ChapterFour: SWOT Analysis
HospitalCorporation of America
HospitalCorporation of America
Healthcare organizations have internal weaknesses and face threats thatresult from the external environment. The two factors (internalweaknesses and external threats) limit the capacity of the healthcare organizations to take advantage of opportunities that come theirway and maximize their internal strengths (Cox, 2015). However, ahealth care organization can safeguard its going concern depending onthe balance between its weaknesses and strengths. In the case of theHospital Corporation of America (HCA), its main weakness is the lackof adequate controls, especially in matters. This is confirmed by theorganization’s inability to protect patient privacy, maintain thequality of care, and prevent fraud. This chapter will focus on HCA’sSWOT analysis.
Internalweaknesses and strengths
Controlis a critical function in a health care organization because it helpsthe organization determine whether its plans are leading towards theaccomplishment of pre-determined goals. The management of HCA hasdemonstrated its commitment to control costs in order to ensure thatit can offer services at an affordable price and enhance itscompetitive advantage. This is achieved through an SDS catalystprogram that was adopted in 2011 (Schur, 2011). This program hashelped HCA achieve cost savings through efficient and innovativemethods of procurement. In addition, HCA has managed to controlefficiency in health care delivery by adopting the best practices inthe industry. The adoption of the best practices is part of theorganization’s plan to control quality and deliver services thatmeet international standards.
AlthoughHCA has some strengths in its control function, persistent cases offraud in the facility indicates that the top executive has lostcontrol over the organization’s operations. For example, HCA hasbeen accused of engaging in the largest Medicare in the U.S., whichresulted in a settlement of about $ 1.7 billion (Sherman, 2014).Fraud occurred when health care providers kept two copies of medicalrecords, where one of them contained the correct information, whilethe other one was inflated. The management used the inflated recordto make Medicare claims, which indicates the lack of capacity to theorganization to control fraud.
Inits mission statement, HCA states that it intends to offer qualityservices to all clients, but the recent increases in cases ofcustomer complaints indicate that the organization has failed tocontrol the level of quality. For example, the litigation made byJulie Fetcko, a patient suffering from trauma in 2015 is aconfirmation that the hospital has lost control over the quality ofcare. Fetcko claimed that she was treated by a non-specialist in thefield of trauma, which reduced her therapeutic outcome (Walser,2015).
Inaddition, HCA has an establishing record of failing to control andprotect patient records, especially those that are storedelectronically. For example, medical records of about 82,601 patientswere stolen from Aventura, one of the HCA’s hospitals in the year2014 (McKesson, 2015). It is reported that unauthorized personaccessed electronic records and stole identification information ofthe affected patients, which means that the information stolen couldbe used to accomplish other types of crime. This loss of control overpatient records has damaged the image of the organization.
Thesuccess of any organization in a highly competitive market isdetermined by the quality of its strategic plan. HCA’s managementhas subscribed to this notion and developed strategic plans thatguide different departments along their development path. Forexample, the current development master plan is helping HCA divestfrom non-performing market to well-diversified and stable economies(Patrick, 2014). In addition, the same master plan has been guidingthe organization towards the diversification of its operations, whichis a reliable way of enhancing the sustainability of revenues.Suitable growth plans have helped HCA attract investors. Whileannouncing the company’s capital deployment plan, HCA’s CEO,stated that the organization will achieve its growth target by makingthe largest acquisitions (Cooper, 2015). This is the easiest and themost viable way of entering new markets.
Itis evident that HCA’s master plan aims at enhancing the hospital’scapacity to generate more profits by reaching the largest number ofclients possible. However, this master plan fails to integratesuitable measures to consistency in the delivery of quality services.The case of Julie Fetcko confirms that HCA is no longer interested inthe needs of its clients, but its plan is to make money from patients(Walser, 2015). This plan is doomed to fail given that consumerdemand for quality has been increasing with time.
