Review Chapter 3 in the textbook, Managing Health Organizations for Quality and Performance (Fallon, Begun, & Riley, 2013) review attached in word document.
From the perspective of a health care administrator, identify, develop, and discuss strategic issues in planning a model by prioritizing issues facing a community when dealing with a natural disaster using the four MAPP assessments that align with the shared community mission.
Lastly, explain how you would promote collaborations among clinical professionals, explain methods that encourage physician leadership in patient care enhancement, and explain quality initiatives that reduce organizational risk and support patient safety.
Your paper must be 2-4 pages. In addition to the text, utilize a minimum of two scholarly sources that were published within the last five years.
Strategic planning is a discipline that is well understood and used in many businesses and competitive health care organizations. However,strategic planning is not as widely used in many nonprofit and public health organizations. This is unfortunate because nonprofit and public healthorganizations, like other health organizations, can benefit significantly from the strategic planning process. All health organizations facecompetition for limited resources, and all have the capability to make better use of those resources and produce more quality and value forconsumers and the public.
Strategic planning helps an organization develop an overall sense of direction for the future. This is essential because an organization thatdoes not identify and make strategic choices loses opportunities to learn about its market and its capabilities to serve and endangers fulfillment ofits organizational mission. Strategic planning is an important competency for managers because it stimulates new ideas and emphasizescontinuous improvement in quality and value relative to alternative or competing organizations.
3.2 STRATEGIC PLANNING
Two definitions are necessary to understand strategic planning. Strategy addresses the question of how to position an organization in itsenvironment. A strategy is a major course of action an organization uses to pursue its mission and vision. Strategic planning is the process ofdeveloping strategies. As a result of conducting a strategic planning process, an organization will make significant, nonrecurring decisions aboutits nature and the directions it will take in the future. As a first step, an organization must first clearly articulate its mission.
An organization’s mission statement delineates its purpose and reason for existence. It establishes boundaries for the organization’s activities,programs, and services. It creates focus, assuring that the organization does not attempt to be all things to all people. Mission statements are asimportant for what they exclude as for what they include.
A mission statement is typically brief, usually not exceeding two or three sentences. It communicates the current intentions of theorganization. Mission statements are often accompanied by statements of vision and values.
Vision and Values
Decision makers in many organizations develop a targeted description of the future outcomes expected if the organization is successful. Thisdescription is called a vision. Visions are somewhat idealistic because they are intended to motivate people and enroll the hearts, as well as theminds, of organizational stakeholders. Many organizations also produce a written statement of the values upon which an organization is built.This is especially true in organizations with a religious affiliation or foundation. They may rely on explicit values to a greater degree than theirsecular counterparts. Strategic planning activities are based on the mission, vision, and values of the organization.
Guiding statements (the mission, vision, and values documents) from two different organizations provide useful examples. Fairview HealthServices (FHS) is a large, nonprofit integrated health delivery system in Minnesota. FHS is comprised of 7 hospitals, has over 2000 employed andaffiliated physicians, and is supported by more than 21,000 staff. The mission of FHS is to improve the health of the community and supportresearch and education efforts (Fairview Health Services 2010). The vision of FHS is to be the best health care delivery system in America. Thevalues of FHS—dignity, integrity, service, and compassion—reflect beliefs regarding ways to serve individuals.
A second example of a guiding statement comes from Healthy People 2020, which lists strategic priorities for national health promotion anddisease prevention efforts to improve the health of people in the United States by 2020. It is used as a tool for strategic planning by all levels ofgovernment and the health system to prioritize targets and to measure progress for health issues in specific populations (US Department of Healthand Human Services 2010). The mission of Healthy People 2020 is to identify priorities for improving health nationwide and engage multiplesectors to take health actions based on scientific evidence. The vision of Healthy People 2020 is to help promote a society in which all people livelong, healthy lives. The values of Healthy People 2020 are embedded in its overarching goals—the values emphasize a desire to improvecommunity health, nurture healthy behaviors, and eliminate health disparities.
Both guiding statements (FHS and Healthy People 2020) set stretch goals—becoming the best health care delivery system in America (FHS)and creating a society where all people live long, healthy lives (Healthy People 2020). Stretch goals are important to the improvement processbecause they challenge employees and stakeholders to perform at even higher levels. The mission, vision, and values of each organization createthe foundation for aspirations and strategic plans of the organization.
