HCM-FPX5312_MusiKeti_Assessment 3-2

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1 Assessment 3: Using Evidence-Based Strategies to Address Challenges and Opportunities Keti Musi HCM-FPX5312: Analyzing the Health Care Environment Prof. Nowill Capella University October 24, 2021

2 Executive Summary For my Analyzing the Health Care Environment course project assessment, I will be conducting in an in-depth analysis of NewYork-Presbyterian Healthcare System and recommend evidence-based strategies to address organizational challenges and opportunities in a dynamic environment. For this assessment, I will provide the foundation for this analysis and apply an understanding of the external healthcare environment across core disciplines. Overview of NewYork-Presbyterian NewYork-Presbyterian is one of the nation’s most comprehensive, integrated academic health care delivery systems, dedicated to providing the highest quality, most compassionate care, and service to patients in the New York metropolitan area, nationally, and throughout the globe. NewYork-Presbyterian encompasses 10 hospital campuses across the Greater New York area, more than 200 primary and specialty care clinics and medical groups, and an array of telemedicine services. NewYork-Presbyterian has four major divisions: (1) NewYork- Presbyterian Hospital, (2) NewYork-Presbyterian Regional Hospital Network, (3) NewYork- Presbyterian Physician Services, and (4) Community and Population Health. NewYork- Presbyterian Healthcare System’s mission is to be a leader in the provision of world class patient care (i.e., high quality, fiscally responsible healthcare services that meet the needs and expectations of the communities they serve), teaching, research, and service to local, state, national, and international communities. However, NewYork-Presbyterian still has a huge potential in providing great patient care, maximizing value for patients (i.e., achieving the best outcomes at the lowest cost), and making its financial outcomes more sustainable.

3 PESTLE Analysis of NewYork-Presbyterian The healthcare sector is undergoing rapid technological advancement, an aging and diverse population, major disruptors, payment and reimbursement restructuring, health policy shifts, cost increases, and more (Bowen et al., 2009). However, NewYork-Presbyterian has been able to survive and flourish in the healthcare industry due to its viable long-term and short-term strategies, that enable it to be the leading healthcare system in providing outstanding patient care. In order to better navigate and address the organizational challenges and opportunities inherent in these dynamic environments, NewYork-Presbyterian looks for ways to provide great patient care, maximize value for patients, and make its financial outcomes more sustainable, while not straying away from the core of their mission, vision and strategies (Child & Rodrigues, 2011). NewYork-Presbyterian has identified merger and acquisition, commonly known as M&A, as the one specific strategic initiative to accomplish both goals – improve patient outcomes and financial sustainability and resiliency outcomes. Goal Description (1) Improve Patient Care (2) Maximize Value for Patients Expand patient access to care Enhance the quality of care and outcomes for patients Improve the quality of clinical care and doctor experiences Expand service offerings (ex. add key service lines and physicians) Diversify care delivery models to accommodate patients’ and communities’ changing needs and preferences (3) Make Financial Outcomes More Sustainable Achieve cost and care efficiencies (ex. increase bargaining power; spread fixed costs for technology and administration over a larger revenue base) Boost profitability Enhance growth (ex. increase the number of customers and market opportunities) Diversify revenue Enhance ability to assume payment risks Sustain or grow market share

4 Expansion, which can result from multiple causes, is of vital importance to ensure the continuity of businesses. Mergers and Acquisitions is one way of expanding businesses beyond the boundaries they originally operated in. Mergers and acquisitions are subjected to many internal and external factors, some which may result pursuing such an option a bad decision for the members of the company. NewYork-Presbyterian will need to conduct a proper and complete analysis of these factors to ensure balanced evidence, reasoning, and options to make the most informed decisions about pursuing a merger and acquisition. The healthcare industry depends on evaluating existing and impending legislation, changes in market and economy, societal changes over time and technological advancement. To properly proceed through an M&A transaction, businesses commonly complete a full PESTEL analysis. PESTEL analysis is a strategic (i.e., situational, risk management, scenario planning) tool to help us understand the external macro- environmental factors (beyond a healthcare organization’s control) that are impacting the operations and performance (and profitability) of the healthcare organization, and how the organization can either manage or mitigate the impact of these external factors (Rothaermel, 2017). The PESTEL Model includes six factors: Political, Economic, Sociocultural, Technological, Legal, and Environmental aspects of a company (Rothaermel, 2019). For healthcare organizations, like NewYork-Presbyterian, PESTLE analysis is an essential tool when considering a merger and acquisition. That’s because the best merger and acquisition strategies are developed in large part based on various external factors that may significantly affect NewYork-Presbyterian’s operational and financial performance (Markwell & Leigh-Hunt, 2016). PESTLE Analysis Political Factors Effecting M&As: Political factors are triggered by the relation with foreign government, political stability, and government intervention in economy. The Political environment impact on the healthcare industry performance is changing continuously mainly because of the changing government regulations. Tax legislation changes, consumer protection and employment regulations,

