HCM-FPX5312_MusiKeti_Assessment 2-1

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1 Assessment 2: Using Market Data to Understand the Healthcare Environment Keti Musi HCM-FPX5312: Analyzing the Health Care Environment Prof. Nowill Capella University September 12, 2021

2 PESTEL Analysis Continued NewYork-Presbyterian (NYP) has identified merger and acquisition (M&A) as the one specific strategic initiative to improve patient outcomes and financial sustainability and resiliency outcomes. As we continue to analyze the external factors affecting NYP’s goal of maintaining a competitive advantage (i.e., provide great patient care, maximize value for patients, and make its financial outcomes more sustainable) in a highly competitive healthcare environment; it is important to identify the core participants and stakeholders in the healthcare system and how they play an important part in identifying and resolving several of the challenges facing the organization in achieving its goal. In the healthcare system, the customers are the patients seeking care. The patients seeking medical care is spread out over various disciplines of care; including but not limited to emergency care, inpatient care, routine medical care, surgery, and research participants. This makes the customer/patient care population very complex as they all seek different level of care and have different goals to care achievements. Often the external supply chains must be decided based on the patient population served. The supply chain generally refers to the resources needed to deliver goods or services to a consumer. Healthcare (internal and external) supply chain management involves obtaining resources, managing supplies, and delivering goods and services to providers and patients. In healthcare supply chains, the principal participants include payers (e.g., government agencies and regulators, employers, or any other individuals), fiscal intermediaries (e.g., insurance companies, health maintenance organizations, pharmacy benefit managers), providers (e.g., hospitals, divisions, physicians, and facilities such as physician offices, medical and ambulatory surgical centers and pharmacies), purchasers (e.g., resellers such as pharmaceutical wholesalers, medical surgical distributors, product representatives,

3 independent contracted distributors, group purchasing organizations) and manufacturers (e.g., drugs, medical device/equipment, hospital medical supplies, providers of information technology services and manufacturer of capital equipment) (Burns & Lee, 2008). The goal of the supply chain is to deliver materials (i.e., physical goods) and information about medical products and services in order for patients to receive quality care. An effective supply chain brings in the right materials and information at the right time, with the right quantities, to the right place. This can have a direct, positive impact on patient care by reducing risk and errors, eliminating operating room waits and cancellations, and reducing the length-of-stay (Singh, 2006). For example, the external supply chain for NewYork-Presbyterian’s clinic locations that provide outpatient clinic and routine appointments is different from the locations where higher level of care such as emergency care and intensive care is provided at the hospital locations such as hospital beds, advanced medical equipment like respiratory ventilators supply is different from the medical office supply chain such as minor procedure equipment that can be provided at the clinic levels. On the other hand, the external world especially the socioeconomic status of the population served by the medical facilities can greatly impact the revenue models of the organization. We can see the effect of that directly related to the location of the facilities as it can represent the economic status of the communities served by the facility and have a direct impact on the revenue stream for that medical center. For example, the location in a low socioeconomic status will be serving a lot of Medicaid and patients receiving government assistance, which means the billing for the services will be directly to these programs; and regulatory restrictions will be observed as these programs can be strict when it comes to financial reimbursements and rewards to the medical facilities. On the other hand, the facilities located at a high socioeconomic community will be serving patient with private payers or direct contracts with NewYork-

4 Presbyterian through the employers such as big corporations. This also directly affect the revenue stream for such facilities. In the healthcare industry, competition (and external world uncontrolled factor) among organizations has long been encouraged as a mechanism to increase value, quality and convivence of healthcare for patients, and reduce healthcare costs (Thomson, 1994). NewYork- Presbyterian faces a lot of competition from several healthcare systems including Mayo Clinic, Northwell Health, Mount Sinai, Cleveland Clinic, Memorial Sloan Kettering Cancer Center, St. Joseph’s Health, NYU Langone Hospital, and Montefiore. In order to remain competitive healthcare systems have pursued two paths: (1) expansion through mergers with other systems and acquisition of satellite campuses in the service of achieving administrative efficiency, increasing bargaining power, diversifying revenue and, crucially, gaining the ability to act as their own insurers, and (2) making strategic investments and focused on ambulatory care and their traditional role as teaching hospitals (they steer well clear of the insurance business). In order defend against competition and to improve their market positions relative, healthcare organizations form strategic partnerships or alliances. Strategic partnerships or alliances offer Healthcare organizations, like New York-Presbyterian, opportunities to expand their network, access and leverage expanded benefits of scale, access essential industry resources, offer excellent value for consumers as they shop for health care services, expand access to advanced medical care to improve patient outcomes, streamline processes, reduce costs, lead to innovation, and improve patient care (McCue et al., 1999). The type of external partnerships are (1) healthcare networks, (2) local businesses, (3) physician practices, (4) rehabilitation services, (5) laboratories, (6) nursing facilities, (7) pharmacies and (8) accountable care organization (ACO).

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