, and the application of advanced technology to provide high-quality care to the patient at an affordable cost. In 2014, Mayo Clinic celebrated its 150th anniversary and the then CEO, Dr. John Noseworthy, had three strategic goals for the next five years. One goal—to hop off the acquisition bandwagon—seemed contrary to the goals of the rest of the country’s healthcare organizations. Mayo chose to invest in a network model that would support “the diffusion of knowledge” without extensive consolidation of other organizations (Kimmel 2019). In 2011, it had created the Mayo Clinic Care Network, where outside organizations could pay a subscription fee to Mayo for access to many resources such as medical consultations, the Ask Mayo Clinic resources, and administrative consultations. In 2018, the network collectively saw more than 12.5 million patients and now includes 40-plus practices across 35 states, as well as international sites in Mexico, Egypt, Saudi Arabia, United Arab Emirates, South Korea, Malaysia, and China. Mayo attributes its success to an “extensive due diligence process” for prospective member practices; the due diligence allows Mayo to carefully vet the organizations it allows to share its brand. Mayo uses its own strengths in planning to evaluate other organizations.

Though well known for its strengths in quality and safety, Mayo Clinic is also thought to be the most expensive. A 2008 research study from Dartmouth Medical School, however, showed that Medicare patients at the Mayo Clinic consistently cost Medicare far less than did similar patients at clinics across the country. The Mayo patients also had better outcomes than did patients from elsewhere. The study found that although the initial costs might be higher for a procedure, the efficiency and value were derived from

strengths

Current factors that

have prompted

outstanding

organizational

performance.

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C h a p t e r 4 : S W O T A n a l y s i s 1 1 1

the fewer complications and readmissions after the procedure (Wennberg et al. 2008). A more recent study confirmed that Medicare beneficiaries hospitalized at a major teach-ing hospital had lower total standardized costs at 30 days than did similar patients at other hospitals (Burke et al. 2019). Like the older study, the newer study found that initial hospitalization costs were higher at major teaching hospitals, partly because the patients were often sicker, but readmissions and post-acute care services cost less, leading to lower overall spending at 30 days.

The Centers for Medicare & Medicaid Services (CMS) uses the metric Medicare spending per beneficiary (MSPB) to look at total cost 3 days before hospitalization, during the hospitalization, and 30 days after hospitalization. The number is presented as a ratio using the hospital MSPB calculation divided by the national mean MSPB calculation. The lower the number, the more efficient the organization. For example, in 2017, the MSPB in the Mayo Clinic in Florida was 0.97, which is lower than the MSPB for the state of Florida, at 1.03, and the national average of 0.99 (Hospital Compare 2020).

Mayo Clinic exemplifies how the elements of SWOT can interact. The clinic used its strengths in quality and safety to offset the costs for a more efficient practice. Mayo’s strengths also include its investments in technology (the clinic recently spent $1.5 billion on a standard electronic medical record [EMR] for all sites), the use of teams for accurate diagnoses, and a culture of teamwork and excellence to deliver patient-centered care. This cooperative attitude translates into a unified focus on shared values and much collabora-tion across the team. The teamwork enhances learning, inspires confidence, and promotes camaraderie among the clinical team members.

For other healthcare groups, potential organizational strengths include highly com-petent personnel, the employees’ clear understanding of the organization’s goals, and a focus on quality improvement. An organization’s future strengths include growth through mergers and acquisitions as healthcare organizations consolidate into larger organizations. In 2017, there were 115 reported healthcare mergers and acquisitions, the largest number in recent history. One study showed that the acquired hospitals involved in these mergers had a 2.5 percent decrease in cost per admission (LaPoint 2018). Larger organizations can reach economies of scale and reduce costs, and combined with improved quality, create greater value for the patient.

W e a K n e s s e s

In the healthcare business, weaknesses are organizational factors that increase healthcare costs or reduce healthcare quality. Under healthcare reform, hospitals that seek to go it alone will no doubt increasingly struggle to acquire the financial and human resources necessary to build the infrastructure required for coordinated care.

