Case Study Analysis: Obamacare and Insurance Rating Rules

Cultural Diversity for Criminal Justice Professional

June 6, 2018

MBA673/Organizational Change

June 6, 2018

To complete this assignment review the following resources Web resource: Haislmaier E. (2011 January 20). Obamacare and insurance rating rules: Increasing costs and destabilizing markets. The Heritage Foundation. Retrieved fromhttp://www.heritage.org/research/reports/2011/01/obamacare-and-insurance-rating-rules-increasing-costs-and-destabilizing-markets
Complete a detailed case study analysis of the given case using the process described in Appendix A of your textbook Strategic Management of Health Care Organizations.
Your completed Case Study Analysis Report will include the following sections:
Executive summary
Body of the case report
oKey issues
oSituational analysis
oStrategy formulation
oRecommendation
oImplementation strategies
oBenchmarks for success and contingency plans
Where not all pertinent information is given in the case itself search for that information through the South University online library or perform a Web search for the required information. Note: Do not search for information beyond the date of the case.
For the Situational Analysis you are encouraged to provide visual presentation of data in your situational analysis and use the analysis tools from your textbook and other analysis tools you have used in your program such as trend analysis stakeholder analysis etc.
Present your Case Study Analysis report in a Word document formatted in the headings and sub-headings given above.
Submit your report in two steps: First a preliminary report with the key issues situational analysis and strategy formulation. Then the complete report with recommendation implementation strategies benchmarks and the executive summary.
Key Issues: Key issues are complete and clearly explained.12
Situational Analysis
External environment analysis includes detailed service area competitive analysis.12
Internal environment analysis includes strengths and weaknesses with respect to resources competencies an capabilities. The SWOT analysis must include all 4 elements Strengths Weaknesses Opportunities and Threats12
Directional strategies are defined.12
Strategy Formulation: Adaptive market entry and competitive strategies are developed and supported with rationale.
12
Recommendation: Alternatives are practical specific and related to key issues.
12
Implementation Strategies: Service delivery and support strategies are linked to directional adaptive and market entry and competitive strategies.
12
Benchmarks for Success: Measurements for success are clearly identified.
12
Expressed ideas clearly in writing used appropriate visual presentation of data and presented the case study analysis report in the specified format.
12
Applied the correct APA style usage grammar and punctuation.
12
APPENDIX A of Strategic Management of Health Care Organizations.
Analyzing Strategic Health Care Cases
How do students of management gain experience in strategic thinking and making strategic decisions in health care organizations? One way is to work their way up the organization holding a variety of positions experimenting as they develop their decision-making skills and observing other leaders as they deal with issues and develop strategies. Then when the opportunity presents itself they combine what they have learned from others and their own management philosophy and do the best they can. Unfortunately learning by experimenting and observing others may be risky in rapidly changing environments and in the often unique situations that health care managers and leaders face.
Hospitals HMOs long-term care facilities public health organizations and other health services prefer to trust important decision making to experienced managers and leaders. Case studies have been successfully used as a surrogate method to provide aspiring managers and leaders with experience in strategic thinking strategic planning and making decisions without undue risk. The best case studies such as those in this text contain real situations actually faced by managers and leaders in health care organizations and are documented in a way that makes them useful in providing experience for future strategic decision makers. Because many future health care decision makers are not familiar with how to analyze cases this appendix has been included not to prescribe how cases should always be solved but to offer some initial direction on how to surface and address the real issues presented in the cases.
An Overview of Case Analysis
Case analysis provides the student of health care an exciting opportunity to act in the role of a key decision maker. From hospitals to community blood centers to physicians’ offices students have the chance to learn about a variety of health and medical organizations and to practice decision-making skills through analyzing cases.
The decisions required to solve cases represent a wide range of complexity so that no two cases are addressed in exactly the same manner. However the strategic thinking maps presented in this text provide frameworks to aid in strategically thinking about case issues. The fundamental task of the case analyst is to make decisions that will serve as a map to guide the organization into the future. Therefore most case instructors will expect a comprehensive plan for the organization that addresses relevant current issues and provides a viable and reasonably complete strategy for the future. In order to achieve this goal the case analyst typically should:
surface and summarize the key issues
analyze the situation
develop an organizational strategy
develop an implementation plan and
set some benchmarks to measure success.
