Healthcare Case Study Having Grown

¶ … Healthcare Case Study

Having grown in response to the need for patient care throughout northern Mississippi and Western Tennessee since its incorporation in 1981, Methodist Healthcare has grown into one of the top 50 integrated healthcare systems in the nation. This has been accomplished through a varied set of partnerships, alliances, and affiliations with larger integrated networks, most notably the University of Tennessee. Methodist Healthcare hospitals are the primary University of Tennessee teaching hospitals in the Memphis area. This affiliation is infusing Methodist Healthcare with a continual stream of state-of-the-art processes and techniques for treating the wide variety of practices supported by the integrated network of health care providers. The many partnerships and alliances, in addition, create a wide spectrum of services for Methodist healthcare to offer as well.

Methodist Healthcare has been fortunate in its financial performance, and has not had to face the reality of mass consolidation of hospital and care centers as other local healthcare providers have. To the contrary, Methodist Healthcare has seen Total Revenues climb to $933M in 2001 from $865M in 1999, and Net Income or Excess of Revenues and Other Support Over Expenses, climb to $16.3M. In addition Methodist Healthcare consistently has one of the highest occupancy rates of all local hospitals at 43.9% overall in 2001. Methodist Healthcare has also been able to successfully manage its Payor Mix so as to not be overly dependent on just a single source of revenue. In 2001 Medicare was 40.5% of total Gross Patient Charges, with 34.7% coming from Managed Care and Commercial providers. Medicaid/Tenncare was 18.9% of Gross Patient Charges, and Self Pay and other forms of payment were 5.9%. This distribution of Gross Patient Charges by source is a competitive advantage for Methodist Healthcare in that it is not overly dependent on a single source of revenue, including the state-funded Medicaid program. Additionally this translates into greater potential influence nationally due to the need for Medicaid payments to partially underwrite the alliance with the University of Tennessee. Finally, the customer-centric view of both relationships with patients and physicians is a key ingredient in Methodist Healthcare's success.

Environmental Factor Analysis

In scanning the external environment, Methodist Healthcare needs to keep both quantitative and qualitative factors in perspective, as they are in a leadership position in healthcare throughout Northern Mississippi and Western Tennessee. Due to the alliance with the University of Tennessee, Methodist Healthcare is also viewed as an emerging thought leader in many critical care areas including cancer, cardiac, neurologic, obstetric and gynecologic treatment methods. This leadership position connotes a significant level of responsibility and accountability to the public and the continual nurturing of trust in their healthcare expertise. From this perspective of community and thought leadership, here are the most critical environmental factors that Methodist Healthcare needs to continually monitor as part of its strategic planning efforts:

Financial condition of other healthcare providers in the area. This is critical to know constantly as if one of them is either acquired or ceases operations, Methodist Healthcare may be called upon to pick up their patient workloads. The ability of Methodist Healthcare to "flex" and serve these patients is critical, and having an advanced approach to knowing this is going to make their ability to be more responsive to patients and physicians affected by the closures even stronger.

Funding of each Payor Source at the Federal and State Level. This is also critical for Methodist Healthcare to keep monitoring as state programs like TennCare are often cut during budgeting cycles. Methodist Healthcare also needs to know the status of Medicaid over the long-term as well.

Nursing staffing levels and shortages across the region need to be constantly monitored. Methodist Healthcare needs to focus on knowing this situation monthly and also working to retain the nurses they have today, as there is a national nursing shortage that is very acute today.

Changing demographics, sociographics and psychographics of communities served. This is also critical for Methodist Healthcare to continually monitor, as they must know as much as possible about their patients and physicians, who are their primary customers. Knowing about demographic shifts which could include a significant rise in an aging population, rise in baby births for example would be very valuable for allocating resources to the specific communities with these demographic patterns. In addition, psychographics, or how patients see themselves as parts of groups, is also important in the defining of key marketing messages. An example would be the very active 20-30+ extreme sports fans and their medical needs, just as the 40+ weekend warriors and their needs. Lastly this data would be invaluable for defining preventative programs aimed at-risk teens.