The fundamental Affordable Care Act (ACA) model for integrated care shifts the healthcare system from volume-driven, fee-for-service care to chronic-disease management

weaknesses

Organizational

factors that increase

healthcare costs or

reduce healthcare

quality.

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E s s e n t i a l s o f S t r a t e g i c P l a n n i n g i n H e a l t h c a r e1 1 2

and value-driven episodes of care (see highlight 4.1). The shift is occurring piecemeal, one payer and one contract at a time—forcing hospitals to operate in both the volume-driven and the value-driven models at the same time. As a result, many hospitals have entered mergers to find strategic partners that could manage the transition from a volume-driven to a value-driven marketplace. In 2000, some 52 percent of hospitals were part of multihospital systems, whereas by the end of 2016, about 69.7 percent of hospitals were affiliated with 626 health systems in the United States (AHRQ 2017). As organizations now position themselves for value-based reimbursement with shared savings and bundled payments (single payments made to providers or healthcare facilities for all services rendered to treat a given condition or provide a given treatment), freestanding hospitals will increasingly be unable to provide integrated healthcare.

bundled payment

Single payment

made to providers or

healthcare facilities

(or jointly to both) for

all services rendered to

treat a given condition

or to provide a given

treatment.

HIGHLIGHT 4.1 Value-Driven Episodes of Care

The Centers for Medicare & Medicaid Services (CMS) has been continuously expanding

its new payment models in an effort to drive value-based care and shared risk with pro-

viders. In early 2019, CMS rolled out five new payment models for primary care practices

and other providers. There are two paths: Primary Care First (PCF) and Direct Contracting.

PCF has two payment models: one for the general population and another for high-

needs populations. The Direct Contracting path has three payment models: global,

professional, and geographic. The models are summarized as follows:

1. PCF General

2. PCF High-Need Populations

3. Direct Contracting Global

4. Direct Contracting Professional

5. Direct Contracting Geographic

Before 2011, many Medicare payments to providers were tied only to volume,

rewarding providers, for example, according to how many tests they ran, how many

patients they saw, or how many procedures they did, regardless of whether these ser-

vices helped (or harmed) the patient. The PCF payment models will be tested for five

years and were slated to begin in January 2020. The first two Direct Contracting options

were expected to begin in January 2020, and the third option, the geographic model,

is expected to launch in January 2021 and run for five years. CMS expects 25 percent of

primary care providers to join one of the five models (Ellison 2019).

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C h a p t e r 4 : S W O T A n a l y s i s 1 1 3

Other hospital weaknesses include aging facilities and a lack of continuity in clini-cal processes; continuity problems can lead to duplication of efforts. Weaknesses can be broken down further to identify their underlying causes. For example, a disruption in the continuity of care often results from poor communication. This fragmentation leads to inefficiencies in the entire system—weaknesses also breed other weaknesses. Thus, poor communication can ultimately hurt an institution’s financial picture: The flawed commu-nication disrupts the continuity of care, which causes inefficiencies, which in turn deplete financial and other resources.

The growth in integrated delivery systems allows greater efficiency across the con-tinuum of healthcare. As a result, hospitals will need to develop ambulatory care networks and enhance their relationship with multispecialty physician groups. Failing to market ambulatory services in the face of increasing competition could prove to be a fatal weakness as patient referrals migrate to larger health systems.

Other common weaknesses include poor use of healthcare informatics, insufficient management training, lack of financial resources, and an organizational structure that limits collaboration with other healthcare organizations. A payer mix that includes many uninsured patients or Medicaid patients can also diminish an organization’s financial per-formance, and lack of relevant and timely patient data can increase costs and lower the quality of patient care.

O p p O r t u n i t i e s

Traditional SWOT analysis views opportunities as significant new business initiatives available to a healthcare organization. For example, organizations could collaborate through healthcare delivery networks, pursue increased funding for healthcare informatics, partner with communities to develop new healthcare programs, or introduce clinical protocols to improve quality and efficiency. Additional opportunities include efforts to increase reim-bursement, institute value-based purchasing, increase patient satisfaction, provide new clinical services aligned with population health needs, and deliver integrated, patient-focused care. Healthcare organizations might also improve patient satisfaction by increasing public involvement and ensuring patient representation on boards and committees.