5 insurance mandates, and impact of changing government funding to healthcare are all elements that could have an impact on the healthcare environment. These various factors affect mergers and acquisitions as companies will not risk its existence by entering into M&A activity during an unfavorable political environment, politically unstable environment, or when governmental intervention in business activities is more than desirable. Economic Factors Effecting M&As: Unemployment, inflation, interest rates, and credit availability are economic factors that both directly and indirectly affect the financial performance and operation of the healthcare industry. These economic factors define the future of an organization in a market where it is willing to invest, helping business organizations in deciding the price of its product and services, target consumer, and marketing strategy. Any of changes is these factors can change how the public is able to spend their money, impacting policy spending. Economic factors, irrespective of the size of business, play a very important role, and must be analyzed thoroughly before moving into a market. There have been cases in the past where this factor led to the closure of healthcare organizations which underwent mergers and acquisitions. Social Factors Effecting M&As : Socio-cultural factors (or issues) relate to the cultural differences or similarities (ex. beliefs, values, and norms) of people. Social factors affect the whole M&A cycle: pre-merger decision-making, negotiation and deal structuring, and post-merger integration. These factors generally become visible when the M&A (i.e., restructuring) is done and the day-to-day operations begin to proceed. Businesses often fail to notice or consider this factor at an earlier stage, as the initial primary focus is to maximize wealth. The primary reason for a M&A’s failure to achieve the promised value is cultural differences (i.e., the fundamental ways of working are so different and so easily misinterpreted). Therefore, it is the duty of the top management to do a due diligence over this factor to avoid significant issues. Technological Factors Effecting M&As: Technological factors are a more contemporary challenge that a business encounters in its day-to-day operations and functions. Technological advancements (including the speed at which technology disrupts that industry) specific to hospitals and healthcare manufacturers plays a significant role in determining the factors that can impact NewYork- Presbyterian long-terms operations and performance. A business must match itself with constantly changing technologies in order to sustain themselves in the market and to ensure their objectives are achieved. For established players, staying ahead of industry innovators and new agile startups is critical—and harder than ever. Fortunately for them, M&A can level the playing field and open the door to future game-changing transformations. Forward-thinking healthcare companies merge with or acquire companies with technological expertise they can then use to develop new offerings, redefine industry boundaries and drive top-line growth. Legal Factors Effecting M&As: The law is another consequential factor, as it directs the way in which a company should conduct business under the guise of legislation. Legal factors (which involve antitrust laws, taxation policies, corporate social responsibility, intellectual property rights law, consumer protection laws,

6 etc.) are of utmost significance as they ultimately decide the fate of the business which has been restructured as a new entity. These factors require due diligence (ex. books, assets, liabilities legal issues in past and pending ones) on the part of parties involved in the M&A transaction and conduct through research in the market they are entering. Such analysis would give a business a better idea that whether the objective behind this M&A is duly met or not. Environmenta l Factors Effecting M&As: Environmental factors (which can be both controllable and uncontrollable) and are related to all types of physical environment, such as climate, climate change, weather, renewable energy, non-renewable energy, types of goods available, and the environmental laws which a business has to abide by to carry on its activity. Environmental factors question the conduct of a business in whether they are doing their activity in an environmentally friendly manner, as well as if and how they abiding to the various environmental legislation. Environmental factors play a very significant role in M&A. To avoid any post M&A hindrances, a business has to do a proper analysis of target company’s environmental factors and make a direct link between the segment they will be dealing in and the direct impact on it due to environment. The trend of healthcare systems consolidation will likely continue due to financial pressures (i.e. in pursuit of cost efficiencies through scale and improved market position; gain access to clinical, strategic and financial resources; revenue diversification), growth of nonhospital care settings (i.e., more outpatient and virtual care delivery), the need for transformed care delivery (i.e. prevention/well-being, more specialized care), and the increasing presence of and opportunities for outside entrants and disrupters to the healthcare industry—all which have accelerated by the COVID-19 pandemic (Beckham, 2016). NewYork-Presbyterian’s Health System can strategically use M&A to transform their business model and innovate (through new capabilities, resources, and relationships). The PESTEL analysis allowed me to understand the diverse (external) macro-environmental factors – political, economic, socio- cultural, technological, environmental, and legal – that could have direct or indirect impact on the NewYork-Presbyterian Healthcare System’s (internal) decision to pursue a M&A in order to provide great patient care, maximize value for patients, and make its financial outcomes more

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