Physician's Unmet Needs Survey completed bi-annually. The executive management at Methodist Healthcare discusses often in the case study being customer-centric. To fulfill this vision of being easy for the physician to work with, Methodist Healthcare needs to concentrate on what their unmet needs are and complete a focused series of surveys, including focus groups of physicians, to see what they need. If Methodist Healthcare can find out the unmet needs of physicians they can further their leadership in the medical community and therefore in the broader community.

Trust and transparency measures from the general pubic. It is too easy for many organizations to just think that if there aren't any problems that there is an abundance of trust in the publics they serve. Methodist Healthcare needs to actively seek out, on a regular basis, just how trusted they are and what they could to do be even more transparent.

Methodist Healthcare SWOT Analysis

The following is a strengths, weaknesses, opportunities and threats analysis of Methodist Healthcare:

Strengths

Excellent financial performance controls in place for managing costs relative to expenses.

Excellent distribution of Gross Patient Charges with a minimal amount of risk as there is not an overly strong reliance on just one source of revenue.

Community and thought leadership throughout the Northern Mississippi and Western Tennessee.

Strong following in the physician community including the ability to attract a variety of medical experts from a variety of disciplines to support the many practices in place.

Alliance with the University of Tennessee and the increased national prestige as a result.

Excellent perspective on just who their "internal" and external customers are is reflected in their strategic management process.

Weaknesses

Lack of consistency in gaining feedback from physicians and employees. They could be doing many more activities in this area.

Serving economically depressed areas in Northern Mississippi makes the task of managing risk and Accounts Receivable challenging.

Its IT architecture today is very disjointed and lacks integration. The planned move to a more integrated system is overdue. This lack of information management is a competitive disadvantage and slows responsiveness to customers.

Lack of a broader strategic care plan that makes a consistent strategy out of the many affiliations, alliances, and partnerships.

Opportunities

Expanding the ability to attract world-class researchers with the University of Texas affiliation needs to be explored.

Better physician listening and customer listening systems is a great opportunity to better understand how Methodist Healthcare can improve performance.

More of a monitoring of community demographics and health trends to align preventative programs to the needs of the community.

Making Methodist Healthcare one of the top 100 places to work for healthcare professionals in the U.S. To alleviate turn-over and increase retentions of top nursing and physician talent.

Threats

Funding cutbacks for Medicaid at the national level and Tenncare at the regional level would force a significant financial hardship in the company.

Becoming too invested in Northern Mississippi and potentially having to write off investments in that specific area of service. Methodist Healthcare needs to work with the University of Mississippi and Mississippi State University to get alliances created and bring greater levels of investment and healthcare to this economically challenged region of coverage.

Trying to be all things to all people given the breadth of coverage in the complete network today. The board of Methodist Healthcare needs to decide on just a few objectives and convincingly accomplish them.

The lack of a strong rural healthcare strategy has the potential to significantly increase costs over the long-term for Methodist Healthcare.

Methodist Healthcare Critical Success Factors

For Methodist Healthcare there are many critical success factors as their breadth of coverage and potential future strategies must be focused on a few key strategic objectives if they are going to be successful. Presented below are the most critical Methodist Healthcare success factors:

Knowledge of Physician's Unmet Needs. For Methodist Healthcare to continually be chosen as the hospital of choice, knowledge of physician's unmet needs to continually be understood and acted upon. Capitalizing on this knowledge will further differentiate Methodist Healthcare from other options physicians have in the region. This also supports the new vision statement and further differentiates Methodist Healthcare through being more closely aligned with physicians' unmet needs relative to any other healthcare provider.

Re-vamped Information System that integrates across all functional areas and centers on the patient. This is a major weakness for Methodist Healthcare today and needs to be addressed quickly with an comprehensive re-vamp of all systems that they are integrated with one another and give a 360 degree view of the patient.

Trust and transparency with the public. Given the leadership position that Methodist Healthcare has it is imperative that it cultivate trust as a core part of its branding strategy with the public segments and audiences it serves.