These categories represent the major elements of strategy development and make appropriate section headings for a case analysis written report or presentation. First using the strategic thinking map presented in Chapter 1 (Exhibit 11) it is important to do some serious strategic thinking about the external environment of the organizationthe political/legal economic social/cultural technological and competitive situations faced by the case characters. After gaining knowledge of the issues in the general and industry environments the service area competitors should be assessed. Next it is important to relate the resources competencies and capabilities of the organization to the external environment which will require a thorough and objective analysis of the competitively relevant strengths and weaknesses. The value chain provides a useful tool for uncovering these strengths and weaknesses. These strengths and weakness must be evaluated as to their potential to create competitive advantages or disadvantages for the organization. External issues and the organization’s competitive advantages and disadvantages provide the basis for strategy formulation. In addition to create the strategy for a health care organization it is necessary to understand its unique mission vision values and strategic goals (directional strategies).
Once the situational analysis is complete strategic alternatives can be generated as possible solutions to the issues identified in the case. Consideration must be given to the possible adaptive strategies market entry strategies and competitive strategies that provide the means for achieving the organization’s mission and goals and lead to the accomplishment of its vision. The effectiveness of the
chosen alternative for each type of strategy must be evaluated. In addition at least some thought must be given to the likely outcomes resulting from the different choices. After the evaluation a recommendation needs to be made from among the alternatives.
Nothing will happen of course unless the strategy can be implemented. Therefore the case analyst must address how the strategy will be carried out. The development of a feasible implementation plan should include specific service delivery and support strategies and where possible action plans. These areas are important because they create value for the organization and translate strategy into organizational and individual actionsthe work to be done.
Finally the case analyst should consider how the success of the proposed strategy should be measured. Returning to the mission vision values and goals will provide an initial measure of success. Other measures will include fit with the changing environment internal changes (development of competitive advantages and lessening of competitive disadvantages) and other more specific measures such as financial measures market share growth and so on.
Although the approach outlined here is logical it is important to remember that a case should be approached and appreciated as a unique opportunity for problem solving. Cases that everyone agrees have only one solution are not good decision-making aids. Moreover managers in health care organizations rarely face problems where the solution is obvious to everyone. This does not mean that there are no good and bad answers or solutions in case analysis; some are better than others on the basis of the logic presented. Sometimes the issues presented in a case are not even problems (defined as a negative occurrence that needs to be addressed). Often the greatest challenge facing an organization is recognizing and acting on an opportunity rather than solving a problem. The evaluation of a case analysis is often based more on the approach and logic employed than the precise recommendation offered.
Cases Strategic Management and Health Care Organizations
Cases add realism that is impossible to achieve in traditional lecture classes. Realism results from the essential nature of cases although students may complain that cases fail to provide all the information necessary for decision making. The complaint is valid because cases rarely provide everything that is needed. However decision makers in health care organizations rarely have all the information they want or need when they face decisions. Risks must be taken in case analysis just as in actual decision making.
Risk Taking in Case Analysis
Any decision about the future involves uncertainty. Decision making under conditions of uncertainty requires that means be devised for dealing with the risks faced by leaders. Cases are valuable aids in this area because they allow the analysts to practice making decisions in low-risk environments. Decisions in a poor case analysis may be embarrassing but at least they will not result in the closure of a hospital or medical practice. At the same time the lessons learned by solving cases and participating in discussions will begin to build problem-solving skills.
Solving Case Problems
Solving a case is much like solving any problem. First information is gathered and issues are defined; the competitive situation is analyzed; alternatives are generated evaluated selected and implemented. Although the person solving the case seldom has the chance to implement a decision he or she should always keep in mind that recommendations must be tempered by the limitations imposed on the organization in terms of its resources competencies and capabilities (although strategies to improve these areas may be required). As the success or failure of the recommendation is analyzed lessons are learned that can be applied to future decision making.
Alternative Perspectives: Passion or Objectivity
Different hypothetical roles can be assumed when analyzing cases. Some prefer to think of themselves as the chief executive officer or leader to impose a perspective on the problems presented in the case providing the case analyst with the liberty to become a passionate advocate for a particular course of action. Others prefer to observe the case from the detached objectivity of a consultant who has been employed by the organization to solve a problem.
Either the leader or the consultant perspective may be assumed but the first offers some unique advantages. To answer the questions from the leader’s perspective it is important to get inside the decision maker’s headto feel the excitement and fear of doing new and innovative things in the dynamic and complex health care environment. However the passion and frustration of the leader suggest why some case analysts prefer to assume the objective posture of a consultant. Not being in the front line can sometimes suggest alternatives that cannot be seen by those directly involved in making the payroll and paying the bills. The consultant can more easily play the devil’s advocate and point out how actions are at odds with current theory. Although the fun and excitement of case analysis is enhanced by assuming the decision maker’s role the options might be expanded through a more objective and detached outlook of an outsider. There are no absolutely correct or incorrect answers to complex cases. The most important lesson is to learn problem-solving and strategic management skills.