Organizations that successfully use data to improve clinical processes have lower costs and higher-quality patient care than do groups that don’t put data to good use. For example, healthcare organizations with CMS Hospital Compare quality scores above the ninetieth national percentile are eligible for CMS pay-for-performance incentives (see chapter 6 for information on CMS Hospital Compare). Pay-for-performance incentives base their provider payments on quality and efficiency measures to encourage the providers to work toward desired outcomes. The greater the number of organizations achieving high CMS Hospital Compare scores, the greater the patients’ access to quality healthcare. High scores also enhance an organization’s reputation in the community. While some hospitals will always reach the ninetieth percentile, the bar continues to be raised. Even the best must continue to improve.

opportunities

Significant new

business initiatives

available to

a healthcare

organization.

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t h r e at s

Threats are factors that could hurt organizational performance. Examples are political or economic instability, increasing demand by patients and physicians for expensive medi-cal technology that is not cost-effective, increasing state and federal budget deficits, and increasing pressure to reduce healthcare costs. Additional threats include healthcare fund-ing cuts, the increasing cost of technology, and the potential for reduced access to capital.

One of the basic threats to a healthcare organization’s survival is churn rate, the quantity of new patients relative to existing patients. Hospital churn rates can vary, but a good target is 15 percent new patients annually. This rate replaces lost business while maintaining significant growth. A high churn rate can be good news. A low churn rate suggests that an organization is losing potential new patients to its competitors and poses a significant threat if the number of existing patients also declines. Such a decrease in the number of existing patients can have many causes; patients may move out of the area, die, or age into a cohort requiring a different type of provider. Referral patterns among primary care physicians may also change. A health system must continually monitor how easily new residents to the community can gain access to one of its primary care physicians. Specifi-cally, health systems must be vigilant about ensuring patient access, regardless of the payer, to their network. Low churn rates clearly reflect an organization’s inability to attract new patients—a shortcoming possibly driven by low patient satisfaction or the lack of primary care providers.

in t e r n a L a n d ex t e r n a L pe r s p e c t i v e sAs shown in exhibit 4.1, SWOT analysis has both an internal and an external focus. Strengths and weaknesses are primarily internal in origin. Examples of these internal factors include patient satisfaction, cost per procedure, and level of quality. Conversely, opportunities and threats are primarily external in origin. These could include the level of competition in the market, the availability of integrated care, and the economy of scale as measured by an organization’s market share. Strengths and opportunities are helpful to the objective; weaknesses and threats are harmful to the objective.

FO r c e-Fi e L d an a Ly s i sHealthcare organizations’ responsibility to implement change that is beneficial to the patient, staff, and organization is increasing. The primary drivers of change in healthcare are the push for quality improvement, the need for customer satisfaction, the desire to improve working conditions, and the diversification of the healthcare workforce.

Force-field analysis (see exhibit 4.2) takes SWOT analysis a step further by iden-tifying the forces driving or hindering change—in other words, the forces affecting an organization’s strengths, weaknesses, opportunities, and threats. Lewin’s (1951) force-field

threats

Factors that could

negatively affect

organizational

performance.

churn rate

Ratio of the number

of new patients to the

number of existing

patients.

force-field analysis

Examination of

the forces helping

or hindering

organizational change.

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C h a p t e r 4 : S W O T A n a l y s i s 1 1 5

analysis and diagrams are the founding theory for the identification of these important forces. Forces that propel an organization toward goal achievement are called helping forces, while those that block progress toward a goal are called hindering forces. After identifying these positive and negative forces, an organization can develop strategies to strengthen the positives and minimize the negatives. For an organization to succeed, the helping forces must outweigh the hindering forces. When it reaches this state, an organization moves from its current reality to a preferred future.

