The Strategic Management of Health Care Organizations

Peter M. Ginter, W. Jack Duncan, Linda E. Swayne

• Publisher: Wiley
• Year: 2018
• ISBN:
  9781119349716
• Edition: 8
• Topic: Medicina
• Subtopic: Infermieristica

A comprehensive guide to effective strategic management of health care organizations.

Strategic Management of Health Care Organizations provides essential guidance for leading health care organizations through strategic management. This structured approach to strategic management examines the processes of strategic thinking, consensus building and documentation of that thinking into a strategic plan, and creating and maintaining strategic momentum – all essential for coping with the rapidly evolving health care industry. Strategic Management of Health Care Organizations fully explains how strategic managers must become strategic thinkers with the ability to evaluate a changing industry, analyze data, question assumptions, and develop new ideas. The book guides readers through the strategic planning process demonstrating how to incorporate strategic thinking and create and document a clear and coherent plan of action. In addition, the all-important processes of creating and maintaining the strategic momentum of the organization are fully described. Finally, the text demonstrates how strategic managers in carrying out the strategic plan, must evaluate its success, learn more about what works, and incorporate new strategic thinking into operations and subsequent planning.

This strategic management approach has become the de facto standard for health care management as leadership and strategic management are more critical than ever in coping with an industry in flux. This book provides heath care management students as well as health care administrators with foundational guidance on strategic management concepts and practices, tailored to the unique needs of the health care industry. Included are a clear discussion of health services external analysis, organizational internal analysis, the development of directional strategies, strategy alternative identification and evaluation, and the development and management of implementation strategies providing an informative and insightful resource for anyone in the field.

This new eighth edition has been fully updated to reflect new insights into strategic thinking, new methods to conceptualize and document critical environmental issues, practical steps for carrying out each of the strategic management processes, industry and management essentials for strategic thinkers, and new case studies for applying the strategic management processes. More specifically, readers of this edition will be able to:

• Create a process for developing a strategic plan for a health care organization.
• Map and analyze external issues, trends, and events in the general environment, the health care system, and the service area.
• Conduct a comprehensive service area competitor analysis.
• Perform an internal analysis and determine the competitive advantages and competitive disadvantages.
• Develop directional strategies.
• Identify strategic alternatives and make rational strategic decisions for a health care organization.
• Develop a comprehensive strategy for a health care organization.
• Create effective value-adding service delivery and support strategies.
• Translate service delivery and support plans into specific action plans.

The health care industry's revolutionary change remains ongoing and organizational success depends on leadership. Strategic management has become the single clearest manifestation of effective leadership of health care organizations and the strategic management framework's strengths are needed now more than ever. The Strategic Management of Health Care Organizations provides comprehensive guidance and up-to-date practices to help leaders keep their organizations on track.

Chapter 1
The Nature of Strategic Management

“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”

—CHARLES DARWIN, BRITISH NATURALIST

Why the Nature of Strategic Management Is Important

Charles Darwin’s quote speaks to a core concept of strategic management – responsiveness to change. For organizations in a world where there is no change, strategic management is unnecessary; however, for organizations in an ever-changing world, strategic management is essential. Similar to biology, the organization that best adapts to the demands of its environment prospers and those organizations that do not adapt become less and less relevant. Staying relevant is the key to success. The rate of technological, social, economic, competitive, and political change impacting organizations continues to accelerate. Although change affects all industries, nowhere has greater change occurred than in the health care sector. Strategic management enables leaders to make sense of change and develop strategies to position organizations for success in the continuously evolving health care environment.

More than simply being responsive to change, strategic management attempts to create the future by envisioning what could be and charting a course toward that dream. In addition to the processes underlying the pursuit of the dream, strategic management provides the organization with structured thinking and practices for translating dreams into effective visions, missions, strategies, and plans that will move organizations toward their aspirations. Dreams, without the enabling strategic management processes and direction, are just fantasies; with the structure provided by strategic management, dreams can become reality.

