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Strategic Business Management MBAD 631-Z Strategic Analysis of Presence Mercy Medical Center

Strategic Management Presentation Final PPT

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Page 1: Strategic Management Presentation Final PPT

Strategic Business ManagementMBAD 631-Z

Strategic Analysis of Presence Mercy Medical Center

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Executive Summary

The goal of this report is to analyze the organizations standing, market position and evaluate potential strategy. The changes initiated by the passage of the Affordable Care Act has radically changed several aspects in the healthcare sector. These aspects consisting of issues ranging from services rendered, technology and expansion/contraction.

Key strategy points will be explored and a through review of

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Analysis Overview

Situation Analysis:• Remote Analysis• Porter’s Analysis• Competitor Profile• Organization Profile• SWOT Analysis• Key Drivers • Strategy Options

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Remote Environment

Remote Environment

Economical

Global

Ecological

Technological

Social

Political/Legal

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Remote Analysis

• Healthcare Industry:– Hospital Sector

• Hospitals are significantly affected by the changes precipitated by the ACA and has made this a very fluid market situation in recent years.

• Unprecedented growth has led to radical changes in operations and is continuing to fuel change.

Analysis Points

EconomicSocialPoliticalTechnologicalEcological

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Remote EnvironmentEconomic Outlook – Improved.- PMMC has been able to generate a profit according to internal memo Releases from Michael Brown, CEO of PMMC. Bond rating status has Improved according to Crain’s Business Chicago. • Requests for this information is not available via internet or is made available to the public. Personal requests were made to executive secretary (Elidia Vazquez) but all request were declined.Social – Improved- At the local level television advertisement has begun to promote Presence’s Health

Neurology treatment service line.- Many in roads are being into the Hispanic community by utilizing local parishes to

reach out to parishioners and improve health concerns of at risk individuals. This demographic consists primarily of the Hispanic and Africa-American community.

Global- Non-Issue

Ecological – Fair- According to Michael Brown, CEO of PMMC. An effort to reduce waste by improving recycling measures is in place, and effective utilization of linen processing. The building received a significant patient room retrofitting in 2012. No other mention of improving sustainable were made.

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Technology – Poor- Presence Health, in general, lags behind RCMS and Rush Health. The software and

hardware is dated and not being upgraded as it should be to maintain an operational and competitive edge.

- PMMC is using several different software programs that do not always communicate with each other. Radiology equipment is still primarily based on cassette and film use. Only one digital room and portable x-ray device are available.

- To become efficient and transmit information in real time, more of an investment needs to be made in efficient diagnostic equipment and patient data recording devices.

Political/Legal – High- 2014 is an election year with a very unpopular President Obama in office. Political

rivals have stated that they will repeal the ACA I they regain control of the senate and legislative branch of government. Repealing this program may once again cause new obstacles to overcome that may affect expenses and revenue streams.

- Risk of litigation is always high, even though many reductions in the minimizing of errors has occurred. Implementation of newer and safer practices has been beneficial to hospital operations.

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Hospital Comparison

• Presence Mercy Medical Center

Licensed Beds – 293 Joint Commission Accredited Physician's – 432 Non-for Profit hospital Provides clinical education

opportunities for colleges Locally recognized

• Rush-Copley Medical Center

• 210 beds• Joint Commission Accredited• Physician's – 500• Non-for Profit hospital• Teaching/Educational Hospital• Nationally, regionally and locally

recognized health system

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PMMC Quality Achievements• Key quality accolades• Certified Primary Stroke Center by The

Joint Commission• Accredited Chest Pain Center by the

Society of Chest Pain Centers• Hip and Knee Joint Replacement, Certified

Gold Seal of Approval from The Joint Commission

• Emergency Department Approved for Pediatrics (EDAP)

• Mammography, Accredited by American College of Radiology

• Accredited with Commendation, American College of Surgeons’ Commission on Cancer

• "A" Hospital Safety Score from The Leapfrog Group

• Key Line of Services• Level II trauma center• Behavioral health and addictions• Maternal/Child services with level II

special care nursery• Pediatric specialists and neonatologists

from Ann & Robert H. Lurie Children's Hospital of Chicago

• GI care• Cardiovascular services including open

heart surgery• Da Vinci robotic surgery• Joint replacement program• Diabetes wellness center• Occupational health and employer

services

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RCMC Quality Achievements• Quality Achievements• Rated “A” Hospital Safety Score by The

Leapfrog Group• American Heart Assoc./American Stroke

Assoc. Stroke Silver Plus Quality Achievement Award

• Joint Commission Gold Seal of Approval for treating;

– Joint Replacement of Hip and Knee.– Heart Failure– Normal Delivery and Respiratory Distress

Syndrome in the Preterm Infant.

• American College of Radiology designation as Breast Imaging Center of Excellence.

• Key Service Lines• Emergency Department Approved for

Pediatrics (EDAP).• Cancer Treatment Center• The only Level III Neonatal Intensive

Care Unit in the Fox Valley• Serves as a teaching hospital to future

physicians who are attaining Residency In Family Medicine

• Designated as a Chest Pain Center and provides extensive cardiac services

• Nationally recognized for orthopedic services by The Joint Commission and U.S. News and World Report

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Porter 5 Forces

Threats of New Entrants:

Several new healthcare providers have emerged who are dealing with cash paying customers. These locations consist of same day surgical centers and walk in care clinics. These clinics are provide service customers who have insurance that covers this service or are cash paying customers.

