Situational and Decision Analysis

1. Situational and Decision Analysis By: James Onisk

2. Strategic Issue Emanuel Medical Center (EMC) is encountering financial troubles as it struggles to remain open as an independent general acute care hospital. Changes in federal regulations such as the implementation of the EMTALA laws and lower reimbursement rates for federally run insurance programs, changes in service area demographics, and the evolution of the services that locally competing hospitals offer, all have contributed to five consecutive negative operating margins for Emanuel Medical Center. Emanuel Medical Center’s poor infrastructure and inability to adapt to these changes has left the hospital on the brink of closure.

3. Service Area Highlights • Modesto (207,376) the most densely populated city in the service area is 15 miles away • Turlock (EMC’s home city) has 64,577 residents • No other city has over 38,000 • Increase in Hispanic population (29.4%) • Population is aging, 14.7% is over 60 yrs • Median household income is $39,050 • 12.4% of families are below poverty level • High rates of chronic disease (cancer, heart disease) • 17.2% of county population covered by Medi-Cal • EMC is the last independent hospital in its service area • 64% of EMC patients are from Turlock

4. Competitor Highlights Key Strengths Weaknesses • Kaiser Permanente Modesto Medical Center- • Memorial Medical Center-

5. Competitor Highlights Key Strengths Weaknesses • Mercy Medical Center- • Doctors Medical Center-

6. Competitor Highlights Key Strengths Weaknesses • St. Joseph’s Medical Center- • Oak Valley Hospital-

7. Critical Success Factors • Range of Major Services Offered • EMC (5 Major Services); St. Joseph’s Medical Center (8); Mercy Medical Center (7); Kaiser (10); Memorial Medical Center (6); Oak Valley Hospital (4); Doctors Medical Center (5) • Medicare Reimbursement Per In-Patient Visit • EMC ($10,176); St. Joseph’s ($14.480); Mercy ($14,190); Kaiser (no data available); Memorial ($15,051); Oak Valley ($8,922); Doctors ($17,897) • Quality Measurements of Services Provided • Patient Safety; Overall Patient Experience; Critical Care Rating; Heart Failure Rating • Capital Assets • Technology Advancement; Structural Improvements/Capabilities; Total Net Income

8. Financial Highlights • Operating Income- Negative for the last 5 yrs. • Excess Margin- Decreasing for the last 3 yrs. • Days in Accounts Receivable (All Above Ntl. Avg. 51.9 Days) • Acid Test Ratio

9. SWOT Matrix Weaknesses Strengths

10. SWOT Matrix

11. Decision Analysis

12. Directional StrategiesMission • Current Mission • “to create a healthier community” • Does not target any consumers, identify any of the main services that are offered, or recognize a specific community population • New Mission • “Emanuel Medical Center’s mission is to provide high-quality comprehensive acute health care services to Turlock residents and members of surrounding communities. Emanuel Medical Center’s medical staff will heal ailments of patients through Christian values by collaborating with the patient’s family and outside community resources, while encouraging intellectual growth for the medical staff and structural and financial growth of the hospital organization”

13. Directional StrategiesVision • Current Vision: • “A caring community, caring for our community” • Does not show what the hospital should look like in the future • Does not inspire the employees to thrive for excellence • New Vision: • “Emanuel Medical Center will provide affordable, high quality care for all patients in the community as it develops into a regional leader in health care, and a provider of choice for doctors and patients alike”

14. Directional StrategiesValues and Goals New Values New Goals Caring for customers and each other Providing clinical, operational, and service excellence Growing revenue, facilities, services, and people • Quality and service excellence • Teamwork and collaboration • Financial stability • The affirmation of life

15. Adaptive Strategies TOWS Matrix SPACE Matrix • Internal Fix-It Quadrant • Internal weaknesses prevent EMC from exploiting opportunities • Does not offer Cardiac or Oncology services to capitalize on aging population • Strong local market share • Low in-patient occupancy rate • Lack of financial resources

16. Adaptive Strategies • Product development and market development • Product Development: • Expanding EMC’s incomplete in-patient product line to include cardiac and oncology services • Vertically integrate product line for aging population, being able to place them in EMC’s skilled nursing or assisted living facility after surgery • Market Development: • Market new services offered to aging population • Will regain market share of aging population that travels to other hospitals to receive these services , and receive their Medicare reimbursements • Being the only hospital in Turlock, it is easier to access EMC than other hospitals for local residents

17. Market Entry StrategyInternal Development • Organizational Goals • High initial control over production, marketing, and design of products/services • External conditions • Federal Regulations • Internal Resources, Competencies, and Capabilities • Marketing competency • Operational capacity • Product/Service management expertise • Technical expertise

18. Strategic Posture and Positioning • Posture • Analyzer (Defender + Prospector) • Defender (Focus on cost control and preservation of current market share) • Prospector (Expand new services to capture local elder market) • Positioning • Market-wide differentiation approach • Ease of access for new cardiac and oncology services offered

19. Value-Adding Service Delivery Strategies:Pre-Service • Target Market • Expand the target market to show the elderly population new cardiac and oncology services that are offered • Marketing • Consider aiming television commercials during television programs directed towards the elderly • Pricing • Continue to monitor competitors prices to maintain an advantage over insurer preference • Services Offered • Expand to cardiac and oncology care

20. Value-Adding Service Delivery Strategies:Point-of-Service • Clinical Operations • Continue to monitor quality performance through surveys and patient outcomes • Marketing • Continue to communicate and emphasize individuality and quality treatment to every patient

21. Value-Adding Service Delivery Strategies:After-Service • Follow-On • Practice good communication habits with other hospital/facility divisions to ensure patients have a place to receive extra care (skilled nursing facility, long in-patient stays, etc.) • Billing • Implement a new electronic billing system where patients may register for appointments and pay online

22. Value-Adding Service Delivery Strategies:Strategic Resources • Human Resources • Begin searching for cardiologists and oncologists to work in the new departments that will be constructed • Can start by researching incentives that are most likely to attract top quality physicians • Facilities and Technology • Continue research into costs and implementation time frames for facility and technological changes

23. Value-Adding Service Delivery Strategies:Culture • Behavioral Norms • Human Resources: hold training sessions for employees to improve their communication between patients and other staff • Values • Management: rewrite all mission, vision, values and goals and apply them to the external environment

24. Questions?