Introduction
Knowing the internal and external environment is important for healthcare facilities because it enables the management personnel to understand the possible future occurrences in the external environment that can affect the business. This provides an opportunity to formulate effective strategies to adapt the business to the changing environment. The external environment contains those factors that affect business but cannot be controlled by the organization.
Businesses can only respond to them. While influencing its internal environment, businesses can convert the external threats into opportunities. The internal environment consists of forces that can be manipulated by the organization. Businesses can manipulate these variables to influence their marketing efforts and gain a competitive advantage (Duncan, Ginter, & Swayne, 1998).
Forces in the External Environment
For businesses, the external environment is beyond the control of the organization. Despite the inability to control some of these factors, an organization can respond and adapt to the threats and incorporate the controllable elements from the internal environment to make the business sustainable. Roswell Health Center is being faced with the challenges of declining reimbursements from insurance providers and increasing demand for patient services due to the changes in the external environment. The specific forces in the external environment that will have the most impact on my organization as the administrator include the governmental policies or legislative requirements and the stakeholder environment (insurers).
Specifically, the Patient Protection and Affordable Care Act is a legislative requirement that is likely to greatly affect the Roswell Health Center. This was a federal statute that was signed into law by the president of the United States. The main objective of this law was to increase the affordability and quality of health insurance (Gruber, 2011). It also aimed at increasing the number of individuals with health insurance. This legislative requirement was meant for good.
However, it has faced resistance and has remained a matter of political debate (Blendon & Benson, 2010). The rise in insurance costs has led to fewer employers offering health insurance. Other employers are managing this cost by asking employees to make higher contributions.
The Patient Protection and Affordable Care Act is affecting Roswell Health Center in that it has increased the demand for patient services. This has led to an increase in patient numbers. This legislation has helped reduce the costs of healthcare for individuals. Some of the mechanisms in use include subsidies and mandates.
Another factor that makes up the external environment includes the stakeholder environment. All businesses depend on a number of stakeholders to survive. The stakeholders include individuals and institutions that are directly concerned with the company. Therefore, Roswell Health Center needs to learn the identity of its stakeholders in order to assess the potential impacts that they can have on the health center. Insurers are major stakeholders in healthcare.
The stakeholder environment has been determined as one of the major external forces because it is one of the major sources of funding for the health center. With the enactment of the Patient Protection and Affordable Care Act, more individuals depend on insurance covers to pay for their medical bills. For this reason, Roswell depends on reimbursements from the insurers to pay its bills and ensure the continued operation of the business. However, Roswell has experienced challenges of declining reimbursements from these insurance providers.
Internal Factors That Organization’s Leaders Should Consider
Internal factors include those forces within the organization that affects business. Such factors can be manipulated in order to make a business sustainable. In the case of Roswell Health Center, one of the internal factors that may need to be considered by leaders is staffing or organizational structure. Proper staffing is required to ensure that the needs of the consumers are met. In a healthcare facility, enough medical practitioners are required to serve all the patients in time and ensure that they are satisfied. In order to provide quality care, the employees also need to be skilled. The physical capacity of individuals and their skills need to match with their job requirements so that they can work effectively.
The future of Roswell Health Center depends on staffing and the structure of the organization. This is mainly due to the dramatic changes in the external environment that led to the increase in the demand for patient services. The Patient Protection and Affordable Care Act ensured that the working poor and the unemployed could afford quality healthcare. Individuals who have low incomes also receive federal subsidies that ensure that they can access quality health care (Gruber, 2011).
For this reason, the health center will need to ensure that an adequate number of skilled personnel is available to handle a huge workload. However, it is also important to understand that staffing is an expensive agenda. Maintaining employees is one of the largest expenses in an organization. Therefore, it is also important to ensure proper staffing and not overstaffing.
Other internal factors that may have a great impact on Roswell Health Center include the internal processes that cause the increase in the costs of operation. The current environment is characterized by high operating costs and decreased reimbursements. To reverse this, it is only logical to reduce the costs as much as possible. For example, Roswell has invested heavily in real estate. This constitutes fixed costs. Several health facilities opt to sell off some of the offices to meet their financial obligations. Such costs need to be reduced in order to increase cash on the balance sheet. This also helps reduce debt and lowers operating costs. Similarly, costs incurred on equipment should be managed effectively.
