Executive Summary
The purpose of this report is to provide a comprehensive analysis of a business strategy used by Emory Atlanta Hospital. In particular, this report provides a brief historical profile of the institution, outlines its vision and mission statements, describes internal and external environments of the company (using EFE, CPM, SPACE and SWOT matrices).
The final section of the report explains how the organization can improve its performance and, correspondingly, to increase its market share.
Introduction
Emory Atlanta Hospital is one of the most reputable healthcare institution of the United States of America, recognized for its medical and academic integrity, exceptional professionalism of the staff and profoundly eventful history. It received numerous awards in cardiac surgery and cardiology, neurosciences and oncology. In the meantime, the hospital faces serious challenges today, which require application of the aggressive development strategies and effective financial management techniques.
Brief Historical Profile
Founded in 1904 on the foundations of Wesley Memorial Hospital, the hospital has evolved into the 275-bed facility by 1922 under the auspices of the United States businessperson and philanthropist Asa Candler. In 1930, the hospital was renamed to Emory University Hospital and the modern phase of its development started (Emory Hospital (a), 2015).
Vision and Mission
Emory University Hospital positions itself as an integrated academically oriented healthcare system. Not only it strives for being the leading provider of attentive and effective medical care, but also it focuses on training professional and committed staff (Emory Hospital Website, 2015).
Thus, the hospital declared that its mission statement is ‘to serve the humankind and to improve health standards by making improvements of the healthcare system through systematic integration of research, education and technology’ (Emory Hospital,(b) 2015).
Correspondingly, the vision of the hospital is ‘to gain recognition as a leading system of academic excellence, which is characterized and distinguished by the highest standards of patient care, innovation and compassion’ (ibid).
The core values of this institution are academic and healthcare excellence, integrity and caring, which explicitly reflect its non-profit orientation and humanistic mission.
External Profile
The external profile of Emory University Hospital has been analyzes through the lenses of EFE and CPM matrixes, analysis of the competition, threats, opportunities and financial ratios.
External Factors Evaluation Matrix
It is reasonable arguing that the hospital is critically dependent on the funding, research grants and subsidies provided by the United States federal government and by the State of Georgia Composite medical board. Therefore, Emory University Hospital strategic framework should be completely harmonized with the healthcare priorities of the nation in general, and with the local medical necessities in particular (Cunningham, n.d.). Should any conflict between the two arise, the interests of the U.S. Department of Health and Human Services should prevail.
Competitive Position, Opportunities and Threats
Currently, the facility is one of the leading healthcare institution in the state of Georgia. Its patient admittance share was 1.5% of the state total in 2013. Although the company was not ranked among the 20 benchmarked institutions in terms of urgent care, it was the top hospital facility in terms of teaching and research. In addition, Emory University Hospital was mentioned above the five top neurosciences institution.
Therefore, it is inferable that the hospital operates in two unique segments: medical training and neuroscientific research and development. The key competitor, which activities overlap the both segments of the hospital operations is Medical Center of Central Georgia. (Georgia Trend, 2013)
The Competitive Profile Matrix
It is evident that the company is rather successful in developing and implementing effective marketing projects. Comparing its performance with the key competitor in its market segment, Emory University Hospital is better in reputational aspects, range of services, use of technology and national rating. However, the institution has some problems in creating a persuasive and patient-oriented presence in the media sphere.
In order to increase its revenues and brand recognition, which is a highly essential aspect of a healthcare institution development, Emory University Hospital should explore these growth opportunities:
Inviting medical professionals from the leading overseas healthcare establishments. The research shows that the most qualified oncology treatment is provided in the Israeli clinics, while the best general surgeons are known to work in Germany. However, average compensation of a clinician in the United States of America is 82% higher than in Israel and 53% higher than in Germany. Thus, this offer may be lucrative for these specialists.
Developing projects for requesting state funding. As discussed before, Emory Hospital has the strongest research and technological facilities in the region. This is a serious competitive advantage, which can make it more advantageous before the U.S. Department of Health and Human Services, which is the chief administrator of national grants in the U.S.A.
Financial Ratios
In 2014, Emory Healthcare declared US$ 2.7 billion in total operating revenue. The amount of charitable health care contributions was US$ 80.4 million, showing the largest profit per employee ratio (US$ 168 750 per one staff member; $438 750 per one member of the clinical staff) (Emory Hospital, 2015).
Financial ratios for 2014-2015 fiscal year are the following:
These ratios indicate that Emory Healthcare is in a comparatively healthy financial condition. The cash flow coverage ratio is above the national average, debt to capitalization ratio is positive, while the operating margin is double to national average (Conover, 2015).
Internal Profile
Internal situation of the company will be reflected through SWOT, SPACE and growth-share (BCG) matrices.
SWOT Analysis
This SWOT analysis reveals only major factors, which are worth analyzing for the entire organization. In order to analyze organizational performance on a departmental level, the analysis should be structurally subdivided.
Generally, this SWOT analysis indicates that Emory Hospital’s strengths and opportunities outweigh its major weaknesses and threats. While the first ones are realistic and proven by practice, the second ones are still spectral. However, the managers of Emory should not defy their importance, especially when the national economy is turbulent.
