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The document outlines the fundamentals of strategic management in healthcare, emphasizing the importance of business policy, strategy formulation, and the need for effective management in navigating challenges like regulatory changes and technological advancements. It discusses various strategic dimensions, the role of Strategic Business Units (SBUs), and the significance of a clear vision and mission. Additionally, it highlights tools like the Balanced Scorecard and critical success factors for improving healthcare delivery and operational efficiency.

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31 views14 pages

scribd3

The document outlines the fundamentals of strategic management in healthcare, emphasizing the importance of business policy, strategy formulation, and the need for effective management in navigating challenges like regulatory changes and technological advancements. It discusses various strategic dimensions, the role of Strategic Business Units (SBUs), and the significance of a clear vision and mission. Additionally, it highlights tools like the Balanced Scorecard and critical success factors for improving healthcare delivery and operational efficiency.

Uploaded by

haqtivist
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© © All Rights Reserved
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Strategic Management in Healthcare

Unit I: Basics of Strategic Management


1. Introduction to Business Policy and Strategy
Business policy refers to the guidelines and practices adopted by organizations to direct
their operations and achieve long-term objectives. In the healthcare sector, business policy
helps institutions navigate ethical dilemmas, financial constraints, patient care quality, and
stakeholder interests.

Strategy in healthcare encompasses plans formulated to improve health outcomes, expand


access to care, and ensure organizational sustainability. Strategic thinking became essential
in hospitals due to rising patient expectations, technological disruptions, and competitive
service delivery.

For example, Apollo Hospitals and Fortis Healthcare use strategic planning to expand
services, adopt digital health records, and enhance patient experiences through
telemedicine and AI tools.
2. Nature, Evolution and Dimensions of Strategy
Strategy originated in the military and transitioned to business as a method to gain
competitive advantage. Over time, strategic management became essential for navigating
global competition and market uncertainty.

Dimensions of strategy include:

- Corporate Strategy: Decisions on overall direction (e.g., a hospital chain expanding into
diagnostics).

- Business Strategy: Competitive approaches within specific service lines (e.g., offering
affordable surgeries).

- Functional Strategy: Operational-level plans such as HR, marketing, or finance (e.g., staff
retention strategies).
3. Strategic Management: Definition, Importance and Process
Strategic management involves setting objectives, analyzing competitive environments,
evaluating strategies, and ensuring execution. In healthcare, it is vital due to frequent
regulatory changes, evolving technologies, and public health challenges.

Importance of Strategic Management in Healthcare:

- Helps manage risks and uncertainties

- Encourages innovation and service efficiency

- Aligns clinical goals with business sustainability

- Enhances reputation and patient satisfaction

Process: Environmental scanning, strategy formulation, strategy implementation,


evaluation, and control.
4. Current Healthcare Scenario and Strategic Needs
India’s healthcare system is transforming with growing private sector participation, digital
health initiatives, and increasing demand for quality services. Hospitals face issues like
resource constraints, skilled workforce shortages, and compliance requirements.

Strategies are needed to improve:

- Infrastructure in rural areas

- Affordability and accessibility

- Use of technology (e.g., AI, telemedicine, EHRs)

- Medical tourism and accreditation (e.g., NABH, JCI)


5. Strategic Business Units in Healthcare
Strategic Business Units (SBUs) are semi-autonomous units focused on specific market
segments or services. In a hospital, SBUs might include: diagnostics, outpatient services,
emergency care, or wellness clinics.

Each SBU has its own strategic goals but aligns with the overall mission of the hospital.

Example: Apollo Diagnostics operates as a distinct SBU under Apollo Hospitals with focused
goals and resource allocation.
6. Strategic Intent: Vision, Mission, Goals, and Objectives
Strategic intent refers to the purpose that guides an organization’s actions. It includes:

- Vision: Long-term aspiration (e.g., 'To be India’s most trusted healthcare provider')

- Mission: Organization’s purpose and approach (e.g., 'Deliver high-quality care through
innovation and compassion')

- Goals: Broad, long-term aims (e.g., expand to 10 new cities in 5 years)

- Objectives: Specific, measurable outcomes (e.g., increase outpatient visits by 15%


annually)
7. Vision vs Mission in Healthcare
While Vision defines 'what we want to become', Mission defines 'what we do today'.

Example:

- Vision of Fortis: 'To be a globally respected healthcare organization known for excellence
in patient care.'

- Mission: 'To deliver quality healthcare with a human touch.'


8. Business Model in Healthcare
The healthcare business model describes how an organization creates, delivers, and
captures value. Common models include:

- Fee-for-service (traditional)

- Capitation model (fixed per patient)

- Value-based care (linked to outcomes)

- Telehealth platforms (subscription-based)

Case Study: Practo’s digital consultation model reduces physical clinic load and increases
accessibility in rural areas.
9. Philosophy and Core Values
Philosophy reflects the fundamental beliefs of an organization. In healthcare, it emphasizes
empathy, ethical treatment, transparency, and patient-first approaches.

Values include: Compassion, Integrity, Excellence, Accountability, and Teamwork.


10. Balanced Scorecard (BSC) in Hospitals
The Balanced Scorecard is a strategic tool that monitors performance using four
perspectives:

- Financial (e.g., cost efficiency)

- Customer (e.g., patient satisfaction)

- Internal Processes (e.g., average waiting time)

- Learning and Growth (e.g., staff training)

It helps align day-to-day operations with long-term strategy.


11. Working of Balance Scorecard: Example
In a tertiary care hospital:

- Financial: Revenue growth from new specialties

- Customer: Increase in repeat visits

- Internal: Reduced average admission-to-treatment time

- Learning: Number of CME programs attended by staff

Hospitals use BSC dashboards to track KPIs monthly and adjust plans accordingly.
12. Critical Success Factors (CSFs) and KPIs
CSFs are areas essential for the organization’s success. In healthcare, CSFs may include:

- Quality of clinical care

- Accreditation and compliance

- Skilled manpower

- Patient trust and branding

KPIs are measurable indicators tied to CSFs.

Examples:

- CSF: Patient safety → KPI: Rate of hospital-acquired infections

- CSF: Patient satisfaction → KPI: Net promoter score (NPS)


13. Summary and Strategic Models
Strategic management is critical for achieving operational efficiency, financial sustainability,
and superior care delivery in the healthcare sector.

Models like SWOT, PESTEL, Porter’s Five Forces, and Balanced Scorecard help managers
plan effectively.

Regular review, stakeholder alignment, and data-driven decision-making are the pillars of
successful healthcare strategy execution.

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