Good Case Study About Strategy Implementation: Cabarrus Memorial Hospital
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Cabarrus Memorial Hospital (CMH) began operation on July 26, 1937. The original hospital had 50 inpatient beds and 19 employees. In 1940, the hospital expanded to a 150 bed facility. A second expansion occurred in 1951 and bringing bed availability to 339. Mr. Cannon, the manager of Cannon Mills, prepared the hospital to provide employees with superior human services. Cabarrus Memorial Hospital had expanded the accessibility of symptomatic and remedial cardiovascular administrations to the group (Swayne, 2008).
Cabarrus Memorial Hospital was devoted to providing staff with quality training. They were a partner of Duke University Medical Center, and it permitted new physicians to practice at Cabarrus Memorial Hospital. The objective was for everybody to have the best health awareness administrations. The issues confronting Cabarrus Memorial Hospital were to address the opening of another cardiovascular administration program, keeping in mind the end goal to continue the path of providing excellence in health care service execution.
2.0 Situational Analysis
a) An Environmental Analysis
Exhibit 2-3 Strategic Thinking Map of the Environmental Analysis Process
Figure 1: PEST Analysis
The hospital’s service area requires steady monitoring in order to continue to assess the feasibility of the specialized cardiac care unit. The local municipality of Cabarrus is the most reliable source of the area’s demographic information.
The shifting needs of the service area’s population makes the expansion a smart move to service the community. As the population continues to age and grow the hospital would be prepared to handle the increased demand for the specialized cardiac services.
The current environmental situation supports the proposed cardiac expansion project. The hospital would be making a sound investment by renovating to create the open heart surgical unit along with the required ten bed post care area now and preparing for the increased demand by the residents in their service area.
B) b) Service Area Competitor Analysis - Exhibit 3-1 Service Area Competitor Analysis
Service Categories: Since the hospital partnered with Duke there has been many gains in the areas of teaching.
Define the Service Area: The service area of Cabarrus Hospital is defined in the image below. The service area centers around the county of Cabarrus.
The proposed specialized cardiac care services would expand the hospitals service area as defined in the image below.
Create a Service Area Profile: The service area of Cabarrus is a dynamic area with a growing population. The population is expected to grow by 18 % in the next 10 years. The aging population is creating an increased demand for open heart surgeries. The at risk population of people aged 45-64 is expected to grow by 38 % in the next 10 years.
Service Area Structure Analysis: The service area has no alternative hospital offering open heart surgery. Residents of the service area are required to travel between 25 – 60 miles to receive the surgery impacting their recovery and increasing cardiac mortality in the area.
Synthesize Analyses: The service area of Cabarrus in demand for the cardiac care expansion and that demand will continue to grow as the area expands and ages.
C) None of North Carolina's 16 current open heart surgery programs right now in operation were situated in the Cabarrus Memorial Hospital administration territory. The nearest office was situated in Charlotte, nearly 25 miles away. Furthermore, patient reviews proposed that patients favored not to go to the Charlotte metropolitan territory for wellbeing administrations essentially because of expanded activity clogging and the craving to stay near and dear. Progression of tend to cardiology patients is considered basic. The patient’s quality of care increases when transportation distances are reduced.
This proposed development would proceed with a pattern of the healing facility expanding cardiovascular administrations to enhance the progression of consideration, the nature of consideration and patient fulfillment. Only two years already, the heart catheterization system had been made and actualized.
3.0 Strategy Formulation
Strategy Formulation starts with the Directional Strategies. Directional Strategies incorporate the Mission, Vision, Values and Goal Statements. The Directional Strategies set the system for resulting choice making. Cabarrus Medical Center's central goal is to "make and work a far reaching framework to give health awareness and related administrations, including training and exploration opportunities, for the profit of the individuals we serve" (Swayne, 2008). The vision articulation is "to be perceived as a pioneer in the change of health awareness conveyance and picked for the quality and estimation of administrations we give" (Swayne, 2008). The qualities upheld by the association "perceive that representatives are our most important resource" and state that fruitful workers need to make progress toward four center qualities for the association to be effective: Caring; Commitment; Integrity; and Teamwork. The Strategic Goal that will center the Strategy Formulation endeavors is to "extend the current blend of cardiovascular administrations to incorporate open heart surgery in the following three years" (Swayne, 2008).
B) The proposed addition of an open heart surgical unit could make use of the hospitals current cardiac catheterization laboratory. The proposed project would take years to fully implement. The specialized cardiac surgical unit could perform and estimated 400 procedures per year once it has reached its full operating momentum. The unit would require three dedicated cardiac surgical ICU beds and as seven telemetry beds to maintain its operations. The investment in this proposed project would produce a great return on investment for the hospital and prepare the institution to best serve the needs of their service area in the future.