Thequality of leadership determines the success of the organization. HCAhas established a hierarchical leadership structure that facilitatesthe flow of instructions from the CEO to the junior members of staff(Hospital Corporation of America, 2015). The hierarchical structureenhances the efficiency of leaders, which makes it easier and fasterto make decisions. In addition, the current CEO, Milton Johnson, hasa working experience of more than 33 years. All other members of theboard of directors have similar levels of experience. For example,HCA has a very competent finance officer, Sam Brook, who has beenpraised for helping the organization developed a safe and abroad-based growth plan (Cooper, 2015). Therefore, the rapid growthand financial success that HCA has enjoyed since its foundation in1968 can be attributed to a strong leadership team.
Althoughthe hierarchical leadership structure has helped HCA make decisionsfaster and achieve rapid growth, a hierarchical structure hinders theautonomy of junior employees. This denies them the opportunity tomake their contribution towards the development of the organizationsince all instructions and information flow from top downwards (HCA,2015). This in turn has denied HCA the opportunity to integrate theneeds of clients in its plan since junior members of staff, who arein a direct contact with clients, have a limited platform to airtheir views. This could be the reason for the occurrence of seriouscases of customer complaints for delivery of substandard services(Sherman, 2014). These challenges can be attributed to the lack of asuitable leadership structure.
HCAcan be considered as one of the most organized organizations, whichcan be confirmed by the existence of a well establishedorganizational structure. The structure facilitates the delegation ofauthority as well as responsibilities to employees at the lowerlevels (HCA, 2015). The delegation of responsibilities in a formalstructure reduces confusion and enhances efficiency of the entireorganization. The management of HCA holds that the company believesin the spirit of delegation of duties as well as the responsibilitiesand not their abdication (HCA, 2015). This implies that the processof delegating duties is designed to enhance the organization of thecompany’s operations and accountability among all members of staff.In addition, the smooth flow of operations in which such as largecompany and the flow of information from the parent company to itssubsidiaries and from subsidiaries back to the parent firm is anindication of proper coordination.
HCAclaims to delegate duties together with the responsibilities thatemployees require to perform those duties. However, the fact thatsome clients complain and even make litigations against theorganization for being served by professionals who are notspecialized in a given field (such as trauma) suggests that theorganization of employees within the company is not a sufficient(Sherman, 2014). This is because the delegation of duties to thewrong members of staff affects the quality of care in a negative way.
HCA’sexternal opportunities and threats
HCAhas managed to contain the threat of rivalry in health care withinthe U.S. by acquiring potential competitors, but it is practicallyimpossible to buy all for-profit and private hospitals. Consequently,numerous hospitals have mushroomed and they are continually growing,which has intensified competition within the health care sector. Someof the key examples of health care organizations that are giving HCAa direct and a stiff competition include Adcare Health Systems Inc,Adeptus Health Inc, and American Caresource Holdings among others(NASDAQ, 2015). Although HCA is still ranked as the largest networkof health care facilities globally, it cannot ignore the impact ofthese competitors that are growing with time. Therefore, industryrivalry in the health care sector can be considered to be medium.
Thelevel of substitution can be considered to be quite low since nearlyall health care facilities offer similar types of medical services.In addition, substituting the services offered by HCA may be quitedifficult given that HCA is a large firm that is able to offer nearlyall types of services that its clients may need (HCA, 2015). However,substitution in the health care sector may occur in two ways. First,the non-profit health care organizations operating in the U.S. areable to deliver quality care at an affordable price, which reducesthe market share for the for-profit organizations, such as HCA.Secondly, the free standing emergency rooms and physician offices areable to offer services faster since their queue sizes are less (Cox,2015).
Themain consumers of the health care services include individualpatients and insurance companies that give reimbursement for healthcare services that are offered to patients who have subscribed totheir insurance plans. The bargaining power of these consumers can beconsidered to be relatively low for two reasons. First, the number ofconsumers is quite large to an extent that a single consumer may notaffect the performance of the health care organizationssignificantly. For example, the decision of a consumer to withdraw oravoid seeking for health care services from the formal system cannotlead to a loss in the health care organizations (Cox, 2015).Secondly, health care is too basic to an extent that patients do notchoose whether they want to be treated or not. Therefore, the factthat patients have to be treated irrespective of their economicconditions reduces their bargaining power.
