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Strategy and Structure
Free standing, rural, community hospitals must use strategic management for decision-making processes to ensure their system can withstand any challenges that may come about. Using these processes allows leadership teams to tackle various challenges that may come with rising competition in marketplaces they serve. With the continuous growth of competition in urban areas, organizations struggle to maintain their financial viability while the limitations for attracting new third-party payers are still present. Other challenges involve negotiating purchases of consumable supplies and durable equipment under favorable credit terms or staffing issues due to inabilities for recruiting and preserving the skilled personnel already staffed. The leadership team of Medical Center of Southern Indiana (MCSI) uses strategic management to ensure their organization’s sustainability as they address each of these challenges, they face (Rakich, Longest, & Darr, 2010). Typically, an organizational strategic plan tends to focus on the next three to five years unless it is considered a “turnaround”, the plan focuses on closer terms (Borkowski, 2016)
Over the years, due to loss of revenue, MCSI has focused on three fields of concern after being on the long road of recovery. The governing body has focused on three objectives which have been, improve the q
uality of services that is provided, then increase and improve the market share they have in the service area, and lastly, focus on improving the hospital’s image (Rakich, et al., 2010). Strategic management is defined by thinking, planning, and managing organizations in a way that reflects the strategic momentum. Prior to building the organizational plan, the direction in which the company is headed should be contained into the strategy and displayed throughout the entity by their vision, mission, and goals (Borkowski, 206).
The strategy for MCSI’s expansion should be approached while taking a medium-term plan into consideration. Creating a medium-term plan allows for the organization to breakdown, long-term goals in shorter terms which can be broken down into more tangible goals or actionable stages (Borkowski, 2016). The plan can then be broken down into annual periods and due to the last element of medium-term plans being a financial forecast, leadership can focus on the costs and expenses of each action taken in the strategic plan (Borkowski, 2016). The strategic priorities should also be reflected in the budget so that the set targets are met while ensuring that resources are available for expanding their services are not misallocated (Borkowski, 2016).
Additionally, an alternative approach to ensure there is sufficient resources that will be promptly available to allocate toward the expansion plan, is to reassess the existing services that are currently being offered by the establishment. MCSI should reevaluate their list of services to retrench services that are not yet breaking even. Offering patients similar services such as adult psychiatric and geropsychiatric specialties when they can be referred out to a facility that is already offering these services, have only increased the expenditures of the organization. The attainment of an additional facility would negatively impact the culture within the organization as it would veer away from the committee that their mission and vision is leading them on. Culture has been defined as a leading topic in a business environment, the driving force behind human behavior, and influential component contributing to the level of success that is achieved through the strategic plan. Depending on the organization’s culture, periods of change such as during mergers, acquisitions, and/or growth can be the cause of the plan’s success or failure. Though periods of change can impact organizational objectives, negative culture can be corrected during the execution process by developmental efforts as long as it is aligned with the organization’s direction (). The culture that MCSI desires to have is still being built so the leadership team must ensure that employees feel supported and reassured that their employer has the same directional mindset to guide the company toward achieving the aforesaid goal. Doing this will ensure that the desired culture is established and reflected in arrangements that are acquired in the future (Borkowski, 2016)
Cost Reduction vs. Revenue Enhancement
Going forward, the leadership team should focus on their mission and strategic goals, staying aligned with those of MedTrust. MedTrust is a management corporation that specializes in the revitalization of community hospitals, while staying consistent with their operating philosophy. MedTrust believes that investing in preparing new plans and services is vital to fulfilling their hospital’s mission (Rakich, et al., 2010). Prior to deciding on cost reduction or revenue enhancement, MCSI should perform a SWOT analysis to better understand which venture would be best fitting for them. The analysis outlines the strengths, weaknesses, chances, and threats into an analytical framework that will help identify the challenges that may be faced when entering into a promising new market (Taylor, 2015). With this information, leaders of MCSI can strategically plan the actions they want to take to either decrease costs or increase revenue. If leaders choose to hold off on further expanding their services and focus on the ones that they already provide, they can raise their revenue as well as develop a more strategic plan to service their oncology patients (). In 1960, the New York Cancer Hospital merged with Sloan-Kettering Cancer Institute. The merger created Memorial Sloan-Kettering Cancer Center
STRATEGY AND STRUCTURE
(MSKCC) which later became New York Cancer Hospital in 1984. As a nationally recognized organization who specializes in all areas of oncology, MCSI was able to excel and stand apart from other oncology centers in the state with the development of educational plans. Doctors and scientists were able to gain experience, training, and knowledge in all areas of oncology as they conducted biomedical research to help patients and their families throughout each course of their treatment processes (Center, 2017). MSKCC offered a broad diversity of programs such as support groups, genetic counseling, pain and management courses, rehabilitation services, integrative medical services, as well as an aid to help navigate their lives successfully after having treatments. After taking time to evolve a more expert approach and save towards plans for expansion, MSCI can focus on building a better image for the medical center. Improvements can then help to get more revenue for all the departments that service their oncology patients as well.
Taking on a joint venture with the physicians was intended to provide patient services under MCSI’s umbrella while focusing on the principal aims. In terms of joint ventures, the goal was to have physicians keep their own patterns yet still preserve their private practices associated for managed care contracts which have still been very successful (Rakich, et al., 2010). With the utilization of Michael Porter’s Five Force Model to re-evaluate demands of the external services, leaders will be able to formulate their plan strategy. The structure which has shaped the industry follows five core strengths which are bargaining of suppliers, bargaining power of buyers/customers, threats posed by new entrants, threats from substitutes, and competition amongst the existing players (Porter, 1980). Keeping external conditions in mind, one can go back and revisit trends within the community to ensure that the desired results are then the leadership team can change the strategy that they put into action.