Strategic Planning Steps
The strategic planning process is depicted in Figure 3–1 and consists of six steps that proceed from the mission, vision, and values. Note that themission, vision, and values have two roles in the strategic planning process. First, they form the foundation of the planning efforts. Second, theresults of the planning effort should serve to validate the continuation of the mission. The mission of the organization (and more rarely, the visionor values) is occasionally changed as a result of the strategic planning process, as shown by the feedback loop in Figure 3–1. Although not acommon occurrence, it is important for an organization to alter its mission when the environment, the people, or the community it serves changes,or when it undergoes a major transformation.
The six steps of strategic planning include the following:
1a. Analyze the internal organization
1b. Analyze the external environment
2a. Analyze internal strengths and weaknesses
2b. Analyze external opportunities and threats
3. Identify and evaluate strategic issues and options
4. Select strategic priorities
FIGURE 3–1 The Strategic Planning Process
Although the steps in the process are presented in a linear fashion for simplicity, in reality, they are interdependent. Identification of keystrategic issues can result in a reassessment of external opportunities and threats, for example. A selection of priorities can mean changes ininternal operations that alter the internal strengths and weaknesses of the organization. The strategic planning process is more realisticallydescribed as an interdependent cycle than a series of discrete steps (Begun and Heatwole 1999).
Steps 1a and 1b: Analyze the Internal Organization and the External Environment
Strategic planning begins with an analysis of the internal environment of the organization and the external environment in which the organizationoperates. Because the internal and external environments of organizations are constantly changing, regular review is essential in order to identifyand assess the impact of changes and how they affect an organization. Factors that typically are reviewed to assess changes include laws,regulations, payment mechanisms, competitors, workforce supply, trends in quality and safety, demography of the service area, and customer orclient satisfaction.
An internal organizational analysis consists of a review of the health organization’s resources and performance. An internal analysis typicallyincludes measures of productivity, staffing ratios compared to industry standards, key financial ratios, patient and client satisfaction rates,employee morale, and other performance measures.
An external environmental analysis looks at the key factors outside the organization such as economic, political, and legal trends that affectthe service area and the health care organization. It is also important to examine the demographics and disease risks in the community carefully.Conducting an external environmental analysis is an extensive activity undertaken to gain a complete understanding of relevant external forcesaffecting the organization. At a minimum, this component of the environmental audit should include key demographic trends, employment data,poverty data, workforce supply, and health status of the community. It also should include characteristics of the client or customer populationsserved by the organization, where they come from, and market penetration trends.
Steps 2a and 2b: Analyze Internal Strengths and Weaknesses and External Opportunities and Threats (SWOT Analysis)
The analysis of the internal and external environments forms the basis for determining the organization’s internal strengths and weaknesses aswell as external threats and opportunities. Taken together, these two steps are often referred to as SWOT analysis. This acronym refers to the Strengths and Weaknesses inside the organization and the Opportunities and Threats outside the organization.
A SWOT analysis uses the findings from the environmental audit to perform a critical self-assessment of the organization. Step 2a analyzesthe list of factors identified in the internal organizational assessment performed in Step 1a, identifying those factors that represent strengths of theorganization (what the organization does well) or weaknesses of the organization (what the organization does not do well). For example, strengthsof a health organization may include the high quality of services it delivers to its constituents, a highly committed staff, and low staff turnover. Incontrast, weaknesses may include productivity problems, financial difficulties, falling client base, and aging physical plant.
Step 2b analyzes the list of factors identified in the external environmental assessment, identifying those factors that represent opportunitiesfor the organization (favorable trends outside the organization) and threats to the organization (unfavorable trends outside the organization). Forexample, opportunities for a health organization may include improving community economic growth, increased governmental funding, and grantopportunities. In contrast, threats may include potential funding decreases, the opening of a new organization that serves the same needs and mayencroach on the organization’s activities, or deteriorating socioeconomic trends in the constituent group.
Step 3: Identify and Evaluate Strategic Issues and Options
Analyzing the internal and external environments of a health care organization in terms of the strengths, weaknesses, opportunities, and threats(SWOT) enables the organization to recognize specific areas where improvement is necessary and development is possible. The fifth componentof the strategic planning model (Step 3) is to identify and evaluate major strategic issues and choices. Managers of health organizations have theresponsibility to understand all the issues facing their organization completely in order to prioritize their importance and make decisions toaddress the priority issues adequately. This process of prioritizing is essential for health organizations, which often have limited resources to meetthe seemingly unlimited needs of their stakeholders. The strategic issues must be monitored continually and choices must be identified so that theorganization stays responsive to the patients and population it serves. An organization that tries to do everything will end up doing nothing.
