Strategic Plan for Samaritan Medical Center: A Case Study

Strategic Planning and Organizational Structure

The process of formulating and implementing an organization's objectives and goals—taking into account the resources available and the internal and external environment in which the organization operates and competes—is termed strategic planning (Nag, Hambrick & Chen, 2007). In this context, strategy can be defined as the course of action that an organization develops through the optimum use of resources with the aim of achieving its long-term goals. Strategy also encompasses the process of providing direction, focusing efforts, and clearly defining the organizational setup so that a company can direct its resources and respond to a changing environment.

Since every strategy needs a plan, the planning of a strategy is defined as strategic planning. The collection, assimilation, and analysis of data that are used as inputs in the process of strategic planning are all parts of the planning process (Nag, Hambrick & Chen, 2007).

To create a strategic plan for an organization, it is first important to define the mission, vision, and goals of the organization. Every strategy is aimed at achieving those elements, and the plan is formulated with an understanding of what is to be accomplished using the organization's resources.

Linked to strategy formation and the achievement of an organization's mission, vision, and goals is the aspect of organizational structure and culture. The structure and culture of an organization define the way the company functions, and understanding both is necessary to determine whether a change in either aspect is needed to implement a new strategy (Sheehan, 2010).

Mission, Vision, and Organizational Design of Samaritan Medical Center

For Samaritan Medical Center, it is important to define and understand the organization's mission, vision, and goals in both the long term and the short term.

Situated in Watertown, New York, Samaritan Medical Center is a not-for-profit community medical center with 294 beds, offering a full spectrum of inpatient and outpatient healthcare services. The center serves the civilian and military community in the area through primary and emergency care as well as highly specialized medical and surgical services, including cancer treatment, neonatal intensive care, behavioral health and addiction services, and imaging services (Samaritanhealth.com, 2015).

The basic principles of Samaritan Medical Center are quality, compassion, and safety. To serve the long-term healthcare needs of the community, the center maintains inpatient and outpatient services and numerous community clinics and satellite testing centers. The 272-bed long-term care facility known as Samaritan Keep Home and the 288-bed long-term care facility known as Samaritan Summit Village are examples of the center's long-term community care efforts.

Mission: "Samaritan shall provide high quality, comprehensive, safe, and compassionate healthcare services to meet the needs of our civilian and military community" (Samaritanhealth.com, 2015).

Vision: "Samaritan will be recognized, foremost, as the preferred provider of Inpatient, Outpatient, Emergency, and Long-Term Care services in Jefferson County. Additionally, our health system will enhance selected specialty services to meet the needs of the North Country" (Samaritanhealth.com, 2015).

The values of the non-profit medical center are honesty, empathy, accountability, and respect, captured under the acronym H.E.A.R.T. The center strives to create a culture where quality care and service excellence are collaborative processes, accomplished in part by establishing standards of performance for all employees. The H.E.A.R.T. framework describes the behaviors necessary for employees and leadership at Samaritan Medical Center to provide care that is both safe and compassionate while supporting the broader community (Samaritanhealth.com, 2015).

The formal role configuration, procedures, governance and control mechanisms, and authority and decision-making processes of a firm constitute its organizational structure (Dugdale & Lyne, 2010). Organizational structures are typically built upon four basic principles: hierarchy of authority, specialization, standardization or formalization, and centralization. The aim of building an organizational structure is to achieve goals and objectives that fit the surrounding functional environment. Organizational structures typically exhibit division of work, managerial and non-managerial staffing, and defined flows of decision-making, responsibility, and information exchange.

Samaritan Medical Center follows a functional organizational structure. In a functional structure, a chief executive officer leads a limited number of corporate staff, with functional line managers overseeing important organizational areas such as production, accounting, marketing, research and development, engineering, and human resources. This structure groups reporting relationships by specialty or functional area. Its advantage is that staff are managed by someone with expertise in the same specialty, creating opportunities for career advancement within functional areas and motivating staff retention. The organization benefits from the long-term expertise and institutional knowledge of its staff, further enhanced by knowledge sharing and lateral job moves.

