HPA 455 Exam 2

Watson's Key Indicators Data on Human Resources- Customer (patient) Info.- Physician Information-

- Staffing shortages/needs Turnover/satisfaction reports Training & development -Demographics by service line Volume by major insurance Quality measures/consumer satisfaction -Unique competencies/specialties Productivity measures Specialty deficits

Weaknesses (internal, negative) Organizational factors that increase healthcare costs or reduce healthcare quality.

-Are the organization's internal resources adequate to accommodate growth/change? -Are the staff skilled to accommodate the area of growth/change? -Are the stockholders encouraging of growth/change? -Are the stockholders encouraging of growth/change? -Does the organization have a negative accreditation status?

Threats (external, negative) Factors that could negatively affect organizational performance.

-Is there is there little to no competition in the area of growth/change? -Is there a sufficient labor force that will accommodate this growth/change? -Is the regulatory environment conducive to reimbursement for this growth/change?

Opportunities (external, positive) Significant new business initiatives available to a healthcare organization.

-Is there sufficient market share (demand for service) to accommodate growth/share? -Is there is there little to no competition in the area of growth/change? -Is there a sufficient labor force that will accommodate this growth/change? -Is the regulatory environment conducive to reimbursement for this growth/change?

So, our job becomes a matter of finding the data to support (or dispute) the points in the SWOT. Since this lesson is focusing on the Internal Assessment component, let's focus on several resources and tools you can use to develop comprehensive Strengths and Weaknesses. The tools include:

-Key indicators (facilities, staff, benchmarking) -Financial performance and position (financial statements, ratio analysis) -The characteristics and utilization of major programs and services (Boston Consulting Group Matrix)

There are three types of Benchmarking, the first two are more short-term in their scope and produce quick results (Duff, 2016):

-Process or "best practice" benchmarking compares operational processes. - Performance benchmarking compares product lines, marketing, and sales to determine how to increase revenues. - Strategic benchmarking takes a long-term view of company direction relative to the future strategies of competing companies.

In order for strategic planning to be effective, leaders need to understand the strengths, weaknesses, opportunities and challenges of the organization. To do so, we need to obtain and analyze data specific to the organization. So, you may be asking yourself, where do I start? At minimum the internal assessment should include

-The characteristics and utilization of major programs and services -Key indicators (facilities and staff) -Financial performance and position

Strengths (internal, positive) Current factors that have prompted outstanding organizational performance.

-What are the organization's internal resources, financial, labor, equipment, space, etc.? -Are the organization's internal resources adequate to accommodate growth/change? -Are the staff skilled to accommodate the area of growth/change? -Are the stockholders encouraging of growth/change? -Does the organization have a positive accreditation status?

An organization's mission, vision, and values should be the guideposts for strategic planning and assessment of organizational performance. The organization's mission is an extension of purpose or reason for existence. As illustrated below, Swayne, Duncan and Ginter (2008) suggest the following key characteristics of an effective mission statement regardless of the organizational entity:

1. Mission statements are broadly defined statements of purpose 2. Mission statements are enduring 3. Mission statements should underscore the uniqueness of the organization (competitive advantage) 4. Mission statements should identify the scope of operations in terms of service and market (p. 165).

So, the question becomes, how do we establish organizational values? The values should be based on core beliefs and expectations of our stakeholders. Below are guidelines to establish and understand an organizations values:

1. Obtain key stakeholders' expectations for the organization. 2. Identify common values among stakeholders. 3. Ensure values are visible and tangible to employees. 4. Make values memorable

1. Obtain key stakeholders' expectations for the organization. 2. Identify common values among stakeholders. 3. Ensure values are visible and tangible to employees. 4. Make values memorable

1. Often this may involve surveying or interviewing key stakeholders to determine which values they consider of most importance. Examples of questions (which of course vary by stakeholder group) may include: What do employees want the organization to be known for? What makes employees proud? Who are the organization's heroes and why? What are the five most important ethical values? 2. Look for themes among various stakeholder groups. Of particularly interest, are those values that may distinguish you from your competitors! 3. Organizational values should be visible and connected to performance evaluations. Your values should also be linked to measurable strategic outcomes such as satisfactions scores. 4. Organizational values should be expressed in terms that are easy to understand and remember. As a good rule of thumb, limit your values to no more than seven. The best value statements may be a word or phase, but are also defined.

