WGU C432 Healthcare Management and Strategy Graded A+

WGU C432 Healthcare Management and Strategy Graded A+ How can focusing on operational efficiency blind leaders to the strategic needs of their organizations? Too focused on operating rather than on their strategy and needs. Operating vs. processes to fulfill their strategy. What are the disadvantages of ignoring strategy? Not fulfilling their mission, vision, and values. How do healthcare organizations differ in their use of strategy compared to other industries? Many healthcare organizations tend to study and copy other healthcare organizations to steal the market share from surrounding hospitals. What distinguishes goals-based from issues-based planning? Vision-based or goals-based strategic planning focuses on goals the organization wants to achieve. Issues-based planning focuses on resolving issues the organization faces. Vision Provides direction by depicting the organization's desired future state. Mission Reflects these values by expressing the organization's standards and purpose. Values Indicate how the organization should act; they define acceptable and unacceptable behavior. Prospective Strategy A deliberate planning process that forecasts an organization's future situation and designs means to guide an organization's future decisions. FORWARD THINKING PLANNING. Emergent Strategy A pattern of actions that develop over time and become an organization's strategy de facto. This type of strategy is identified by examining decisions that were made and the patterns that occurred as a result. Also called realized strategy. BACKWARD THINKING OF STRATEGY. Looks constantly at the competitor rather than their own strategy. Market Structure 1. Perfect Competition 2. Monopolistic competition 3. Oligopoly 4. Monopoly Perfect Competition Small organizations produce an undifferentiated, homogenous product. Ex. - Gasoline, generic drugs. Monopolistic Competition a market structure in which many firms sell products that are similar but not identical. Ex. - breakfast cereals and most private physician services. Oligopoly A market structure in which a few large firms dominate a market. Ex. - Organization of Petroleum Exporting Countries (OPEC). Monopoly A market in which there are many buyers but only one seller. Ex. - NFL, New drugs, etc. Herfindahl-Hirschman Index (HHI) A measure of market concentration calculated by squaring the market share percentage of each organization in a market and then summinng the numbers. Four-Firm Concentration Ratio The percentage of total industry sales accounted for by the top four firms in the industry. Business Model The underlying structure of an org; the means through which an organization creates and delivers value to its customers and earns revenues. Types of strategy related to market penetration. Generic - Combination of a target market and the type of competitive advantage sought. - Broad Low-Cost Strategy (Walmart vs. Target) - Focused Low-Cost Strategy (Aldi vs. Walmart) - Broad Differentiation Strategy (Distinct from competitors - In Network Insurances for hospitals) - Focused Differentiation Strategy (Cardiac vs. Cancer hospitals) - Middle Strategy Types of Expansion (Growth) 1. Vertical expansion (acquiring 1 step in the process) and Vertical integration (broad range of patient care/services) (forward vs. backward) 2. Horizontal Expansion (pulling in physician group) and Horizontal Integration (physician group buying another group) 3. Virtual Integration 4. Diversification (related vs. unrelated) Horizontal Integration Absorption into a single firm of several firms involved in the same level of production and sharing resources at that level Vertical Integration Practice where a single entity controls the entire process of a product, from the raw materials to distribution Diversification The acquisition of an organization into a completely different business. Spreading out risk. Virtual Integration The formation of networks based on contractual arrangements. Corporate-Level Strategy The overall strategic scope and direction of a corporation. The primary function of corporate-level strategy is to allocate capital funds to SBUs and decide which business to enter or exit. Business-Level Strategy The strategic scope and direction of SBUs focus on specific product/service lines while under the umbrella of corporate direction. Functional-Level Strategy Strategic scope and direction at the operating division, depeartment, or project level. This type of strategy is driven by product or service line. Stakeholder A person or organization with an interest in a particular place or issue. Shareholder A person who invests in a corporation by buying stock and is a partial owner. Stakeholder vs. Shareholder A shareholder owns part of a company through stock ownership, while a stakeholder is interested in the performance of a company for reasons other than just