Reading the Case
Effective case analysis begins with data collection. This means carefully reading the case rereading it and sometimes reading it yet again. Rarely can anyone absorb enough information from the initial reading of a comprehensive case to adequately solve it. From the very first reading of the case the analyst should start to list the external issues and the organization’s internal strengths and weaknesses. For example when a significant issue is discovered it should be marked for more detailed examination. Is the issue financial? Do the primary issues appear to be those of human resources capital investment or marketing? Perhaps there are few if any apparent issues with negative consequences. The strategic issue facing the organization may be one to be exploited or it may have both positive and negative aspects. For example managed care has created some interesting positive and negative consequences for many health care organizations.
Listing the possible strengths and weakness in the initial reading provides some perspective concerning the organization’s resources competencies and capabilities. This list will provide a basis for further investigation and provide a guide for additional information gathering. Once the situation has been reviewed a better evaluation of the issues facing the organization can be made. An effective way of summarizing the results is through the use of an internal/external strategy matrix (refer to Exhibit 71 on page 249) showing the long- and short-term competitive advantages and disadvantages as well as external issues.
Gathering Information
The information required to successfully analyze a case comes in two forms. The first type of information is given as part of the case and customarily includes history of the hospital long-term care facility or home-health care agency; its organizational structure; its management; and its financial condition. Gathering this information is relatively easy because the author of the case has typically done the work.
A second type of information is obtainable. This information is not provided in the case or by the instructor but is available from secondary sources in the library familiar magazines and related publications or through an Internet site. Obtainable secondary information helps with understanding the nature of the service category the competition and even some managers past and present who have made an impact on the service category.
If the case does not include service category information or competitor information the instructor may expect the class to do some detective work before proceeding. Students should investigate to find out what is happening in the service category and learn enough about trends to position the problems discussed in the case in a broader health care context. The culture of the organization or the style of the chief executive officer may constitute relevant information. Some instructors do not want students to investigate beyond the date of the case or to gather additional service category data. Therefore students must ask the instructor’s preference.
Case Analysis Using the Strategic Thinking Maps
The strategic thinking maps presented in this text provide a means of thinking through strategic management issues and serve as road maps to case analysis. They are useful for analyzing cases and succinctly presenting strategic management decisions in written reports and presentations. The following discussion provides some tips for using the strategic thinking maps in each of the major elements of case analysissurfacing the issues situational analysis development of the strategy and development of the implementation plan.
Tips on Surfacing the Issues
The discussion and questions presented in the Managing Strategic Momentum section of each chapter are designed to surface present and potential issues. In case analysis issues include not only problems but also situations where things may be working well but improvements are possible. The problem may actually be an opportunity that can be capitalized on by the organization if it acts consciously and decisively. With careful analysis patterns can be detected and discrepancies between what actually is and what ought to be become more apparent. In other words fundamental issues not mere symptoms begin to emerge.
Problems vs. Symptoms
It is important to realize that the things observed in an organization and reported in a case may not be the real or essential issues. Often what analysts observe are the symptoms of more serious core problems. For example increasing interest rates and cash-flow discrepancies appear to be problems in many case analyses. In reality the issue is the fundamental absence of adequate financial planning. The lack of planning is simply manifested as a cash-flow problem and rising interest rates certainly complicate cash flow.
Frequently hospitals conclude that they have operational problems in the area of marketing when bed occupancy rates decline. Someone may suggest that the marketing department is not doing a good job of convincing physicians to use the hospital. Sometimes people will complain that the hospital is not spending enough on advertising. The real issue however might be fundamental changes in the demographics of the market area or an outdated services mix that no amount of advertising will overcome. In organizations as complex as health care problems may have more than a single cause so the analyst must not be overly confident when a single simple reason is isolated. In fact the suggestion of a simple solution should increase rather than decrease skepticism.
Using Tools
Identifying key issues requires that information be carefully examined and analyzed. Often quantitative tools are helpful. Financial ratio analysis of the exhibits included in the case will sometimes be helpful in the identification of the real problems. In arriving at the final determination of core problems the analyst should try not to slip into paralysis by analysis and waste more time than is necessary on identifying problems. At the same time premature judgments must be avoided because then real issues may be missed. One general guideline is that when research and analysis cease to generate surprises the analyst can feel relatively though not absolutely sure that adequate research has been conducted and the key issues have been identified.
