This paper examines strategic planning in health systems through two lenses: financial performance metrics and legislative impact. It analyzes return on investment (ROI) and return on assets (ROA) as financial measures of organizational capability, alongside non-financial metrics such as customer acquisition and satisfaction in healthcare settings. The paper then evaluates the Affordable Care Act (ACA) of 2010, focusing on its effects on healthcare workforce shortages and care delivery capacity. Finally, a SWOT analysis framework is applied to the National Strategy for Quality Improvement in Health Care, identifying key opportunities and threats and proposing strategies to capitalize on strengths while minimizing systemic weaknesses.
Two financial metrics that can be used to understand an organization's financial capabilities for strategic initiatives are return on investment (ROI) and return on assets (ROA). ROI metrics address two measures: resource investments and financial returns (Bloom, 2010). ROI metrics contribute financial discipline to innovation management and help protect and recognize the value of strategic initiatives, programs, and overall investment in modernization. Companies with highly effective and well-organized marketing demonstrate much better levels of measurement capability, with approximately half to three-quarters earning positive scores — normally two to three times the levels reported from the general base of marketers (Cave, 2007).
The ability to measure marketing performance and improve the allocation of marketing budgets clearly allows these companies to achieve more efficient and effective marketing. There is a strong correlation between marketing efficiency and effectiveness and the use of marketing ROI and profitability metrics to assess financial performance. When examining how users of marketing ROI metrics rate their own efficiency and effectiveness, a combined 79% indicate they are highly or somewhat effective and efficient (ME., 2009).
Return on assets (ROA) is based on a company's total assets — not just what the company owns outright. Return on assets is calculated by dividing net operating income after tax (but before other revenue or expenses such as interest payments) by total assets (Return on Assets, 2014).
Research shows that return on assets can be compared to other returns with similar or different risk profiles. For example, if a business is returning only 4% per annum (after tax) compared to, say, a 7% yield on a high-yield municipal bond, one could conclude that the business is underperforming given the risk involved in holding all assets in a non-liquid, privately held enterprise. Few investors would accept such a low rate of return in general, particularly when considering the risk of investing in a privately held business.
When it comes to non-financial measures, the healthcare industry continues to focus on improving the quality of patient care, reducing administrative and clinical costs, and becoming more patient-centric (Bloom, 2010). The collection and analysis of numerous process and quality metrics play an important role in these efforts by enabling hospitals, health centers, and other healthcare providers to identify areas for improvement and monitor and quantify performance. These metrics also empower consumers and insurance payers to make informed decisions when choosing among healthcare providers.
Customer acquisition is used as a non-financial measure in the healthcare field. Acquiring a customer, however, is only the first step. A healthcare organization that delivers value and retains the customer is where the real work begins. Research shows that obtaining a new customer is approximately 5 to 10 times more expensive than retaining an existing customer base.
In order to measure customer satisfaction comprehensively, a healthcare organization must account for all major touchpoints where the customer interacts with the organization. It must then select several sub-metrics — such as perceived quality and value, loyalty, and trust — to accurately assess satisfaction levels. These can be evaluated through a variety of tools such as surveys, observations, and focus groups. Neither financial nor non-financial metrics are considered more important than the other; both work together for the greater benefit of the organization. Without both, the organization would not be able to fully prosper.
One major legislative provision related to health care is the Affordable Care Act. The Affordable Care Act of 2010 (ACA) was projected to extend health insurance coverage to an estimated 30 to 34 million individuals. However, expansion of coverage is not an expansion of actual care, and this distinction has become increasingly apparent (Anderson, 2015). When Congress passed the national health law, it released a potential surge of newly insured patients into a delivery system that was already strained and fragile.
The American healthcare infrastructure had experienced workforce shortages for years and was not prepared to efficiently or effectively handle such a large influx of patients. Training new physicians, nurses, and other health specialists takes years — sometimes decades. Without increased graduates from medical and nursing schools and greater innovation in shared roles and responsibilities among physicians, nurses, and other medical specialists, individuals and families face longer wait times, greater difficulty accessing providers, reduced time with providers, higher costs, and new obstacles in care delivery.
A system surplus of demand was inevitable. Pent-up need from those who had been waiting for coverage and were drawn by the promise of free or heavily subsidized services was expected. While physicians, nurses, and other medical specialists naturally want to help those in need, the logistics of extended care delivery, current and growing personnel shortages, and limited resources inevitably undercut the good intentions of the policymakers who crafted the national health law (Anderson, 2015).
