Learning Plan 3 Assignment:Benchmark – A Starting PointAssignmentsLP3 Assignment: Benchmark – A Starting PointCompetency: 3. Determine the positive or negative affect PEST Analysis provides in the healthcare industry.Directions:Conduct a benchmark analysis of your chosen organization.Provide the following: Product/ Service categories (minimum of 4) an example is provided on page 49 in your book.Identify 4(four) factors that are important to your industry and explain how they will benefit your organization.Write a two-page paper with the information provided above.Use third person writings do not use “I think” or “in my opinion” keep it factual, third person and follow APA standards a minimum of two references are required.Submit this assignment to your instructor via the dropbox “LP3 Assignment: Benchmark – A Starting Point.” This assignment is worth 40 points and will be graded according to the scoring guide below.
chapter_7_healthcare_planning.pptx

chapter_8_healthcare_planning.pptx

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Health Administration Press
Strategic Analysis for Healthcare
Chapter 7
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
PEST Analysis of the Environment
• PEST is an acronym that stands for




Political
Economic
Social
Technical
• Some authors have added the words
environmental and legal to form the acronym
PESTEL. For our purposes, however,
environmental and legal matters fall under the
political, because both areas tend to be politically
charged and regulated within healthcare.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
PEST Analysis
• The timing and success of particular strategies can be
influenced positively or negatively by political,
economic, social, and technological factors.
• The strategic analyst studies the macroenvironment
both as an input to strategy and as a limiting factor on
strategy.
• Strategic inputs may involve issues identified in a
PEST analysis that lead to opportunities for an
organization.
• Other findings may limit opportunities for an
organization’s strategy.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
PEST Analysis
• To perform a PEST analysis, the analyst
considers each PEST factor one at a time.
• The analyst identifies what issues influence
each particular factor, how each issue impacts
the organization, and what strategic
implications can be drawn from the issues.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
PEST Analysis
An Example
PEST
Factor
Issue
Impact on organization
Implication for strategy
Opportunities to market to
the older generation as
Increased consumer demand
Extended families moving into
extended families move in;
for healthcare services due to
SOCIAL homes of younger family
opportunities to penetrate
growing number of older
members
the geriatric market and
patients
expand existing services for
older population
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
PEST Analysis
• Note again that “Implication for Strategy” is
different from “Strategy.”
– An implication for strategy identifies a broad
possibility and allows for future brainstorming of
many strategies that could respond to that
possibility.
– By contrast, identifying a particular strategy here
ends the discussion and shuts out other possible
strategies.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Potential Questions to Consider in a
PEST Analysis
Political
• How stable is the political environment you are
analyzing?
• How will government policy influence your ability to
do business?
• How favorable are the existing tax laws regarding your
industry and potentially your business?
• What is the government’s position on financial
reporting and corporate transparency?
• What is the government’s economic policy?
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Potential Questions to Consider in a
PEST Analysis
Economic
• What are the short-, middle-, and long-term prospects for
the economy?
• What is the average disposable income, and how is
income distributed?
• What are the interest rates?
• What is the rate of inflation?
• What employment trends have appeared in recent years?
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Potential Questions to Consider in a
PEST Analysis
Social
• What are the cultural aspects of the area you are
analyzing?
• What are the roles of men and women in the society?
• What are the demographic distributions of the
population?
• What are the population growth trends?
• What is the influence of tradition, and who are the
keepers of tradition?
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Potential Questions to Consider in a
PEST Analysis
Technological
• Does the location have available technology
infrastructure?
• Does the location have available technological
resources?
• What is the area’s overall research and development
investment rate?
• Is technology available to produce high-quality
products and services?
• Do consumers and businesses take advantage of, and
demand, technology?
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Exercise
• Break into groups and brainstorm political,
economic, social, and technical issues that
impact the industry you are studying.
– Determine what impact each issue has on your
organization.
– Determine what implication each issue has on
strategy for your organization.
– Use the space provided at the end of Chapter 7.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Strategic Analysis for Healthcare
Chapter 8
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
• Understanding the position of competitors in the market is essential for the
development of effective business strategy.
• One way analysts achieve this understanding is through competitive market
benchmark analysis.
• This approach helps analysts identify key factors that differentiate a company
from its competition.
• Benchmarking—that is, establishing goals through comparisons with other
organizations’ performance—is widely used in healthcare as a quality
improvement tool, and it can be extremely helpful in ensuring a competitive
advantage over the competition.
• Analysts are able to use comparisons and differentiation to drive strategy
development.
• For example, consider an organization that currently ranks first in market
share but sees a competitor quickly rising in the rankings for price, quality,
service, and reputation. Benchmark analysis helps the organization identify
this new competition and decide what to do about it.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
• To begin a benchmark analysis, analysts need to identify what
factors are important in the industry being studied.
• Each industry has a unique set of critical success factors, key
competencies, requirements, and indicators.
• In most industries, analysts evaluate productivity.
– In retail sales, for instance, productivity has been measured in sales per
square foot, and this measure serves as a key indicator of the efficiency
of operations, trends (when measured over time), and competitive
position (when compared to other retailers).
• In healthcare organizations, we evaluate conditions across a number
of categories (operations, finance, and so on), and we compare our
own organizations with organizations considered to be the best in
those specific categories, in or out of healthcare.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
• Conducting a competitive market benchmark
analysis involves a series of steps. First, through
research, select the appropriate broad categories
for your organization. These categories may
include, but are not limited to, the following:





