HSA 4938 Palm Beach State College PCLI External and Internal Analysis

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Please correct the comments on this paper by providing the information missing. Only correct page 7. Paper name phase two Nancy corrected version. A case study, the book are listed for more information and Another paper is provided as example. other research may also included.

the revision of this paper is about (conducting a service area structural analysis, you will see in the project format template a table you will use that table to conduct this particular analysis. Also when doing your analysis using porter 5 forces u should address each of the forces as a positively or negatively. Positively by finding opportunity and negatively by detecting the threat)

Book : Strategic Mmanagement of Healthcare Organizations 8 edition ISBN 9781119349709 page 86 ....96

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Running head: EXTERNAL AND INTERNAL ANALYSIS Phase Two: External and Internal Analysis Team Name HSA4938 Palm Beach State College 1 EXTERNAL AND INTERNAL ANALYSIS 2 External Analysis Issue Map Categories of Issue Issue Map General Health Care SystemEnvironmentUnited States United States Service AreaGadsden, AL Economic In 2018, education funding increased in three states, allowing teachers to get a pay raise (Kidd, 2019). In 2019, U.S. increases tariffs on Chinese imports (Weijian, 2019). In 2019, the employment rate in the U.S. increased by 61 percent (Trading Economics, 2019). U.S. stocks fluctuate as trade war fears intensify (Weijian, 2019). Several states are suing U.S. government over the loosening of federal regulations for the Environmental Protection Agency (EPA) (Kidd, 2019). Healthcare costs continue to rise with medical goods/services and higher Medicaid costs being the main culprits (Vogenberg, 2019). Company mergers begin to rise as pressure to optimize healthcare delivery intensifies (Vogenberg, 2019). Motus Integrated Technologies built new manufacturing facility and created 90 jobs (Business Facilities, 2019). Median household income in Gadsden is $30,925, a 1.41% growth from the year before (DataUSA, n.d.). 84.8% of the population of Gadsden has health coverage (DataUSA, n.d.). HIPAA violations and data breaches continue to rise resulting to recordUninsured citizens setting fines and have declined by settlements 6.25% from 16.2% to (Vogenberg, 2019). 15.2% (DataUSA, n.d.). In 2019, the drug market has expanded and is expected to bring in more than $1 billion in sales by 2025 (Vogenberg, 2019). EXTERNAL AND INTERNAL ANALYSIS Social/Demographic 3 The old-age The aging population The Gadsden, AL dependency ratio is in the U.S. is putting a population is expected to rise to greater demand on the currently at 35,832, a about three and a half health care system 1.11% decline working-age adults to when it comes to (DataUSA, n.d.). every retirement aged level of care. person by year 2020 (U.S. Census Bureau, 2018). The ethnic composition of the population is composed of 20,200 white residents, 12,400 black residents, 2,160 Hispanic residents, 324 Asian residents, 105 American Indian residents, and 53 other/mixed residents (DataUSA, n.d.). The non-Hispanic, White population is projected to shrink in the coming decades from 199 million in 2020, to 179 million in 2060 (U.S. Census Bureau, 2018). Legislative/Political The United States is divided politically. There is a border crisis going on with the current sitting president demanding funding to build a wall on the Mexico border (Williams, 2019). States have adopted new strategies relating to the accessibility, coverage and regulation of substance use treatment programs and facilities (NCSL, 2019). Health insurance coverage and affordability is still a top concern across the healthcare industry (NCSL, 2019). Alabama passed a bill deeming it illegal for firms to pay different wages based on race or sex (Lyman, 2019). Alabama legislature approved a bill that requires public colleges to develop, adopt, and enforce a policy on free expression (Lyman, 2019). Technological Drones are now being utilized in delivery companies such as Technology has allowed organizations such as the World Health Organization Medical centers in the Gadsden area offer services that EXTERNAL AND INTERNAL ANALYSIS UPS (Premack, 2019). Artificial Intelligence is becoming advanced and being implemented in many organizations. 4 (WHO), to create massive databases that holds a massive amount of information (Healthcare IT, n.d.). utilize advanced methods of technology. Telehealth is a new technology that helps improves efficiency of communication between healthcare provides, clinics, and patients (Scherman, 2019). Competitive The United States is losing ground on the global scale when it comes to competitiveness but still ranks 2nd on the innovation capability pillar (Bains, 2019). Healthcare organizations are participating in mergers with other organizations increasing the competitive environment in their location. In the Gadsden area, there are multiple hospitals and clinics that offer products/services over one another thus creating a highly competitive environment. Validation of the Strategic Assumptions Performance and general environment trend/issues. The trends and issues that have adversely affected Riverview Regional Medical Center are mainly due to their close industry competitors. The medical center is constantly trying to retain and gain patients, but it is constantly getting overshadowed by competing hospitals such as: Gadsden Regional Medical EXTERNAL AND INTERNAL ANALYSIS 5 Center and Mountain View Hospital who both offer resources and services that Riverview does not. Performance and health care system trends/issues. Riverview Medical Center is passionate about the level of care that they give to their community. Currently, the medical center is working to find new, innovative ways to improve their operations. One issue that is affecting their performance is the lack of specially trained doctors for their Intensive Care Unit (ICU) (The Leapfrog Group, n.d.). As one of the most important parts of the hospital, the ICU requires specialized doctors who have advanced training in intensive or critical care. Currently, Riverview is lacking in that area and it has caused their performance level to decrease. Performance and service area trends/issues. The service area surrounding Riverview Medical Center is made up of mostly women with gap being 7.98% (DataUSA, n.d.). As the population continues to grow, women will be in a higher demand for obstetrics services that Riverview does not provide. The women of the population are encouraged to go to other medical centers that provide those services and therefore are getting their full-service care from those organizations. This is adversely affecting Riverview because not only are they losing clientele, they are missing out on potential gains in revenue. Effect of new technology developments. Currently, advances in technology in the healthcare system is at an all-time high. New surgical robotic machinery allows surgeons to be more precise, many healthcare organizations have implemented electronic medical records to allow easier access to patient information, telemedicine is now available to patients in most states, and many organizations are now working under a cloud-based system that allow patients to view their records outside of the facility (Healthcare Business Tech, n.d.). Riverview offers state-of-the-art heart care through the use of advanced technology that allows them to properly EXTERNAL AND INTERNAL ANALYSIS 6 diagnose and treat their patients (RRMC, n.d.). They are constantly searching for new ways to adapt to the everchanging technological advances in the health care industry. That being said, Riverview is limited to the amount of technology that they use due to the limited number of services that they provide. They do not provide virtual care (telemedicine) to their patients which can be a disadvantage for them because the virtual care industry is expected to bring in accelerated growth over the next year (Roth, 2019). Many individuals are open to trying out virtual care and Riverview would benefit greatly if they were to add on this service. Not only would patients have access to their physicians outside of the hospital, they can be provided with other options to improve their overall health. Legislative/Political environment changes. Politically, the United States is very much so divided. A big problem that has been ongoing since the last election is healthcare reform, which has each side up in arms about which route to take. The Trump administration has been working hard to repeal and replace the Affordable Care Act (ACA) but so far have been unsuccessful in finding a new plan. However, recently President Trump signed an executive order that requires the Department of Health and Human Services (HHS) to create regulations that will encourage Medicare Advantage plans to offer new services and benefits. The proposals that HHS is supposed to develop include: expanding access to Medicare medical savings accounts, allowing plans to offer access to telehealth services, change the payment model to allow beneficiaries to receive savings or rebates for high-quality care, and so on (Health Markets, 2019). Effect of new local, state, or federal regulations/laws. Many hospitals are struggling financially due to low reimbursement rates. With this problem being a concern for states such as Alabama with the majority of their hospitals operating in the red, the Centers for Medicare and EXTERNAL AND INTERNAL ANALYSIS 7 Medicaid Services (CMS) recently announced that the federal government will grant more funds to hospitals who are operating in the bottom 25% of the country (Bryan, 2019). Alabama has more hospitals in the bottom 25% than any other state in the country so this is a big deal for the state. By doing this, Riverview Regional Medical Center will benefit some from this new regulation and could potentially gain back the funds to re-build their Women’s Pavilion and gain more clients. New economic issues. Currently, tariffs and talks of a trade war with China is a growing concern in the U.S. Placing high tariffs on goods coming from China not only would affect companies who import goods from that country, it would affect the healthcare industry as many healthcare products are imported from China. The U.S. Medtech company experienced about $836 million in tariffs when the Trump administration first implemented them (Perriello, 2019). A lot of medical supplies (MRI machines, X-ray machines, surgical instruments, etc.) are coming in from China every year and with the new tariffs being put into place, the price for medical equipment will increase by roughly $400 million nationwide (Varas & Hayes, 2018). These costs will affect certain hospitals and could lead to managed care problems that will impact patients without insurance. Service Area Structural Analysis Five Forces Threat of New Entrants Service Area Structural Analysis Forces Driving Service Area Conclusion Competition There are several medical centers High. The threat of new within a 10-mile radius that, based on entrants is likely to stay high the services they provide, have a as the competing medical competitive advantage over centers are continuing to Riverview Medical Center. Two of service more patients and those medical centers offer services population and the economy that Riverview does not and of Gadsden, AL is no longer ultimately takes on new patients that increasing at a steady rate. Riverview could have had if they offered those same services. EXTERNAL AND INTERNAL ANALYSIS Intensity of Rivalry Services that are provided at the competing medical centers have them utilizing techniques such as process innovation to improve the way they are delivering services and creating strategies to set themselves apart from the rest. Threat of substitutes The threat of substitutes as it pertains to services provided is high due to the centers retaining their patients through patient satisfaction. Bargaining Power of The bargaining power of the patients Buyers (Customers) is high in regards to The Emergency Medical Treatment and Labor Act (EMTALA) and government health care programs that requires patients to receive treatment. However, the power of choice can be limited due to managed care restrictions. Bargaining Power of Bargaining power of suppliers is high Suppliers due to new technologies that can improve the efficiency of care provided. Depending on the managed care contracts for reimbursement for the physicians in the medical centers, the amount of quality care given by physicians can be affected. 