Development (or revision) of an organization's vision is critical to an organization's future. Why do you think this is the case? The vision creates an image for stakeholders. If that image is not clear, it is just like an out-of-focus image on your cell phone-not good! Vision development can be a difficult task, yet is it by far one of the most important. A few points to keep in mind as you develop the vision include:

1. The vision should represent a dream and future direction. 2. Statement is usually 5 to 10 or more years out. 3. It should have some detail, like a picture that would help people see what the future looks like. 4. The vision should clearly reflect how the organization's passion, belief or value adds to the community. 5. The vision should be measurable as a reflection of quality. For example, we will be in the top 10% in clinical quality indicators.

Stakeholders as individuals or groups can be very diverse; however, in health care, we generally simply classify our stakeholders as either internal or external groups:

An internal stakeholder group is connected to the inside of the organization in some direct way. So for example, internal stakeholders include our employees, investors, stockholders, and board members. Conversely, external stakeholders, while still connected to the organization, these individuals or group operate outside of the organization.

Values

An organization's values are the underlying behaviors and expectations, which direct the organization's members to attain its mission. The values provide an "ethical compass" ideally influential in creation of the organizational culture. Culture is important because it ensures that healthcare professionals are working toward a common goal. A strong organizational culture is associated with improved team morale, enhanced healthcare quality, and higher levels of patient satisfaction.

Cash Cows

Cash cows are products or services in low growth markets with high market share. Cash cows grow slowl, therefore require little cash. Because cash cows dominant market share and require limited cash investment, they generate significant cash. Most organizations explore strategies to continue to support the cash cows without having to reinvest significant cash.

As we move forward with the formulation and implementation of the strategic plan, it is imperative to consider the needs and level of support it requires of our stakeholders. If, we fail to recognize this, our stakeholders may withdraw their support to the organization.

For example, sticking with our skilled nursing facility example, if we served an aging community and there was a demand for skilled nursing facility beds, including a dementia unit, what do you think would happen if we instead focused our efforts in opening a new facility in another state? Most likely, we would experience negative feedback from our stakeholders, and perhaps our local investors would withdraw support or our customers may seek services elsewhere. You always need to be in tuned to your stakeholders needs...it is a key factor in strategic success!

Although the trending of internal financial ratios is helpful, we also should also compare the data to some reference point. Standards exist for each financial ratio, however we gain the most insight from comparisons to our competitors and the industry as a whole (Wayland & McDonald, 2016). For example, if analyzing our financial ratios, we determine a high debt-to-equity ratio we would also want to know:

How highly leveraged our competitors are? What is the norm in the industry? Again, the goal is to determine our strengths and weaknesses and ultimately develop implications for strategy as a result of our analysis.

So what exactly is strategic intent?

It is a key gauge of an organization's relationship with its stakeholders. It is a matter of identifying stakeholders most important to the organization and the benefits they are to receive. It generally involves a statement of commitment to stakeholders. It is the basis on which the organization defines its successes and failures.

An organization's financial statements consist of three main sections: Balance sheet, income statement and the statement of cash flows. An internal financial analysis examines key financial ratios to determine the current state of the organization as well as trends. So, what are the key financial ratios? Generally these include:

Liquidity ratios Leverage ratios Activity ratios Profitability ratios Growth ratios Valuation ratios

Stakeholders and Organizational Purpose

Organizations evolve with the intent of accomplishing some purpose or aim for a group of stakeholders. The aim of course, varies by organization. The 'stakeholders' are individuals and groups that have some investment in an organization and/or obtain some benefit from it.

Stars

Products or services in high growth markets with high market share. They are growing rapidly; therefore require a lot of cash, however they also generate a lot of cash. At some point, the stars lights begin to dim and the growth and revenue slows. Organizations must then consider whether strategic approaches designed to fuel growth and expand market share. If the organization is successful in maintaining its dominant market share, it may become a cash cow. If however it fails to hold its market share, than it becomes a dog.

Question Marks (or Problem Child)

Products or services in high growth markets with low market share. These are your cash traps and 'gambles' in the market. These divisions tend to require cash to simply compete in the marketplace. Unfortunately, due to low market share, they do not generate cash. The leadership team will need to decide if there is growth potential in the market to move the division into the star category.