Suppliersof the health care sector include pharmaceutical companies, officesuppliers, and IT vendors. The bargaining power of these suppliers isquite low. This is because there is a large number of a supplier,which makes it easy for the health care facilities to switch from onesupplier to another, depending on the quality and terms of sale (Cox,2015). For example, pharmaceutical companies that supply genericproducts are able to offer their drugs at relatively low prices,which attract most of the for-profit organizations. In such a case,the bargaining power of firms that produce original drugs is low.Producers of generic products are also many, which lower theirbargaining power since none of them can singly determine thedirection that the health care sector should take.
Threatof new entrants
Possiblenew entrants into the health care industry include the freestandinghealth care facilities, physician offices, and ambulatory surgicalfacilities (Cox, 2015). However, the cost of starting a fullyequipped health care facility is extremely high, which makes itdifficult for potential investors to enter the health care sector.This cost is mainly increased by the expensive equipments and thehigh cost of hiring competent providers of health care facilities.Moreover, returns to investment are relatively low, which discouragespotential investors who would not like to risk their money inunprofitable or ventures with low returns. Therefore, the threat ofentry into the health care sector is low.
Theglobal health care sector in general is affected by several trends.First, the cost of delivering health care is a global force that isaffecting all health care facilities irrespective of theirgeographical location (Jivraj, 2014). This trend can be attributed toan increase in demand for modern technology and the cost of hiringregistered health care professionals. Moreover, cooperation amonghealth care facilities within and outside a given jurisdiction hascontinued to grow as the world becomes a global village. This is apositive trend that will enhance the quality of care and the capacityof health care professionals to address emerging medical challengesand diseases.
Acontinuous increase in population implies the number of patients willgrow with time. This implies that the demand for health care servicesis more likely to grow than decline in the future. Most importantly,the population of senior members (aged 65 years and above) hasincreased over the years. According to Administration for CommunityLiving (2015) the population of seniors is 14 % and it is expected toreach 21 % of the national population by 2040. This population ismore susceptible to diseases given that the level of immunitydeclines with age. All these demographic factors suggest that thedemand for HCA will continue to grow.
Legaland political forces
Operationsof health care facilities are affected by legal and political forcesdirectly and indirectly. For example, health care facilities arehighly regulated by the state laws that are formulated with theobjective of ensuring that they meet the standards and offer qualityservices to patients. HIPAA Act is a legislation that regulateshealth care facilities in order to ensure that they safeguardpatient’s privacy in the current error where electronic health carerecords are increasingly becoming a basic necessity (Health IT Gov,2015). The recent enactment of the Affordable Care Act increased thenumber of people covered by insurance programs, which means thatcases of patients defaulting medical bills will decline.
Currently,technology is a primary determinant of the competitive advantage ofthe health care organizations. Health care organizations that areable to adopt the modern technology offer quality care, in a moreefficient way. For an instant, it is estimated that health carefacilities (such as HCA) that have adopted electronic medical recordsare able to save about $ 42,000 for every health care provider(Health Management Technology, 2015). This has created a generalperception that technology is the most viable solution that healthcare providers can use to address the issue of a rapid increase inthe cost of care. However, the adoption of technology without a plancan be too expensive for health care facilities.
Largehealth care organizations operating in different geographicallocations, like HCA does, are affected by multiple social factors.Being present in different locations implies that the organizationserves people from different races, religion, and culture.Consequently, health care facilities (including HCA) are forced toreview their recruitment patterns in order since they need members ofstaff who are competent enough to serve all clients irrespective oftheir social and cultural differences (Jivraj, 2014). These suggestthat there are needs for a diverse workforce that will help HCA meetthe needs of a multicultural society.
AlthoughHCA is among classified as the largest network of the health careorganization globally, it has several weaknesses that are likely tolimit its future growth and affect its going concern. For example,delivery of substandard health services, cases of data breach, andfraudulent operations can be attributed to the lack of adequatecontrols and weaknesses on the part of leadership. In addition, HCA’smaster plan directs the organization towards an increase inprofitability and focuses less on provision of quality care. Thehierarchical leadership structure is quite rigid and denies thejunior staff the chance to make their contributions towards theorganization’s growth. However, HCA has is still financially soundand has adequate resources to counter its current weaknesses. Forexample, its strong and experienced leadership team, strategic plansthat guide the organization’s long-term development, and aneffective plan for the delegation of duties are some of the keyfactors that have helped HCA continue growing.
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