8 High. Rivalry is likely to remain intense as the competitors are providing diverse services, creating more strategies, and bringing in more patients. High. Patients will continue to frequent the competing centers due to services provided. Medium. Patients have the ability to demand coverage but at times certain managed care plans can dictate the kind of service they will receive. High. Due to the types of services provided that require upgraded technology and the reimbursement level that dictates the quality of care that is given. Internal Analysis The Value Chain Service Delivery. Pre-service. Riverview Regional Medical Center has been operating within Gadsden, Alabama, since 1917 (About Us, 2019). Throughout the years of its operation, Riverview Regional has managed to be consistently ranked as one of the top hospitals in the Gadsden Area along with high patient satisfaction scores and accreditations (About Us, 2019) Riverview Regional Medical Center primarily provides services for specialized care and complimentary services and programs. These services and programs include Wound Care, a Hyperbaric Center, EXTERNAL AND INTERNAL ANALYSIS 9 a Heart and Vascular Center, a Sleep Lab and an Imaging Center (About Us, 2019). To help service their patients Riverview Regional offers patients the ability to expedite their admission process by offering the option to complete pre-registration online or over the phone (Your Hospital Visit , 2019). This service not only helps patients to skip certain steps upon arrival, but it also helps the hospital to service more patients quickly and efficiently. In addition, RRMC offers patients access to an online portal, MyChart by Prime Healthcare, where they can view their medical records (My Chart Patient Portal, 2019). This online portal gives patients the ability to review their health summary, lab results, pay bills online, view their account summary and view MyChart accounts from other facilities while storing all their health information in one location (My Chart Patient Portal, 2019). After service. Riverview Regional has become a large staple in their community, who takes pride in offering help to those who need it. After a patient is discharged from Riverview Regional Medical Center, they are given the option of speaking with social workers, physicians, and the resource management department for guidance (Your Hospital Visit , 2019). If a phone call is not sufficing, they also offer a variety of healthcare assessments ranging from Alcohol use to Type 2 Diabetes. These free health assessments will provide patients with personalized, confidential information that will help them to take preventive steps to prevent illness (Health Assessments, 2019). Community events and educational seminars are offered to give current, past, and future patients tools and information to lead a healthier, long-lasting life. Additionally, they provide access to Nutritional counseling and education and Corporate Wellness for companies to help improve the health of their employees (Well Being Services, 2019). All these combined allow for Riverview Regional Medical center to offer their patients all-around service care EXTERNAL AND INTERNAL ANALYSIS 10 Point of service. Although healthcare is a very profitable business, most organizations hold the importance of providing quality care to patients as more of a priority instead of monetary gain. As part of their service to the community, Riverview Regional Medical Center provide financial assistance to those who are underinsured or uninsured (Financial Assistance , 2019). Financial Counselors within this program work hard to help patients find solutions to help them cover the cost of care that was provided. For patients insured, Riverview Regional has a list of standard pricing on their website for the patients review (Financial Assistance , 2019). Depending on the type of insurance the patient may have, these prices can vary when the actual bill arrives. This also applies for those who are receiving Medicaid or Medicare. Designated staff is assigned to these patients to help them understand their pricing and eligibility for these programs. Support activities. Organizational culture. Organizational culture. Organizational culture is “shared values, norms, artifacts, and assumptions that serve as a guide for behavior; made up of cognitive and emotional cultures” (Peter M Ginter, 2018, p. 366). At Riverview Regional Medical Center, they pride themselves on providing compassionate and quality care to their patients. This organization values patient safety, medical excellence and customer service above all else (Mission and Values, 2019). All staff does their part in ensuring patients feel welcomed, respected, and cared for. Organizational structure. Organizational structure refers to how a business is run and operated. There are four different organizational structures, functional, divisional, matrix, and combination. Riverview Regional Medical Center follows a combination structure. They utilize both a functional and matrix structure. A functional structure is based on “primary activities or EXTERNAL AND INTERNAL ANALYSIS 11 processes required for producing the product/service of the organization” (Peter M Ginter, 2018, p. 370). In their leadership team, aside from their CEO, it is broken up into certain department heads. Their leadership team consists of the Chief Medical Officer, Chief Nursing Officer, and Chief Financial officer. The people within these positions are responsible for making the large operational decisions of the organization (Usmani, 2019). Underneath those within the leadership team are those within Human Resources, Administration, and Finance. They are responsible for the decisions that affect both staff and patients regarding rules, policy, pricing, and treatment (Usmani, 2019). Staff and department heads that operate within each of their departments, would be considered in the last level of their organizational structure. They carry out the services provided and provide Riverview Regional Medical Center patients with exceptional and quality care. Additionally, Riverview Regional Medical Center operates on a matrix structure. A matrix structure is “an organization structure based on the organization’s projects or programs where centralized functional specialists interact with and provide services to project or program teams” (Peter M Ginter, 2018, p. 372). This structure applies because Riverview Regional Medical Center specializes in emergency medicine and heart and vascular care. They also branch off into over seven other departments like neurology, wound healing, orthopedic, and sleep care. With so many departments and each one having a department head, this can lead to the confusion that is often associated with matrix structures. This confusion is because “employees are often confused on priorities and who is the boss” (Peter M Ginter, 2018, p. 372). However, it is still properly managed because they utilize a combination structure to reinforce the roles and procedures required. EXTERNAL AND INTERNAL ANALYSIS 12 Strategic resources. Strategic resources “include financial, human, information systems, and technological assets of the organization” (Peter M Ginter, 2018, p. 374). Riverview Regional Medical Center utilizes many different advanced technologies to help deliver their services to their patients. Some of these technological advances include a new 64 slice CT Scanner, hyperbaric oxygen therapy, and the new Impella 2.5 procedure (Medical Services, 2019). All of which aid doctors in effectively detecting and treating life-threatening illnesses, treating difficult wounds that threaten lives, and providing those with intensive heart problems with a potential solution. Their technological advances also allow the use of an online chart portal for their patients. This makes it easier for patients to access pertinent information such as bills, lab results, and patient history. Lastly, Riverview also offers a new way of taking MRIs for their patients without enclosing them in traditional tunnels. This system is called the Hitachi Oasis™ 1.2T scanner (Medical Services, 2019). This scanner has an open design, therefore allowing those who suffer from anxiety when taking an MRI can still see their surroundings and loved ones if necessary. Organizational Strengths and Weaknesses Value Chain Component Value-Creating Strength Value-Reducing Weakness Service Delivery Pre-Service 1. Patient care for over 100 years of services and providing high quality care 2. Phone Registration for admission process. 3. Online portal for access to record, bills, and lab results 1. Phone registration doesn’t eliminate everything required before checking in. EXTERNAL AND INTERNAL ANALYSIS 13 Point-of-Service 1. Financial assistance is provided to those who can’t afford to pay their health bills. 2. Pricing is listed on the website for patients to review prior to admission. After-Service 1. Free health care assessment for a wide range of life-threatening conditions. 2. Classes and seminars to teach patients about nutritional and health information. 3. Counseling provided to those who may need guidance through after care. NONE 1. Classes and seminars are not provided online and may be difficult for certain people to attend. Support Activities Culture 1. Providing compassionate and quality care to their patients. 2. High value placed on patient safety, medical excellence and customer service. Structure 1. Creating value for customers through function, division, and matrix Strategic Resources New Technological advances. Online portal. NONE 1. Can cause confusion for employees on who is in charge. 1. Competitors may offer more advanced resources in other areas such as partnership, EXTERNAL AND INTERNAL ANALYSIS 14 process, and information. Competitive Relevant Advantages and Disadvantages Strengths Is the Value of the Strength High or Low? (H/L) Is the strength Rare? (Y/N) Is the Strength Easy or Difficult to Imitate? (E/D) Can the strength be Sustained? (Y/N) Implications Service Delivery -Pre-Service 1. Patient care for over 100 years of services and providing high quality care. 2. Phone Registration for admission process. H Y D Y Long term competitive advantage No competitive advantage H N E Y 1. Online portal for access to record, H bills, and lab results N E N No competitive advantage N D Y Threshold condition Service Delivery -Point-of-Service 1. Financial assistance is provided to those who can’t afford to H EXTERNAL AND INTERNAL ANALYSIS 15 pay their health bills. H Y E Y 2.Pricing is listed on the website for patients to review prior to admission Long term competitive advantage Service Delivery -After-Service 1.Free health care assessment for a wide range of lifethreatening conditions. 2.Classes and seminars to teach patients about nutritional and health information. 3. Counseling provided to those who may need guidance through after care. Support Activities -Culture 1. Providing compassionate and quality care to their patients. H N E Y No competitive advantage No competitive advantage H N E Y H N E Y H N D Y No competitive advantage Threshold Condition EXTERNAL AND INTERNAL ANALYSIS 2. High value placed on patient safety, medical excellence and customer service. 16 H N D Y Threshold condition H Y D Y Long term Competitive Advantage H N D Y H N E Y Threshold Condition No Competitive advantage Support Activities -Structure 1. Creating value for customers through combination structure, using both functional and matrix structures. Support Activities -Strategic Resources 1. New Technological advances. 2. Online portal EXTERNAL AND INTERNAL ANALYSIS Weaknesses 17 Is the Value of the Weakness High or Low? (H/L) Is the Weakness Common (Not Rare) Among Competitors? (Y/N) Is the weakness Easy or Difficult to Correct? (E/D) Can Implications competitors Sustain their Advantage? (Y/N) H Y E Y H N E Y Service Delivery -Pre-Service 1. Phone registration doesn’t eliminate everything required before checking in. No competitive disadvantage Service Delivery -Point-of-Service NONE Service Delivery -After-Service 1. Classes and seminars are not provided online and may be difficult for certain people to attend. Support Activities -Culture NONE Short term competitive disadvantage EXTERNAL AND INTERNAL ANALYSIS 18 Support Activities -Structure Support Activities -Strategic Resources 1. Competitors may offer more advanced resources in other areas such as partnership, process, and information. H N D Y No competitive Disadvantage Implications of the Competitive Advantages and Disadvantages Competitive Relevant Strengths 1. Patient care for over 100 years of services and providing high quality care. Strategic Implications 1. Brand recognition and history 2. Creating value for customers through combination structure, using both functional and matrix structures. 2. The combination of styles can provide for a more coordinated system with better communication. Competitive Relevant Weaknesses Strategic Implications 1. Competitors may offer more advanced resources in other areas such as partnership, process, and information. 1. May start receiving less amount of patient because of lack of competitive resources. EXTERNAL AND INTERNAL ANALYSIS 19 Directional Strategies Organization’s Mission Statement At Riverview Regional Medical Center, we know the value of all human life is guided by our commitment to excellence and quality of leadership. Riverview seeks to provide deserving physical and emotional care for all patients and their families. They are committed to the care of all regardless of their financial status. The mission of Riverview Regional Medical Center is “To deliver compassionate, quality care to patients and better healthcare to communities”, they serve (RRMC, n.d.). Organization’s Vision Statement Riverview Regional Medical Center will provide exceptional healthcare to inspire a healthier community. We are always looking for new ways to improve our health care practice and patient experience. We are known for creating a caring safe environment that is recognized by employees, patients, families and volunteers. We realize the goal of an excellent medical organization is to treat patients with integrity to improve the quality of care to the patients we serve. Organization’s Values The values, that guide Riverview Regional Medical Center’s mission is the face of the vision and intent of our organization. Riverview Regional Medical Center is always committed to providing exceptional healthcare services. Their values are as follows: • “We deliver patient-centered healthcare with compassion, dignity and respect for every patient and their family”. • “We are honored to be trusted partners who serve, give back and grow with our communities.” EXTERNAL AND INTERNAL ANALYSIS • 20 “We are a uniquely physician-founded and physician-led organization that allows doctors and clinicians to direct healthcare at every level.” (RRMC, n.d.). Strategic goals The goal of all doctors and medical professionals at Riverview Regional Medical Center is to provide a therapeutic atmosphere that exudes the principles of patient safety, medical excellence and customer service (RRMC, n.d.). Individuals employed by Riverview Regional Medical Center strive every day to follow the hospital’s mission, vision and values. EXTERNAL AND INTERNAL ANALYSIS 21 References About Us. (2019). Retrieved from RiverviewRegional.com: https://www.riverviewregional.com/About-Us/About-Riverview-Regional-MedicalCenter.aspx Bains, J. (2019, October 10). Canada and the U.S. fall in global competitiveness ranking. Retrieved from Yahoo! Finance: https://finance.yahoo.com/news/canada-united-statesfall-global-competitiveness-ranking-191047752.html Bryan, S. (2019, August 11). New Alabama Hospital Rules Benefits Rural Communities. Retrieved from WHNT 19 News: whnt.com/2019/08/11/new-alabama-hospital-rules/ Business Facilities. (2019, July 17). Motus Integrated Technologies Creating 90 New Jobs In Alabama. Retrieved from Business Facilities: https://businessfacilities.com/2019/07/motus-integrated-technologies-90-new-jobsgadsden-alabama/ Clark, K. (2019, March 24). What Does Negative Shareholders' Equity Mean? Retrieved from Investopedia.com: https://www.investopedia.com/ask/answers/08/negative-shareholderequity.asp DataUSA. (n.d.). Economy. Retrieved from DataUSA: https://datausa.io/profile/geo/gadsden-al/ Financial Assistance . (2019). Retrieved from riverviewregional.com: https://www.riverviewregional.com/Patients-Visitors/Financial-Assistance.aspx Health Assessments. (2019). Retrieved from riverviewregional.com: https://www.riverviewregional.com/About-Us/Community-Events/HealthAssessments.aspx EXTERNAL AND INTERNAL ANALYSIS 22 Health Markets. (2019, October 04). Helthcare Reform News Updates. Retrieved from Health Markets: https://www.healthmarkets.com/resources/health-insurance/trumpcare-newsupdates/ Healthcare Business Tech. (n.d.). Medical Technology. Retrieved from Healthcare Business Tech: http://www.healthcarebusinesstech.com/medical-technology/ Healthcare IT. (n.d.). 