stock appreciation. Business Flow - Vision - Mission - Goals - Objectives - Actions - Measurements Organization A group of people who work together to achieve some specific purpose. Not the administration. Corporate Structure BOD Leadership Management -- Governing Board --- Organizational Capabilities ---- Core Competencies External Stakeholders 1. Customers 2. Suppliers 3. Governments 4. Local communities Internal Stakeholders 1. Employees 2. Investors 3. Board 4. Others Role of Leadership in Management 1. Move closer toward the vision via Strategic Management - Strategic thinking - Strategic priorities - Strategic planning - Using human capital - strategic planning committee (Nominal group technique) 2. Development of the Business Plan and Measurements - Strategic Business Units (SBUs) --Portfolio analysis Nominal Group Technique (NGT) A group that identifies an issue and works towards coming up with a solution. An idea-generating process in which group members generate their initial ideas silently and independently and then combine them and consider them as a group. Strategic Business Unit (SBU) A division of the firm itself that can be managed and operated somewhat independently from other divisions and may have a different mission or objectives. Possibly another profit center. Portfolio Analysis A major activity in strategic planning whereby management evaluates the products and businesses that make up the company. Also talks about incorporating the products and business into the strategic planning process. Strategy vs. Marketing 1. Marketing - Market Analysis - Marketing Plan - Sales Plan 2. Marketing The activities involved in promoting products and services, including creating, communication, and delivering offerings that customer's value. Marketing Strategy Process 1) Understand customer 2) analyze market 3) analyze competition 4) Research Distribution 5) Define Marketing Mix 6) Financial analysis 7) Review and Revise 4 P's of Marketing Product, Price, Place, Promotion Sales Plan A statement describing what is to be achieved and where and how the selling effort of salespeople is to be deployed. Market Analysis studies the attractiveness and the dynamics of a special market within a special industry Isomorphic Tendency Hospitals tending to have the same or similar products and services. Five Forces Model A model developed by Michael Porter that helps us understand the five competitive forces that determine the level of competition and profitability in an industry. Management Considerations 1. Five Forces Model 2. Barriers to Entry - Economies of Scale - Cost disadvantages - Product differentiation - Non-recoverable investment - Distribution channels - Switching costs - Governmental Policy Economies of Scale Factors that cause a producer's average cost per unit to fall as output rises. Strategic Groups 1. Pooles Service Alliance - Group Purchasing Organizations (GPOs) 2. Strategic Alliances - Accountable Care Organizations (ACO) - Managed Care Organizations (MCO) - Physician - Hospital Organizations (PHO) 3. Networks - Network Outsource Alliance 4. Coalitions Analysis - External Driving Forces 1. Benchmarking 2. PEST Analysis 3. Force Field Analysis 4. Marketing Analysis PEST Analysis Political Factors Economic Factors Sociocultural Factors Technological Factors Analysis - Internal Environment 1. Internal Relationships - Pooled interdependence (resources are modular; low degree of coordination is needed) - Reciprocal Interdependence (resources are interactive; high degree of coordination is needed) - ED, ICU, Cath Lab - Resource Interdependence - Sequential Interdependence (resources are handed off from one unit to another; moderate degree of coordination is needed) - resources from ED should be transferrable to ICU or cath lab. 2. SWOT 3. GAP (gaps b/t doing and want to do) 4. Scenario 5. TOWS Analysis 6. Trend analysis Project Charter A document issued by the project initiator or sponsor that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. Creating Value 1. Value Chain - Use of resources (valuable, tangible, intangible) Organizational Readiness (Preparedness) The degree to which an organization understands planned changes and the rationales behind them, the alignment of an organization's culture with the planned changes, and leaders' and participants' readiness for change. Organizational Structure The manner in which a company arranges its jobs and people to complete its work and achieve its goals. An ______ ______ depends on a number of factors, including culture, top management's preferences, number of employees, geographic dispersion, and the range of a company's products and services. Frederick W. Taylor () Focus on productivity and efficiency prompted businesses to optimize their work through organizational structure. Span of Control Types 1. Functional Organization Functional Organizations Structure departments by