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Free Custom «Regional Health System: The Satellite Health Park Strategy» Essay Sample

Free Custom «Regional Health System: The Satellite Health Park Strategy» Essay Sample

History

The Satellite Health Park Strategy aims at enhancing strategic management within the hospital environment. These efforts have been initiated by the Chief Financial Officer (Michael Reynolds) to enable the hospital to increase its revenues and navigate through a competitive environment. First of all, Reynolds has realized the need to acquire an aggressive approach that would increase profit of a hospital. The implementation of the Satellite Health Park Strategy would aim at three fundamental objectives. They include the conversion of 36 general medical and surgical acute care inpatient beds to a Medicare certified hospital based skilled nursing unit. Secondly, there is the acquisition of a Medicare certified hospital based on home health agency. Lastly, there would be an acquisition of a 120-bed free standing nursing home. According to Reynolds, this was a financially viable strategy that would increase revenues and allow the hospital to proactively compete in the hostile market place.

Strengths and Weaknesses

On one hand, the strategy would offer the opportunity of enhance reimbursement. At the same time, it would provide economies of scale that would lead to reduced overhead costs. Secondly, there were adequate resources to support its implementation (Sheldon & Windham, 2002). For instance, there was approximately $6,000,000 remaining from the recent bond issuance. Moreover, there was an additional capital of $10,000,000 that was available from the board-designated fund for plant replacement and expansion. On the other hand, the financial viability and long-range strategic value of the Health Park is challenged by the population age distribution (Hillestad & Berkowitz, 2004). For example, the analysis indicated that there was a significant contrast in the national average. More importantly, the national statistics represent the population with 65 years and above to be 13%, while the actual average shows 45 % (Thomas, 2007). 

External Environment

These are factors outside the organization that affect its ability to function. Some of the external factors may require the company to make adjustments to its strategies. The government is a major player that affects the functioning of different firms (Swayne, Duncan, & Ginter, 2012). For instance, the Health Park Strategy would require an approval of the State Agency for Health Administration in the form of a Certificate of Need (CON). This means that although management anticipates that such approval is forthcoming, if the agency fails to approve the strategy, then it will not be implemented even if it is financially viable (Hillestad & Berkowitz, 2004). Secondly, the needs of the population seeking medical services of the facility are becoming increasingly complex. In Thus, approximately 45% of the population of the hospital’s markets was above 65 years compared to the national average of 13%. Therefore, there is a greater utilization of health services by the elderly than expected (Hillestad & Berkowitz, 2004).

SWOT Analysis

Strengths

-Innovative and new services;

-Capabilities and cost advantages;

-Special expertise and experience;

-Availability of other value-adding services.

Weaknesses

-Gaps in service areas;

-Technological complexities.

Opportunities

-Adapting to new technology;

-Changes in the needs of the target population;

-New market segment that will increase profit margin;

-Lack of a dominant competitor in the service area.

Threats

-Competitive and complex market forces;

-Adverse changes.

The Satellite Health Park Strategy has a major strength that will boost its implementation. The chief finance officer has a vast experience in various financial positions, which will be useful in order to increase the financial viability of the strategy (Thomas, 2007). However, Reynolds is worried that there are external forces, such as state regulations, which could affect the potential success of the strategy. What is more, Reynolds has an in-depth understanding of the financial dimensions of health service delivery (Thomas, 2007). Therefore, his experience presents the regional health system an opportunity to develop a market segment that will increase profits. It will also help navigate through such threats as competition from other healthcare organizations (Hillestad & Berkowitz, 2004).

Corporate Strategy

A corporate strategy helps an organization to develop processes that are consistent with its mission and values. It must help the management create value for the customers in a sustainable manner (Hillestad & Berkowitz, 2004). Evaluating the Satellite Health Park, Reynolds made recommendations that would help with value addition and satisfaction. The strategy would be used as the backbone for expanding the outpatient services by including an ophthalmology surgery center, a diagnostic service, and a rehabilitation facility. In addition, these are alternatives processes that could enhance the market competitiveness of such organizations (Swayne et al., 2012). In order to facilitate the implementation process, the restructuration of the hospital would involve changing the name to the Regional Health System. In this way, the facility would become an integrated health system offering a range of services on top of acute in-patient care (Sheldon & Windham, 2002).

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Business Strategy

A business strategy assists the management with determining the direction that the organization will take in the future. It involves focus on the strengths of the company as a way to differentiate it from other competitors (Hillestad & Berkowitz, 2004). An effective business strategy allows to set priorities and accomplish specific tasks. The Satellite Health Park Strategy is an aggressive way to increase the financial performance of the hospital system. For instance, by acquiring a 120-bed free standing nursing home, the facility had the opportunity to acquire an upscale nursing home for private investors (Thomas, 2007). Moreover, the CEO was cautious that the state regulations prohibited building of more nursing home beds in one area. Therefore, by falling to implement the strategy, there was little a likelihood that another opportunity would be available for many years (Berkowitz, 2010). 

The second strategy would involve converting 36 general medical and surgical beds to a Medicare certified hospital-based skilled nursing unit. In this way, the facility will provide an alternative setting for patients to get other healthcare services such as rehabilitation and transfusion (Berkowitz, 2010). Furthermore, this unit would increase revenue beyond the fixed amounts under the Medicare programs. Additionally, the acquisition of hospital-based home health agency with a Medicare certification would reduce costs. This would be an opportunity to provide services of health agencies at homes. Consequently, it would increase the reimbursements and at the same time maintain the quality of healthcare services delivery (Sheldon & Windham, 2002).

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Structure and Control

Free-standing ophthalmology surgery and diagnostic services would be based upon a fee schedule. Moreover, the surgical procedures would be reimbursed at the rate of $795 per procedure, while the diagnostics would have a Medicare reimbursement of $85 per procedure (Sheldon & Windham, 2002). In addition, the implementation of Satellite Health Park would require careful control by the CEO, chief finance officer (CFO), physicians and relevant committees and board members. For example, the CFO and his committee determined the economic viability of the strategy by engaging a project management firm (Berkowitz, 2010). In such a way, it becomes easier to determine the construction costs, environmental impact, and other developmental aspects. On the other hand, 40% of the diagnostic and rehabilitation volume would shift towards making the Health Park Strategy operational and more productive (Hillestad & Berkowitz, 2004).

Recommendations

Under the leadership of the CEO, the Satellite Health Park Strategy should be implemented to help the facility solve its problems in the complex health care environment (Sheldon & Windham, 2002). Moreover, the organizational structure should set clear responsibilities for each member of the healthcare facility. This is a way to ensure that special challenges from the external environment will be handled in an effective manner. There is also the need for economic evaluation that inform the management about the efficiency of the resources allocation and strategy implementation (Hillestad & Berkowitz, 2004). These efforts are aimed at making decisions that will translate cost-effectiveness ratios into resource allocation. As a result, it will be easier to compare the inputs and the outcomes of the strategy and make changes when necessary (Swayne et al., 2012). 

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