Strategic management is leadership – responding to change, setting direction, and focusing the organization’s momentum. Strategic management is the clearest manifestation of leadership in organizations. As a result, virtually all successful health care organizations have embraced strategic management to cope with change and translate their visions, missions, and strategic goals into actuality. Learning about strategic management also means learning about leadership – the ability to utilize strategic thinking, strategic planning, and strategic momentum in organizations.

Use concepts in this chapter to remain relevant!

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Learning Objectives

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After completing the chapter you will be able to:

1. Describe why strategic management is crucial in today’s dynamic health care environment.
2. Trace the evolution of strategic management.
3. Discuss the rationale and usefulness of strategic thinking maps.
4. Define and differentiate between strategic management, strategic thinking, strategic planning, and strategic momentum.
5. Articulate the necessity for both the analytic and emergent models of strategic management.
6. Clarify whether an organization may realize a strategy that it never intended.
7. Discuss the benefits of strategic management for health care organizations.
8. Explain the links between the different levels of strategy within an organization.
9. Describe the various leadership roles of strategic managers.

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Strategic Management Competency

After completing this chapter you will be able to create a process for developing a strategic plan for a health care organization.

Managing in a Dynamic Industry

A major aspect of strategic management concerns responsiveness to change to remain relevant. Significant change in the health care system comes from many sources, including: legislative and policy initiatives; international as well as domestic economic and market forces; demographic shifts and lifestyle changes; technological advances; and fundamental health care delivery changes. Furthermore, a multitude of interests are directly or indirectly involved in the delivery of health care. For instance, the for-profit provider segment has grown dramatically; private-sector businesses are largely responsible for the development and delivery of drugs, medical supplies, and many technical innovations, and government agencies regulate much of the actual delivery of and payment for health care services. Certainly, health care systems, as well as other domestic and international health care organizations, have had to continuously adapt to these and other changes. As suggested in the introductory quote, health care organizations must be responsive to change and effectively manage that change in this dynamic industry.

The Nature of Health Care Change

The health care system has experienced considerable change and will undoubtedly contend with even more intensive transformations in the future. Interviews with health care professionals and a review of the health care literature suggest that the types and magnitude of change for which health care organizations will have to be responsive include some or all of the following areas: legislative/political, economic, social/demographic, technological, and competitive.¹ A few illustrations are provided below.

Economic Changes

• Continued growth in the industry – health care by most measures is the largest U.S. industry and non-government employer.²
• Procedure costs may be falling while total spending is rising.³
• Employers will become increasingly unwilling to shoulder the burden of the costs of health care for their employees and retirees.
• Over 27.3 million Americans were without health insurance in 2016. However, the uninsured rate dropped to 8.6 percent, which is the first time in recent history the rate has dropped below 9 percent.

Social/Demographic Changes

• Without a truly radical reduction in health care spending, which there is no reason to expect, demographics alone will drive health care’s share of GDP (gross domestic product) as high as 25 percent.⁴
• The 2010 Affordable Care Act (ACA) resulted in 20 million people gaining health insurance coverage – continuing evolution of health care legislation will no doubt further affect the number of people with health insurance.
• An aging population and increased average life span will place capacity burdens on some health care organizations while a lessening of demand threatens the survival of others. By 2020, the U.S. population over the age of 65 is expected to increase from 47.5 million to 53.7 million or approximately 20 percent of the U.S. population.
• The U.S. population will become increasingly diverse.
• The Hispanic population will continue to grow; some experience difficulty with health literacy. Hispanics have become the largest minority group, representing about 18 percent of the U.S. population. By 2050, it is estimated that as many as one out of every four Americans will be Hispanic.

Legislative/Political Changes

• Legislative changes in health care regulation will become the “new normal” in conjunction with changes in government administrations as policy makers try to balance costs and issues related to health care access.
• The most significant external factor affecting health care may be how it is financed. See Essentials for a Strategic Thinker 1–1, “What Is Private Health Insurance?” and Essentials for a Strategic Thinker 2–1, “What Is Government Health Care Insurance?” to understand why the health care insurance market is so important for this industry.
• Employer-based insurance may diminish as the penaltie...