children's hospital of michigan strategic plan -...

Running Head: CHILDREN'S HOSPITAL 1

Children's Hospital of Michigan Strategic Plan

Team 2:

Chanelle Christie

Cynthia Faust

Milton Griffin

Phillip Hinson

Jacqueline Hoekema

Christine Lewandowski

A project submitted in partial fulfillment

of the requirement for the degree

Master of Arts

Dr. John Fick

Strategic Leadership (OB)

Siena Heights University

Southfield, Michigan

5/21/2015


Children’s Hospital of Michigan Strategic Plan

Background and Overview of Children's Hospital of Michigan (CHM)

Children’s Hospital of MI has come a long way from its inception in 1886. It began as a

small area of the Harper Hospital to treat “children regardless of race, religion, or ability to pay”

(About Children’s, n.d, para. 2). Dr. Devendorf established this to care for children so that their

parents wouldn’t have to go into poverty staying home to care for them. He said, “We will take

the most hopeless cases. All the children who are suffering from want of care or illness in Detroit

will be nursed and made well if we can do it” (About Children’s, n.d., para 4). This has remained

the core mission of the current Children’s Hospital of Michigan. “Its current mission is to meet

the physical and emotional needs of youngsters with common childhood illnesses, as well as the

diagnosis and treatment of rare and unusual diseases” (About Children’s, n.d., para 4).

Since, the hospital has grown and developed to be a premier center for pediatric care. “It

was Hiram Walker, however, who was responsible for taking Children's Hospital from a series of

rented houses and barns to an admirable facility” (About DMC, n.d, para 1). Among his own

tragedy with his daughter, he donated a new building to the hospital in 1896 (About DMC, n.d.,

para 1).

Many developments have led to achieving many accomplishments in the way of pediatric

medicine. “As Children's grew into a state-of-the art hospital, it served both as a pioneer and

advocate by leading the way in researching Sudden Infant Death Syndrome, genetically caused

childhood diseases, and nutrition needed to improve maternal and child health, and lobbying

state legislature to write laws that would identify and protect abused and battered children”

(About DMC, n.d., para 6).


DMC Children’s Hospital of Michigan has more than 40 clinical specialties and is an

international leader in pediatric and adolescent medicine. Surgical services include general,

neurosurgery, orthopedics, and cardiovascular. Imaging technology designed especially for

children provides advanced diagnostic services such as Positron Emission Tomography (PET)

and MRI. The Children’s Hospital of Michigan’s Emergency Department is a verified Level 1

Trauma Center dedicated exclusively to children. Experts in pediatric critical care, rehabilitation,

neonatal and perinatal medicine provide care for thousands of children every year (About DMC,

n.d., para 5).

“The hospital offers outpatient specialty and rehabilitation centers serving children in

Birmingham, Bloomfield Hills, Canton, Clinton Township, Dearborn, Detroit, Novi, Southfield

and West Bloomfield” (About Children’s, n.d., para 5). The hospital has won much recognition

and awards for its contribution to pediatric medicine. It is affiliated with Wayne State University

and Michigan State University (Services, n.d., para 2).

Directional Strategies

According to Ginter et al, (2008), “mission, vision, values, and strategic goals are

appropriately called directional strategies because they guide strategists when they make key

organizational decisions” (p. 161). Together, the directional strategies provide a basis for an

organization in which they conduct their day to day operations which highlights the importance

in developing well-conceived directional strategies (Ginter et al., 2008). More importantly, a

successful business will communicate their written mission, vision, values, and strategic goals to

their entire organization.

The mission statement describes the purpose of a business. “An organizational mission is

a broadly defined and enduring statement of purpose that distinguishes a healthcare organization


from other organizations of its type and identifies the scope of its operations in product, service,

and market (competitive) terms” (Ginter et al., 2008, p.162). The mission of an organization will

capture their distinctive character (Ginter et al., 2008). A mission is a general statement about an

organization, but it is more specific than a vision. Children's Hospital of Michigan mission

states:

Mission

"Children's Hospital of Michigan (CHM) will improve the health and well-being

of all children and their communities by advancing the science and practice of pediatric health

care and through advocacy efforts" (CHM, 2015, para. 1).The proposed mission statement is as

follows per team two’s analysis: Children’s Hospital of Michigan will be the premier leader in

pediatric services in Southeastern Michigan serving the community regardless of their financial

ability. Children’s Hospital of Michigan will be a leader in research, technology, and

differentiate from competitors by improving quality, safety, and cost leadership.

An organization's vision is a statement of hope for the future. This vision is the

inspiration of the business leadership and the dream of what they strive for their organization to

become (Swayne et al., 2008). Some important factors for an effective vision are to have

originality and clarity (O'Hair, Friedich, & Dixon, 2011). A vision that is readily understood by

all members of an organization makes this easier to follow. CHM's vision states:

Vision

Children's Hospital of Michigan will fulfill its mission by being an outstanding

provider of child health services within the Detroit area and throughout Michigan

to patients around the region, nation and globe. We will establish a national,

regional and statewide child health system, promote a family-centered system of


care and prevention, engage in the generation of new knowledge relevant to child

health and well-being, educate physicians and other health professionals in the

provision of care to children, and advocate for programs which will benefit

children, families and communities (Children's Hospital of Michigan, 2015,

para.2).