common tasks, services or roles. Ex: - Finance, marketing, manufacturing, R&D, and HR. Advantages: - Higher level of expertise and the potential for achieving economies of scale. - More easily standardize processes and products throughout its business because specialized tasks are centralized in units that have responsibility for company -wide processes. Disadvantages: - The potential for poor communication and coordination among units. Multidivisional Organizations Broken down into a number of smaller businesses or profit centers. Each division is individual itself, but add to the organization. Ex: - cardiology, physician group, radiology, etc. Can be held responsible for their outcomes. Advantages: - Autonomy Matrix Organization Incorporate the strength of the functional and multidivisional structures and compensate for their weaknesses. Ex: Used in hospital clinical areas to promote the coordination and integration of functional department personnel. Advantages: - Interaction and interchange b/t personnel from different departments to improve coordination and communications. - Chain of command Affordable Care Act (ACA) Federal legislation passed in 2010 that includes a number of provisions designed to increase access to healthcare, improve the quality of healthcare, and explore new models of delivering and paying for healthcare. Accountable Care Organization (ACO) A network of doctors and hospitals that shares responsibility for managing the quality and cost of care provided to a group of patients. Change Process (Lewin's Change Model) Involves three interconnected, sequential phases: 1. Pre-change preparation (Unfreeze - by employer) 2. Implementation/execution (Change) 3. Sustainment/maintenance (Refreeze) Delphi Group Technique A method of achieving consensus among members of a group. Content experts make forecasts, develop solutions, or identify issues, and then these inputs are summarized, re-reviewed, and revised until a general consensus is reached. Coalition Core group of stakeholders, sufficient to support and embed change, must fully buy into the strategic change and be cheerleaders, champions, and defenders of the effort. ______ Facilitate employee empowerment and delegation of authority. Change Process - Pre-Change Preparation Unfreezing the culture or practices currently that you wish to change. Ex: - Employees everyday process. Change Process - Implementation/Change Change (melting ice cube) Add and/or take away according to your change plan in many ways is far more important than having a great strategy. Steps: 1. Identifying resistance and removing obstacles. - Resistance is part of the change process (expect it) 2. Achieve Short-Term Wins - Must be visible, real, and meaningful. - Must be achievable. Change Process - Sustainment/Maintenance Refreeze New set of standards and monitor to make sure it holds the new shape. Steps: 1. Need to be anchored in organizational culture and processes. 2. Periodically monitor change efforts to make certain that changes are maintained. 3. Embedding change and monitoring the progress of a change effort is the use of checklists/audits that clearly identify important actions and engender accountability. Leaders' and Participants' Preparedness Examined in terms of the amount of experience that have had leading change, their level os skills, their motivation, and their values. Annual Budget Process Yearly generations of action plans and budgets to drive implementation of strategies and subsequent control of problems and evaluation of progress. Makes sure processes are working and strategies are implemented. Capital Budget The estimated dollar amount to be expended on projects in a given fiscal period. Statistical Budget Merger of an organization's capital budget forecasts with estimated statistical projections for an organization's services or products for a given fiscal year. Static Budget A budget that is based on forecasted volumes and does not change when the volume of activity deviates from the forecast. Flexible Budget A budget that changes according to actual (not forecasted) activity volumes. Budget Variance The difference a budgeted amount and the actual expenditures. Key performance indicators (KPIs) Critical milestones that can be used to measure progress toward an objective or a goal quantifiable, based on benchmarks, and challenging to achieve. Monitoring and Evaluating - Ensures that efforts are following the direction set by strategic planning. - Helps organizations better achieve their goals and objectives. - Helps organizations evaluate the progress they are making toward their mission and vision. - Helps organizations meet the need of key stakeholders. - Helps managers to assess whether resources are being used efficiently. - Encourages ongoing improvement. - Provides a continuous basis for informed decision making and planning. Monitoring Tools - Accounting 1. Balance