Product/service categories
Finance
Productivity
Human resources
Facility
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
Second, identify the particular factors within those broad
categories that are important to your industry.
• For example, within the finance category, “return on assets”
might be important in an industry such as manufacturing,
which is highly dependent on equipment.
• At the same time, “number of accounts 30 to 59 days past
due” would likely be much more important in the retail
credit industry.
• Examples of broad categories and key factors common in
healthcare are provided in Exhibit 8.1 in your book. In
conducting your analysis, you can select as many factors as
you feel are important.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
• In identifying factors, analysts sometimes fall into conceptual traps
such as failure to think in the big picture or failure to move from the
present to the future tense.
• Consider the US automotive industry in the 1960s. The industry
failed to foresee the oil crisis of the 1970s, the growth of the
Japanese automotive industry, and the trend of increasing consumer
sensitivity to price and quality.
• Looking back, one might wonder how analysts would miss those
issues.
• This example provides a clear picture of the need to think broadly
and consider future possibilities.
• American auto industry analysts could have, and in retrospect
should have, identified those issues and enabled the US industry to
stop the Japanese industry in its tracks.
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College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
• Healthcare is different from the auto industry, but
the key points still apply.
• Consider the rapidly evolving healthcare system
in the United Sates.
• Most agree that some type of reform is necessary,
but few can agree on how to approach it.
• Can you consider the big picture to address the
healthcare issues in the industry segment you are
studying?
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
• As the third step, identify the competition in
your area, and obtain their information for
each key factor you have identified.
• Laying the results out in a table allows for
easier presentation and quick grasp of the
issues.
• Consider adding an “industry average” column
to compare your organization to the averages.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
• You can choose from a number of methods for finding
how the competitors compare.
• Common methods include
– numeric data reporting,
– forced ranking (in which competitors are assigned ranks
from best to worst),
– scoring (on a point scale from 1 to 5 for each factor, for
instance), and
– selecting “yes” or “no” for key items.
• Examples of these approaches are presented in exhibits
8.2 through 8.5 in your book.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
Analysis Example Using a Yes/No Method
Our
Hospital
Alpha
Hospital
Beta
Hospital
Omega
Hospital
Industry
Product/Service:
YES
NO
NO
YES
NO
NO
Cancer center
YES
YES
Emergency department
YES
NO
Practice network
Trauma center
YES
Yes
YES
NO
NO
NO
NO
YES
YES
YES
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
Analysis Example Using a Scoring Scale Method
Our
Hospital
Alpha Hospital
Beta
Hospital
Omega
Hospital
Industry
5
3
5
2
Human Resources
1
2
2
2
1
2
Flexibility
1
4
2
5
3
Onboarding and training
1
4
3
5
3
Overall quality rating
Retention
1 = superior; 5 = poor
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
Analysis Example Using a Numeric Data Reporting Method
Our
Hospital
Alpha
Hospital
Beta
Hospital
Omega
Hospital
Industry
Financial
Liquidity ratio
Long-term debt to assets
Age-of-plant ratio
Average days in accounts receivable
2.18
1.95
.98
.25
48
9.49
48
67
2.02
33
2.11
.21
7.80
8.21
5.72
10.31
59
62
54
49
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
Analysis Example Using Forced Ranking Method
Our
Hospital
Alpha
Hospital
Beta
Hospital
Omega
Hospital
Median
Productivity
1
2
3
Market share
2
4
4
2.5
1
2.5
3
Adjusted operating revenue
Revenue per provider
2
4
1
3
2.5
Patient loyalty
1
3
2
4
2.5
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
• Fourth, extract meaning from the data.
• Ask questions like,




“Why is it so?”
“Who is the best of the best and why?”
“What trends are visible?”
“Given this same data, what are the competitors likely to do?”
• In subsequent chapters, we will look at strengths,
weaknesses, opportunities, and threats (SWOT).
• Findings from the competitive market benchmark analysis
will provide you with some of the information necessary to
complete the SWOT analysis.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
• Again, remember to think broadly.
• Your competition includes anything that could compete
with your organization, not just your peer group.
• For example, movie theaters compete with other
theaters directly, but they also compete indirectly with
cable TV, video rentals, electronic games, websites,
restaurants, live music venues, Broadway-style theater,
and circuses, to name a few.
• In healthcare, alternative providers are but one category
of potential competitors.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Competitive Market
Benchmark Analysis
• When a benchmark analysis contains both financial and
nonfinancial information, it is often called a balanced
scorecard.
• The word balanced reflects the fact that many
companies in the past only measured themselves and
their competitors based on financial data.
• The inclusion of a broad range of categories, from
corporate culture to technical innovation, gives the
strategic analyst a deeper insight to the company under
study, the competitors, and the industry.
• This insight will likely lead to a more effective strategy.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Exercise
• Break into groups.
• Conduct a competitive market benchmark
analysis for your industry.
• Use the space beginning on page 53 in your
book.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.

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