C) Exhibit 6-10: Definition, Advantages and Disadvantages of Market Entry Strategies
The proposed business sector section technique that compares is "Reconfigure the Value Chain", actualizing this method will permit Cabarrus to change the way exercises or the grouping of exercises in the quality chain and accordingly changing how esteem is conveyed to the client. Actualizing this system pivots both on the preferences and detriments. This approach prevents us from appearing as a danger to our competitors while alowing us to appear favorable to our service area residents. The hospitals position as providing excellence in cardiac care services in response to the needs of the service area will place the hospitals excellence into a humble frame within the market.
The best situating method for this project is a Differentiation model. Applying this tactic will position the hospital as being the specialists in cardiac care and being responsive to the needs of their patients.
Strategy Formation Plan
The missions of CMH are to provide patients with the highest quality medical services. The mission is to provide care for all patients within the organizations defined service area. The hospital “in the past year had referred 117 patients to open heart surgery and 82 to angioplasty.” The goal was is to offer “full service” to best serve the needs of the people the hospital serves (Swayne, 2008).
Accomplish and keep up the ideal enrollment, fulfillment, and maintenance of understudies where ideal is defined by the academic institution. Position the scholastic projects of the school to address the issues of a changing health awareness environment mulling over understudy, superintendent, and CHS hierarchical objectives. Guarantee satisfactory monetary assets are accessible to maintain the academic institution and empower it to attain to its main goal.
Natural Growth technique includes fortifying the organization utilizing its particular vitality and assets. This is the procedure of business development because of expanding general client base, expanded yield every client or agent, new deals, or any blend of the above, rather than mergers and acquisitions (Swayne, 2008).
This structure of organization development is slower than others. However it has moderately low in advance expenses, making it an appealing choice for organizations looking for a safer approach. Adding to the organization's qualities through Natural Growth can make the hospital a substantial competitor in the health care environment. For example, an organization that ceaselessly commits its benefits to enhancing its quality-control office offers expanding worth to its clients, making it an inexorably difficult contender. The main disadvantage of the Natural Growth system is the time it requires to solidify growth. For instance, the hospital could invest years adding to a solid advertising group or it could procure a little showcasing firm that as of now has the staff and essential aptitude. The last approach requires generously more cash in the short term, which is the reason Natural Growth, may be the best alternative for some little organizations like Glitter.
Natural Growth methods exhibit a few dangers. Assume the hospital decides to invest time and assets into developing naturally. However, a significant contender chooses to seek after outer development procedures by converging with different organizations.
4.0 Development by merger or purchasing another organization
At the same time, the decision to expand requires consideration of the client base, reinvesting benefits in new resources for more prominent fiscal returns and the ability to best service the needs of residents in the service area. The expansion into other service areas will produce a ripple effect of higher costs and expectedly higher returns. The addition of a new service will speed the process of natural growth and bring into account a larger client base. In the consideration of possible options, a merger could also offer an opportunity for growth.
Where a merger creates an outer growth system. At the point when diverse organizations consolidate together into new corporate associations, such a procedure is known as mergers. A merger can happen in two ways: (an) Acquisition of takeover and (b) amalgamation.
Takeovers occur when one organization assumes control of another. Amalgamation occurs when two or more organizations of equivalent size or quality formally submerge their corporate personalities into a solitary one in an amicable air. In the case of Cabarrus, the hospital could consider taking over a small health facility to house the proposed cardiac care expansion. Creating a gain to the organization's perceived quality.
Gain by organization quality - They are so solid in such a variety of zones, that the gained organization gets the profit of a large portion of those qualities. An intense business quickening agent gains revenue by introducing a high quality service to the existing customer base. If the hospital could purchase a small health facility to house the specialized cardiac care services, the expansion would create an image of a condensed expertise facility.
Enhancing a product offering - this methodology has a few components from other securing systems. Adding the specialized cardiac care services enhances the services offered by the hospital creating an image of being an expert in the area of cardiac care. Using messaging that describes the hospitals as putting people first positions the hospital as caring. The hospital can further enhance the product (open heart Surgical expansion) by describing the product as being a response to the needs of the people residing in the service area.
4.0 Value Chain Mapping
These suggestions direct Cabarrus Memorial Hospital to continue to ensure the best administration quality paired with cutting edge medical services. The hospital has prepared a crisis room, coronary consideration unit with eight beds, cardiovascular catheterization and recovery (Swayne, 2008). The hospital is currently considering renovating a ten intense cardiac recovery beds and one suite for open-heart surgery. It is anticipated to purchase "three committed cardiovascular surgical ICU informal lodging telemetry beds" before the end of the third year with expectations to backing the new program of open-heart surgical operations extension.