3 Ways Technology has Changed Healthcare. Retrieved from Healthcare IT: https://healthinformatics.uic.edu/blog/3-ways-technology-has-changed-healthcare/ Kidd, D. (2019, January). Issues to Watch. Retrieved from Governing: https://www.governing.com/topics/politics/gov-2019-legislative-issues-to-watch.html Lyman, B. (2019, May 31). Alabama Legislature 2019: What passed; what didn't, what remains. Retrieved from Montgomery Advertiser: https://www.montgomeryadvertiser.com/story/news/2019/05/31/alabama-legislature2019-what-passed-what-didnt-what-remains/1308411001/ Medical Services. (2019). Retrieved from riverviewregional.com: https://www.riverviewregional.com/Medical-Services.aspx Mission and Values . (2019). Retrieved from riverviewregional.com: https://www.riverviewregional.com/About-Us/Mission-and-Values.aspx My Chart Patient Portal. (2019). Retrieved from riverviewregional.com: https://www.riverviewregional.com/Patients-Visitors/MyChart-Patient-Portal.aspx NCSL. (2019, August 26). Substance Use Disorder Treatment Enacted Legislation 2019 Postcard. Retrieved from National Conference of State Legislatures (NCSL): http://www.ncsl.org/research/health/substance-use-disorder-treatment-enactedlegislation-2019-postcard.aspx EXTERNAL AND INTERNAL ANALYSIS 23 Perriello, B. (2019, July 10). These Medical Devices Are Exempt From The Trump Tariffs On China. Retrieved from Mass Device: massdevice.com/these-medical-devices-are-exemptfrom-the-trump-tariffs-on-china/ Peter M Ginter, W. J. (2018). Strategic Mangement of Health Care Organizations. Hoboken: John Wiley & Sons Inc. Premack, R. (2019, October 03). UPS beat out Amazon and Google to become America's first nationwide drone airline. Retrieved from Business Insider: https://www.businessinsider.com/ups-is-now-operating-the-first-national-drone-airline2019-9 Roth, M. (2019, January 03). 3 Predictions For Virtual Care in 2019. Retrieved from Health Leaders: https://www.healthleadersmedia.com/innovation/3-predictions-virtual-care-2019 RRMC. (n.d.). Heart and Vascular Center. Retrieved from Riverview Regional Medical Center: https://www.riverviewregional.com/Medical-Services/Featured-Medical-Services/HeartCare-Center.aspx RRMC. (n.d.). Mission and Values. Retrieved from Riverview Regional Medical Center: https://www.riverviewregional.com/About-Us/Mission-and-Values.aspx Scherman, J. (2019, May 20). 5 Ways Technology in Healthcare Is Transforming the Way We Approach Medical Treatment. Retrieved from Rasmussen College: https://www.rasmussen.edu/degrees/health-sciences/blog/technology-in-healthcaretransformation/ The Leapfrog Group. (n.d.). Specially Trained Doctors Care for ICU Patients. Retrieved from The Leapfrog Group: EXTERNAL AND INTERNAL ANALYSIS 24 https://www.leapfroggroup.org/hospital/profile/Riverview+Regional+Medical+Center/Ga dsden/AL Trading Economics. (2019). United States Employment Rate. Retrieved from Trading Economics: https://tradingeconomics.com/united-states/employment-rate U.S. Census Bureau. (2018, March 13). Older People Projected to Outnumber Children for First Time in U.S. History. Retrieved from U.S. Census Bureau: https://www.census.gov/newsroom/press-releases/2018/cb18-41-populationprojections.html Usmani, F. (2019, February 3). What is a Functional Organization Structure? Retrieved from pmstudycircle.com: https://pmstudycircle.com/2012/08/what-is-a-functionalorganization-structure/ Varas, J., & Hayes, T. (2018, July 12). How a Trade War with China Will Impact U.S. Health Care Costs. Retrieved from American Action Forum: https://www.americanactionforum.org/research/how-a-trade-war-with-china-will-impactu-s-health-care-costs/ Vogenberg, R. F. (2019, February). US Healthcare Trends and Contradictions in 2019. American Health & Drug Benefits, 12(1), 40-47. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6404804/ Weijian, S. (2019, December). The Unwinnable Trade War. Retrieved from Foreign Affairs: https://www.foreignaffairs.com/articles/asia/2019-10-08/unwinnable-trade-war Well Being Services. (2019). Retrieved from riverviewregional.com: https://www.riverviewregional.com/Medical-Services/Other-Services/Well-BeingServices.aspx EXTERNAL AND INTERNAL ANALYSIS Williams, P. (2019, October 11). Judge rules Trump violated the law on wall funding with national emergency. Retrieved from NBC News: https://www.nbcnews.com/politics/immigration/judge-rules-trump-violated-law-wallfunding-national-emergency-n1065216 Your Hospital Visit . (2019). Retrieved from riverviewregional.com: https://www.riverviewregional.com/Patients-Visitors/Your-Hospital-Visit.aspx 25 CASE Pacific Cataract 17 and Laser Institute: Competing in the LASIK Eye Surgery Market Dr. Mark Everett, clinic coordinator and optometric physician (OP) of the Pacific Cataract and Laser Institute (PCLI) office in Spokane, Washington, looked at the ad that Vancouver, Canadabased Lexington Laser Vision (LLV) had been running in the Spokane papers and shook his head. This was not the first ad This case was prepared by John J. Lawrence and Linda J. Morris, University of ldaho, for the sole purpose of providing material for class discussion. It is not intended to illustrate either effective or ineffective handling of a managerial situation. The authors thank Dr. Mark Everett for his cooperation and assistance with this project. The authors also thank the anonymous Case Research Journal reviewers and the anonymous North American Case Research Association 2000 annual meeting reviewers for their valuable input and suggestions. Copyright © 2002 by the Case Research Journal and John J. Lawrence and Linda J. Morris. both17.indd 763 11/11/08 12:29:46 PM 764 C A S E 1 7 : PA C I F I C C ATA R A C T A N D L A S E R I N S T I T U T E nor the only clinic advertising low-priced LASIK eye surgeries. Dr. Everett just could not believe that doctors would advertise and sell laser eye surgery based on low price as if it were a stereo or a used car. The fact that they were advertising based on price was bad enough, but the price they were promoting – $900 for both eyes – was ridiculous. PCLI and its cooperating optometric physicians would not even cover their variable cost if they performed the surgery at that price. A typical PCLI customer paid between $1,750 and $2,000 per eye for corrective laser surgery. Although Dr. Everett knew that firms in Canada had several inherent cost advantages, including a favorable exchange rate and regulatory environment, he could not understand how they could undercut PCLI’s price so much without compromising service quality. PCLI was a privately held company that operated a total of 11 clinics throughout the northwestern United States and provided a range of medical and surgical eye treatments including laser vision correction. Responding to the challenge of the Canadian competitors was one of the points that would be discussed when Dr. Everett and the other clinic coordinators and surgeons who ran PCLI met next month to discuss policies and strategy. Dr. Everett strongly believed that the organization’s success was based on surgical excellence and compassioned concern for its patients and the doctors who referred them. PCLI strived to provide the ultimate in patient care and consideration. Dr. Everett had joined PCLI in 1993 in large part because of how impressed he had been at how PCLI treated its patients, and he remained committed to this patient-focused value. He was concerned, however, about his organization’s ability to attract laser vision correction patients. He knew that many prospective PCLI customers would be swayed by the low prices and would travel to Canada to have the procedure performed, especially because most medical insurance programs covered only a small portion of the cost of this procedure. Dr. Everett believed strongly that PCLI achieved better results and provided a higher quality service experience than the clinics in Canada offering low-priced LASIK procedures. He also felt PCLI did a much better job of helping potential customers determine which of several procedures, if any, best met the customers’ long-term vision needs. Dr. Everett wondered what PCLI should do to win over these potential customers – both for the good of the customers and for the good of PCLI. Pacific Cataract and Laser Institute Pacific Cataract and Laser Institute (PCLI) was founded in 1985 by Dr. Robert Ford and specialized in medical and surgical eye treatment. The company was headquartered in Chehalis, Washington, and operated clinics in Washington, Oregon, Idaho, and Alaska. (Exhibit 17/1 shows a map of PCLI locations.) In addition to laser vision correction, PCLI provided cataract surgery, glaucoma consultation and surgery, corneal transplants, retinal care and surgery, and eyelid surgery. Dr. Ford founded PCLI on the principle that doctors must go beyond science and technology to practice the art of healing through the Christian principles of love, kindness, and compassion. The organization had defined eight core values that were based on these principles. These core values, shown in Exhibit 17/2, guided both17.indd 764 11/11/08 12:29:47 PM PA C I F I C C ATA R A C T A N D L A S E R I N S T I T U T E 765 Exhibit 17/1: Map Showing PCLI Clinic Locations (Clinics designated by a♦; Anchorage, Alaska, clinic not shown) PCLI’s decision making as it attempted to fulfill its stated mission of providing the best possible “co-managed” services to the profession of optometry. Co-management involved PCLI working closely with a patient’s optometrists, or OD (for doctor of optometry). In co-managed eye care, family ODs were the primary care eye doctors who diagnosed, treated, and managed certain diseases of the eye that did not require surgery. When surgery was needed, the family OD referred patients to ophthalmologists (e.g., PCLI’s eye surgeons) for specialized treatment and surgery. Successful co-management, according to PCLI, depended upon a relationship of mutual trust and respect built through shared learning, constant communication and commitment to providing quality patient care. PCLI’s co-management arrangements did not restrict ODs to work with just PCLI, although PCLI sought out ODs who would use PCLI as their primary surgery partner and who shared PCLI’s values. Many ODs did work exclusively with PCLI unless a specific patient requested otherwise. PCLI – Spokane had developed a network of 150 family ODs in its region. both17.indd 765 11/11/08 12:29:47 PM 766 C A S E 1 7 : PA C I F I C C ATA R A C T A N D L A S E R I N S T I T U T E Exhibit 17/2: Pacific Cataract and Laser Institute’s Core Values • We believe patients’ families and friends provide important support, and we encourage them to be as involved as possible in our care of their loved ones. • We believe patients and their families have a right to honest and forthright medical information presented in a manner they can understand. • We believe that a calm, caring, and cheerful environment minimizes patient stress and the need for artifcial sedation. • We believe that all our actions should be guided by integrity, honesty, and courage. • We believe that true success comes from doing the right things for the right reasons. • We believe that effcient, quality eye care is provided best by professionals practicing at the highest level of their expertise. • We believe that communicating openly and sharing knowledge with our optometric colleagues is crucial to providing outstanding patient care. • We believe that the ultimate measure of our success is the complete satisfaction of the doctors who entrust us with the care of their patients. PCLI operated its 11 clinics in a very coordinated manner. It had seven surgeons that specialized in the various forms of eye surgery. These surgeons, each accompanied by several surgical assistants, traveled from center to center to perform specific surgeries. The company owned two aircraft that were used to fly the surgical teams between the centers. Each clinic had a resident optometric physician who served as that clinic’s coordinator and essentially managed the day-to-day operations of the clinic. Each clinic also employed its own office support staff. PCLI’s main office in Chehalis, Washington, also employed patient counselors who worked with the referring family ODs for scheduling the patient’s surgery and a finance team to help patients with medical insurance claims and any financing arrangements (which were made through third-party sources). Dr. Everett was the Spokane clinic’s resident optometric physician and managed the day-to-day activities of that clinic. Actual surgeries were performed in the Spokane clinic only one or two days a week, depending upon demand and the surgeons’ availability. Laser Eye Surgery and LASIK Laser eye surgery was performed on the eye to create better focus and lessen the patient’s dependence on glasses and contact