As a leader in healthcare, the Mayo Clinic's organization values provide an excellent example: Respect: Compassion: Integrity: Healing: Teamwork: Excellence: Innovation: Stewardship:

Respect: Treat everyone in our diverse community, including patients, their families and colleagues, with dignity. Compassion: Provide the best care, treating patients and family members with sensitivity and empathy. Integrity: Adhere to the highest standards of professionalism, ethics and personal responsibility, worthy of the trust our patients place in us. Healing: Inspire hope and nurture the well-being of the whole person, respecting physical, emotional and spiritual needs. Teamwork: Value the contributions of all, blending the skills of individual staff members in unsurpassed collaboration. Excellence: Deliver the best outcomes and highest quality service through the dedicated effort of every team member. Innovation: Infuse and energize the organization, enhancing the lives of those we serve, through the creative ideas and unique talents of each employee. Sustain and reinvest in our mission and extended communities by wisely managing our human, natural and material resources

A third component of the internal assessment includes characteristics and utilization of major programs and services. One tool used to assess programs and services is The Boston Consulting Group Matrix (BCG). An organization can use the BCG Matrix to classify business activities into one of four categories:

Stars Question Marks Cash Cows Dogs These categories are based on objective criteria and organized according to market share prospects, as well as cash flows, and capital requirements. The shear act of an organization examining a product line or service and classifying it according to specific categories can bring a sector of that organization both a new and clearer perspective. The approach was originally developed to analyze organizations with multiple divisions however it can also be used to analyze an organization with one unit. For this reason, it is often referred to as a 'portfolio analysis tool." (Watson, 2014). Let's take a closer look at the Matrix as illustrated below:

As recommended by Harrison (2016), an organization may implement the following steps in completing a SWOT: Step 1- Step 2- Step 3- Step 4-

Step 1- Conducting an analysis, which involves the collection and evaluation of key data. Examples: population demographics, community health status, sources of healthcare funding, and/or the current status of medical technology. Once the data have been collected and analyzed, the organization's capabilities in these areas are assessed Step 2-Collecting and sorting data into four categories: strengths, weaknesses, opportunities, and threats. Strengths and weaknesses generally stem from factors within the organization, whereas opportunities and threats usually arise from external factors. Step 3- Developing a SWOT matrix for each business alternative under consideration. Step 4-Incorporating the SWOT analysis into the decision-making process to determine which business alternative best meets the organization's overall strategic plan.

As leader, you are often 'charged' with crafting the organizations

Strategic Intent

SWOT analysis

The SWOT is an examination of an organization's internal strengths and weaknesses, and external opportunities and threats that the organization needs to be aware of when making strategic plans. The SWOT is used throughout the strategic planning process. Initially it provides a framework for brainstorming and continues to evolve as internal and external data are incorporated into the appropriate sections.

Resources to Build a SWOT

The SWOT is an integral component of our strategic planning process; however the SWOT alone does not provide a comprehensive, nor accurate picture of your organization. The tool is only as good as the information input into it. The phrase "Garbage in, garbage out!" comes to mind! Often, the SWOT is actually final product of a series of assessments.

The organization's mission, vision and values form the foundation for a strong strategic plan.

The strategic plan helps unify your stakeholders, providing direction based on mission, vision, and values. Let's take a moment to review the major components.

Dogs

These products or services exhibit low growth or market share. So, these divisions in your organization are not doing well. They are often referred to as "cash traps." In the best-case scenario they are not adding significant value, and may actually be costing you more in terms of management time and attention. Generally, organizations must decide if they will invest to turn the dogs around, divest or simply close the division. In some cases, however, an organization may opt to keep the division for strategic reasons. For example, an organization may keep one service (such as rehabilitation services) in order to deliver other services (such as orthopedics) to the market. It is important in strategic planning to recognize the dog only because of its resource implications (Berkowitz, 2011).

While a fair amount of brainstorming is needed, the development or revision of the vision should actually be based on the data gathered in both the internal and external assessment. The real test, or reality check for many organizations in crafting a vision is found in asking two simple questions:

What activities could be carried out under the umbrella of the vision statement? What strategies or ideas would we not explore because of what our vision says?

BCG Matrix Example

When we plot divisions on a BCG matrix, we use a circle or image to indicate placement. The size of the circle or image indicates the relative significance of each division in terms of cash generation. The tool again, is designed essentially to 'force' leaders to explore their current divisions and ultimately strategic direction.

Benchmarking is the process of

comparing what your company is doing with what the best performing company in the industry is doing. For example, if we had 300 admissions to our skilled nursing and rehabilitation unit in University Park, PA is that number good or bad? How does it relate to our mission or vision, or even does it? The number would be more meaningful if those 300 admissions were reported as 75% of the total admissions to skilled nursing and rehabilitation facilities in University Park, PA this year. So, in this example, we are comparing our data to other organization's data. The practice is referred to as performance benchmarking (Watson, 2014).

The relationship between the organization and internal/external stakeholders is viewed as reciprocal as indicated in the illustration below:

https://psu.instructure.com/courses/2146458/files/125792154/download So, for example, a skilled nursing facility may offer products or services that benefit the customer such as a dementia unit and at the same time seek benefits in the form of payments or other types of supports (e.g. reputation, loyalty, regulatory approval)