Deck 3: External Environmental Assessment: Law, Economics, Demographics, Technology

Question 1

Explain the term "systems thinking" and its relevance to successful execution of the strategic planning and management process.

Answer 1

$\bullet$ Systems thinking sees an organization as a collection of components that are closely interrelated with and dependent upon each other. Those interrelationships and dependencies extend outside the organization to other organizations, forces, and phenomena in the external environment. Any operational and strategic decisions made by the organization must take into account those connections. The organizational components and the challenges they face cannot be considered in isolation. When a detached approach is taken, important factors and influences are ignored, resulting in less successful strategies and incomplete problem solutions.

Question 2

What are the three basic components of an organization's external environment?

Answer 2

$\bullet$ The industries in which the organization is active and the competing firms that operate there.
$\bullet$ The markets in which the organization sells its products or services and the customers who make purchases there.
$\bullet$ The general environmental forces that may impact the organization's operations and the strategies that it tries to implement. These factors include market demographics, economic conditions, legal developments, new technologies, and cultural values and beliefs.

Question 3

List at least ten stakeholders the of a managed care organization (MCO). Stakeholders are persons or entities that have a stake in the success or failure of an organization.

Answer 3

$\bullet$ Employees
$\bullet$ Independent contractors or subcontractors
$\bullet$ Patients
$\bullet$ Employed and contracted providers (physicians and hospitals)
$\bullet$ Vendors and suppliers
$\bullet$ Pharmaceutical companies
$\bullet$ Biomedical researchers
$\bullet$ Competing MCOs
$\bullet$ Private payers such as employers
$\bullet$ Public payers like CMS (Medicare) and state Medicaid agencies
$\bullet$ Public health care regulators (DOJ, IRS, OIG)
$\bullet$ Private health care regulators (JCAHO, NCQA)
$\bullet$ State legislators
$\bullet$ Federal legislators
$\bullet$ General public
$\bullet$ Immediate neighbors of MCO facilities

Question 4

Describe five strategic benefits to an organization that carries out regular external environmental assessments.

Question 5

Describe a multi-step system that an organization might use to gather information about its external environment and apply to its strategic planning and management decisions.

Question 6

List and explain ten external environmental factors to which a 10-physician group practice should pay attention.

Question 7

List and explain ten external environmental factors to which a state Medicaid agency should pay attention.

Question 8

List and explain ten external environmental factors to which a large pharmaceutical company should pay attention.

Question 9

For the organization type in one of the previous three questions, indicate a source from which information might be obtained for each of the ten external environmental factors.

Question 10

There are several trends developing in the external environment of the health care industry with a potential to impact individual organizations. Two examples are the consumer-driven health care movement and the push to implement a nationwide integrated EMR system. You are responsible for strategic initiatives at a 70-bed community hospital. Pick one of these two trends, or another significant trend that interests you, and explain a) what kinds of information about the trend you would like to follow and gather, and b) what strategic decisions might be based on the information that emerges.