Effective force-field analysis considers not only organizational values but also the needs, goals, ideals, and concerns of individual stakeholders. Individuals who promote change are helping forces, whereas those who resist change are hindering forces. Con-sidering the impact that stakeholders can have, leaders must work to understand these

Limited Financial Resources

Poor Payer Mix withLow Reimbursement

Marginal Patient Safety

uil

ibri

Low Healthcare Quality

Lack of Motivated and Skilled Personnel

Culture Opposed to Change

Patient Perception of Quality

Driving Forces Restraining Forces

Culture of Innovation

Adequate Financial Resources

Profitability

Highly Skilled Personnel

Transformational Leadership

High LowProbabilityof Change

+2 +1 0 –1 –2

exhibit 4.2Healthcare Model for Force-Field Analysis

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E s s e n t i a l s o f S t r a t e g i c P l a n n i n g i n H e a l t h c a r e1 1 6

individuals, their attitudes, and the culture of the organization. A group performing force-field analysis should also identify the key stakeholders in an issue and develop a plan to gain their support. The group needs to counteract organizational inertia (the hindering forces) and create an environment that proactively supports future change (the helping forces). Such change is accomplished by modifying current attitudes (“unfreezing” an organization’s perspective on a particular issue), emphasizing the positive aspects of change, and then incorporating the new attitudes in the organization’s processes (“refreezing” the new attitudes so that they and their associated behavior patterns become entrenched in the institution).

A transformational management style that solicits input from inside the organiza-tion is important in implementing change. This approach also supports working groups in the development of a consensus, which helps refreeze the new, desired behaviors in the organization.

su p p L e m e n t i n g sWOt an a Ly s i s W i t h ga p an a Ly s i s dataTo further refine its planning decisions, an organization can supplement its SWOT analysis with gap analysis, which, as explained in chapter 3, reveals differences between the organi-zation’s current standing and its target performance. Knowing where to focus intervention efforts improves the efficiency of the interventions. Obtaining data that can be used for local benchmarking and improvement is a key step in raising awareness and driving qual-ity improvement.

Research shows that while we have seen improvement, there are still gaps in the quality of care in healthcare practice. For example, one of the pressing issues in the United States is maternal and infant mortality. In 2019, the US maternal mortality rate increased over the previous ten years after decades of decreasing mortality. The Centers for Disease Control reports that between 800 and 900 women die each year from pregnancy-rated complications, a rate of 20.7 deaths per 100,000 live births. Infant mortality, the death of a child within the first year of life, continues to decrease worldwide. Although US infant mortality overall is 5.8 deaths per 1,000 births, down from 7.1 in 2005, state rates vary substantially, from 3.7 per 1,000 in Massachusetts to 8.6 per 1,000 in Mississippi. States are charged with using the data to identify improvement opportunities and utilize evidence-based interventions to reduce both maternal and infant mortality rates (Bellazaire and Skinner 2019).

In implementing a gap analysis to improve the quality of patient care, an organiza-tion needs to ask and answer a series of tough questions of its stakeholders (Hill Golden et al. 2017) (see exhibit 4.3).

Gaps also exist between people’s expectations of high-quality care and situations in which they receive low-quality healthcare. An unsatisfactory outcome may stem from

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C h a p t e r 4 : S W O T A n a l y s i s 1 1 7

the providers’ lack of responsiveness, marginal competence, unreliability, weak commu-nication skills, or breaches of confidentiality. In fact, patients think that their provider’s communication of such things as treatment protocols, cost information, and potential side effects is a primary driver of high quality (Wong, Roach, and Meropol 2016). Per-formance variations also result from trade-offs in the allocation of healthcare resources. For example, some healthcare organizations may lack the financial resources to purchase new equipment or hire additional staff when experiencing increased demand, because they have allocated their resources for another purpose; as a result, patients experience excessive waiting times.

dO W n s t r e a m re v e n u eUnderstanding downstream value—the revenue captured by the services a patient uses after the initial visit—can provide a hospital with a better foundation for strategic plan-ning and resource allocation. Although hospitals tend to think in terms of transactions, in the rapidly changing healthcare environment, institutions must increasingly look beyond the dollars spent on the initial transaction and incorporate downstream revenue. Hospital executives are now looking at access points for ambulatory and primary care and their potential for downstream revenue (Kacik 2019a). Other sources for downstream revenue may also be considered. Healthcare systems have marketed care model innovations such as Geisinger Health System’s patient-care management model, which Geisinger has licensed to Epic Systems Corporation and Cerner Corporation for their clinical-decision support systems. Some organizations have leveraged royalties from drugs, diagnostics, and devices.

downstream value

Revenue captured

by the services a

patient uses after an

initial visit, such as

subsequent testing or

return visits.