BCG Matrix and Product Positioning Map
This matrix illustrates the product portfolio offered by Emory Hospital, emphasizing its strongest and weakest points. Meanwhile, it is important to highlight that this matrix represents the main products only:
The matrix demonstrates that Emory’s products with the strongest positions on the market of healthcare are neuroscientific research and transplantation. General surgery and traumatology are the mature markets, where the hospital demonstrates traditionally staid performance. The departments of neuroscience and transplantation are the most promising market areas. Cardiologic and cardiac surgery practices are the most problematic ones. Cardiac surgeries practice does not generate enough profits to reach the break-even, and require additional funding. However, phasing out the operations of these departments is not possible, because the hospital is focused on satisfying needs of the community first, than being a profitable venture (Cunningham).
The map illustrates that neuroscience department of the hospital provides the most expensive services, while adhering to the standards of supreme quality. Transplantation unit of the hospital is somewhere in the middle, while general surgery/traumatology and cardiology/cardiac surgery are the services, for which the company charges comparatively low prices, while provides supreme quality.
SPACE Matrix
This matrix explains the competition model used by the company. Among other issues, this matrix indicates that the hospital operates in the environment, which is mostly determined by the growth of technology, volatility of demand, pricing differences in the category of competitive products, demand pricing elasticity and substitute services pressure.
It is also important emphasizing that because it operates in an attractive and relative unstable industry, the hospital has to focus on developing and marketing its competitive advantages, as well as it should minimize the prices, even if it leads to the profit margins decline.
Strategic Alternatives
As discussed before, the main industry focus of the hospital is training and staffing services, neuroscience, transplantation, cardiology and cardiac surgery. During the latest decades the hospital has been cultivating these industries. These services is in high demand on the market, and re-profiling the research focus is neither financially justified, nor it is accordant with its mission and core values.
However, Emory Hospital may strategically variegate its marketing tools. Not only should it place advertisements in the published newspapers and magazines (a comparatively outdated approach), but it reinforce its presence in the digital space. Promotion in the social networks is a viable tactic and positively tested tactic in this regard
Performance Improvement
Organizational Structure and Recommended Changes
Emory Hospital follows a traditional approach to healthcare management, following a strict hierarchical model of governance. Despite the fact that this model is thought to have many disadvantages to be effective in today’s market, healthcare management is an exception to this rule. Thus, assuming that the organization is controlled efficiently now, introducing the changes is not justified. However, the managers should carefully monitor ‘the best practices’ in this field. If any effective approach to organizational management which is more effective than the current one appears, Emory Hospital should analyze the impacts of its implementation.
Strategies to Increase Market Share
Several strategies to increase the market share of Emory Hospital in its core practices are available:
The use of affinity marketing principles – the hospital should create partnership agreements with the general practitioners, who work in the state. The GPs should direct their patients with acute medical needs to the hospital.
Community marketing – to popularize the image of Emory Hospital among potential patients, the hospital should start publishing personal stories of its former patients.
Project Objectives and Milestones
Execution of this project pursues the following objectives:
Financial Projections
In accordance with the present financial estimates, increasing annual operating profits from US$ 2.7 billion in 2015 to US$ 3.6 billion (considering inflation and rise in interest rates) is a feasible possibility.
Conclusions
Secondly, financial performance of the hospital is significantly beyond the market median. Not only it manages its operating margin is double to the industry ratio, but also its cash flow indicates that the funding is sufficient for the operational and strategic needs.
Lastly, the performance may be significantly improved, if the organization develops and implements new marketing strategies (content and community marketing), as well as intensifies its online presence. As a separate project the hospital should intensify its campaign in soliciting private and public research grants. These measures may substantially reinforce rating position of the organization and increase its market share.
References
Conover, C. (2015). “Seriously, Steven Brill? Hospitals Make 'Gluttonous' Profits?” Forbes – Healthcare, Fiscal and Tax. Web. Available at: http://www.forbes.com/sites/theapothecary/2015/01/28/seriously-steven-brill-hospitals-make-gluttonous-profits/#5b5d8cb83efe
Cunningham, T.R. (n.d.) Organizational Behavior Management in Health Care: Applications for Large-Scale Improvements in Patient Safety. Web. Available at: http://www.ahrq.gov/downloads/pub/advances2/vol2/advances-cunningham_11.pdf
Emory Hospital and University (b). (2015). Emory Healthcare's Mission, Vision and Values. Web. Available at: http://www.emoryhealthcare.org/about-us/mission-vision.html
Emory Hospital and University. (2014). Audited Financial Statements 2013-2014. Web. Available at: https://www.finance.emory.edu/home/accounting_svcs/Audited%20Financial%20Statements/FY2014_Audited_Financial_Statement.pdf
Emory Hospital and University. (2015). Audited Financial Statements 2014-2015. Web. Available at: https://www.finance.emory.edu/home/accounting_svcs/Audited%20Financial%20Statements/FY2015_Audited_Financial_Statement.pdf
Georgia Trend. (2013). Georgia Hospital Rankings 2013. Web. Available at: http://www.georgiatrend.com/December-2013/Georgia-Hospital-Rankings-2013/