lenses. Excimer lasers were the main means of performing this type of surgery. Although research on the excimer laser began in 1973, it was not until 1985 that excimer lasers were introduced to the ophthalmology community in the United States. The FDA approved the use of excimer lasers for photorefractive keratectomy (PRK) in October 1995 for the purpose of correcting nearsightedness. PRK entailed using computer-controlled beams of laser light to permanently resculpt the curvature of the eye by selectively removing a small portion on the outer top surface of the cornea (called epithelium). both17.indd 766 11/11/08 12:29:50 PM LASER EYE SURGERY AND LASIK 767 The epithelium naturally regenerated itself, although eye medication was required for 3 to 4 months after the procedure. In the late 1990s, laser in-situ keratomileusis, or LASIK, replaced PRK as the preferred method to correct or reduce moderate to high levels of nearsightedness (i.e., myopia). The procedure required the surgeon to create a flap in the cornea using a surgical instrument called a microkeratome. This instrument used vacuum suction to hold and position the cornea and a motorized cutting blade to make the necessary incision. The surgeon then used an excimer laser to remove a microthin layer of tissue from the exposed, interior corneal surface (as opposed to removing a thin layer of tissue on the outer surface of the cornea as was the case with PRK). The excimer laser released a precisely focused beam of low temperature, invisible light. Each laser pulse removed less than one hundred-thousandth of an inch. After the cornea had been reshaped, the flap was replaced. The actual surgical procedure took only about 5 minutes per eye. LASIK surgery allowed a patient to eliminate the regular use of glasses or contact lenses although many patients still required reading glasses. Although LASIK used the same excimer laser that had been approved for other eye surgeries in the United States by the Ophthalmic Devices Panel of the FDA, it was not an approved procedure in the United States, but was under study. LASIK was offered by clinics in the United States, but was considered an “off-label” use of the laser. “Off label” was a phrase given to medical services and supplies that had not been thoroughly tested by the FDA, but which the FDA permitted to be performed and provided by a licensed medical professional. Prescribing aspirin as a blood thinner to reduce the risk of stroke was another example of an off-label use of a medical product – the prescribing of aspirin for this purpose did not have formal FDA approval but was permitted by the FDA. The LASIK procedure was not without some risks. Complications arose in about 5 percent of all cases, although experienced surgeons had complication rates of less than 2 percent. According to the American Academy of Ophthalmology, complications and side effects included irregular astigmatism, resulting in a decrease in best corrected vision; glare; corneal haze; overcorrection; undercorrection; inability to wear contact lenses; loss of the corneal cap, requiring a corneal graft; corneal scarring and infection; and in an extremely rare number of cases, loss of vision. If lasering were not perfect, a patient might develop haze in the cornea. This could make it impossible to achieve 20/20 vision, even with glasses. The flap could also heal improperly, causing fuzzy vision. Infections were also occasionally an issue. Although PRK and LASIK were the main types of eye surgery currently performed to reduce a patient’s dependence on glasses or contact lenses, there were new surgical procedures and technologies that were in the test stage that could receive approval in the United States within the next 3 to 10 years. These included intraocular lenses that were implanted behind a patient’s cornea, laser thermokeratoplasty (LTK) and conductive keratoplasty (CK) that used heat to reshape the cornea, and “custom” LASIK technologies that could better measure and correct the total optics of the eye. These newer methods had the potential to improve vision even more than LASIK, and some of these new processes also might allow both17.indd 767 11/11/08 12:29:50 PM 768 C A S E 1 7 : PA C I F I C C ATA R A C T A N D L A S E R I N S T I T U T E additional corrections to be made to the eye as the patient aged. Intraocular lenses were already widely available in Europe. LASIK Market Potential The market potential for LASIK procedures was very significant, and the market was just beginning to take off. According to officials of the American Academy of Ophthalmology, over 150 million people wore glasses or contact lenses in the United States. About 12 million of these people were candidates for current forms of refractive surgery. As procedures were refined to cover a wider range of vision conditions, and as the FDA approved new procedures, the number of people who could have their vision improved surgically was expected to grow to over 60 million. As many as 1.7 million people in the United States were expected to have some form of laser eye surgery during 2000, compared to 500,000 in 1999 and 250,000 in 1998. Laser eye repair was the most frequently performed surgery in all of medicine. Referrals were increasingly playing a key role in the industry’s growth. Surgeons estimated that the typical patient referred five friends and that as many as 75 percent of new patients had been referred by a friend. A few employers were also beginning to offer laser eye surgery benefits through managed care vision plans. These plans offered discounts from list prices of participating surgeons and clinics to employees. Vision Service Plan’s (VSP) partners, for example, gave such discounts and guaranteed a maximum price of $1,800 per eye for VSP members. The number of people eligible for such benefits was expected to grow significantly in the coming years. PCLI did not participate in these plans and did not offer such discounts. LASIK at PCLI The process of providing LASIK surgery to patients at PCLI began with the partnering OD. The OD provided the patient with information about LASIK and PCLI, reviewed the treatment options available, and answered any questions the patient might have concerning LASIK or PCLI. If a patient was interested in having the surgery performed, the OD performed a pre-exam to make sure the patient was a suitable candidate for the surgery. Assuming the patient was able to have the surgery, the OD made an appointment for the patient with PCLI and forwarded the results of the pre-exam to Dr. Everett. PCLI had a standard surgical fee of $1,400 per eye for LASIK. Each family OD added on additional fees for pre- and postoperative exams depending on the number of visits per patient and the OD’s costs. Most of the ODs charged $700 to $1,200, making the total price of laser surgery to the patient between $3,500 and $4,000. This total price rather than two separate service fees was presented to the patient. Once a patient arrived at PCLI, an ophthalmic assistant measured the patient’s range of vision and took a topographical reading of the eyes. Dr. Everett would then explain the entire process to the patient, discuss the possible risks, and have both17.indd 768 11/11/08 12:29:51 PM COMPETITION 769 the patient read and sign an informed consent form. The patient would then meet the surgeon and have any final questions answered. The meeting with the surgeon was also intended to reduce any anxiety that the patient might have regarding the procedure. The surgical procedure itself took less than 15 minutes to perform. After the surgery was completed, the patient was told to rest his/her eyes for a few hours and was given dark glasses and eyedrops. The patient was required to either return to PCLI or to his or her family OD 24 hours after their surgery for a follow-up exam. Additional follow-up exams were required at 1 week, 1 month, 3 months, 6 months, and 1 year to make sure the eyes healed properly and to insure that any problems were caught quickly. The patient’s family OD performed all of these follow-up exams. Three of PCLI’s seven surgeons specialized in LASIK and related procedures. The company’s founder, Dr. Robert Ford, had performed over 16,000 LASIK procedures during his career, more than any other surgeon in the Northwest. His early training was as a physicist, and he was very interested in and knowledgeable about the laser technology used to perform LASIK procedures. Because of this interest and understanding, Dr. Ford was an industry innovator and had developed a number of procedural enhancements that were unique to PCLI. Dr. Ford had developed an enhanced software calibration system for PCLI’s lasers that was better than the system provided by the laser manufacturers. More significantly, Dr. Ford had also developed a system to track eye movements. Using superimposed live and saved computer images of the eye, PCLI surgeons could achieve improved eye alignment to provide more accurate laser resculpting of the eye. Dr. Ford was working with Laser Sight, a laser equipment manufacturer developing what PCLI and many others viewed as the next big technological step in corrective eye surgery – custom LASIK. Custom LASIK involved developing more detailed corneal maps and then using special software to convert these maps into a program that would run a spot laser to achieve theoretically perfect corrections of the cornea. This technology was currently in clinical trials in an effort to gain FDA approval of the technology, and Dr. Ford and PCLI were participating in these trials. Although Dr. Ford was on the leading edge of technology and had vast LASIK surgical experience, very few of PCLI’s patients were aware of his achievements. Competition PCLI in Spokane faced stiff competition from clinics in both the United States and Canada. There were basically three types of competitors. There were general ophthalmology practices that also provided LASIK surgeries, surgery centers like PCLI that provided a range of eye surgeries, and specialized LASIK clinics that focused solely on LASIK surgeries. General ophthalmology practices provided a range of services covering a patient’s basic eye care needs. They performed general eye exams, monitored the health of patients’ eyes, and wrote prescriptions for glasses and contact lenses. Most general ophthalmology practices did not perform LASIK surgeries (or any other types both17.indd 769 11/11/08 12:29:51 PM 770 C A S E 1 7 : PA C I F I C C ATA R A C T A N D L A S E R I N S T I T U T E Exhibit 17/3: Eye Consultant’s Advertisement of surgeries) because of the high cost of the equipment and the special training needed to perform the surgery, but a few did. These clinics were able to offer patients a continuity of care that surgery centers and centers specializing solely in LASIK surgeries could not. Customers could have all pre- and postoperative exams performed at the same location by the same doctor. In the Spokane market, a clinic called Eye Consultants was the most aggressive competitor of this type. This organization advertised heavily in the local newspaper, promoting an $1,195 per eye price (Exhibit 17/3). The current newspaper promotion invited potential customers to a free LASIK seminar put on by the clinic’s staff, and seminar attendees who chose to have the procedure qualified for the $1,195 per eye price, which was a $300 per eye discount from the clinic’s regular price. both17.indd 770 11/11/08 12:29:51 PM COMPETITION 771 Surgery centers did not provide for patients’ basic eye care needs, but rather specialized in performing eye surgeries. These centers provided a variety of eye surgeries, including such procedures as cataract surgeries and LASIK surgeries in addition to other specialty eye surgeries. PCLI was this type of clinic. The other surgery center of this type in the Spokane area was Empire Eye. PCLI viewed Empire Eye as its most formidable competitor in the immediate geographic area. Empire Eye operated in a similar way as PCLI. It relied heavily on referrals from independent optometric physicians, did not advertise aggressively, and did not attempt to win customers with low prices. It did employ a locally based surgeon who performed its LASIK procedures, although this surgeon was not nearly as experienced as Dr. Ford at PCLI. LASIK clinics provided only LASIK or LASIK and PRK procedures. They did not provide for general eye care needs nor did they provide a range of eye surgeries like surgery centers. These clinics generally had much higher volumes of LASIK patients than general ophthalmology or surgery centers, allowing them to achieve much higher utilization of the expensive capital equipment required to perform the surgeries. The capital cost of the equipment to perform the LASIK procedure was about US$500,000. The largest of these firms specializing in LASIK surgeries was TLC Laser Eye Centers, Inc. TLC was based in Mississauga, Ontario, and had 56 clinics in the United States and 7 in Canada. During the first quarter of 2000, TLC generated revenues of US$49.3 million by performing 33,000 surgeries. This compared with first quarter of 1999 when the company had revenues of US$41.4 million on 25,600 procedures. TLC was the largest LASIK eye surgery company in North America and performed more LASIK surgeries in the United States than any other company. The closest TLC centers to Spokane were in Seattle, Washington, and Vancouver, British Columbia. The second largest provider of LASIK surgeries in the United States was Laser Vision Centers (LVC), based in St. Louis, Missouri. Its closest center to Spokane was also in Seattle. Almost all of the Canadian competitors that had been successful at attracting US customers were clinics that specialized solely in LASIK surgeries. The largest Canadian competitor was Lasik Vision Corporation (LVC), based in Vancouver, British Columbia. LVC operated 15 clinics in Canada and 14 in the United States, and was growing rapidly. LVC had plans to add another 21 clinics by the end of 2000. During the first quarter of 2000, LVC generated revenues of US$20.1 million by performing 26,673 procedures. This compared to first quarter of 1999, when the company had revenues of only