The proposed vision statement is as follows: Children’s Hospital of Michigan will

be an innovator in pediatric medicine research and technology implementation. CHM will

strive to be a market leader by developing its competencies and achieving cost leadership

in order to continue to serve its communities in alignment with its mission. CHM will

treat each and every patient and family member with dignity, respect, and empathy while

providing access to care regardless of financial ability.

The values of an organization "are the fundamental principles" that they stand for (Ginter

et al., 2008, p.179). They also define the uniqueness of the organization. "Values are the

principles and ideas that organizations strongly believe in and consider important" (O'Hair et al.,

2011, p. 26). A successful organization will have these shared values among all employees.

CHM's values are stated as:

Values

"Children's Hospital of Michigan's values are: accountability, compassion, excellence,

innovation, integrity, partnership, respect, and unselfishness" (Children's Hospital of Michigan,

2015, para. 3). Accountability refers to the organization living up to their end of providing

premiere healthcare services to children. Compassion is about taking into consideration the

nature of the illness and the impact on the child, family, and psychological needs of them both.

Excellence will be achieved by continuing to implement the newest and most advanced


technology and research in the care of children. Innovation is described as discovering new ways

to tackle new problems in ways that are not applicable from previous medical practices. Integrity

will be maintained by treating each customer with the highest ethical standards. Partnership

refers to the collaboration with child, parent(s), and healthcare provider to treat and sustain

health. Respect will be given in all interactions taking into account the diverse nature of the

demographics and respect for cultural differences in treating patients. Unselfishness refers to not

withholding any of these values for financial gains.

The strategic goals of an organization will be developed after the mission, vision, and

values are established. "Goal setting should be focused on those areas that are critical to mission

accomplishment" (Ginter et al., 2008, p. 181). These areas are called the critical success factors

and they are what is necessary for an organization to achieve if they are going to reach their

vision (Swayne et al., 2008). CHM's strategic goals are stated as:

Strategic Goals

Children’s Hospital goal is to select a vendor that is very well known in dealing with its

competitors, such as, Beaumont Hospital, Oakwood, Botsford, St John Providence Hospital, and

Henry Ford Health System and many other hospitals in Michigan (Christie, 2015). However, the

goal is to utilize Press Ganey to monitor and improve patient satisfaction. “To improve the

patient experience, health care providers must first be able to see and understand the complex

relationships between satisfaction, clinical, safety and financial measures” (Press Ganey, 2015).

Another strategic goal that CHM are implementing is called GEMBA. GEMBA is a

Japanese word which means, at the site. When GEMBA is used in conjunction

with process improvement methodologies, it refers "to the act of making observations of

the process in action” (google, 2015). Each day the leaders of Children's Hospital, such as,


managers and directors form teams and go to each department site within the hospital to view

each department's boards that has ratio performance and graphs of performance (Christie, 2015).

Each department must set a goal. These goals are aligned with the corporate metrics utilized by

Tenet Healthcare Corporation, its parent company. An example of a goal is quick patient

admission into a department such as the emergency department. The leader would make sure that

goals are met and to speak to the departments to encourage what they can do better. Monitoring

the metrics enables leadership to make proactive corrections the current process. The CHM

implements GEMBA and KAIZEN to align the strategy of managing visibly and implementing

Lean management (Expert Resource, 2015). This is a participative style of leadership.

External Environmental AnalysisGeneral

Political

There are many anticipated changes in the environment due to politics. To highlight

some, funding of healthcare, prison systems, education, and infrastructure repair are of need of

immediate attention. According to The National State of State Budgeters, "Much of the

additional spending in governors’ budget proposals is targeted towards making greater

investments in areas such as education, economic development and infrastructure" (Summaries

of fiscal, 2014, para. 3). Tax policies affecting businesses will also impact the general public

associated with the burden of rising costs. As mentioned in Congress, “Senate Majority Leader

McConnell also identified reform of an “insanely complex tax code that is driving jobs overseas”

as a priority for the 114th Congress if not corrected” (Opportunities and Challenges, n.d., para 2).

The more jobs sent overseas, the less employment here to contribute to economic growth. The


less the general public has access to disposable income, the more the economy suffers in

stagnation.

The immigration issues and how they are handled in the upcoming election will also have

major impacts, not only on the costs associated with the healthcare industry, but the economy as

a whole as costs continue to climb to care for those not legally immigrating and contributing to

the tax base to fund healthcare. Immigrants are important to the social fiber of our society in

contributing to economic stability and growth. “Since 2000, the immigrant population has

increased by 30% to a record 41.3 million” (Immigrants, n.d., para. 2). However, the amount of

unauthorized immigration has decreased (Immigrants, n.d.). Our current population growth rate

is not enough to sustain economic growth without allowing for immigration and adding to those

employed and paying taxes. The 2016 election will prove to be a challenge to the healthcare

environment; in addition, to the general environment in how these issues are handled.

