Strategic Management in Healthcare

Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives. It involves the systematic identification of the firm 's objectives, nurturing policies and strategies to achieve these objectives, and acquiring and making available these resources to implement the policies and strategies to achieve the firm 's objectives. Strategic management, therefore, integrates the activities of the various functional sectors of a business, such as marketing, sales and production to achieve organisational goals. It is the highest level of managerial activity, usually

See Chapter 1, Exhibit 01: Strategic management consists of the analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages:

In 1997 University of California, San Francisco (UCSF) merged its two public hospitals with Stanford’s two private hospitals. The two separate entities merged together to create a not-for-profit organization titled UCSF Stanford Health Care. The merger between the health systems at UCSF and Stanford seemed like a good idea due to the similar missions, proximity of institutions, increased financial pressure with cutbacks in Medicare reimbursements followed by a dramatic increase in managed care organizations. The first year UCSF Stanford Health Care produced a profit of $22 million, however three years later the health system had lost a total of $176 million (“UCSF-Stanford Merger,” n.d.). The first part of this paper will address reasons

(MCOs) operating. The hospital group is the state’s largest not-for-profit organization and boasts an impressive performance plan, serving the healthcare needs of approximately 8 million citizens in Virginia. Moreover, Chesapeake Health Plans was the first organization to successfully attempt to request and obtain the highest level of accreditation from the National Committee of Quality Assurance (NCQA). Furthermore, Chesapeake health plans are structured to provide medical plans that cover services under the HMO’s, PPO’s, POS, and Medicare HMO’s. Chesapeake health plans attributes a considerable portion of their net service revenue generated to their effective HMO health plans, which realized a 46% of total revenue, while their Medicare HMO produced an impressive 39% of total revenue. Furthermore, their Preferred Provider Plan (PPO) generated 10%, and the Point of Service Plan (POS) saw a 5% figure. This case study financial analysis will effectively assess Chesapeake Health Plans: HMO financial performance, focusing on a competitive analysis, a cash flow analysis, clear profitability ratios, liquidity ratios, debt management ratios, asset management ratios, operating indicator analysis, a comprehensive financial assessment of Chesapeake’s financial state, as well as effective fiscal recommendations for their organization.

The role of finance in Health Care Systems, Inc. as a regional not-for-profit hospital relates to both the accounting and financial management aspects of the business. Facets of both accounting and financial management are intertwined with maximizing productivity by way of managing and analyzing financial operations to ensure resources are being utilized properly (Gapensiki, 2013). The divulgence of financial reports to managers and investors will aid in the development of plans and budgets for future growth, assess acceptable levels of financial risk, manage contracts appropriately and make decisions related to capital investments allowing the organization to expand service offerings thereby demonstrating greater value in the community. Operating as a not-for-profit entity requires that the hospital operate exclusively in the interest of the public for a charitable purpose. Through understanding who the primary third party payers

In the hope of better coordinating the care of patients, improving quality and lowering costs, the ACA provides incentives for physicians and hospitals to work together in several ways, such as Accountable Care Organizations (ACO’s) or establishing bundled payments for episodes of care (Martin Gaynor, 2012 ) which has spurred consolidation (Becker, Gamble, & Rosin, 2015). Additionally, compliance with various federal programs such as Meaningful Use requires a significant investment in technology which can be fiscally challenging for smaller provider groups; driving acquisitions of these smaller entities by larger health systems. Other reasons cited by hospital administrators in the pursuit of consolidation is to ensure a steady stream of physician referrals (NPR, 2010), and to create economies of scale and increased efficiencies, the fruits of which result in reduced costs and therefore cheaper care for patients (ProMarket Writers, 2016). However, what most hospital

Some hospitals have merged with other healthcare organizations in hopes of providing a more integrated delivery system. However, delivery in many organizations is still quite fragmented leaving many US citizens dissatisfied. According to a 2011 survey conducted by the Commonwealth Fund;

"Strategic management is a set of managerial decisions and actions that determine the long-run performance of a corporation" (Wheelen & Hunger, 2006, p.3). The benefits of strategic management helps the firm focus on the objectives and develop the steps involved in obtaining the vision and financial wealth of the organization. An effective strategic management plan should include the following three questions: (1) Where is the organization now? (2) If no changes are

Our group defined the success of the merger based on several outcomes. First of all, financial stability within the first two years of the merger; the formation of value-based payment models or other innovative payment structures which appeal to both payers and employers; low employee turnover, at or below the national benchmark; high employee engagement levels based on national benchmarks for the healthcare industry and finally the maintenance of accreditation. Once we defined success, we built out the following steps to work towards these outcomes.

Strategic management is the process where leaders establish an organization’s long-term direction, set the specific performance objectives, develop strategies to achieve these objectives in the light of all external and internal changes, and undertake effective strategies to manage these changes and execute action plans.

The Stanford Health Services and UCSF medical center merger was projected to have a great turnout as it was supposed to be “enhanc[ing] the academic mission[s], strengthen[ing] referrals, and creat[ing] a more cost effective teaching hospital” (Sjoberg, 1999). The two competitors joined forces in hopes that it would alleviate the pressures of the new managed care systems by merging resources and acquiring more bargaining power. Stanford Medicine and UCSF came together at a time when many other academic health centers were looking to improve their negotiating powers with healthcare plans and physician groups. The merger offered hope to UCSF and Stanford by strengthening training programs and offering innovation plans as well as financial support.

Merger of Hospital A and B and its consolidation into PRMC was essential as Hospital A was crippled with losses for 3 previous years and was also forecasting losses in the coming year. Hospital B was struggling with an aging facility. Furthermore, given that both the hospitals were in the same community and therefore essentially serving the same community, they were competing both: for the same patients, as well as, the clinical staff. The merger, allowed the new PRMC to reduce the healthcare costs, address the shortage of healthcare personnel and improve the delivery of healthcare by reducing the duplication of services and providing wide variety of services to the small community of 60,000 in southeastern part of Idaho.

The intention of this research paper is to further understand the financial statement of four distinct hospitals located in the San Diego, California County. An analysis of the financial report for Sharp HealthCare, Scripps Health, Tri-City HealthCare, and Palomar Health will be briefly discussed individually on each important financial outcome’s Such as: assets, liabilities, revenue, expenses, hospital debt, and investments. To analyze further, a break down between the hospitals assets, liabilities, and revenue will be compared in the paper.

Therefore, strategic management is an all-encompassing approach for formulating, implementing and evaluating managerial decisions in a way that permits the business to reach its objectives.

The strategic management is actually defined as the process in which an organization actually formats and also implements the plans which espouse the objectives and goals of that organization (Diana Wicks, 2011). The process of the strategic management is continuous and it changes with the evolution of the organizational goals and objectives.