US$4.3 million on 6,300 procedures. In total, there were 13 companies specializing in providing LASIK surgeries in British Columbia, mostly in the Vancouver area. One of the British Columbia firms that advertised most aggressively in the Spokane area was Lexington Laser Vision (LLV). LLV operated a single clinic staffed by nine surgeons and equipped with four lasers. The clinic scheduled surgeries 6 days a week and typically had a 2-month wait for an appointment. The service design process at LLV was structured to accommodate many patients and differed significantly from PCLI’s service process. To begin the process, a patient simply called a toll-free number for LLV to schedule a time to have the both17.indd 771 11/11/08 12:29:52 PM 772 C A S E 1 7 : PA C I F I C C ATA R A C T A N D L A S E R I N S T I T U T E surgery performed. Once the patient arrived at the LLV clinic, he or she received a preoperative examination to assess the patient’s current vision and to scan the topography of the patient’s eyes. The next day, the patient returned to the clinic for the scheduled surgery. The typical sequence was to first meet with a patient counselor who reviewed with the patient all pages of a LASIK information booklet that had been sent to the patient following the scheduled surgery date. The patient counselor answered any questions the patient had regarding the information in the booklet and ensured that the patient had signed all necessary surgical consent forms. Following this step, a medical assistant surgically prepped the patient and explained the postcare treatment of the eyes. After this preparation, the surgeon greeted the patient, reviewed the topographical eye charts with the patient, explained the recommended eye adjustments for the patient, and reiterated the surgical procedure once again. The patient would then be transferred to the surgery room, where two surgical assistants were available to help the doctor with the 5- to 10-minute operation. Once the surgery was completed, a surgical assistant led the patient to a dark, unlit room so that the patient’s eyes could adjust. After a 15-minute waiting period, the surgical assistant checked the patient for any discomfort and repeated the instructions for postcare treatment. Barring no problems or discomfort, the surgical assistant would hand the patient a pair of dark, wraparound sunglasses with instructions to avoid bright lights for the next 24 hours. At the scheduled postoperative exam the next day, a medical technician measured the patient’s corrected vision and scheduled any additional postoperative exams. If desired, the patient could return to the clinic for the 1-week, 1-month, and 3-month postoperative exams at either the LLV clinic or one of the US – based partner clinics of LLV. In some cases, the patient might opt to have these postoperative exams performed by his or her family OD. US patients traveling to LLV or the other clinics in British Columbia to have the surgery performed needed to allow for 3 days and 2 nights for the surgery. A pre-exam to insure the patient was a suitable candidate for the surgery was performed the first day, the surgery itself was performed the second day, and the 24-hour postexam was performed on the third day. Two nights in a hotel near LLV cost approximately US$100, and airfare to Vancouver, British Columbia, Canada cost approximately US$150 from Spokane, Washington. Lexington Laser Vision had a sister clinic in the Seattle area where patients could go for postoperative exams. LLV requested patients to undergo follow-up exams at 1 week, 1 month, and 3 months. These exams were included in the price as long as the patient came to either the Seattle or Vancouver clinics. Some patients outside of the Seattle/ Vancouver area arranged with their family ODs to perform these follow-ups at their own expense to avoid the time and cost of traveling to Seattle or Vancouver, British Columbia. A breakdown of the estimated cost structure for each of these different competitors is shown in Exhibit 17/4. Dr. Everett believed that both Eye Consultants and LLV were probably incurring losses. Both were believed to be offering belowcost pricing in response to the significant price competition going on in the industry. Eye Consultants was also believed to be offering below-cost pricing in order to build volume and gain surgeon experience. PCLI’s own cost structure both17.indd 772 11/11/08 12:29:53 PM T H E C A N A D I A N A D VA N TA G E 773 Exhibit 17/4: LASIK-Related Revenue and Cost Estimates for PCLI’s, Competitors (All Figures Are in US$)a Competitor Type of Operation Location of Operation Number of Procedures/Year Price to Customer, per Eye Estimated Revenues Estimated Expenses Payments for Pre- and Postoperative Carec Royalties Surgeon’s Fees/Salary Medical Supplies Laser Service Depreciation Marketing Overhead Total Annual Expenses Eye Consultants Empire Eye TLC Clinic Lexington Laser Visionb General Ophthalmology Practice Eye Surgery Center Specialized LASIK Clinic Specialized LASIK Clinic Spokane, WA Spokane, WA Seattle, WA Vancouver, BC 600 $1,195 1,000 $1,900 4,000 $1,600 10,000 $500 717,000 $1,900,000 $6,400,000 $5,000,000 120,000 150,000 120,000 30,000 100,000 125,000 75,000 200,000 $925,000 450,000 250,000 300,000 50,000 100,000 125,000 75,000 350,000 $1,700,000 1,400,000 1,000,000 1,200,000 200,000 200,000 250,000 400,000 500,000 $5,150,000 1,500,000 0 1,500,000 500,000 400,000 500,000 500,000 600,000 $5,500,000 a This table was developed based on a variety of public sources on both the LASIK industry in general and on individual competitors. In a number of cases, the figures represent aggregated “estimates” of data from several sources. Estimated expenses are based largely, but not entirely, on discussion of the LASIK industry cost structure provided in “Eyeing the Bottom Line: Just Who Profits from Your Laser Eye Surgery May Surprise You,” by James Pethokoukis, U.S. News & World Report, March 30, 1998, pp. 80–82. b This cost structure was thought to be typical of all of the specialized LASIK clinics located in British Columbia, Canada, that competed with PCLI. c ln some cases, these costs are paid directly by the patient to the postoperative care provider; they have been included here because they represent a part of the total price paid by the customer. was fairly similar to Empire Eye’s cost structure, as both operated in a similar fashion. The Canadian Advantage LASIK clinics operating in Canada had a number of advantages that allowed them to charge significantly less than competitors in the United States. First, the Canadian dollar had been relatively weak compared to the US dollar for some time, fluctuating between C$1.45 per US dollar and C$1.50 per US dollar. This exchange rate compared to rates in the early 1990s that fluctuated between C$1.15 per US dollar and C$1.20 per US dollar. On top of this, the inflation rate in Canada averaged only 1.5 percent during the 1990s compared to 2.5 percent in the United States. This dual effect of a weakened Canadian dollar combined with somewhat both17.indd 773 11/11/08 12:29:53 PM 774 C A S E 1 7 : PA C I F I C C ATA R A C T A N D L A S E R I N S T I T U T E higher inflation in the United States meant that Canadian providers had, over time, acquired a significant exchange rate cost advantage. Second, laser surgery equipment manufacturers charged a $250 patent royalty fee for each surgery (i.e., each eye) performed in the United States. The legal system in Canada prevented equipment manufacturers from charging such a royalty every time a surgery was performed, amounting to a $500 cost savings per patient for Canadian clinics. Competitive pressure among surgery equipment manufacturers had caused this fee to drop in recent months to as low as $100 for certain procedures performed on some older equipment in the United States, giving US clinics some hope that this cost disadvantage might decrease over time. Third, clinics in the United States generally paid higher salaries or fees to surgeons and support staff than did their Canadian rivals. The nationalized health system in Canada tended to limit what doctors in Canada could earn compared to their peers in the United States. LASIK clinics themselves were not part of the Canadian national health system because they represented elective surgeries. However, Canadian LASIK clinics could pay their surgeons a large premium over what they could make in the nationalized system, but this was still significantly less than a comparable surgeon’s earnings in the United States. This cost differential extended to the referring optometrists who provided pre- and postoperative exams and whose fees were typically included in the price quoted to customers. Many Canadian clinics relied more heavily on advertising and word-of-mouth customer referral rather than referrals from optometrists and de-emphasized preand postoperative exams. Fourth, there was some speculation among US clinics that some low-priced Canadian clinics were making a variety of care-compromising quality trade-offs, such as not performing equipment calibration and maintenance as frequently as recommended by the equipment manufacturers and reusing the microkeratome blades used to make the initial incision in the cornea. Canadian clinics denied that the choices that they made compromised the quality of care received by the patient. Finally, it seemed clear to Dr. Everett that Canadian providers were in the midst of a price war and that at least some of the clinics were not generating any profit at the prices they were charging. Canadian providers also had significant noncost advantages. Because of differences in the approval process of medical equipment and procedures, laser eye surgery technologies were often available in Canada before they became readily available in the United States. Approval of new medical technologies in Canada was often based on evidence from other countries that the technology was safe, whereas approval of new medical technologies in the United States required equipment manufacturers to start from scratch with a series of studies. As a result of this, and combined with the volume that the Canadian clinics’ low prices generated, many Canadian clinics had more experience with laser eye surgery than comparable clinics in the United States. Experience was a critical factor in a clinic or specific surgeon having low rates of complications. Further, the differences in the approval processes between the countries allowed Canadian providers the ability to offer advanced equipment not yet available in the United States. For example, the FDA approved the first generation of excimer laser for use in the both17.indd 774 11/11/08 12:29:54 PM US COMPETITORS’ RESPONSES TO THE CANADIAN CHALLENGE 775 United States in October 1995. No centers in Canada, however, had purchased this particular laser since 1995 because more advanced versions of the technology had become available for use in Canada. Although some of these equipment advances have had minimal impact on the results for the average patient, they have, at the very least, provided Canadian clinics a marketing advantage. US Competitors’ Responses to the Canadian Challenge The surgeons and staff at PCLI knew from reading a variety of sources and from following changes in the industry that most US-based clinics were experiencing some loss of customers to Canadian competitors. These companies were responding in a variety of ways in an attempt to keep more patients in the United States. One company in the industry, LCA, had created a low-priced subsidiary, LasikPlus, as a way to compete with lower priced competitors in Canada. LasikPlus had facilities in Maryland and California and charged $2,995 compared to the $5,000 price charged by the parent company’s LCA Vision Centers. One way that the LasikPlus subsidiary had cut cost was by employing its own surgeons. Regular LCA Vision Centers provided only the facilities and equipment, and contracted out with independent surgeons to perform the procedures. Another strategy that US firms were using to compete was to partner with managed care vision benefits firms, HMOs, and large businesses. TLC Laser Eye Centers had been the most aggressive at using this strategy. It had partnered with Vision Service Plan (VSP) to provide the surgery to VSP members at a $600 discount and had partnered with HMO Kaiser Permanente to provide Kaiser members a $200 discount. TLC was also attempting to get employers to cover part of the cost for their employees and was letting participating companies offer a $200 discount on the procedure to their employees. Over 40 businesses had signed up by late 1999, including Southern California Edison, Ernst & Young, and Office Depot. TLC was not the only provider pursuing this strategy. LCA Vision centers had partnered with Cole Managed Vision to provide the surgery to Cole members at a 15 percent discount. One of the significant advantages that US providers had over their Canadian competitors was convenience, because patients did not have to travel to Canada to have the procedure performed. Most facilities providing the surgery in the United States, however, were located in major metropolitan areas, which may not be seen as being all that much more convenient for potential patients living in smaller communities and rural areas. One competitor had taken this convenience a step further. Laser Vision Centers was using mobile lasers to bring greater convenience to patients living in these smaller communities. It used a patented cart to transport the laser to ophthalmologists’ offices, where it could be used for a day or two by local surgeons. LVC could also provide a surgery team in locations where no surgeons were qualified to perform the procedure. The company was serving patients in over 100 locations in this manner and was expanding its efforts. Technological or procedural advances offered clinics another basis upon which to compete. For example, during the summer of 1999, Dr. Barrie Soloway’s clinic was the both17.indd 775 11/11/08 12:29:54 PM 776 C A S E 1 7 : PA C I F I C C ATA R A C T A N D L A S E R I N S T I T U T E first in the United States to get an Autonomous