“Immigrants to the United States represent a sizable and rapidly growing group that totaled

approximately thirty-six million people, or 12 percent of the U.S. population, in 2005”(Derose,

2015). However, over the years it has been reported that “the estimated twelve million

undocumented immigrants living in the United States in 2004, 81 percent were from Latin

America, and 86 percent were thought to have arrived since 1990”(Derose, 2015).

Reform to the structure of social security will also need to be considered in the political

arena as the population ages and the increases strain on the costs associated with caring for this

demographic. Simply, there will not be enough employed Americans to support the rising costs

of the vast elderly population who is also living longer due to increased technology in life

sustaining medicine.


Political turmoil leads to increased costs of fuel from foreign nations. This has a domino

effect at raising the costs of transporting and manufacturing goods and so on. This also changes

how the demographics reorganize to survive the economic strain. Changes in a seemingly small

part of the external environment can have a domino effect elsewhere. According to Bloomberg

News, the US has decreased its spending in defense while other countries, such as, China and

Russia have increased their spending in defense (Yoon, 2015).

In addition, employee-based insurance may be diminished (Ginter et al., 2013, pp.36-37).

Enders (2013) stated, “An aging population, federal and state budget deficits and the potential

addition of 16 million lives to cover are among the trends coming together to drive major

Medicaid reform.”

The cost of water is another issue. In addition to the shortage of water supply, there is a

demand for replacement of the old system that has increased costs that were not previously

budgeted by politicians. These costs will now be passed onto the public. These replacements

could end up costing over $2 trillion over the next 25 years, according to Tom Curtis from the

AWWA (American Water Works Association) (Sustainability, n.d.). This shortage of supply is

forcing states to look for new sources of water in distant areas.

Social changes

With an increase in immigration and predicted birth rates, "Whites will become a

minority (47%) by 2050” (Passell& Cohn, 2008, para.5). The baby boomer population will

double in size and consume more than the fair share of resources related to social services. As

the lifespan improves, there will be more pressure on healthcare organizations and government

funding. According to the Social Security website, Americans are living longer and are having


fewer children. These two factors result in the aging of the U.S. population and a subsequent

strain on the Social Security System. Additionally, aging of America has created a situation in

which fewer workers will be tasked with supporting a growing retired population. The baby-

boom generation will soon reach the early eligibility age for retirement under Social Security.

The U.S. will then find themselves at a crossroads where which the older population have grown

at a rate that far outpaces that of the working-age population.

The Hispanic population will continue to flourish. This will also change the way

communication is performed with language barriers becoming more prevalent. Ginter et al.

(2013) stated, “Tiered access to health care is anticipated, with the division between the tiers

becoming more extreme. An increase in income disparity is expected and a more ethnically

diverse population will continue to develop” (p.47).

With an increase in population predicted, the amount of raw resources is depleting at an

alarming rate. This will also force the costs associated with demand higher or force innovative

ways to make do. The prevalence of the ecological impact of businesses will be more important

to business’ success and branding. It will be an important market driver in how "green" a

company is perceived as. Ethical and responsible will be an indicator of success. However, due

to a rise in different ethnic backgrounds and cultures within Michigan’s health organizations,

strategic planning will be necessary to expand their organization to handle larger productivity.

Industry Specific Analysis

Technological

Technology will continue to evolve and advance. It will be essential for healthcare

providers to keep up with their industry specific advances ahead of the competition. Technology


that brings the virtual world of medicine to the customer will be needed to embrace before the

competitors in unrelated industries beat healthcare providers to it. Telemedicine is projected to

grow six times to avoid Medicare penalties and reduce readmission rates by monitoring the

patient remotely (Telehealth to grow, 2013).

An increase in technology will improve the health of people extending their lives, which

was not possible a decade ago. New advances in imaging, drug design, minimal invasive surgery,

genetic mapping, and testing, gene therapy, vaccines, and artificial blood will emerge in these

areas (Ginter et al., 2013). The electronic health record implementation and telemedicine will

improve quality patient care and standardization of care. The research of the today will be the

surgical procedures of tomorrow. Technology changes will include high costs in equipment, an

updated electronic health record database, medical information, drugs, imaging, surgeries, and

vaccines. Technology within health organizations such as Children’s Hospital of Michigan has

grown and will constantly continue to grow as patient data will need to be transferred. Electronic

medical records are a popular way to for technology to constantly keep advancing within health

organizations.

Regulatory

With advances in technology comes the necessity for regulatory measures that healthcare

providers will have to contend with to remain within ethical and moral boundaries. As medicine

reaches far into sustaining life beyond normative measures, regulations will come into place

regarding research and development of new advanced treatments. Research and development

will proceed with monumental progressions that will alter the mortality and morbidity rates of

disease pattern.