The primary disadvantage of a functional structure is that competition between different functional areas can result in poor communication and a limited understanding of what other departments contribute to the organization.

At Samaritan Medical Center, the CEO sits at the top of the management hierarchy. Various functional departments—including doctors, nursing, medicine, finance, and administration—are each headed by a functional manager who reports directly to the CEO. The CEO in turn reports to the Board of Directors (Samaritanhealth.com, 2015). The organizational hierarchy is as follows:

Board of Directors → CEO → Administration | Medicine | Finance | Nursing | Doctors

The organizational structure creates an environment of ownership among stakeholders and supports achievement of the center's mission, vision, and core values of accountability, empathy, honesty, and respect. Each functional area is accountable within the hierarchy, while each division operates with a degree of independence and reports to a single point of authority, making coordination from the CEO level more efficient (Kelly, Kelly & Kelly, 2006). This fosters mutual respect and supports the collaborative nature of the strategic plan. The structure is a system of tasks, workflows, reporting relationships, and open communication channels that link the diverse parts of the organization.

Organizational structure is the keystone that keeps a business functioning. It tells stakeholders how the organization is organized and how it works, how leaders are chosen, how decisions are made, and how participants are recognized. Healthcare organizations develop long- and short-term goals that translate into organizational growth, and strategic planning is essential when implementing change in an unpredictable healthcare environment (Grunig, Kuhn & Kuhn, 2005).

Present Strategy of the Organization

The target market for Samaritan Medical Center is the residents of the tri-county region (Jefferson, Lewis, and St. Lawrence Counties, as well as Fort Drum). Given that the surrounding area is predominantly rural, has a higher elderly population, and includes a large Amish community, approximately 20% of the population holds private health insurance, with the remainder covered by Medicare, Medicaid, or self-pay arrangements.

The beliefs and values of Samaritan Medical Center are central to the organization's ability to serve its community. Policies must be adhered to at all times. Violations can result in legal action against the organization or its healthcare professionals, leading to unexpected financial losses and a decline in community trust.

Environmental Analysis and Strategic Goals

Environmental analysis of any organization has two parts: internal and external environments.

Internal Environment Analysis

The internal environment of an organization helps determine the organization's readiness to respond to business requirements and how it can adjust its internal characteristics to suit the external environment (Kuratko, Hornsby & Covin, 2014). Internal environment analysis identifies the strengths and weaknesses present within the company, the resources available for business development, and the competencies that represent opportunities for growth. This analysis is conducted through a SWOT framework.

For Samaritan Medical Center, the SWOT analysis is as follows:

Strengths

Strong leadership with extensive knowledge and experience; a strong therapeutic environment; an effective marketing process; a consistently organized committee structure; and excellent results from CMS (Centers for Medicare and Medicaid Services) and TJC (The Joint Commission) surveys.

Weaknesses

A decrease in available inpatient beds due to high census and low availability; an increase in overnight stays for same-day surgeries; interdepartmental teams that need to be more efficient and patient-focused; and poor communication between departments.

Opportunities

Continued refinement of the pharmacy process to generate significant cost savings; providing a more efficient and responsive process for physicians and nurses; and creating a Short Stay Unit (SSU) to free up inpatient beds.

Threats

Compliance with Medicare regulations; and difficulty attracting nurses and physicians.

The SWOT analysis reveals that Samaritan Medical Center possesses extensive knowledge and experience, good leadership, effective marketing, and solid medical therapy and treatment facilities. The center also provides long-term health facilities for the entire community. However, the number of inpatient beds is proving inadequate for the population that depends on community healthcare, increasing pressure through longer overnight stays and demand for same-day surgeries. Difficulty attracting adequate physicians and nurses due to the rural location poses an additional threat. The continuation of pharmacy process refinement for cost savings and the creation of a Short Stay Unit represent meaningful opportunities. The organization must also ensure compliance with evolving medical regulations to avoid legal entanglements that could derail its strategic plans (Samaritanhealth.com, 2015).