laser. This laser was designed to overcome a major problem in eye surgery, the tendency for the eye to move while the procedure was being performed. In an interview with Fortune magazine, Autonomous’s founder, Randy Frey, described the advantages of this new technology. At present, doctors stabilize the eye merely by asking the patient to stare at a blinking red light. But, says Frey, aiming a laser at the eye is “a very precise thing. I couldn’t imagine that you could make optics for the human eye while the eye was moving.” The eye, he explains, makes barely perceptible, involuntary movements about five times a second. This “saccadic” motion can make it difficult to get a perfectly smooth correction. “The doctor can compensate for the big, noticeable movements,” Frey says, “but not the little ones.” Frey’s machine uses radar to check the position of the eye 4,000 times a second. He’s coupled this with an excimer laser whose beam is less than 1 millimeter in diameter versus 6 millimeters for the standard beam. Guided by the tracker, this laser ablates the cornea in a pattern of small overlapping dots. (Murray, 1999) There were a number of technological advances under development like the autonomous laser system that could have a significant impact on this industry. With approvals for new procedures generally coming more quickly in Canada than the United States, however, it was unclear whether technological advances could help US providers differentiate themselves from their Canadian competitors. The Upcoming Strategy and Policy Meeting Every time Dr. Everett saw an exuberant patient after surgery, or read a letter of gratitude from a patient, he knew in his heart that they were doing something special. He was energized by the fact that the laser vision corrections they were performing were changing people’s lives. He was also proud of the fact that they continued to treat all of their customers as special guests. However, he knew that for every LASIK patient they saw at PCLI, there was another potential PCLI patient who went to Canada to have the surgery performed. PCLI had the capacity to do more laser vision correction surgeries in Spokane than they were currently doing, and he wanted to make use of that capacity. He felt both PCLI and prospective patients from Spokane and the surrounding communities would be better off if more of these patients chose PCLI for laser vision correction surgeries. However, Dr. Everett was not sure what, if anything, should change at PCLI to attract these potential customers. PCLI had already begun to advertise. Advertising, in general, was not a commonly used practice in the US medical community, and some in the medical profession considered much of the existing advertising in the industry to be ethically questionable. Although Dr. Everett was comfortable with the advertisements they had started running three months ago (Exhibit 17/5), he was still unsure whether PCLI should be advertising at all. More importantly, he felt that advertising represented only a partial solution, at best. What was needed was a clear strategic focus for the organization that would help it to respond to the Canadian challenge. both17.indd 776 11/11/08 12:29:55 PM T H E U P C O M I N G S T R AT E G Y A N D P O L I C Y M E E T I N G 777 Exhibit 17/5: Pacific Cataract and Laser Institute Advertisement One obvious answer was to also compete on price; however, he simply could not conceive of PCLI treating eye surgery like a commodity and competing solely on price. Such a strategy seemed inconsistent with PCLI’s core values, unwise from a business standpoint because PCLI’s operating costs were much higher than its Canadian competitors, and simply wrong from an ethical standpoint. The problem was, he was not sure what strategic focus PCLI should pursue in order to retain its strong position in the Pacific Northwest LASIK market. What he did know was that whatever this strategy was to be, it needed to emerge from next month’s meeting, and he wanted to be prepared to help to make that happen. He wanted to have a clear plan to bring to the table at this meeting to share with his colleagues, even if it was simply a reaffirmation to continue doing what they were currently doing. both17.indd 777 11/11/08 12:29:55 PM Running head: PACIFIC CATARACT AND LASER INSTITUTE Phase Two: External and Internal Analysis HSA4938 Palm Beach State College The External Analysis and its Process 1 PACIFIC CATARACT AND LASER INSTITUTE 2 Pacific Cataract and Laser Institute (PCLI) is an eye center that specializes in eye treatment. A six-step process called an external analysis reveals that the organization has an opportunity to thrive in the state of Washington. Lawrence and Morris (2002) argue that the clinic is dealing with a rising number of patients that are experiencing different eye issues. The clinic has continued to offer various surgical operations and services to these patients. However, in some situations, the organization experienced various problems that emanated from the organization's environment. These factors are contributed by the independent variable and which affects the organization's operations (Khan & Khalique, 2014). This case study analysis illustrates the different concepts and issues that cloud the organization. The six-step process is proposed by Ginter et al. (2018). The first step for assessing PCLI’s environment involves organizing the assessment process and creating an issue map template. The second process involves scanning the general situation, the healthcare system, and the service area. The third step entailed monitoring and confirming external issues. In the fourth and fifth steps, forecasting and assessing, respectively, of external issues was conducted. Finally, the following issue map was generated. Issue Map Categories of Issue Economic Issue Map General Health Care EnvironmentSystem-United United States States Interest rates are high Healthcare products (Austin et al., 2016). and services are expensive. US experiencing a poor financial state. 2017 Tax Cuts and Cost of living Jobs Act (Siwicki, B increasing (The 2019). USAonline.com, Service AreaWashington State Services are lost because of the high unemployment rate (Austin et al., 2016). Washington State have very few avenues open for PACIFIC CATARACT AND LASER INSTITUTE 2020). Social/Demographic Legislative/Political Technological Decrease of College graduates (The USAonline.com, 2020) Average standard of living will rise (The USAonline.com 2020). Demand for medical care and long-term care facilities will increase (The USAonline, 2020). Tax, consumer protection, and subsidies policies are stringent. Patients are turning to natural remedies. Medicare and Medicaid promote subsidies (Austin et al., 2016). Rising level of international trade (The USAonline.com, 2020) Some ACA revenueraising provisions have been delayed or eliminated (Siwicki, 2019). High technological advancement There is high innovation and technology adoption such as the Health Information System (Austin et al., 2016). New manufacturing technologies are rapidly reducing the number of production jobs (Chao, Pham, & Seregine, 2000). Competitive People are more health-conscious (Austin et al., 2016). High competition within the health organizations. By 2022, 20% of workers are expected to rely on artificial intelligence to do their jobs (Siwicki, 2019). The healthcare system is highly competitive US remains the Lacking a "value 3 direct participation in private economic development projects (MRSC 2017) Washington residents have a high literacy level. Carbon Dioxide from fossil fuel use and deforestation is making the Pacific Ocean and Puget Sound more acidic (Hart, 2020). Professional bodies play a significant role in controlling healthcare services (Austin et al., 2016). Washington State may not loan or gift public funds to a private business due to state laws. (MRSC 2017). Eye services adopt technologies such as laser (Lawless & Hodge, 2012). Controversial use of facial recognition technology (Santos, 2020). Eye products and services are highly competitive (Lawless & Hodge, 2012). PACIFIC CATARACT AND LASER INSTITUTE world’s largest recipient of foreign direct investments (Porter & Rivkin, 2012). line" of products and services (Siwicki, 2019). 4 Competitive prices and high-quality products need to be at its best to lure consumers away from the black market (Pistilli, 2019). Validation of the Strategic Assumptions Performance and general environment trend/issues. General issues that PCLI is likely to face involve the increasing population in the US, especially regarding people who are aged 65 years and older. As the population increases, it is estimated that the demand for eye health services will rise by 47%, which is an equivalent of having 15 million new patients eye-related issues by the year 2020 (Alldredge, 2014). As a result, this presents as both an opportunity and a crisis for the PCLI. Also, the organization's performance has been affected significantly by the trends in the environment like the change in the technology that is used in the health care industry. The costs of operations have increased significantly. Performance and health care system trends/issues. PCLI focuses on customer care rather than how cheap it will cost to have corrective eye surgery. The trends in the healthcare system have affected the organizations adversely more so when it comes to the policies and the regulations governing the healthcare system. The trends call for the organization to adjust their strategies. For example, in the ophthalmology world, the high cost of necessary equipment and special training is needed so that surgery can be performed properly. Keeping up with the trends can be challenging because you want to make sure that your organization is up to speed on what is required to maintain your facility. Performance and service area trends/issues. The service area trends like the behavior of the suppliers and the customers have also had adverse effect on the organization’s PACIFIC CATARACT AND LASER INSTITUTE performance. Some suppliers have been relatively unreliable making it quite challenging for the organizations to come up with an effective and profitable operations strategy in the industry. Canada is very near to the Washington State area. As previous stated, clinics in Canada such as Lexington Laser Vision (Lawrence & Morris, 2002) will offer services at such a cheaper rate that customers will prefer to travel to another country just to have eye surgery. While offering cheap prices is easy to attract new customers, you need to make sure that it is the right thing to do for your organization. It may not be ideal to offer cheaper services if it costs you more to run your actual clinic or equipment. Effect of new technology developments. There are several technological developments in the industry which will have significant implication on the organization. The technological advancements have been embraced on the operations and right now, the business organizations find it easy to carry out different activities. The operations costs and the quality of services will reduce significantly in the healthcare, hence increasing the profits. Another issue is as medical technology advances and equipment such as optical coherence topographers, corneal topographers, nerve fiber analyzers, and pachymeters continue evolving, it is important for PCLI to keep up with any and all changes (Johnson, 2010). Keeping track of medical technological advancements will improve their reimbursement and revenue aspects and increase the patients’ confidence in their doctors. As a result, the patients will keep coming back and enjoying value in their services. Legislative/Political environment changes. There have been changes in the political environment on issues like the policies guiding the activities of the healthcare organizations. Most of the laws guiding the insurance policies and issues like alternative medications have changed over the years. Changes in policies such as the Affordable Care Act, Medicaid, and 5 PACIFIC CATARACT AND LASER INSTITUTE Medicare, are likely to influence PCLI’s pricing strategies, financial alliances, and investment options. For example, some insurance companies might opt to limit access to physicians they deem expensive, and employ restrictive formularies, or pre-authorizations to enable them to contract with inexpensive doctors. However, since eye care is not hospital-based and is not a large part of commercial insurance portfolios, it is likely to escape such financial and policy influences (Stuart, 2020). Effect of new local, state, or federal regulations/laws. The new laws that were previously mentioned in the issue map will affect the operations because they will change the manner customers are treated by the various professionals and the organizations. They will also adjust on the manner the service is priced. The performance and the operations will therefore be affected significantly. From what is shown in the issue map, , there is also enough evidence that there is a need to understand and leverage the proper grasp of the clinic with a higher obligation to attract external customers. The clinic needs to align itself with the legal requirements of the United States and other countries that the company is situated. New economic issues. There are new economic issues like the changes in the currency values and the inflation rates that will affect the customers and suppliers’ powers and behavior. Within the current headquarters of the clinic, the country experiences a rather poor financial state as there is a continued increase in inflation, and which has adversely affected the clinic's operations. Comparing the economic conditions in competing nations like Canada, there is limited inflation, and which has led to improved pricing of surgery services by Canadian based clinics. Service Area Structural Analysis Service Area Structural Analysis 6 PACIFIC CATARACT AND LASER INSTITUTE Five Forces Forces Driving Service Area Conclusion Competition Threat of New There are several LASIK clinics High. The threat of new Entrants surrounding the Washington State entrants will stay high due to and Canada area. TLC Laser Eye the growing trend of Lasik Centers is one of those organizations eye surgery being done on an that has 56 clinics in the United increased number of patients States and 7 clinics in Canada. in their local area. Intensity of Rivalry PCLI focuses more on the quality of High. PCLI may not offer care and compassion for their patients better prices such as other eye while providing excellent skills on centers do in Canada, but they eye treatments that include laser do a much better job of vision correction surgery. helping patients determine which eye procedure is best for them to meet the longterm vision needs. Threat of substitutes The threat of substitutes as far as High. New surgical procedures goes is that currently, procedures and technologies PRK and LASIK are the main types are becoming more advanced of corrective eye surgery available such as laser that is approved by the FDA. In thermokeratoplasty (LTK) conclusion, the threat is high. and conductive keratoplasty (CK). Bargaining Power of Vision Service Plan’s (VSP) partners High. More people will Buyers (Customers) offers discounts and guaranteed become eligible for this maximum payout price of $1,800 per benefit in the coming years so eye for VSP members, PCLI may want to consider accepting this plan since they currently do not participate in these plans. Bargaining Power of Bargaining power of suppliers is high High. Due to the new Suppliers because Dr. Ford worked closely developments that were with Laser Sight, a laser equipment discovered by Dr. Ford and manufacturer that helped develop Laser Sight, an enhanced procedural enhancements that are software calibration system unique to PCLI. was made along with eye movement tracker that helps to improve eye alignment and help provide a more accurate laser re-sculpting of the eye. Internal Analysis The Value Chain Service Delivery. 