What are we trying to accomplish?

What to Ask How to Answer

Identify best practices.Pinpoint the gaps and who falls through them.

Identify the target population or process andimprovement goal.

What changes can we make that will result in improvement?

Identify the causes of a gap and the barriers toclosing it.Determine what changes would improve careor close the gap.Prioritize the gaps.Summarize interventions to address the gaps.

How will we know if a change is an improvement?

Collect appropriate data.

Plot or display the data for analysis.

exhibit 4.3Tough Questions in a Gap Analysis

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E s s e n t i a l s o f S t r a t e g i c P l a n n i n g i n H e a l t h c a r e1 1 8

For example, Spark Therapeutics, the gene therapy company of Children’s Hospital of Philadelphia, is generating a return of more than $450 million (Kacik 2019b).

A 2019 survey of physicians found that a full-time physician brings in an average of $2.38 million in net revenue every year to the hospital with which the professional is affiliated, and some specialties bring in almost double that amount. This revenue includes both net inpatient and outpatient revenue derived from hospital admissions, tests, treatments, prescriptions, and procedures performed or ordered by physicians (Merritt Hawkins 2019). Cardiovascular surgeons topped the list of specialty physicians, generating an average of $3.7 million a year for hospitals. The same survey showed that primary care physicians generated an average of $2.13 million in net revenue annually for their affiliated hospitals (Merritt Hawkins 2019). This figure did not include indirect revenue they may have created from patient referrals to specialists. Hospital revenue from outpatient services, such as surgical procedures, grew from 30 percent in 1995 to 47 percent in 2016 (Adams, Balan-Cohen, and Durbha 2018). In an analysis of Medicare claims data from 2012 to 2015, hospitals that had quality- and value-based contracts provided 21 percent more outpatient services and generated 13 percent higher outpatient revenue (Burrill 2018).

Hospital emergency departments (EDs) have been a key entry point for consum-ers to receive care in hospitals. As part of the treatment process, patients are frequently cared for in the ED and then discharged home. Other patients who come to the ED are frequently admitted to the hospital for ongoing care and treatment. A more recent innova-tion designed to provide better access to this community resource and patient admissions is the freestanding ED. According to recent estimates, there are at least 566 freestanding EDs in the United States (Haefner 2019).

Downstream revenue can provide a strong foundation of resources for future stra-tegic planning. Moreover, as changes in reimbursement drive transactional revenue down, positive patient relationships that produce an ongoing revenue stream from repeated and clinically appropriate visits are critical.

Organizations conduct SWOT analysis before their strategic planning. Ideally, the analy-sis includes a comprehensive review of the healthcare literature, an in-depth data analysis, and input from a panel of SWOT analysis experts. Findings from the analysis are sorted into four categories: strengths, weaknesses, opportunities, and threats. Force-field analysis supplements the SWOT analysis by identifying the forces affect-ing the strengths, weaknesses, opportunities, and threats. To refine these analyses even further, leaders may do a gap analysis to determine where deficiencies exist in

freestanding

emergency department

An independent facility

that provides hospital-

level emergency

care in communities

without full-service

hospitals. For seriously

ill patients requiring

hospitalization,

protocols and

emergency

transportation are

in place to move the

patient quickly to a

hospital.

s u m m a r y

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C h a p t e r 4 : S W O T A n a l y s i s 1 1 9

r e v i e W Q u e s t i O n s

1. How does SWOT analysis set the stage for strategic planning?2. Discuss the use of force-field analysis in promoting change in a healthcare

organization.3. Provide examples of how gap analysis can be used to improve the quality of health-

care services.4. Provide an example of how a hospital’s strategic plan can affect downstream

revenue.

c O a s ta L m e d i c a L c e n t e r Q u e s t i O n s a n d e x e r c i s e s

1. SWOT Analysis and Hospital Emergency Department Expansion Exercise

Using the four steps of SWOT analysis discussed in this chapter, create a panel of experts and perform a SWOT analysis for Coastal Medical Center (CMC). Use SWOT analysis to identify factors that would help CMC get back on track and move forward on a new road to success.