There will also be the second phase of meaningful use implementation that will be

regulated more heavily in order for providers to comply with the incentives of EMR

implementation. There will also be a catalyst for regulatory measures to ensure Public Health

Information (PHI) is protected and who is responsible in the event of a security breach. The

second phase of the implementation of ICD 10 billing is expected to pose a challenge for

healthcare providers not prepared. “Although many of these regulations were designed to

improve care and efficiency, many providers see them as burdensome and impractical” (Beckers

Hospital Review, Regulatory demands, 2014, para. 1).

Additionally, the EPA has proposed that states reduce carbon emissions over the next

fifteen years. The healthcare industry will have to focus on the public’s changing perspective on

value. This will include going “green” and being ecologically and socially responsible, in

addition, to providing quality over volume healthcare. “Green industry methods are on the rise

because they’re increasingly demanded by consumers, sought after by shareholders, and required

by governments” (Green Industry, n.d., para. 13).

Specific to the healthcare industry, political issues affecting the reform of the current

ACA model and possible repeal could pose major challenges for healthcare organizations.

Changes to the funding of CHIP (Children's health insurance program) could also decrease

accessible care for those most vulnerable. “The year is likely to see a down-to-the-wire debate

over federal funding for the Children’s Health Insurance Program. A decision in Congress not to

continue funding the program would leave last-minute holes in state budgets while stripping

millions of children of health coverage”(The top ten, n.d.,para. 3).Therefore, it is expected for

health insurance percentages to be on the rise for the adult population and small business as some

smaller businesses in the near future may be facing lots of penalties because of the rising


insurance costs and the mandating of health coverage and for children’s insurance plan to

possibly be a thing of the past in the near future due to budget cuts. Also, health expenses have

increased and will continue to do so.”health-related expenditures are now rising faster with

increasing co-payments and deductibles, and a much larger percentage of the population is

without health insurance”(Campbell, 2008, para. 2). The political arena is taking away services,

such as, insurance that is needed to ensure children are getting the quality of care that they

deserve in the counties that Children’s hospital is serving. However, due to the Children’s health

insurance expiring in September there are states that are required to budget finances for medical

coverage and without prompt action there will be a lot of children uninsured. (LA Times, para 3,

2015). It is predicted that children under 18 and under coverage will be cut in half and from the

years of 1997 to 2012 there already been some declining medical coverage for our children(LA

Times, 2015,para 3). The children who need to see specialist would have a much harder time

because of not having all procedures covered to get the quality of care that they need because of

the cutbacks. Each state would have to strategically plan for the insurance of the children of

ways to still care for the children without proper funding that the federal government was once

giving.

Service Area Competitor AnalysisService Area

Children’s Hospital of Michigan, along with its closest competitor’s span two of the

seven counties that help make up what is referred to as the “Region” of Southeast Michigan.

Two of the closest competitors are Beaumont Children’s Hospital in Royal Oak, Michigan, and

Botsford Hospital in Farmington Hills, Michigan; both located in Oakland County. The third is

Oakwood Hospital, which shares Wayne County with Children’s Hospital of Michigan. All

competitors are within a twenty-mile geographic service area.


According to the Southeast Michigan Council of Governments (SEMCOG), during the

2000s both Oakland and Wayne counties were greatly impacted by the statewide recession for

the greater part of a decade, before the nationwide Great Recession of 2007. During this period,

Oakland and Wayne counties were particularly hard hit. Loss of considerable number of jobs

and people plagued these counties adding to the demographic, social, and economic changes

experienced. Review of recent statistics from the Census American show that both Oakland and

Wayne counties are currently on a slow path to recovery.

In 2012, Southeast Michigan experienced an increase in population for the first time

since 2003, after experiencing population loss for eight years consecutively. However, the region

remains three percent below its 2000 population, while the growth experienced between 2011

and 2012 was a considerable amount smaller than the losses that occurred during the recession

years. While the region continues to experience more births than deaths, natural increase fell 38

percent during the four year period of 2008-2012. Domestic migration is the lowest it has been

since 2001. While this is encouraging, more people are continuing to move out than in,

evidenced by the region’s loss of 6,000 people between the years 2011-2012, due to out-

migration.

According to the most recent census statistics, the regional unemployment rate dropped

between 2010 and 2012, from 16.3 to 11.8 percent. While these rates remain higher than the

national rates, they are closer than ever before. This narrowing gap indicates that recovery is

occurring faster in the region than nationwide. With unemployment rates still high, the region’s

median household income has been negatively impacted by 22 percent over the course of a

twelve year period of 2000-2012. When compared nationally, this decline in household income

fell well below the national average. Although Southeast Michigan’s per capita income slightly


increased in 2012, when compared to 2000, individual income declined by 14 percent, while the

nationwide rate was 8 percent.

According to the most recent Census, “wide income disparities continue to exist among

households in Southeast Michigan” (SEMCOG, November 2013, p.6-7). The recession affected

the lower-income households disproportionally. Between 2000 and 2012, some of these incomes

dropped by 30 percent, thereby adding to the poverty levels of the region. Census statistics

indicate the percentage of people in the region living in poverty “declined from 17.8 percent in

2011 to 17.3 percent in 2012” (SEMCOG, November 2013, p.7-8). Today, the region’s poverty

rate remains higher than the nation’s. While poverty rates for children under 18 declined slightly

by 2012, the rate is back on the rise placing one in every four children in Southeast Michigan in

poverty.

