Cabarrus Memorial Hospital - Assignment 3 PDF

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This was an essay about the effectiveness of open-heart surgery at a particular hospital. ...

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Running head: CABARRUS MEMORIAL HOSPITAL

The Case for Open Heart Surgery at Cabarrus Memorial Hospital Dorothy Moses Professor Donna Levesque Health Services Administration Capstone – HSA 599 Strayer University Assignment 3 June 17, 2019

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Abstract This paper diagnoses the pros and cons of establishing an open-heart surgery program at Cabarrus Memorial Hospital. It details factors and analyzes the program’s compliance to the hospital’s mission. This paper will also scrutinize Cabarrus Memorial Hospital’s infrastructure and financial resources/leverage to determine if they are substantial enough to undertake a new program as well as describe the change in service area required for the cardiovascular surgery service. This analysis will also detail alternative strategies that the board should consider before making a “go/no-go” decision on the possible addition of the open-heart program. Key Words: Cabarrus Memorial Hospital, mission, infrastructure, financial resources/leverage, alternate strategies

The Case for Open Heart Surgery at Cabarrus Memorial Hospital

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The open-heart surgery program does comply with the hospital’s mission. The mission of Cabarrus Memorial Hospital appears to be based on helping those in the community and others closely surrounding Cabarrus County. In keeping up with its competition and affiliating hospitals, Cabarrus Memorial Hospital would like to offer services, such as open-heart surgery to those who would otherwise would have to travel long distances for the procedure. Offering such a procedure however would increase Cabarrus Memorial Hospital’s patient quota. Cabarrus Memorial Hospital Mission The history of Cabarrus Memorial Hospital (CMH) stated in the text (Swayne, Duncan & Ginter, 2009), provides proof of Cabarrus Memorial Hospital’s mission for growth and expansion. Cabarrus Memorial Hospital, from the time that it was established and opened its doors for service, number one objective was to increase beds and to modernize technology and equipment for better performance and health care delivery. The area’s largest employer, Mr. Charles A. Cannon, and other community leaders provided guidance which facilitated rapid growth and helped CMH to achieve its goal of being the very best in health care delivery. However, Cabarrus Memorial Hospital was lacking a program that could maximize it revenue and profit: an open-heart surgery program. Cabarrus Memorial Hospital’s Infrastructure and Financial Resources/Leverage Cabarrus Memorial Hospital has sufficient infrastructure and financial resources/leverage necessary to add the program. “Cabarrus Memorial Hospital had several educational affiliation programs and extensive in-service and continuing education programs, including a unique teaching arrangement with Duke University Medical Center”, (Swayne, Duncan & Ginter, 2009, p.805). Because of the affiliation with Duke, Cabarrus Memorial Hospital acquires skills and connections that provide the facility with a huge competitive advantage.

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Cabarrus Memorial Hospital receives guidance from the largest employer in Cabarrus County. Through this guidance, Cabarrus Memorial Hospital has been provided financial assistance leading to 457 beds from 1937 to 1982 (Swayne, Duncan & Ginter, 2009, p.805). The infrastructure and financial resources have made it possible for Cabarrus Memorial Hospital to add the much-needed open heart surgery program. Cabarrus Memorial Hospital Competitive Situation The competitive atmosphere among other area hospitals could deter the decision to add the program. The 457 beds that Cabarrus Memorial Hospital has would not be enough to accommodate the program. The projections clearly showed the growth of the population in Cabarrus County. Funding for the renovations to accommodate the various service components would have to materialize from a hike in health care charges at Cabarrus Memorial Hospital or a sponsor. The capabilities of Cabarrus Memorial Hospital and its new program would only be conceivable if the finances could be procured without exacting them from an increase in charges for services to its patients. Because Cabarrus Memorial Hospital had no history of performing such a procedure, its open-heart surgery clientele was non-existing. Surrounding hospitals had a competitive advantage over Cabarrus Memorial Hospital because they already had an established open-heart surgery program and an excellent performance reputation. Change in Service Area at Cabarrus Memorial Hospital The additional cardiac services Cabarrus Memorial Hospital is considering to offer are already provided at the other community hospitals. Those hospitals have service areas comparable in size to that of Cabarrus Memorial Hospital. Thus, while Cabarrus Memorial Hospital goes through renovations, those patients needing open heart surgery or coronary