External Environment Analysis

External analysis reveals opportunities present in the broader business environment that the organization can exploit, as well as potential problems related to technical, political, cultural, and economic factors that may impinge on growth. External analysis is coupled with internal analysis to form a strategized plan for growth. The organization must plan to combat external threats and take advantage of external opportunities using the resources identified through internal analysis (Khan & Khalique, 2014).

Two tools are used to analyze the external environment: PESTLE analysis and Porter's Five Forces.

PESTLE Analysis of Samaritan Medical Center

Political: The political environment affects the development of new plans and marketing decisions. Political stability is essential for any organization to function well. Samaritan Medical Center operates in a politically stable environment without interruptions to operations.

Economic: Economic factors are critical for any organization. Samaritan Medical Center must consider the financial capabilities of its clients when offering services and must purchase the resources needed to provide medical care. Operating in a region with predominant dependence on social healthcare programs, the organization must be highly sensitive to economic conditions (Samaritanhealth.com, 2015).

Social: Samaritan Medical Center operates within specific societal conditions that shape consumer needs and wants. The center must consider the demographic factors and preferences of its market to provide the services its customers need.

Technological: The medical field is rapidly evolving, and technology has made healthcare delivery easier, safer, and more economical. Samaritan Medical Center must keep pace with new treatment technologies and equipment to provide the best possible service at economical rates, especially given its non-profit status.

Environmental: Environmental regulations regarding the safe disposal of medical waste are increasingly stringent. Samaritan Medical Center must ensure it protects the environment and manages its waste responsibly to prevent harm to people or contamination of the environment (Samaritanhealth.com, 2015).

Legal: The healthcare facility must observe all required rules and regulations set by the Federal Government, state authorities, and various licensing agencies. Given concerns for patient health and safety, rules and regulations are updated regularly. Adherence to these rules prevents expensive fines, ensures stable operations, and maintains consumer trust (Gordon et al., 2000).

The PESTLE analysis shows that Samaritan Medical Center has the human resources, equipment, and operational flexibility necessary to achieve its strategic plan. It has already established a market share that it can build on through effective marketing and excellent service. The staff are dedicated to the organization's success, and the strategic plan is flexible enough to accommodate environmental changes.

Porter's Five Forces Analysis of Samaritan Medical Center

Porter's Five Forces is used to analyze the company's business environment and industrial context. The five forces that affect the market of a specific industry are competitors, new entrants, substitute products, customers, and suppliers. This tool helps identify market threats and supports the implementation of strategic management (Roy, 2009).

Threat from Competitors: Samaritan Medical Center operates in a market with numerous other similar and larger service providers. The center must develop strategies that differentiate it from competitors or that incorporate additional services. Stiff competition can also create problems in attracting adequate human resources. However, the center has meaningful differentiators—for example, its community clinics that reach patients unable to travel to the hospital, a service most healthcare facilities do not offer (Samaritanhealth.com, 2015).

Threat of New Entrants: The healthcare industry requires extensive expertise, financial capability, and planning, particularly for non-profit service providers. The high barriers to entry mean that Samaritan Medical Center does not face significant threats from new entrants.

Threat of Substitute Products: There are always alternative forms of treatment, and fee-for-service payment models or medical plans such as Medicare represent a realistic threat from substitutes.

Bargaining Power of Customers: Samaritan Medical Center seeks to reach financially vulnerable populations while also boosting revenue to sustain operations. Because patients can seek services from other providers, the bargaining power of customers is relatively high, meaning the center must develop incentives that attract and retain patients.

Bargaining Power of Suppliers: Suppliers have limited bargaining power given existing supply agreements with the center. Moreover, the availability of a large pool of suppliers reduces the risk of supply disruption. Hence, suppliers do not hold significant leverage in their relationship with Samaritan Medical Center (Samaritanhealth.com, 2015).