Healthcare Business and Finance

Healthcare Business and Finance

Introduction

Organisations operate within a three-tiered environment - internal, micro and macro. The environment is a powerful force acting upon the effectiveness of strategic decision making. Failure to take cognisance of the influence of the three-tiered environment can have disastrous consequences. The cross-impact matrix and the TOWS matrix are two strategic decision-making aids that improve effective decision making. When used in conjunction with creative problem solving methods they can provide the basis of a powerful management tool.

The Changing Nature of the Business Environment

The business environment can be thought of as being three tiered. At the first level is the internal environment comprising:

stakeholders (shareholders, directors, employees, and unions);

objectives (profit, non-profit);

culture and structure (entrepreneurial, professional, divisional, holding company); and

resources (large firm, small firm).

At the next level is the micro-environment comprising:

suppliers (equipment, material, premises, finance);

intermediaries (agents, wholesalers, retailers);

customers (end-user, trade); and

competitors (direct rivals, substitutes).

At the third level is the macro-environment comprising the following influences:

political;

economic;

socio-cultural; and

technological.

All of these factors influence the kind of strategic management decisions that have to be taken. In the situation of the Town Hospital case environment, stakeholders can exert a powerful influence over the priorities and direction given to courses of action. This often reflects the culture of the organisation and the kind of resources available to pursue organisational objectives. Unlike a profit making business, a state hospital, for example, does not have the objective of maximising profit but of providing high quality patient care. There are many influences that might prevent public services, for example, from becoming fully customer oriented. These include the fact that some public sector organisations are effectively monopoly suppliers; objectives may be multiple and contradictory - cut costs and improve efficiency simultaneously; and government often interferes in policy making. In addition, customers are not targeted and often have imprecise or conflicting needs. As a hospital's services are available to the general public it has to accommodate as best it can the needs of many different customer types, sometimes with unclear or conflicting needs.

At the micro-level, the shift to co-operative strategic alliances and networking has much to change the nature of competition in business and hence place a greater emphasis on strategic management to manage relationships. Indeed, relationship marketing and internal marketing have come to the fore as concepts and have equal place with the transactional viewpoint on marketing that has traditionally been adopted by most organisations. Consumerism and ethics have become a major issue with the customer so that all organisations have had to pay more attention to customer requirements in terms of product and service quality. In the UK healthcare market successive reforms by governments separated the role of purchaser from the role of provider and created quasi-markets.

In terms of the macro-environment, one of the foremost environmental influences on business organisations is technology. Rapid advancements in technology influence not only the products and services offered by firms to customers but also the work processes employed to produce ...