Impact of the Internal and External Factors
The internal and external factors may affect Roswell Health Center in several ways. For example, developing a competitive strategy may be difficult (Duncan, Ginter, & Swayne, 1998). The legislative requirements have caused an increase in the number of patients. For this reason, the number of health practitioners available may not be adequate to meet the market needs. Since quality health care should be provided to all, proper staffing is required. The health practitioners of Roswell Health Center are skilled to handle specific areas only and are not dynamic. This implies that individuals can only handle specific issues and cannot be used to solve other organizational issues.
The declining reimbursements from insurance providers may also greatly affect the health center. With the increase in healthcare costs due to real estate, equipment, and employee insurance costs, the declining reimbursements from insurance providers only lead to increased operational costs. Since Roswell Health Center relies on reimbursements from insurance companies to offset the costs incurred during treatment of low-income or unemployed patients, this decline in reimbursements is causing a threat to the future of the clinic’s practices.
Recommendations
In order for Roswell Health Center to develop a competitive strategy, it must employ highly skilled and trained health practitioners. It can also introduce new technologies that can provide a competitive advantage. An operational effectiveness strategy may be used to ensure that the internal business activities outperform those of the competitors. Roswell Health Center can begin by addressing fixed costs since they are quite substantial. In particular, these costs comprise real estate investments. Roswell should sell office buildings so as to reduce these costs. Since equity builds up in such property, Roswell can sell the buildings and lease them back. This would help increase cash on the balance sheet. This strategy will help reduce debt and reduce operating costs (Harrison, 2010).
When it comes to equipment, Roswell Health Center can free up cash by leasing the equipment instead of purchasing them. This can be considered as 100% financing with no down payment. This differs from traditional financing which usually requires a significant down payment. Leasing can also help in the financing of all costs incurred in purchases. Leasing would be beneficial for Roswell Health Center because it would help maximize the available financing. It would also help in freeing up capital and enable financing of other sectors (Harrison, 2010).
Since the Patient Protection and Affordable Care Act mandates businesses that employ fifty individuals or more to provide health insurance, Roswell Health Center will ensure that employees make more contributions towards this venture. This will help in reducing the costs of insurance. The human resource managers will also ensure that proper staffing is done. This would involve the hiring of dynamic employees.
Such employees would need to be multi-skilled. Multi-skilled employees would be able to work in more than one area in the health center. Such employees may receive training in various areas so that they can increase productivity and reduce labor costs. Such individuals are flexible since it is possible to schedule them according to the needs of the business. In the absence of some employees, others can stand in for them without the need to employ an extra workforce.
Such arrangements would ensure business continuity and sustainability. It would also ensure that fewer dynamic employees are employed. Overstaffing will be avoided and costs incurred on employees will be reduced. Outsourcing of employees may also be used on some occasions. Technological advancements may also be employed to help reduce costs in the health center (Menachemi, Shin, Ford, & Yu, 2011). For example, an electronic medical records system can be installed.
Due to the increase in patient numbers and limited bed space, the use of remote monitoring tools would help reduce the need for hospital visits because the health practitioners can monitor the health of their patients in the comfort of their homes. Portal technology may also be employed to help patients and medical practitioners interact online without the need for constant physical interaction.
Conclusion
Roswell Health Center is being faced with financial challenges due to the declining reimbursements from insurance providers. The enactment of the Patient Protection and Affordable Care Act aimed at ensuring increased quality and affordability of health insurance. This has led to an increase in demand for patient service. Roswell Health Center is planning to ensure proper staffing and is introducing new technology. This would ensure that it continues to provide quality care and it would develop and maintain a competitive edge despite the numerous challenges.
References
Blendon, R., & Benson, J. (2010). Public opinion at the time of the vote on the health care reform. New England Journal of Medicine, 362(16), 55-76.
Duncan, J., Ginter, P., & Swayne, L. (1998). Competitive advantage and internal organizational assessment. Academy of Management Executives, 12(3), 6-16.
Gruber, J. (2011). The impacts of the affordable care act: How reasonable are the projections? National Tax Journal, 64(1), 893-908.
Harrison, J. (2010). Essentials of Strategic Planning in Healthcare. Chicago: Health Administration Press.
Menachemi, N., Shin, D., Ford, E., & Yu, F. (2011). Environmental factors and health information technology management strategy. Health Care Management Review, 36(3), 275-285.