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angioplasty would continue to be transferred to other hospitals in the region. As a result, Cabarrus Memorial Hospital risks a great chance of losing its patients to the other hospitals due to potential patients building a relationship and familiarity with other hospitals. Cabarrus Memorial Hospital should evaluate its market entry strategy so that patients and families of patients needing open heart surgery would feel comfortable and confident of the outcome. CMH Alternative Strategies The alternative strategy the Board should consider before making a “go/no-go” decision on the possible addition of the open-heart program should be pulled from adaptive strategies. Adaptive strategies are pertinent in deciding whether to expand, reduce, or maintain scope. These strategies should be completed once the direction of Cabarrus Memorial Hospital has been set or reaffirmed. The Board should consider some of the other alternatives to what Cabarrus Memorial Hospital is currently utilizing so that the open-heart surgery program will evolve. Currently, the Board of Cabarrus Memorial Hospital is utilizing horizontal integration. If the Board should consider vertical integration, the hospital will not only offer a range of patient care and support services in a functionally unified manner, it will increase comprehensiveness and continuity of care while simultaneously controlling the channel of demand for the open-heart surgery program. Vertically integrating Cabarrus Memorial Hospital would be beneficial by allowing management to ensure supplies are of quality and delivered efficiently. “Vertical integration is the fundamental adaptive strategy for developing integrated systems of care and is central to many health care organizations’ strategies,” (Swayne, Duncan & Ginter, 2009, p. 206). Market development is a strategy that will assist Cabarrus Memorial Hospital in achieving greater volume through service area expansion or by targeting new market segments within its current area. Cabarrus Memorial Hospital is fairly strong in the market, has a growing

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market, and has good prospects for long-term growth due to its affiliation with other hospitals in the area. Vertically integrating Cabarrus Memorial Hospital will reduce costs which will enhance its competitive advantage. Harvesting strategy will allow Cabarrus Memorial Hospital to reap the maximum shortterm benefits of the open-heart surgery program if it is not successful. The Board should contemplate the economic collapse of today and as well as consider how Cabarrus Memorial Hospital could suffer if the program does not receive the funding and interest that it thought it would receive. Harvesting will allow Cabarrus Memorial hospital to exit in an orderly fashion if there is a declining segment of the market by having a planned downsizing method. The status quo strategy is another alternative the Board of Cabarrus Memorial Hospital should consider. “In this situation, the organization has secured an acceptable market share and managers believe the position can be defended against competitors,” (Swayne, Duncan & Ginter, 2009, p. 215). Hard economic times can affect anyone negatively. If Cabarrus Memorial Hospital or any of its affiliates were to suffer from economic hardship for any reason, the status quo strategy will help with maintaining market share and keep services at their current level. The Board should consider the environmental influences that may affect the products or services of the open-heart surgery program to determine when significant change is imminent. The environmental influences could have an impact on penetration. The Board should think about how to market effectively and inexpensively. Marketing is important because it will make the public aware of the new service, but it can be costly, forcing existing and potential patients to absorb the costs. “A market penetration strategy is typically implemented by marketing strategies such as promotional, distribution, and pricing strategies, and often includes

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increasing advertising, offering sales promotions, increasing publicity efforts, or increasing the number of salespersons,” (Swayne, Duncan & Ginter, 2009, p. 217). Cabarrus Memorial Hospital’s affiliates could undermine the hospital by competing even harder to keep the flow of open heart surgery patients from Cabarrus Memorial Hospital. Duke and the other hospitals with an established open-heart surgery program could capitalize on the fact that they have phenomenal open heart surgery outcomes and initiate an aggressive penetration strategy against Cabarrus Memorial Hospital. The Board of Cabarrus Memorial Hospital must not underestimate or place complete trust in its affiliates because money talks and can influence change. The Board of Cabarrus Memorial Hospital should reflect on the product life cycle analysis. “Product life cycle analysis can be useful in selecting strategic alternatives based on the principle that all products and services go through several distinct stages,” (Swayne, Duncan & Ginter, 2009, p. 249). Product Life Cycle can assist the board in answering questions about whether the addition of the open-heart surgery program is necessary at this present time and what might be the best market entry strategy for the new program. Product Life Cycle will also help the Board with not only examining the internal environment but the external environment as well. Conclusion Before and after the open-heart surgery program becomes a part of Cabarrus Memorial Hospital, there should be a program evaluation. Cabarrus Memorial Hospital should really be concerned with having a competitive jump on the other hospitals in the area. Even though Cabarrus Memorial Hospital is in a market share with the other hospitals, program evaluation should be important. Despite the fact that Cabarrus Memorial Hospital and its affiliates are

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public community hospitals, they should develop explicit strategies and evaluate the adaptive strategic alternatives open to them.

Running head: CABARRUS MEMORIAL HOSPITAL Reference Swayne, L. D. (2009). Strategic Management of Healthcare Organizations. San Francisco: Jossey-Bass.

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