Cabarrus would incredibly profit from planning a quality including administration and worth including bolster technique that is typical of the recommended suggestions for the Directional Strategies and the Expansion of Scope (Swayne, 2008). So, the association ought to execute the purpose of administration worth including procedure, as a result of the center of the clinic's foundation in the configuration of the vital arrangement in advancement.
Illustrated in the Implementation Matrix, are benchmarks for the completion of this expansion. Advancement reports will be explored by the authority group on a regular basis to track progress toward the targets.
5.0 Analysis Of The Feasibility Of The Open Heart Program Incorporating
The direct projected costs for the proposed open heart services are $2,364,214 in year 1, $3,217,739 in year 2, and $5,438,392 in year 3 (see Exhibit 19/14). The average patient in the proposed open heart surgical unit is estimated to stay in the hospital nine days with a projected charge per procedure being $40,957.
For the Department of Facilities Services for North Carolina to award the CON there needs to an 80% utilization rate for the cardiac surgery suite (Swayne, 2008). The proposed current open heart cases from Cabarrus County and Rowan County is only around 73% utilization. CMH is likely to upturn their present patient volume to reach the 80% occupancy requirement with the proposed open heart surgical services.
CMH could use the market advancement opportunity to expand their service area into Rowan and Stanley County. Lastly, CMH may upsurge their market position through the increase of advertisements and promotions to probable clients in Rowan, Cabarrus, and Stanley Counties.
Does the proposed program comply with the Cabarrus Memorial Hospital’s (CMH) mission?
Yes, CMH’s mission is to best serve the needs of all patients, and with an ageing population creating and increased demand for open heart surgery the proposed program is in the best interest of serving the needs of the hospitals service area residents.
Does CMH have sufficient infrastructure and financial resources/leverage necessary to add the program?
Yes, as written in the case study:
“The hospital had sufficient reserve funds to underwrite the renovation project and the additional equipment without borrowing money (p. 815).”
What is the competitive situation among other area hospitals that could impact the decision? Would they offer competition or cooperation to CMH?
The situation amongst other area hospitals further creates a need for CHM to create the open heart surgical unit. None of the competitors offer the service to the residents of CMH’s key service area. The other hospitals would offer cooperatitative services to CHM.
Is the hospital’s proximity to Charlotte an advantage or disadvantage? What about its affiliation with Duke University Medical Center?
The hospital’s proximity to Charlotte is both an advantage and disadvantage. The area has a large population but creates a diverse need for services. The affiliation with Duke University is a major advantage of CHM. The affiliation with Duke has led to many opportunities for the hospital to bring in top medical talent to provide the best quality of service for the patients.
What is the break-even number of cases for the cardio-vascular program at CMH?
The break-even number of cases for the proposed cardio-vascular program at CMH to reach its targeted revenue generation is 400 surgeries after a three year warm up period.
Is the current service area sufficient to sustain an open heart program?
With appropriate renovation the current service area is sufficient to sustain the proposed open heart program.
If the threshold population required for initiation of the program proved adequate what were the financial obligations and obstacles to success?
The financial obstacle to overcome is to establish a profit generating efficiency level. It will require time to train the additional staff to be able to serve 400 surgeries per year.
Should CMH offer comprehensive cardiac care?
After careful examination of the case study it is my opinion that the proposed comprehensive cardiac care would be a wise investment for the hospital. With an aging population to plan for the hospital would be prepared to handle the increased demand for open heart surgery long before the need arises.
What strategic options would you recommend as CEO to the Board of Directors of Cabarrus Memorial Hospital?
I would recommend a slower approach than the proposed plan in order to avoid the risk of allocating to much of the hospital’s space in the early phases of the expansion. The plan could be stretched to expand slower at first only dedication the operating room and two intensive recovery suits. The three year plan could then be stretched into a five – ten year plan. Ensuring that CMH is prepared to meet the needs of the aging population as the needs arise and maximizing the space allocated to the proposed plan.
J. Are there any other factors or concerns that could impact the board’s decision?
Factors that impact the board the most are the equipment and renovations required for the cardiac operations are always in place allowing the doctor to perform the highest quality of cardiac services. References
Swayne, L. E., Duncan, W. J., & Ginter, P. M. (2008). Strategic management of health care
organizations (6th Ed.). San Francisco, CA: John Wiley & Sons Ltd.
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