RCMC opened the only hospital located within Kendall County and may now begin to build satellite clinics to divert patients to that facility or the primary hospital in Aurora.

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Suppliers:

Outside contracting services have been secured to bring down operating costs by not having to provide benefit packages to that particular employee demographic.

Financial constraints are present with the allotted budgets that have been determined to department managers. Capital budgets are limiting the amount of vendors to approach to receive the best service for the limited amount of money made available to them.

Depth of specialty independent physicians is shallow. The largest and most diverse medical group is that of Dreyer Medical Group (Advocate Health System).

Threat of Substitution:

Substitution of services is high with many options available to to insured and cash paying customers. Similar if not better services are available to the community if they chose to use RCMC for their care.

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Customers:• According to the PMMC Community Health Needs Assessment Report, the

poverty status is at 13.9%. Currently, the US Census Bureau estimates the poverty level to be at 14.4% and with anonymous internal sources stating that the percentage is more like 15% plus. PMMC provides a considerable amount of care to this demographic and the Emergency Department is the primary point of care this demographic. This repeat group of nonpaying customers is economically taxing on the system.

• RCMC has employed two key physician groups consisting of Fox Valley Cardiology Consultants and two longtime Pulmonary Medicine physicians.

Competitors:• Rush-Copley Medical Center • Cadence Delnor Hospital• Dreyer Medical Group• Walgreens Pharmacy• ATI Physical Therapy Services

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Competitor ProfileStatus/Type: Non for profit teaching hospital

Financial: Rated A+ by Moody’s Financial Services. Income/debt ratio is improved even after the completion of the newly constructed medical facility in Chicago.

Services: RCMC announced that they will be investing in a$52.7 million dollar renovation and expansion project that will be completed in 2018.

Effective Market: RCMC provides services primarily to Kendall County and the city of Aurora. Other cities that benefit are Plainfield and Naperville.

Technology: It has been a a key tactic for their strategy is to maintain a strong technology foundation.

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Competitor SummaryRUMC/RCMC

Asset Summary 2014 March 31, 2014

Cash and Cash Equivalents $ 190.2

Fixed Income Securities $ 500.0

Equity Securities, U.S. and International

$105.4

World Asset Allocation Mutual Funds

$69.9

Moderate Allocation(Balanced) Mutual Funds

$49.9

Unrestricted Endowment $50.9TOTAL $966.3 (millions)

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SWOTStrength – Long-time history and commitment to the community. Recent leadership hasshown initiative to change and pursue long term goals.

Weakness – Payer mix is poor and revenue streams are limited as competition for market share has become more intense with RCMC.

Opportunities – There are 8 MUA’s that are within PMMC’s areas and these areas couldImprove revenue streams.

Threats – RCMC could continue to expand into territory that was once traditionally dominated by PMMC and completely lose there market share.

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Key DriversThe ACA is mandating policy and compliance with best practices as well as communication and data retrieval.

Technology and digital platforms are dominating the healthcare landscape.

Expanding services and aligning with other groups and organizations are leaving very little room for smaller competitors.

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StrategyPhase one

• Critical Success Factors Controlling Costs:• Establish a list of potential vendors for data

analytics and healthcare ERP vendors. Existing software and hardware is dated and a uniform upgrade needs to be implemented to the most productive facilities first, such as PMMC. The goal is to implement one integrated system to improve accounting procedures, billing accuracy, data storage capability, and improved real time communication.

• Integration of ERP with existing and expanding LEAN /RIE processes. 

 • Customer Relationship Management

• Develop the Presence Medical Group:• Conflict of interest is present with

maintaining relationships with independent physicians who are technically employees of rival healthcare systems, principally, Rush-Copley and Dreyer Advocate.

– Strategically eliminate and minimize the relationships with physicians who do not refer their patients to PMMC for services.

– Retain and employ services of independent physician’ that specialize in the following areas.

• Cardiac• Renal• Interventional Radiology• Obstetrics and Gynecology• Primary Care Services

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Sustainability and Expansion:

Phase Two

• RCMC made a strategic move to build and operate a freestanding hospital while only providing emergency services. This action also translated to them being the only hospital facility in Kendall County. As population continues to grow this population base will seek out their medical services at RCMC.

• PMMC needs to open one walk in care clinic in Kendall County to obtain some of this market share and another clinic west of Sugar Grove, IL to serve the rural communities that do not have easy access to hospital services.

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Strategy Phase TWO cont.

• PMMC needs to establish a facility on the western part of the I-88 corridor west of DeKalb, IL to provide services that can be performed at PMMC. Significant portions of cardiac thoracic surgical procedures are being performed on individuals from the Sterling, Illinois area.

Rural Communities face the burden of not having access to healthcare services, let alone quality healthcare services.

• The strategic placement of a small facility with an available transport team that can transfer patients to PMMC will help increase visibility within the community and assist in capturing more of the market. A transport team is already in place at PMMC but it is under utilized because service area needs to be expanded