While the recession is over and the region is showing signs of slow recovery, the

downturn of 2007 continues to affect the social and economic well-being of Southeast Michigan

residents. With the substantial, regional loss of population over the past ten years, along with a

decrease in natural increase; increased migration into the region continues to be a critical success

factor for future population growth. According to SEMCOG, 2014 population estimates indicate

that Wayne County will lose 3.7% of its population, while Oakland County is trended to increase

its population by 3.9%. Due to the geographic location of its competitors in the service area, the

burden is placed on Children’s Hospital of Michigan to create additional value in order to

persuade customers to travel for pediatric services that are offered by a closer competitor.

Population Change by Community, Southeast Michigan, 2010-2014

County CensusApr. 1, 2010

EstimateDec. 31, 2014

Variance Percent

Oakland 1,202,362 1,249,149 46,787 3.9


Wayne 1,820,650 1,752,566 68,084 -3.7

Source: SEMCOG, Population and Household Estimates for Southeast Michigan, December 2014, p.1, table 1.

While unemployment rates continue to decrease slowly, the per capita and median

household income, continue to decrease. This continued decrease has devastating effects on

households in the lower income brackets, resulting in poverty rate increases. With poverty rates

on the rise in Southeast Michigan, the dramatic increase in poverty among children is of

particular concern. “Poverty in early childhood often carries over into adulthood, thereby

negatively affecting the productivity and earning power of these individuals later in life,”

(SEMCOG, November 2013, p.7-8).

Although the region is on the slow path to recovery, it continues to lag behind the

national averages in several indicators to include; unemployment rates, incomes, and poverty.

Closing these gaps is imperative for Southeast Michigan to make a strong, sustainable rebound.

Competitor Analysis

A competitor analysis was conducted using three similar organizations within the

operating vicinity of Children’s Hospital of Michigan. These direct competitors are as follows,

Beaumont Hospital, Botsford Hospital, and Oakwood Hospital. All three competitors operate

within the same metropolitan areas as that of Children’s Hospital of Michigan, and offer similar

services.

A chart was created (figure 1.) to show a comparison of 4 major areas, the number of

staff, number of physicians, number of beds, and number of pediatric services offered. As we

take into account these areas, we also review each hospitals strengths and weaknesses.


Beaumont Hospital

This 141 bed children’s facility has many strengths that lend them to be a major

competitor within the aspect of children’s care. Their biggest strength is the more than 80 sub-

specialty pediatric treatments that they provide which include gastroenterology, neurology,

oncology, pulmonary, and vast surgeries (beaumontchildrenshospital, 2015). What adds to the

value of these treatments is that they are offered at more than one location, Troy, and Royal Oak.

Another strength for Beaumont is they are rated as a Level 1 Trauma facility for pediatric

patients, of which there is staff on hand 24/7 (beaumontchildrenshospital, 2015). This gives great

comfort to those who seek excellent emergent care for their children. They also offer an after-

hours pediatric clinic, which accepts walk-in appointments (Beaumont, 2015).

Some of Beaumont’s weaknesses include a drastic difference in their Emergency Room

waiting time, as to that of which they advertise. Some people choose Beaumont’s ER over others

simply based on the radio and TV advertisements stating that they have a short ER waiting time.

However, if you read patient reviews, many of them are a reflection of long waits upon arrival at

their ER. Another weakness may be that of not enough staffing. With so many sub-specialty

services offered, the difficulty becomes having the appropriate staff that are trained in said sub-

specialties, and are also available to work.

Botsford Hospital

Botsford Hospital is a 330 bed facility (16 pediatric bed) that when compared to their

local competition, are not as prevalent in the pediatric services field. However, for being a

smaller provider of pediatric services, they do have strengths that benefit those who utilize them.

One strength is the pediatricians staffed with Botsford Hospital are on-call and available 24/7 to


their patients (Botsford, 2015). Another strength is they are highly rated by the Leapfrog Group,

a group that conducts safety and quality surveys amongst hospitals nationwide (Botsford, 2015).

When patients can review survey information, and that information is positive, it will help

strengthen the patient’s confidence.

Botsford’s weaknesses when compared to their competition in terms of services offered

in pediatrics are many. In comparison, Botsford does not seem to find it necessary to expand

upon their pediatrics program with specialty services. They seem to stick to the basics when it

comes to pediatric services.

Oakwood Hospital

This 632 bed (combined within the system, 30 pediatric beds) Oakwood Hospital offers

many services that are great strengths to pediatric patients. Oakwood Hospital operates with a

Level III Neonatal Intensive Care Unit which is staffed 24/7 (Oakwood, 2015), a strength that

will always attract customers, Oakwood offers same day or next day pediatric appointments

(Oakwood, 2015). They also offer after hours, and weekend pediatric care (Oakwood, 2015).