7 PACIFIC CATARACT AND LASER INSTITUTE Pre-Service. Pacific Cataract and Laser Institute (PCLI) was founded by Dr. Robert Ford in 1985. PCLI started in the small town of Chehalis, Washington where their headquarters remains today (Pacific Cataract and Laser Institute, 2020a). In addition to the Washington location, they also served Oregon, Idaho, and Alaska. Now PCLI has a foothold in other states that include Montana and New Mexico. They have 17 locations within the 6 states and their mission is consistent in all locations which is to provide the best possible co-managed care to their patients. PCLI could improve its market share by expanding services beyond the 6 states they currently serve. PLCI is a leader in eye care services providing quality care in cataract surgery, glaucoma consultations and surgery, corneal transplants, retina care, and surgery, eyelid surgery and Lasik vision correction. PCLI has an established and comprehensive patient portal where patients can correspond with their doctor(s) or the practice, view and update personal health records, access education information, and view and schedule appointment. The patient portal is also accessible on most mobile devices making it convenient for patients to utilize. Point of Service. At the core value of how patients receive services at PCLI is through a group approach known as co-managing. From its inception, PCLI realized that the best way to provide quality care to their patients is by working closely with their optometrists or Doctor of Optometry. The specialist at PCLI works closely with the patient’s primary care eye doctors to ensure the best result for their patients. PCLI recognizes the financial implications for a patient to receive treatment and therefore; they participate with a wide range of insurance plans and are continually being added as providers to additional plans. At PCLI they also offer flexible payment options to ease the burden for services not covered under a patient’s plan. The Point of Service plan at PCLI is to go beyond the scope of the treatment they provide by partnering with 8 PACIFIC CATARACT AND LASER INSTITUTE the primary care provider and to provide several financial options to their patient to ensure they receive the services needed. After service. In addition to the interactive patient portal where new and existing patients have access to a tremendous amount of information, PCLI also provides other services to their patients when they leave the office so they can receive additional information and education. Among the resources available at PCLI is their Video Eye Library. In this library, patients can explore a wide range of medical conditions and treatment options. The library may even cover areas that PCLI does not specifically provide but thought would be helpful to their patient. PCLI working together with a patient’s primary care eye doctor will also assist in referring patients if their condition is outside the scope services provided. PCLI has a Find an Optometrist tool available for their patient’s convenience. Another resource available at PCLI is their newsletter which has been provided over to 60,000 patients (Pacific Cataract and Laser Institute, 2019). Support activities. Organizational culture. “Organizational culture is unique and exerts a powerful influence on how people function and act as a key factor in how well the organization performs (Ginter, Duncan & Swayne, 2018 p.366). The culture at PCLI is based on the Christian principles of love. As founder and president of PCLI, Dr. Robert Ford has a strong Christian belief that is shared by many doctors, staff, and management team members (Pacific Cataract and Laser Institute, 2020b). At PCLI, the care given to their patients goes beyond the science and technology of the services they provide to include the art of healing with kindness and compassion. 9 PACIFIC CATARACT AND LASER INSTITUTE Organizational structure. PCLI is recognized as one of North America’s most experienced eye care facilities. It has achieved this success by adhering to a strategic organizational structure of consistency throughout the organization. PCLI openly seeks the assistance of the patient’s primary eye care doctor to ensure all the patients’ needs are being met. At PCLI there is a team approach to providing excellent care to their patients and therefore among the different organizational structures the best one to describe how PCLI operates is through the functional structure. Each member of the PCLI team has a specific role to meet the patient’s needs. PCLI has experts in each functional area including finance, human resources, marketing, information services, and clinical operations each focused on a specific area of patient care. Strategic Resources. “Effective development and use of key organizational resources are critical in carrying out the selected strategies” (Ginter et al, 2018 p.374). There are many areas to consider in the discussion of strategic resources which include finance, human resources, information and technology. At PCLI Chip Deitrich, CPA is the Director of Finance and oversees a team of experts in accounting, patient finance, purchasing and receiving and managed care. Robert Jasa is the Director of Healthcare and Informatics and his role is to oversee the electronic processing of patient financial data, medical records and real-time monitoring of patient flow. PCLI are in search of a better way to capture data found on a digital pen and paper technology resulting in more efficient operations (Eyewire News (2012). This pen and paper technology interpret with handwriting with high accuracy and at first, Jasa was skeptical but now is implementing the technology in all PCLI locations. In addition, Dr. Ford has been credited with many innovations in cataract surgery and the doctors at PCLI often participate in clinical studies in search of improving the quality of care provided at PCLI. 10 PACIFIC CATARACT AND LASER INSTITUTE 11 Organizational Strengths and Weaknesses Value Chain Component Value-Creating Strength Value-Reducing Weakness 1. Services are offered in 17 locations across 6 states. 2. A leader in eye care services. 3. Comprehensive patient portal. 3. Offering a co-management approach to health services. 4. Participation in a wide range of insurance plans. 5. Offering flexible payment options. 6. Offering patients a Video library. 7. Providing patients with the Find an Optometrist tool. 8. Reaching over 60,000 patients with the newsletter. 1. Have not branch out beyond the 6 states they currently serve. Service Delivery Pre-Service Point-of-Service After-Service None 2. They don’t provide all services listed in the video library so patients will have to seek some services elsewhere. 3. Losing market share by not providing primary optometry care. Support Activities Culture 9. Christian principles of love. 10. Emphasis on kindness and compassion as part of providing health services. Structure 11. Maintaining a consistent organizational functional structure. 12. A team approach to providing services. Strategic Resources 13. Digital pen and paper technology. 14. Innovations in cataract surgery. 15. Participation in clinical studies. 1. Openly identifying with a specific religion may limit the patient demographic who will seek services. 1. A team approach can sometimes cause delays in services if when there is a disagreement in managing the patient’s protocol. 1. Technological advances happen so quickly is may not be financially feasible to stay competitive. PACIFIC CATARACT AND LASER INSTITUTE 12 Competitive Relevant Advantages and Disadvantages Strengths Is the Value of the Strength High or Low? (H/L) Is the strength Rare? (Y/N) Can the strength be Sustained? (Y/N) N Is the Strength Easy or Difficult to Imitate? (E/D) E Service Delivery -Pre-Service Service Delivery -Point-ofService Service Delivery -AfterService Support Activities -Culture Support Activities -Structure Support Activities -Strategic Resources H H N E Y H N D N H N D N H N E N H N D N Weaknesses Is the Value of the Weakness High or Low? (H/L) Is the weakness Easy or Difficult to Imitate? (E/D) Can competitors Sustain their Advantage? (Y/N) Service Delivery -Pre-Service Service Delivery -Point-ofService Service Delivery H Is the Weakness Common (Not Rare) Among Competitors? (Y/N) Y E Y H Y E N H Y D Y Implications Y Implications PACIFIC CATARACT AND LASER INSTITUTE -AfterService Support Activities -Culture Support Activities -Structure Support Activities -Strategic Resources 13 H Y D N H N E Y H N E N Implications of the Competitive Advantages and Disadvantages Competitive Relevant Strengths 1. Individuals that have gone or will go through Lasik surgery will have improved vision and will not have to wear glasses. 2. With Lasik, all adverse effects from contacts and glasses will be gone, instead patients will experience healthier eyes. Strategic Implications 1. Lasik has a competitive industry regarding safety and pricing regarding the laser eye surgery. 2. Healing time is anywhere where from 24-36 hours. Individuals can return to their everyday lives with minimal downtime. Competitive Relevant Weaknesses 1. Dry eye can occur and can last for days or in severe cases, months. Strategic Implications A prescribed dry eye medication, oral flax seed, and a possible punctual occlusion will be used to strategically fix the problem. Very low complication that can occur percent rate is anywhere from 3% to 5.7%. A second surgical correction is needed, and a second laser procedure is needed to correct the issue. 2. Flap becoming displaced, flap breaks, and possible debris becoming trapped under the eye. Directional Strategies Organization’s Mission Statement PACIFIC CATARACT AND LASER INSTITUTE The mission statement that PCLI adheres by is to "provide the best possible comanagement services to the profession of Optometry" (Pacific Cataract & Laser Institute, 2020). Their characteristics are well written and are communicated to their patients. It describes what kind of organization they are. The mission statement does show the uniqueness of the organization. Co -management is when different optometrists work with PCLI in referring their patients to their organization and perform any eye procedure that is necessary for the patient. In order to have a successful co management relationship, PCLI believes that mutual trust and respect needs to be established through shared learning, constant communication and sharing the same commitment of providing quality patient care (Lawrence & Morris, 2002). Organization’s Vision Statement The vision statement that PCLI believe in is earning the patient's and referring physician's trust in their care and caring for their patients. The vision statement correlates with their mission statement. It is clear and consistent. It demonstrates what the organization ultimately wants to do. It gives the patients that sense of hope that this organization is right for them. Co management with building trustful relationships with other physicians and sharing their skills and knowledge with them is one of their vision statements. And lastly, to help patients realize the benefits of co management (Pacific Cataract & Laser Institute, 2020). Organization’s Values The values that PCLI strictly follow is that they believe that the support of family and friends will help with recovery and care of their patients. They believe that giving honest medical information matters and making sure that they understand that information is important. They feel that setting the right stress-free environment will help reduce the usage of artificial sedation (Lawrence & Morris, 2002). All actions will be guided by integrity, honesty, and courage. Doing 14 PACIFIC CATARACT AND LASER INSTITUTE the right thing for the right reason is another value that they go by. They also believe that getting the efficient quality eye care can only come from professionals that practice at the highest level of their expertise. Communication and sharing knowledge with their optometric colleagues are critical to help provide excellent patient care. And lastly, is that the organization has the ultimate success of earning the trust of the referring physicians of their patients (Lawrence & Morris, 20...
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Explanation & Answer

