Strategic Analysis for Healthcare

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Strategic Analysis for Healthcare

Strategic Analysis for Healthcare

Chapter 25

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

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1

Strategy Selection

To begin the process of strategy selection, the analyst reviews the potential strategies identified in the Ansoff and TOWS matrices.

Many strategists place each possible strategy on a separate sticky note, so the strategies can be sorted and moved around into clusters.

The strategist searches for commonalities among the strategies.

Most likely, about 25 strategies can be grouped under four or five main headings.

The strategist identifies those main headings and places the appropriate strategies under each.

The main headings become “overarching strategies,” and the specific strategies from the Ansoff and TOWS matrices become “supporting strategies” or “substrategies.”

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

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Strategy Selection

In a strategy consolidation from the Ansoff and TOWS matrices, “Expand into adjacent counties,” “Expand into urgent care,” “Place satellite locations,” “Open cancer center,” and “Buy out private practices” could all be grouped together.

A title of “Facility Expansion” could be placed above these strategies, and that could become an overarching strategy.

Likewise, many Ansoff and TOWS example strategies could be consolidated under other overarching strategies, such as “Service Expansion,” for instance.

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

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Strategy Selection

Pursuing every good strategy is not recommended.

An organization likely will not have sufficient funds to pursue every option, and doing so would lead to a lack of focus.

The strategic options need to be culled and the most promising ones retained.

After the strategies have been consolidated, the analyst can evaluate the strategies at two levels.

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

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Strategy Selection

First, the overarching strategies can be compared against one another.

For example, the facility expansion strategy would be compared with service expansion.

At the second level, the substrategies under an overarching strategy can be evaluated and then either retained or discarded.

In the facility expansion example, the analyst would decide whether to retain or discard “Expand into adjacent counties,” “Expand into urgent care,” “Place satellite locations,” “Open cancer center,” and “Buy out private practices.”

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Health Administration Press

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Strategic Fit Assessment and the QSPM

To choose among the overarching strategies, the strategist constructs a quantitative strategic planning matrix (QSPM).

This matrix assesses each overarching strategy based on how attractive it is relative to the external factor evaluation (EFE) and internal factor evaluation (IFE) factors (see Chapters 10 and 18).

This assessment produces an attractiveness score (AS) and a total attractiveness score (TAS) for each strategy.

The strategy with the highest total attractiveness score is the strategy considered most appropriate for implementation.

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

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QSPM

To create the QSPM, place the external opportunities and threats from the EFE analysis and the internal strengths and weaknesses from the IFE analysis into the left column of the matrix.

Make sure you list at least ten external factors and ten internal factors. Include the weight from the IFE and EFE with each item.

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

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QSPM

The attractiveness score in the QSPM indicates whether each IFE/EFE factor is important to, has a significant impact on, or produces an “attractive” match with each strategy.

The scores are determined by analyzing each IFE/EFE factor and considering whether the factor makes a difference in the decision of which strategy to pursue.

If the factor does not make a difference, the attractiveness score is zero.

If the factor does make a difference, the strategy is rated relative to that factor.

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Health Administration Press

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QSPM

The rating scale, from 0 to 4, is as follows:

1 = not attractive

2 = somewhat attractive

3 = reasonably attractive

4 = highly attractive

0 = not applicable

The strategist assigns the attractiveness score based upon everything known about the organization and its competitive environment.

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

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QSPM

As an example on the next slide, the overarching strategy of facility expansion is compared to service expansion.

The weight multiplied by the attractiveness score assigned by the strategist yields the total attractiveness score.

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

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QSPM

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Health Administration Press

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QSPM

The entire IFE and EFE, containing all of the strengths, weaknesses, opportunities, and threats and their corresponding weights, is used.

Each item is issued an attractiveness score.

The attractiveness score is multiplied by the weight to arrive at a total attractiveness score.

The entire total attractiveness score column is summed for each strategy individually.

The strategy with the highest TAS is the strategy that is quantitatively most attractive and thus selected.

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Health Administration Press

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Assessing the Supporting Strategies

The supporting strategies within the overarching strategy can be assessed next.

Not all the supporting strategies will be appropriate, and some may be mutually exclusive.

Many strategists run a QSPM again on the supporting strategies and retain those with the highest scores.

Other analysts use research and intuition to determine which ones stay and which go.

The cost of implementing one supporting strategy might affect how many other strategies the company can afford to take on.

At the same time, multiple supporting strategies might be necessary for successful completion of the overarching strategy.

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Health Administration Press

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Consistency Check

Once strategies have been selected, they should be checked for consistency with the directional matrices discussed in previous chapters.

If the grand strategy matrix, SPACE matrix, and internal–external (I/E) matrix suggest a conservative strategy and the strategist has chosen an aggressive overarching strategy with aggressive supporting strategies, then something is wrong.

The inputs and decision making may need to be reconsidered.

Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Health Administration Press

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Facility ExpansionService Expansion

Opportunities

WeightAttractiveness ScoreTotal Attractiveness ScoreAttractiveness ScoreTotal Attractiveness Score

OpportunitiesWeight

1Expansion of Existing Services0.050

30.15040.200

2Additional Locations0.100

40.40040.400

3Greater Exposure and Branding0.050

40.20030.150

4Addition of Trauma Center0.025

40.10040.100

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