Financial management and cost controls in place and integrated new IT system and architecture. This is a major critical success factor for Methodist Healthcare to aggressively pursue as it moves to create a more unified approach to financial management across its many medical specialty areas.

Strategic Objectives of Methodist Healthcare

The following are the strategic objectives of Methodist Healthcare. For each of these objectives a strategy for each objective's accomplishment is provided below:

To clearly differentiate Methodist Healthcare in the market

Strategies for accomplishing this objective:

While this first objective is very broad, Methodist Healthcare needs to define who they are different for. Uncovering the unmet needs of physicians is a first step, and what's just as important is discovering how better to serve the patient. This includes finding what patients most want in a healthcare provider but aren't getting today. By aligning closer than any other healthcare provider with unmet needs, Methodist Healthcare will become more differentiated.

To implement an information systems strategic plan

Strategies for accomplishing this objective:

Badly needed, the IT administrators need to consider a Service-Oriented Architecture (SOA) that will serve unify all applications and provide a 360 degree, real-time view of the patients and their needs. This is very important for the physicians to have on-hand quickly.

To reorganize so that Methodist Healthcare has the right people in the right places with the focuses in the right places

Strategies for accomplishing this objective:

Specifically looking at the most broken processes first, Methodist Healthcare needs to re-define roles and responsibilities to make this a reality. It would be better phrased to say Methodist Healthcare will pursue best practices in the most urgent areas of patient care and physician empowerment. The core processes must first be evaluated and then re-defined for greater performance.

To review financial issues to determine how Methodist Healthcare will finance the business and changes in the system

Strategies for accomplishing this objective:

The key strategy here is to create an integrated financial management system that can specifically manage the costs per incident, cost per patient care strategy, and an indication of what's most needed to gain greater insights into profitable decisions on care strategies and coverage of key practice areas. The role of an integrated financial management system must be part of a broader SOA architecture that Methodist Healthcare needs to gain greater insights into the operation of the many practices the healthcare provider is in.

To emphasize Methodist Healthcare as a learning organization committed to placing resources in and paying a lot of attention to the education of Methodist Healthcare associates.

Strategies for accomplishing this objective:

Often healthcare providers are most harried and the least focused on how to train their staffs to take advantage of new developments in medicine. What is needed is a comprehensive knowledge transfer program with the University of Tennessee so that staff and associates; including physicians, get the latest developments, possibly first discovered in their own hospitals by U. Of T. researchers.

Evaluating the Marketing Mix at Methodist Healthcare

Of all aspects of what Methodist Healthcare is dealing with, their marketing mix needs just as much help as their IT platforms and infrastructure. While today the healthcare provider is experiencing success with key programs, they could be much more effective if they made better use of the classical marketing concept of the 4Ps. In evaluating their mission statement, the voice of the customer needs to come out much more clearly. Based on an assessment of its vision statement and the foundational role it plays in marketing, it is suggested that the vision statement be amended to say the following:

Methodist Healthcare is centered on the values of being a trusted advisor and source of excellent healthcare for our patients and a responsive resource for physicians. Our aim is to be a world leader in our chosen practices, enhancing the lives of our patients, physicians and associates in the process.

Products or Services

Methodist Healthcare needs to create a consistent series of services strategies and align with a core set of practice areas. Today they are too diffused through many alliances and partnerships.

Focusing on outpatient services and how to become a national leader in terms of best practices is badly needed as a competitive position.

Pricing

Aligned with the economic level of patients and underwritten by Medicaid nationally and Tenncare regionally, this is a strength today for Methodist Healthcare.

Consider patient outcare services analysis and the pricing needed to be competitive in rural markets served.

Promotion

Focusing on success stories in cancer research for example and furthering thought leadership is critical for Methodist Healthcare to make the most of its partnership with the University of Tennessee.

Promotion of "big enough to meet your needs but small enough to care" to counter any perceptions of being too big to care for every single patient. The focus on accountability also needs to be clear from this messaging.