This security will help parents feel more at ease that their child will soon be seen, and hopefully

feel better. Other strengths within Oakwood are the numerous pediatric services provided which

include oncology, gastroenterology, cardiology, and neurology (Oakwood, 2015). They also

offer behavioral and therapeutic services to include occupational, physical, and speech therapy

(Oakwood, 2015). These vast amounts of services provided make Oakwood a top competitor for

pediatric services.

A weakness that may affect Oakwood Hospital from receiving return customers is that of

their emergency room admissions operations. There are numerous complaints that speak of the


long waits that patients seeking treatment encountered. With ER wait times a major draw for

patients seeking immediate care, Oakwood could help improve their patient relations by

lowering wait times.

0%10%20%30%40%50%60%70%80%90%

100%

Number of Beds

Number of Services

Number of Physicians

Numer of Staff

Figure 1

Internal Environmental Analysis

Point of Service

Strengths Weaknesses

The largest healthcare system in Michigan

Large operational expenses

Multiple clinical services Abundant capital needs

Multiple surgical specialist Extended wait time

EMR pioneers Physicians and employee dissatisfaction as early adapters


Competitive Relevance

Strengths Is the value of the strength high/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)

Implication

Abundance of technology

H N D YCompetitive advantage most other competitors do not have the capital to invest in new technology

Inpatient services

H N D Y

Competitive advantage most other competitors do not have the operational revenue to sustain the expense to offer the depth of services

Level one pediatric trauma center H Y D Y

Competitive advantage the hospital receive federal funding as designated trauma center and the medical center is the only level one (pediatric) trauma facility in the area

Organizational

Structure

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


Commitment to research pathology H N E Y

No Competitive

Advantage

Diversity

H N E Y

No Competitive

Advantage

Employee Engagement

H N D Y

No Competitive Advantage

Growth Strategy based on internal development

H N D Y

No Competitive

Advantage

Organizational Structure

Organizational Structure: Functional Pediatrics

Strengths Weaknesses

Largest freestanding Children Hospital in the State of Michigan, International reputation in pediatric medicine

Long Patient wait times

Growth Strategy based on internal development and acquisition

Staff nursing shortages

Experienced management team and Technology Technology Machines over a decade old, technology down time due to needing repairs.


Resources: The organizations commitment to pathology resource is considered as a high value

within the organization. With over 100 residents in training, CHM offers a diversity of pediatric

experiences, including urban and suburban clinical rotations, a track in international medicine

and opportunities for child advocacy (Children’s Hospital Of Michigan, 2015).

Competency: Knowledgeable of having diversity in the workplace to ensure creative strategic

planning is very sustainable within the organization. Also the organizations competency to

engage its employees leads to better production results and better patient care and quality

outcomes.

Capabilities: The organization is capable of expanding and introducing by proving new

department within the organization. The capability to fund research programs by finding grants

to keep a high capital of the organization or add on the capital. CHM also is capable and known

for branching out to different regional areas. The newest addition to Children's Hospital of

Michigan is the new pediatric children's hospital that is was built in Troy, Michigan.

The strength of CHM is that the hospital understands their point of service. The structural

point of service is being able to grow in production by accepting new patients because of the

CHIP and Medicaid program being on the rise. The organization structure also creates new

opportunities in the internal environment by being able to support and have technology and

equipment as needed. The organizational strength is also recognizing and implementing a

strategy of “expanding patient volume, the second is to specialize in particular service lines and

the third is to integrate with other health systems (Gamble, 2013).

Strategy Formulation and Evaluation


Overview

Based on the evaluation and analysis of the service and competitor market area, internal,

and external environments, CHM is leading the market in pediatric services. CHM exhibits a

competitive advantage over most other competitors by maintaining operational revenue to

sustain the expenses incurred offering the depth and diversity of pediatric services. In addition,

due to the Level One pediatric trauma designation, CHM receives federal funding that aids the

facility in the replacement of capital equipment, while their competitors do not have access to

this additional governmental funding. Given all previous information regarding internal

resources, competencies, and capabilities, it would be in the best interest of CHM to maintain the

scope of their outpatient pediatric specialties.

Adaptive Strategy

The adaptive strategy most currently suitable for CHM is a maintenance strategy of

enhancement by means of internal development of all outpatient pediatric specialties. The

strategy of enhancement will further utilize the organization's strengths to add value to already

existing pediatric services. Through internal development and special focus on enhancement of

quality, efficiency, speed, flexibility, and innovation of existing services and market area, CHM

will be equipped with the necessary ammunition to sustain the competitive advantage they hold

today. Service development would provide a sustainable competitive advantage in providing

unique specialty services to serve the demographic health disparities, while promoting the

organization’s current strengths and services within the market.