Sheet - Liquidity 2. Ration Analysis - Days cash on hand 3. Operating Statement - Horizontal analysis - Vertical analysis 4. Operating Margin Balance Sheet A financial statement of an organization's assets, liabilities, and capital at a given point in time. Liquidity An organization's ability to convert assets into cash. Ratio Analysis A quantitative analysis that uses financial data from an organization's financial statements to highlight its financial strengths and weaknesses. Days Cash On Hand The combined amount of an organization's cahs nand marketable securities divided by its operating expenses less depreciation, all divided by 365. This liquidity indicator evaluates how many days an organization could pay its daily operating expenses without additional cash inflows. Operating Statement A financial statement containing operating results for a specific periods; includes revenues, expenses, and the difference b/t the two (profit or loss). Columns and rows of operating statement. - Horizontal analysis - Vertical analysis Operating Margin An organization's net operating income divided by its net operating revenues. This ratio measures a percentage of revenues from operations that accumulates as profits and exceeds expenses. Monitoring Tools - Managerial 1. Gantt Chart 2. Balanced Scorecards 3. Dashboards Gannt Chart A bar chart that displays the schedules fo multiple projects, including their start and finish dates and percentage of completion. Rapidly communicate the status of projects, critical dependencies, and key start and end points. Balanced Scorecards Gives leaders a more comprehensive perspective of their organization's strategy. Identifies and highlights critical strategic objectives and enables managers to more quickly recognize when areas are not performing according to expectations. Dashboards A data visualization tool that displays the statuses of key metrics and KPIs Monitoring Tools - Ratios 1. Acid/Quick Ratio 2. Activities Ratios - Asset turnover - Fixed turnover - Inventory turnover 3. Debt Ratios (can be long/short-term) - Long-term debt to net assets 4. Profitability Ratios - Net assets to total assets - Net Margin - Return on assets 5. Average payment period 6. Current Ratio 7. Days in accounts receivable Strategic Leadership The combination of strategic management and strategic thinking. Leaders must interpret internal/external environments and design process that position the organizations to achieve the vision and mission. Daily demands reduce the success of strategic exercises. Strategic Thinking Leaders Ability to: - Collecting, collating, assembling, and organizing info to make an informed decision. - Identify critical info, challenge assumptions, collaborate with key stakeholders, and communicate vision. - Poses humility. Hubris destroys leaders. - May be a good manager, but is not a guarantee for good leadership - managers are myopic. - Are open to new ideas. Strategic Thinkers - Create personal development plans for key employees. - Develop core competencies. - Maintain focus - constantly educate all employees. - Develop mentoring programs. - Offer job opportunities to stretch knowledge and gain experience. - Network - Question their own opinions and assumptions (Not myopic). - Focus on values. Deming's 14 points for Leadership 1. Create constancy of purpose for improvement of product and service. 2. Adopt the new philosophy 3. Cease dependence on inspection to achieve quality. 4. End the practice of awarding business based on price tag alone. Instead, minimize total cost by working with a single supplier. 5. Improve constantly and forever every process for planning, production, and service. 6. Institute on the job training. 7. Adopt and institute leadership 8. Drive out fear 9. Break down barriers between staff areas 10. Eliminate slogans, exhortations, and targets for the workforce 11. Eliminate numerical quotas for the workforce and numerical goals for management 12. Remove barriers that rob people of workmanship. Eliminate the annual rating or merit system. 13. Institute a vigorous program of education and self-improvement for everyone 14. Put everyone in the company to work to accomplish the transformation. Strategic Management a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals. - Goal is to produce results - by building and allocating resources to meet today's needs to fulfill the vision. - Time management is an essential factor. - Development of competencies is nessary and ongoing. - Delegation of activities. - Eliminate waste, both in resources and time (meetings) Kotter's 8 steps for leading organizational change 1. Establish a sense of urgency 2. Create the guiding coalition 3. Develop a vision and strategy 4. Communicate the change vision 5. Empower the broad-based action 6. Generate short-term wins 7. Consolidate gains and produce more change 8. Anchor new approaches in the culture