CMC CEO Richard Reynolds has met with Dr. John Warren, the chief medical officer, and Dr. Debra Jones, the director of the CMC emergency department (ED). They discussed the data included in the following two tables. They also discussed a workload report of the ED service volume for the past year. The data shows high ED utilization. (The average charge for a hospital ED visit is $1,000 plus $500 in ancillary charges such as laboratory, radiology, and pharmacy.) However, the numbers also suggest that the percentage of ED patients leaving without being seen is twice the state or national average. Mr. Henderson, Dr. Warren, and Dr. Jones are concerned about lost revenue because hospital data shows that, in addition to the ED charges, patients generate an average of $100 in profit per inpatient-day if they are admitted to the hospital.

an organization’s delivery of care. SWOT analysis and the supplementary analyses pro-mote (1) a better understanding of the barriers to change, innovation, and the transfer of knowledge to practice; (2) improved outcomes; and (3) more efficient allocation of healthcare resources.

A review of potential revenue sources enables hospitals to use strategies other than expense management to maximize financial performance. These products and services can often have a high profit margin and downstream revenue when there is an associated reasonable payback period. Organizations can explore internal and external environmental issues as potential opportunities as part of their SWOT analysis.

e x e r c i s e s

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E s s e n t i a l s o f S t r a t e g i c P l a n n i n g i n H e a l t h c a r e1 2 0

CMC Hospital Data

Annual discharges 40,720

Average length of stay (days) 5.1

Average daily census 423

Inpatient surgeries 13,000

Outpatient surgeries 14,900

Births 2,400

Outpatient visits 245,000

Emergency department patients (not admitted) 36,400

Emergency department patients (admitted) 24,700

Total emergency department patients 61,100

Comparison of CMC Emergency Department (ED) Quality of Care

Measure CMCState

AverageNational Average

Average (median) time patients spent in ED before admission (minutes) 340 282 272

Average (median) time patients spent between decision to admit and depart-ing for inpatient room (minutes) 130 108 97

Average time patients spent in ED before being sent home (minutes) 150 143 133

Average time patients spent in ED before being seen by a healthcare professional 36 23 24

Average time patients with broken bones waited for pain medication 70 56 55

Patients who left ED before being seen (%) 4 2 2

Patients who came to ED with stroke symptoms and received brain scan results within 45 minutes (%) 55 67 61

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C h a p t e r 4 : S W O T A n a l y s i s 1 2 1

2. CMC Emergency Department Data Analysis Exercise

Use the preceding tables to answer these questions:1. Looking at the data provided, calculate the potential lost revenue for ED visits over

the past year.2. Using the data provided, calculate the potential lost downstream hospital revenue

from ED admissions who walked out over the past year.3. Make a recommendation to Mr. Henderson, Dr. Warren, and Dr. Jones for how to deal

with the ED problem.

O n L i n e e x e r c i s e

Discussion Board: Patient Satisfaction and Hospital Efficiency

Go to the Hospital Compare website (www.medicare.gov/hospitalcompare/search.html), and evaluate three hospitals in your home or university community. The data elements to be used should be the “Survey of patients’ experience” scores (HCAHPS) and the “Payment & value of care” scores, specifically the Medicare spending per beneficiary (MSPB).

From your analysis, determine which hospital in your community has the highest level of satisfaction and is the most efficient (MSPB). In addition to comparing the local competitors, how did these organizations compare with the state and national norms? Is there a hospital that you would choose as a patient, and if so, why?

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E s s e n t i a l s o f S t r a t e g i c P l a n n i n g i n H e a l t h c a r e1 2 2

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