Check Facts
The issue discovery process should not become myopic. There may be a tendency on the part of individuals interested and experienced in accounting and finance to see all problems in terms of accounting and finance. A physician approaching the same case will likely focus on the medical implications. This approach is too limited a view for effective strategic decision makers. Strategic analysis effectively transcends a single function. Insistence on approaching case analysis exclusively from the viewpoint of the analyst’s expertise and training is not likely to produce an accurate overall picture of the situation facing the organization; nor is this approach likely to improve the organization’s performance.
Information either given or obtained must never be accepted at face value. If a CEO states that the hospital delivers outstanding quality care it should not be accepted as a statement of fact without some thought. For example a character in the case may voice an opinion that is not grounded in fact. The ratios on a long-term care facility’s financial statements may look strange but are they? Before jumping to such a conclusion analysts should look at the financial ratios in a historical perspective. Even better they should look at the history (as well as similar ratios) of other long-term care facilities of the same size during the same time period.
Relevant Issues
Once the issues are identified they must be precisely stated and their selection defended. The best defense for the selection of the key issues is the data set used to guide the issue discovery process. The reasons for selection of the issues should be briefly and specifically summarized along with the supportive information on which judgments have been based. The issue statement stage is not the time for solutions. Focusing on solutions at this point will reduce the impact of the issue statement. If the role of consultant has been assumed the issue statement must be convincing precise and logical to the client organization or credibility will be reduced. If the role of the strategic decision maker has been selected the student must be equally convincing and precise. The strategic decision maker should be as certain as possible that the correct issues have been identified to pursue the appropriate alternatives.
The statement of the issues should relate only to those areas of strategy and operations where actions have a chance of producing results. The results may be either increasing gains or cutting potential losses. Long- and short-range aspects of issues should be identified and stated. In strategic analysis the emphasis is on long-range issues rather than merely handling emergencies and holding things together. However in some situations immediate problems have to be solved and then a strategy developed to avoid similar situations in the future (combination strategy).
It is important for students to keep in mind that most strategic decision makers can deal with only a limited number of issues at a single time. Therefore identify key result areas that will have the greatest positive impact on organizational performance.
Tips on Analyzing the Situation
Situational analysis is one of the most important steps in analyzing a case. In most instances instructors will expect comprehensive external and internal environmental analyses. For external environmental analysis the case analyst may want to use and present a variety of tools including a trend analysis stakeholder analysis the development of a scenario and service area competitive analysis. Whatever method is used a clear picture and assessment of the external environment should be presented. Chapters 2 and 3 provide strategic thinking maps for assessing the external environment.
For the internal environment it is important that the case analyst understands the strengths and weaknesses of the organization in terms of its resources competencies and capabilities. Therefore the case analyst may want to use the value chain as discussed in Chapter 4 to map resources competencies and capabilities and assess their strategic relevance using the criteria of value rareness imitability and sustainability.
Understanding the mission is a good starting point to assess the directional strategies. If a mission statement is included in the case the analyst should ask Does it serve the purpose of communicating to the public why the organization exists? Does it provide employees with a genuine statement of what the organization is all about? In addition the other directional strategies (vision values and strategic goals) should be evaluated as to their appropriateness to the organization and its environment. The vision and goals provide a profile of the future and targets to focus organizational actions. Sometimes the case will indicate what the health care organization plans to achieve in the next year and where it hopes to be in three years or even in five years. As with mission statements if the vision and goals are not explicitly stated there is a need to speculate about them because they will be the standards against which the success or failure of a particular strategy will be evaluated. Moreover because strategic planning is futuristic and no one can predict the future with complete accuracy vision and goals should always be adaptable to the changing conditions taking place in the organization and in the service category. Sometimes an organization will have to face a major strategic problem simply because it was unwilling to alter its vision and goals in light of changing conditions.
Tips on Formulating the Strategy
After the situational analysis a recommended course of actionthe strategymust be developed. Thus adaptive market entry and competitive strategies for the organization must be recommended and defended. Exhibit 64 (p. 201) provides a strategic thinking map depicting the various alternatives for each of the types of strategy in the strategy formulation process.
Effective Alternatives
If obtaining and organizing information have been done well the generation of strategic alternatives will be a challenging yet attainable task. Good alternatives possess specific characteristics:
1. They should be practical or no one will seriously consider them. Alternative courses of action that are too theoretical or abstract to be understood by those who have to accomplish them are not useful.
2. Alternatives should be specific.
3. Alternatives should be related to the key issue they are intended to address. If the strategic alternatives generated do not directly address key issues the analyst should ask how important the issues are to the case analysis; rethinking the issues may be required. Exhibit 61 (p. 199) is helpful in demonstrating how the strategic alternatives relate to external and internal issues.