Further analysis of the current state of the organization, utilizing the TOWS and SPACE

Matrix analyses, recognizes the need for maintenance of scope for the organization to remain a

front runner in the service market. Some of the identified threats to CHM include; Beaumont


Hospital merger to increase presence and achieve economies of scale, financial strain affecting

reimbursements, a decrease in available caregivers and providers; not enough to meet the

projected needs of the community, a decrease in funding of Medicaid and CHIP, and a steady

decline of pediatric population in the service area. Additionally, these threats bring opportunities

such as increased need for services as demographics change, improving economy, ACA to insure

many who were not previously insured, reduced spending due to regulations and changes in

reimbursement, and maintaining the current strong market presence that CHM realizes today.

TOWS Matrix

STRENGTHS WEAKNESSES

THRE

ATS

O

PPO

RTU

NIT

IES

SOEnhancement strategy; internal development.Continue to reduce costs to continue profitability. Continue process improvement to compensate for reduction in Medicaid/Medicare reimbursements. Enhancement strategy; internal development; creating a value chain based on external factors.Improve billing and collections processes. Improve morale to improve productivity. STEnhancement strategy and product development.Seek out market with higher pay mix. Increase marketing tactics to seek out new volume growthContinue academia affiliations to produce appropriate staffing needs. Provide community support for continuing education. Continue with plan to expand outpatient pediatric services into Oakland county with higher pay mixRenovations to accommodate regulatory and competitive external environment. WTEnhance internal development through market development.Seek a higher pay mix with new facility for increasing outpatient services. Increase morale to increase productivityTOWS Matrix


SPACE Analysis

Factors Determining Environmental Stability

Technological changes -3

Rate of inflation -5

Demand variability -3

Price range of competing products/services -3

Barriers to entry into market -5

Competitive pressure -1

Price elasticity of demand -4

Average - 6 -3.42

Critical factors: There is intense competition for the pediatric services, especially in specialty

services. Many technological factors play into these services and revenues. Competition for

market share is highly competitive.

THRE

ATS

O

PPO

RTU

NIT

IES


Comments: It is necessary to obtain more market share within the competitor's service area to

increase competition and produce revenue. Demand for services will increase as population

demographics change and new research is developed to improve pediatric medicine.

Factors Determining Service Category Strength

Growth potential 4

Profit potential 4

Financial stability 5

Technological know-how 4

Resource utilization 2

Capital intensity 3

Ease of entry into market 1

Productivity, capacity utilization 2

Other: Flexibility and adaptability 2

Average 3.11

Critical factors: The demand for pediatric services is growing as more and more research is

needed for rare and new diseases affecting pediatric patients. Specialty services will continue to

grow providing potential for profits in a competitor's market.

Comments: The adaptability of services that can provide more patient satisfaction and improved

safety measures will maintain the competitive advantage.

Factors Determining Competitive Advantage

Market share -6

Product quality -5

Product life cycle -3


Product replacement cycle -3

Customer/patient loyalty -5

Technological know-how -5

Vertical integration -5

Average - 6 -4.57

Critical factors: The market share is high but quality of product needs improvement to maintain

market share.

Comments: Rapidly increasing competitors requires enhancement of internal environment to

maintain competitive edge.

Factors Determining Financial Strength

Return on investment 4

Leverage 4

Liquidity 3

Capital required/capital available 6

Cash flow 4

Ease of exit from market 3

Risk involved in business 4

Other: Inventory turnover 3

Average 3.88

Critical factors: Changes to Medicaid and CHIP reimbursement are expected to decrease

reimbursements for services and decrease the insured population. Risk is moderate.


Comments: Investing in internal development to improve quality and safety measures will

enable higher reimbursements and reduce the risk of fines. The Lean management structure will

reduce costs and improve those measures which make CHM a strong competitor in this market.

SPACE Matrix

CONSERVATIVE AGGRESSIVE

3.88

4.57 -3.1

-3.4

DEFENSIVE COMPETITIVE

Financial Stability

Competitive Advantage

Service CategoryStrength

Environmental Stability


Evaluation of the selected adaptive strategy ofmaintenance of scope, using the TOWS

and SPACE analysis methods, indicated and confirmed the thatorganizational enhancement was

the best adaptive strategy, that would utilize the existing CHM organization to further develop

pediatric specialties, enhance quality and safety, while internal conditions at CHM already

demonstrate an ability to reduce costs and increaseprofitability. This can be accomplished by

reducing the wasted resources, decreasing turnaround time, and increasing efficiency, which

directly contributes to patient satisfaction, thus, quality. Decreasing inefficiencies will also

contribute to lowering costs and becoming a cost leader.

Environmental Stability


Market-Entry Strategy

Maintenance of scopecan be accomplished by way of the market entry cooperation

strategy of internal development. Specific to CHM, enhancement of existing service lines for

additional value is mandatory to maintain placement as market leader. Continued strong relations

with Wayne State University will potentially give way to increased technology through enhanced

research and development. Additionally, Wayne State also brings the medical education

component that the competitors do not have. The medical residency program trains new

physicians in pediatric medicine at the CHM campus. The existing alliance between CHM and

Wayne State University must continue to be fostered.