Attached.

Service Area Structural Analysis
Five Forces

Forces Driving Service Area
Competition
The New Entrants Several LASIK clinics are available
Threats
that surround the Washington State
and Canada area. TLC Laser Eye
Centers is one of those organizations
that have 56 clinics in the United
States and 7 clinics in Canada.
Intensity of Rivalry PCLI focuses more on the quality of
care and compassion for their patients
while providing excellent skills on
eye treatments that include laser
vision correction surgery.

Threat of substitutes The threat of substitutes as far as
procedures go is that currently, PRK
and LASIK are the main types of
corrective eye surgery available that
are approved by the FDA. In
conclusion, the threat is high.
Buyers’ Bargaining Vision Service Plan's (VSP) partners
Power
offer discounts and guaranteed
maximum payout price of $1,800 per
eye for VSP members,

Suppliers’
Bargaining Power

The power of bargaining for suppliers
is high because Dr. Ford worked
closely with Laser Sight, a laser
equipment manufacturer that helped
develop procedural enhancements

Conclusion
High. The threat of new
entrants will stay high due to
the growing trend of Lasik
eye surgery being done on an
increased number of patients
in their local area.
High. PCLI may not offer
better prices such as other eye
centers do in Canada, but they
do a much better job by
offering quality services to its
customers. The presence of
highly specialized employees
in the company which cannot
be
easily
adopted
by
competitors makes them
continue operating in the
market. The company cannot
exit the market because of the
high costs of exit in this
industry.
High.
New
surgical
procedures and technologies
are becoming more advanced
such
as
laser
thermokeratoplasty
(LTK)
and conductive keratoplasty
(C.K.).
High. More people will
become eligible for this
benefit in the coming years,
so PCLI may want to consider
accepting this plan since they
currently do not participate in
these plans.
High. The new developments
that were discovered by Dr.
Ford and Laser Sight led to an
enhanced software calibration
system made along with eye

that are unique to PCLI.

movement tracker that helps
to improve eye alignment and
help provide a precise laser
re-sculpting
during
operations. The assets are
highly
specialized,
thus
determining the kind of
services the company offers.


Running head: PACIFIC CATARACT AND LASER INSTITUTE

phase two: External and Internal Analysis
HSA4938
Palm Beach State College

1

PACIFIC CATARACT AND LASER INSTITUTE

2

The External Analysis and its Process
Pacific Cataract and Laser Institute (PCLI) is an eye center that specializes in eye
treatment. A six-step process called an external analysis reveals that the organization has an
opportunity to thrive in the state of Washington. Lawrence and Morris (2002) argue that the
clinic is dealing with a rising number of patients that are experiencing different eye issues. The
clinic has continued to offer various surgical operations and services to these patients. However,
in some situations, the organization experienced various problems that emanated from the
organization's environment. These factors are contributed by the independent variable and which
affects the organization's operations (Khan & Khalique, 2014). This case study analysis
illustrates the different concepts and issues that cloud the organization.
The six-step process is proposed by Ginter et al. (2018). The first step for assessing
PCLI's environment involves organizing the assessment process and creating an issue map
template. The second process involves scanning the general situation, the healthcare system, and
the service area. The third step entailed monitoring and confirming external issues. In the fourth
and fifth conducting steps, forecasting and assessing, respectively, of external problems took
place. Finally, there was a generation of the following issue map.

Issue Map
Issue Map
Categories of Issue

Economic

General
EnvironmentUnited States
Interest rates are high
(Austin et al., 2016).

Health
Care
System-United
States
Healthcare products
and services are
expensive.

Service
AreaWashington State
Services fare lost
because of the high
unemployment rate
(Austin et al., 2016).

The
U.S.
is
experiencing a poor 2017 Tax Cuts and
financial state.
Jobs Act (Siwicki, B Washington State has

PACIFIC CATARACT AND LASER INSTITUTE
The cost of living is 2019)
increasing
(The
USAonline.com,
2020).

Social/Demographic

Legislative/Political

Technological

very few avenues
open
for
direct
participation
in
private
economic
development projects
(MRSC 2017)
Decrease of College People are more Washington residents
graduates
(The health-conscious
have a high literacy
USAonline.com,
(Austin et al., 2016). level.
2020)
Demand for medical Carbon Dioxide from
The average standard care and long-term fossil fuel use and
of living will rise care facilities will deforestation
is
(The
increase
(The making the Pacific
USAonline.com,
USAonline, 2020).
Ocean and Puget
2020).
Sound more acidic
Patients are turning to (Hart, 2020).
natural remedies.
Tax,
consumer Medicare
and Professional bodies
protection,
and Medicaid
promote play a significant role
subsidies policies are subsidies (Austin et in
controlling
stringent.
al., 2016).
healthcare
services
(Austin et al., 2016).
The rising level of Some ACA revenueinternational
trade raising
provisions Washington
State
(The
have been delayed or may not loan or gift
USAonline.com,
eliminated (Siwicki, public funds to a
2020)
2019).
private business due
to state laws. (MRSC
2017).
High technological There
is
high Eye services adopt
advancement
innovation
and technologies such as
technology adoption, laser(Lawless
&
New manufacturing such as the Health Hodge, 2012).
technologies
are Information System
rapidly reducing the (Austin et al., 2016). The controversial use
number of production
of facial recognition
jobs (Chao, Pham, & By 2022, there is an technology (Santos,
Seregine, 2000).
expectation of 20% 2020).
of workers to rely on
artificial intelligence
to do their jobs
(Siwicki, 2019).

3

PACIFIC CATARACT AND LASER INSTITUTE
Competitive

High
competition The
healthcare Eye products and
within
health system is highly services are highly
organizations.
competitive
competitive (Lawless
& Hodge, 2012).
The US remains the Lacking a "value
world’s
largest line" of...


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