4. Alternatives should be usable. A usable alternative is one that can be reasonably accomplished within the constraints of the financial and human resources available to the organization.
5. Alternatives should be ones that can be placed into action in a relatively short period of time. If it takes too long to implement a proposed solution it is likely that the momentum of the recommended action will be lost.
Alternative Evaluation
Alternatives should be evaluated according to both quantitative and qualitative criteria. Financial analysis provides one basis for examining the impact of different courses of action. However a good alternative course of action is more than merely the one with the highest payoff. It may be that the culture of the organization cannot accommodate some of the more financially promising alternative courses of action. For the adaptive strategies one or more of the decision-making tools discussed in Chapter 7 should be usedExternal/Internal Strategy matrix PLC analysis BCG portfolio analysis extended portfolio matrix analysis SPACE analysis or program evaluation. For the market entry and competitive strategies matching the external conditions appropriate for the strategies with the internal requirements of the strategies as discussed in the text with internal strengths and weaknesses and external conditions described in the case provide a basis for selecting and defending these strategies (Chapter 7).
The case analyst should be able to map the strategies selected in the strategy formulation process. Strategy maps similar to the one presented in Exhibit 722 (p. 284) show the endsmeans decision logic for each strategic initiative and provide an excellent overview of the strategy of the organization.
Tips on Developing Implementation Strategies
Once a strategic alternative has been selected an action plan is required. Action planning moves the decision maker from the realm of strategy to operations. Now the question becomes How does the group accomplish the work in the most effective and efficient way possible?
The task of case analysis does not require that the analyst actually implements a decision; however because the strategies must be implementable it is necessary that thought be given to how each strategy would be put into action. Therefore value adding service delivery and support strategies must be developed as well as action plans. This process is a continuation of the endsmeans linkage started in strategy formulationthe implementation strategies are the means to achieve the overall organizational strategies.
Each element of the value chain should be addressed comparing the results of the internal analysis with the requirements of the selected strategy. Matching the present situation with the requirements of the strategy provides a basis to maintain the value chain element or change it to meet the needs of the strategy. Exhibits 89 (p. 322) and 96 (p. 3589) provide examples of what instructors might expect for presenting the value adding strategies.
Next action plans for the major organizational units affected by the strategy should be developed. Objectives action plans and budgets should be addressed if enough detail is provided in the case. Finally the responsibility for accomplishing the different groups of tasks must be clearly assigned to the appropriate individuals in the organization. Although this is not always possible in case analysis it is important that consideration be given to how in a real organization the recommendations would be accomplished. If in the process of thinking about getting the different activities completed it becomes apparent that the organization lacks the resources or the structure to accomplish a recommendation another approach should be proposed.
The process of developing action plans for important organizational unitswhether a highly focused unit such as a pharmacy or a broadly focused unit such as a hospital division for a health systemshould not be neglected. Organizations sometimes spend large amounts of money and resources developing strategic plans only to discover that they are not prepared to implement them in an effective manner.
Making Recommendations
Making good recommendations is a critical aspect of successful case analysis. If recommendations are theoretically sound and justifiable people will pay attention to them. If they are not little is likely to result from all the work done to this point.
One effective method for presenting recommendations is to relate each one to organizational strengths. Or if necessary a recommendation may be related to addressing a weakness. If the organization has sufficient financial strength the recommendations should highlight how each alternative will capitalize on the strong financial condition. If on the other hand the resources are limited it will be important to avoid recommendations that rely on resources that are not available or there should be a combination strategy to gain new resources.
It will be particularly useful to ask the following questions when making recommendations:
Does the health care organization have the financial resources needed to make the recommendation work?
Does the organization have the personnel with the right skills to accomplish what will be required by each recommendation?
Does the organization have methods to monitor whether or not the recommendations are being accomplished?
Is the timing right to implement each recommendation? If not when will the timing be right? Can the organization afford to wait?
Finalizing the Report
Preparation and presentation is the final activity in most case analyses. The report can be either written or oral depending on the preference of the instructor. Although the form is slightly different the goal is the sameto summarize and communicate in an effective manner what the analysis has uncovered and what the organization should do.
Decision making is the intended result of the report. The analysis must be complete; but the emphasis should be on making the entire report brief enough to encourage people to read it and comprehensive enough to ensure that no major factors are overlookedespecially those that might adversely affect the decision. Therefore charts and flow diagrams can be effective. In brief outline the important sections of a case analysis report include:
Executive summaryusually one page and rarely more than two pages it functions as an abstract. Its purpose is to force the writer to carefully evaluate

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