A Case Paper on SWOT Analysis

A Case Paper on SWOT Analysis

THE PROBLEM

Community Health and University Health are two healthcare organizations in a state that has

recently seen the continued growth and rising market power of a large health system, as well as

physician and insurer changes and challenges. Both organizations have been financially healthy,

but downturns in the past three months suggest that the good times may be at an end.

Important information for writing discussion questions and participation

Welcome to class

Hello class and welcome to the class and I will be your instructor for this course. This is a -week course and requires a lot of time commitment, organization, and a high level of dedication. Please use the class syllabus to guide you through all the assignments required for the course. I have also attached the classroom policies to this announcement to know your expectations for this course. Please review this document carefully and ask me any questions if you do. You could email me at any time or send me a message via the “message” icon in halo if you need to contact me. I check my email regularly, so you should get a response within 24 hours. If you have not heard from me within 24 hours and need to contact me urgently, please send a follow up text to

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Your initial discussion post should be a minimum of 200 words and response posts should be a minimum of 150 words. Be advised that I grade based on quality and not necessarily the number of words you post. A minimum of TWO references should be used for your initial post. For your response post, you do not need references as personal experiences would count as response posts. If you however cite anything from the literature for your response post, it is required that you cite your reference. You should include a minimum of THREE references for papers in this course. Please note that references should be no more than 5 years old except recommended as a resource for the class. Furthermore, for each discussion board question, you need ONE initial substantive response and TWO substantive responses to either your classmates or your instructor for a total of THREE responses. There are TWO discussion questions each week, hence, you need a total minimum of SIX discussion posts for each week. I usually post a discussion question each week. You could also respond to these as it would count towards your required SIX discussion posts for the week.

I understand this is a lot of information to cover in 5 weeks, however, the Bible says in Philippians 4:13 that we can do all things through Christ that strengthens us. Even in times like this, we are encouraged by God’s word that we have that ability in us to succeed with His strength. I pray that each and every one of you receives strength for this course and life generally as we navigate through this pandemic that is shaking our world today. Relax and enjoy the course!

Hi Class,

Please read through the following information on writing a Discussion question response and participation posts.

Contact me if you have any questions.

Important information on Writing a Discussion Question

• Your response needs to be a minimum of 150 words (not including your list of references)
• There needs to be at least TWO references with ONE being a peer reviewed professional journal article.
• Include in-text citations in your response
• Do not include quotes—instead summarize and paraphrase the information
• Follow APA-7th edition
• Points will be deducted if the above is not followed

Participation –replies to your classmates or instructor

• A minimum of 6 responses per week, on at least 3 days of the week.
• Each response needs at least ONE reference with citations—best if it is a peer reviewed journal article
• Each response needs to be at least 75 words in length (does not include your list of references)
• Responses need to be substantive by bringing information to the discussion or further enhance the discussion. Responses of “I agree” or “great post” does not count for the word count.
• Follow APA 7th edition
• Points will be deducted if the above is not followed

• Remember to use and follow APA-7th edition for all weekly assignments, discussion questions, and participation points.
• Here are some helpful links
• Student paper example
• Citing Sources
• The Writing Center is a great resource

THE SITUATION

Like many other markets, the state in this scenario has experienced widespread consolidation of

providers over the past 10 years. One system, in particular, based in the largest metropolitan area

in the state, has been especially aggressive in functioning as a consolidator. This system has

captured a 45 percent share of the metro market (population of 1.5 million), is a significant

presence throughout the southern and most populous half of the state, and now has about 15

percent to 20 percent of that market, too.

The provider landscape has changed dramatically in this metropolitan area. As a result of

closures and consolidations, only one independent hospital (Children’s) remains where there had

previously been 20. In addition to the large system (which comprises five hospitals), the four

other players, all of which operate essentially exclusively in the metro area, are:

• Community Health with three hospitals and a 13 percent share

• University Health with two hospitals and a 12 percent share

• Catholic Health with four hospitals and a 17 percent share

• North Suburban Health with two hospitals and an 8 percent share

The physician market is also consolidating. Each system has a large employed group that is

roughly in proportion to its size and mostly, but not exclusively, primary-care-based. The only

exceptions are University Health and Children’s, where physician groups are dominated by

specialty-oriented faculty practice plans. There are still a few large independent multispecialty

groups and many single-specialty groups, but here, too, these groups are increasingly migrating

to a relationship (employment or tight joint venture) with one of the systems.

The insurance market has been relatively benign until the past few years. The commercial

insurers’ favored product has been the preferred provider organization (PPO). But here, as well,

the market is changing. Three years ago, there were six commercial insurers, and not one

had more than a 25 percent share of the market. Since then, the two smallest have merged, and

two of the remaining four have been bought by national companies. As a result, the competitive

ante has been raised and providers have begun to be squeezed; and the competitive pressures are

expected to become much more intense in the next two to three years.

In this environment, six months ago, the CEOs of University Health and Community Health

began discussing a potential relationship. Concerned about the increasing market power of the

large system and the developments involving physicians and insurers, both CEOs thought the

time may be right to merge their organizations.

ALTERNATIVES CONSIDERED AND ANALYSIS

Initially, the two CEOs discussed a range of organizational affiliation options, from a shared

services company or a full merger. As a result, they charged financial staff and consultants early

on to define financial benefits in four categories (see exhibit):

• Low-risk, relatively easy-to-implement cost-reduction opportunities

• High-risk, relatively difficult-to-implement cost-reduction opportunities

• Capital cost avoidance opportunities

• Revenue improvement opportunities

Exhibit 1

Because both systems are themselves the product of previous mergers and had six and nine years

of experience, respectively, functioning as merged entities, there was some skepticism as to the

potential for significant additional economies. However, these two systems largely operate in

different parts of the metro area, so combining could improve geographic coverage while

avoiding conflict between the two organizations (for the most part) over the same markets.

Although the numbers may appear large in absolute terms, the combined entity has annual

revenue of $1.3 billion. And the two CEOs recognized that achievement of the financial benefits

estimated would not be without extremely hard work and major organizational change and pain.

So the question for the CEOs and the joint board oversight committee that will receive this

analysis is: What would you do and why?

3

View exhibit 1

* All estimates are in constant 2016 dollars.

Estimated 40% margin on all incremental revenue

FY 2016 Profile: University Health

Acute beds: 650

Inpatient admissions: 35,000

Outpatient visits: 550,000

FTE employees: 4,500

Net patient revenue: $750 million

Operating margin: 8.0%

Unrestricted cash: $500 million

Debt to capitalization: 29.4%

Age of plant (years): 6.4

FY 2016 Profile: Community Health

Acute beds: 500

Inpatient admissions: 26,000

Outpatient visits: 850,000

FTE employees: 4,200

Net patient revenue: $575 million

Operating margin: 7.5%

Unrestricted cash: $200 million

Debt to capitalization: 29.0%

Age of plant (years): 10.5

A case paper on SWOT Analysis

Please identify and explain at least three strengths and three weaknesses of each organization. Please include some of the financial information identified in the case with this analysis.  (15 Points)

4: Please identify and explain at least three opportunities and three threats associated with each organization and the market it operates in. Please include some of the financial information identified in the case with this analysis.  (15 Points)