In practice, the transformational changes promoted by the law's advocates tended to create confusion and adversely affect healthcare workers and their ability to provide care. These changes raised regulatory burdens, expanded already heavy administrative workloads, reduced payments, imposed new penalties, and disregarded personal values and preferences. The added pressure further strained the healthcare sector. Together, these factors threatened access to and quality of care for all Americans, thereby undermining the President's promises and the stated purposes of those in Congress who passed the law.
Despite the best efforts of medical professionals and educators to grow the workforce over the preceding years, shortages were projected across every healthcare occupation. The anticipated supply of workers was insufficient to meet demand driven by population growth and the aging of the population (Bloom, 2010). With the new demand for medical services from the millions expected to enroll in Medicaid and the federal and state insurance exchanges, workforce shortages risked becoming severe.
Based on a 2012 review of state workforce reports and studies, every state clearly needed more physicians, with shortages in both primary care generalists and specialists (Anderson, 2015). All health professions were experiencing personnel shortfalls: dental, mental health, pharmacy, and allied health, among others. Even before the ACA's enactment, a confluence of pressures had already contributed to workforce challenges. The Affordable Care Act imposed additional stresses on an already strained healthcare labor force.
The resulting shortages posed a danger of increased illness and mortality, particularly for rural Americans. Addressing the issue would likely require a paradigm shift in educational admissions practices, increased staffing of personnel with rural experience, payment reform in both the private and public sectors, and a more favorable regulatory environment for medical practice, including tort reform. Health professionals grew concerned about the ACA's impact on their workforces, with many considering alternative opportunities and careers.
The primary purpose of strategic planning is to bring an organization into alignment with the external environment and to sustain that alignment over time (Goes, 2007). Organizations achieve this balance by evaluating new services and programs with the intent of maximizing organizational performance. A SWOT analysis for the National Strategy for Quality Improvement in Health Care serves as a preliminary decision-making tool that sets the stage for this work.
Key opportunities include: commitment and understanding at the senior management level to improve quality of care; the existence of policies and strategies for priority programs that highlight the importance of improving health service quality and establish targets and indicators for improvement; access to quality-related national and global experts; and availability of donor funding.
Identified threats include: insufficient investment in training, recruiting, and retaining human resources, particularly female staff; primary care services that do not reach the entire country, with discrepancies in services delivered and operating hours where they do exist; a poor rating system compared to other countries; inadequate budget allocations; insufficient numbers of skilled nursing staff; and the absence of a nationally applied salary policy.
The strategy to capitalize on these opportunities is expected to help ensure the rational application of different quality methods and streamline efforts through the introduction of priorities, targets, and milestones (Goes, 2007). By taking advantage of these strategies, organizations can also better coordinate measurement efforts to assess progress and improve collaboration among partners in the field. Improvement in these areas is a continuous process; no single organization has the assets and capacity to advance everything simultaneously, and progress takes time.
This strategic document sets out a plan of action spanning a 5-to-8-year timeframe. A shorter-term work plan covering five years has also been developed. It reflects the most significant and immediate health challenges and ensures that the necessary foundations for quality, measurement, accountability, and change are in place to enable further progress. An additional strategy is to improve the health and nutritional status of people in the community through quality healthcare services and the promotion of healthy lifestyles in an affordable and sustainable manner.
Organizations should also work effectively with communities and development partners to enhance the health and nutritional status of community members, with greater emphasis on women, children, and underserved areas of the country.
One strategy to address identified threats is to implement new training programs that support the human resources and training staff. One outcome of the combination of environmental demands, market forces, and system interdependencies is that healthcare delivery organizations must think carefully about their strategies. To minimize these threats, organizations must assess the specific set of environmental threats and opportunities they face. They must think more strategically in light of finances that will face increasing scrutiny due to the many demands generated by an aging population demographic (Ginter PM, 2009).
A new rating system will need to be developed based on treatment outcomes, efficiency, and quality. New strategies must be established to align with the healthcare standards of other developed nations. One approach is to increase the healthcare budget, as other countries have done, enabling organizations to better serve their communities (Goes, 2007). Increasing the budget will also fund new equipment needed to address patients' needs.
"Strategies to leverage quality improvement opportunities"
"Approaches to reduce workforce and budget-related threats"
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