Once the most important issues facing a health organization are identified, strategic choices must be made to guide the organization’s attemptsto address them adequately. First, the SWOT analysis can be used to identify strategies to (1) take advantage of strengths and to maximizeopportunities (max-max strategies); (2) take advantage of strengths to reduce vulnerability to threats (max-min strategies); (3) minimizeweaknesses by taking advantage of opportunities (min-max strategies); and (4) minimize weaknesses and avoid threats (min-min or defensivestrategies). Strategies in the first category, which draw on strengths and opportunities, are ideal and usually involve growth and expansion.Strategies in the last category, which address weaknesses and threats, often involve downsizing and retrenching.
Two other techniques assist in the process of making strategic choices: key issue analysis and forecasting. These techniques help anorganization analyze its priorities in the context of the changing external environment to make useful strategic choices for the future.
Key Issue Analysis A key issue is an event that, if it occurs or does not occur, will have an important impact on the organization. In a strategicplanning process, it is important to identify and prioritize all key issues in the context of the internal and external environment of the organization,which is constantly changing. For example, emergency preparedness is often identified as a key issue for public health departments. UntilSeptember 11, 2001, however, concerns regarding emergency preparedness would normally have received a low priority in an issue analysis.Today, it receives a much higher priority. Among hospitals, implementation of the Affordable Care Act of 2010 is a key current issue.
Assumptions are often made when identifying key issues. An assumption is an estimate of an important future event over which anorganization has little or no control. For example, as a result of the economic downturn that began in 2008, state and local governments facesubstantial problems in balancing governmental budgets. Assumptions need to be made by publicly funded health organizations regarding theimpact of these budget reductions on health programming.
Identifying how changing external circumstances and events will influence or alter the priority issues of health organizations in the future is animportant component of key issue analysis.
Forecasting Forecasting consists of predicting or estimating future events in the environment. Forecasting is usually based on extrapolation ofpast or present trends into the future. Many trends in public health are readily subject to forecasting techniques. This includes forecasts ofpopulation trends, death rates and their causes, health behaviors and risk factors, and economic predictors.
However, forecasting trends can also be inexact and elusive. Some events are the result of discontinuities or turbulent developments in theenvironment and may not be identified through a forecast of past trends. For example, the outbreak of an epidemic or an unexplained plantclosure of a major employer in a community is an event not likely to be anticipated or included in a forecasting exercise.
Step 4: Selecting Strategic Priorities
The last activity of the strategic planning model (Step 4) is selecting strategic priorities, in which managers decide what an organization must doin order to capitalize on strengths and opportunities, improve areas of weakness, and respond to threats. As a result of the environmental audit, theSWOT analysis, and evaluating major strategic issues, the organization makes strategic choices. Building on the priority issues identified in step 3of the strategic planning process, decision makers select strategies to address these priorities and provide a focus for the organization. Theresulting strategic priorities should answer three essential questions:
1. Where is the health organization at present?
2. Where does it want to go?
3. What actions must take place to achieve the goal from the previous question?
3.3 OPERATIONAL PLANNING
As shown in Figure 3–1, the strategic planning process is followed by planning at the operational level of the organization. Operational planningrequires setting goals and objectives at the tactical level, usually the departmental and subunit levels, for carrying out the organization’s strategies.Plans of the operating units of the organization then form the basis of the goals and objectives of the operating units and the workforce of theoperating units. Operational plans typically are revised annually, whereas strategic plans have a longer shelf life, usually 2 to 5 years.
A business plan is a common type of operational plan. Business plans describe new services, products, or programs and their markets andmake projections concerning the personnel and other resources needed to implement the new items. A key element is the financial analysis, whichoften includes projected expenditures and revenues and a breakeven analysis (analysis of volume required so that the new service does not losemoney for the organization).
Ideally, departmental goals and objectives are also translated into individual employee objectives by managers and workers as part of theemployee performance evaluation process. With evaluation of results and continuous feedback to the strategic planning process, individual anddepartmental goals and objectives may be incrementally adjusted but still are expected to maintain consistency with the organization’s strategy.