Evaluating the surrounding service area for further penetration of the market for pediatric

medicine and specialties is at the forefront of CHM strategic goals. A new service facility for

pediatric specialties will soon be available in the Oakland County market, specifically in Troy

where Beaumont is a strongcompetitor. Analysis of the external conditions supports the need for

internal development to maximize economies of scale, improve profitability, and to take

advantage of increased capital available since the merger with Tenet. These newly penetrated

facilities also address CHM’s weakness of providing disproportionally high amounts of

uncompensated care by expanding services into a county with a more favorable payer mix.

Oakland County outpatient centers will enhance the market presence outside Wayne County, and

present an image of growth for CHM. Providingconvenient locations to customers living

outside Wayne County will increase market share as well as provide additional third-party payer

reimbursements for outpatient services.This facility will help mitigate several internal


weaknesses identified during TOWS and SPACE analysis, specific to reimbursement, payer mix,

and increased market share.

CHM’s goals of focusing on areas of cost, growth, quality, service and people will be

continued with the internal development of services in Oakland County. CHM’s ability to utilize

capital resources, provided by Tenet, to build new facilities and add new technology allows

CHM to expand the outpatient service footprint into Oakland County, while better serving

existing patients with enhanced technology, and maintaining its high level of service. CHM

should focus on entering a presence in Oakland County to contend with competitors in a more

influential demographic since Wayne County is decreasing in population size. This can help the

payer mix and reach those in the community who require specialty pediatric care that the

competitors cannot provide.

By expanding market presence outside of Wayne County, CHM will compete with

Beaumont Health. New outpatient facilities will bring CHM’s pioneering electronic medical

records (EMR), decreased patient turn-around time, and ability to reduce costs while

maintainingprofitability. The EMR will improve the patients of Oakland County’squality of care,

patient health and safety, and provide them with continuum of care service with advanced access

to information throughout the entire CHM system.

Competitive Strategies

Strategic Posture

Strategic posture has an important impact on long-term performance for an organization.

It is a response to external demands. “Organizations are able to change their strategic posture to

match the demands of their environmental context and improve their performance” (Ginter et al,

2013, p. 240). While the CHM states innovation as a part of its vision, based on its actions, it is


clear that they have a prospector strategic posture. The prospector is always on the lookout for

new market opportunities and utilizes experimentation and innovation. Prospector posture is

further confirmed by CHM’s continued cooperation with Wayne State University, innovating

development of new services, in addition to and improving existing products and services,

thereby adding value. Additionally, CHM is looking to better serve current markets with current

services through enhancement utilizing internal resources, competencies, and capabilities.

Penetration into the adjacent Oakland County with current outpatient services will attempt to

increase market share, in response to the external conditions of increased presence of

competition.

Strategic Position

The most appropriate strategic positioning strategyfor CHM would be a focus on service

value leadership and service differentiation. Achievement of this strategy would provide value to

the customer above the competition. Through further development and utilization of the Lean

management philosophies, CHM will be able to reduce the costs associated with delivering care

and provide better value as well as further developed services. Establishing a price advantage

will be essential in such a hard hit economic service area.

Service development will be beneficial to reducing wasted resources and strengthening

the internal culture to support a competitive advantage. With waste reduced, CHM will be better

positioned financially to reduce cost of services to patients. This will, in turn, will increase

productivity, patient satisfaction, efficiency, flexibility, and profitability. Reduction in costs to

patients and insurance companies will drive increased market share, in addition to setting CHM

apart from the competition through achievement of servicevalue leadership.Furthermore, upon

achievement of service leadership, service differentiation is within reach for CHM. Entrance into


adjacent Oakland County with existing (low cost) services, not currently offered by the

competition, will increase market share and place CHM closer to the goal of cost and service

differentiation, thereby setting them apart from their largest competitor. Penetration into a new

demographic will also present the image of growth and help CHM maintain a high level of

control as the market leader. This small expansion of the CHM services is evidence that their

target is particular market segment as opposed to the entire market, focusing specifically on

outpatient services market share. These competitive strategies will be achieved through use of

existing organizational internal resources, competencies, and capabilities and strategically

position CHM at the forefront of their competition.

Conclusion

Children's Hospital of Michigan has been proven by research to be successful in the area

of pediatric services. Children’s Hospital of Michigan is in a great location within the south east

region of Michigan and has started to expand in other regions within Michigan. The organization

has value created in its mission statement “to meet the physical and emotional needs of

youngsters with common childhood illnesses, as well as the diagnosis and treatment of rare and

unusual diseases” (About Children’s, n.d.,para 4). Children‘s Hospital of Michigan is unique

because it is a for profit organization that constantly seeks opportunity for improvement. In spite

of the external and internal environmental factors, CHM is recognized as one of the leading

hospitals in Michigan that has the technology and service excellence to meet the needs of the

patients and their families. As a directional strategy, CHM uses a lean management to improve

processes, safety, and quality by reducing wastes. Against all competitors, Children’s Hospital of

Michigan has its own unique market brand and will be in the healthcare market for years to come


because of the specialties and technology that it employs the competitive advantage that others in

the market have difficulty imitating.

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