4 Internal Environmental Analysis and Competitive Advantage “The biggest problem with health care isn't with insurance or politics. It's that we're measuring the wrong things the wrong way.” — ROBERT S. KAPLAN AND MICHAEL PORTER Introductory Incident Two-Way Communication and Competitive Advantage Health care organizations are notorious for one-way communication. When communicating with patients and communities, health care organizations typically employ traditional techniques such as broadcast advertising, distribution of educational materials prepared for a variety of audiences, and similar methods. A few organizations, however, have recognized the possibilities created by social media and understand that health is extremely personal and materials prepared for mass audiences rarely address the unique concerns of individual patients. Moreover, when patients must access the 127 128 health care system they are unprepared for the experience, lost in the confusion of the high-technology environment of health care, and grasping for information. Social media has done much to change this situation. Patients can easily communicate with people across the globe, share common experiences and fears, discover the personal experiences faced by others, and access all types of medical information. Unfortunately, many health care organizations choose to use social media as just another means of one-way communication. In some cases most of the organization's posts are designed to promote the hospital or medical practice rather than address patient issues and concerns. A few organizations, recognizing this temptation, develop policies that “no more than a certain percentage” of posts can be used for promotion purposes. At Inova Health System an effort is made to ensure that 80–90 percent of its posts address patient health rather than promoting the System. Inova has made serious attempts to use social media effectively. It has created Facebook communities in specific areas such as wellness, pediatric care, bariatric surgery, and so on. Attempts are made to encourage users to trust Inova as a supplier of valuable health information. Information can be shared about the System but only after trust is built and the interests of the organization are consistent with the interests of the communities. It is essential to remember why social media is important. The goal is to connect with friends and build communities around common interests and to share information better and faster. Furthermore, communicating poorly is almost as bad as not communicating. The quality of posts is more important than the quantity. Because real-time communication is so exciting we frequently confuse social media overuse with proper use. Designing social media that is honest and transparent is the important determinant of how likely individuals are to follow and participate in an organization's communication efforts. Some general recommendations for health care organizations to .

1. 4 Internal Environmental Analysis and Competitive Advantage
“The biggest problem with health care isn't with insurance or
politics. It's that we're measuring the wrong things the wrong
way.”
— ROBERT S. KAPLAN AND MICHAEL PORTER
Introductory Incident
Two-Way Communication and Competitive Advantage
Health care organizations are notorious for one-way
communication. When communicating with patients and
communities, health care organizations typically employ
traditional techniques such as broadcast advertising,
distribution of educational materials prepared for a variety of
audiences, and similar methods.
A few organizations, however, have recognized the possibilities
created by social media and understand that health is extremely
personal and materials prepared for mass audiences rarely
address the unique concerns of individual patients. Moreover,
when patients must access the
127
128
health care system they are unprepared for the experience, lost
in the confusion of the high-technology environment of health
care, and grasping for information. Social media has done much
to change this situation. Patients can easily communicate with
people across the globe, share common experiences and fears,
discover the personal experiences faced by others, and access
all types of medical information.

2. Unfortunately, many health care organizations choose to use
social media as just another means of one-way communication.
In some cases most of the organization's posts are designed to
promote the hospital or medical practice rather than address
patient issues and concerns. A few organizations, recognizing
this temptation, develop policies that “no more than a certain
percentage” of posts can be used for promotion purposes. At
Inova Health System an effort is made to ensure that 80–90
percent of its posts address patient health rather than promoting
the System.
Inova has made serious attempts to use social media effectively.
It has created Facebook communities in specific areas such as
wellness, pediatric care, bariatric surgery, and so on. Attempts
are made to encourage users to trust Inova as a supplier of
valuable health information. Information can be shared about
the System but only after trust is built and the interests of the
organization are consistent with the interests of the
communities.
It is essential to remember why social media is important. The
goal is to connect with friends and build communities around
common interests and to share information better and faster.
Furthermore, communicating poorly is almost as bad as not
communicating. The quality of posts is more important than the
quantity. Because real-time communication is so exciting we
frequently confuse social media overuse with proper use.
Designing social media that is honest and transparent is the
important determinant of how likely individuals are to follow
and participate in an organization's communication efforts.
Some general recommendations for health care organizations to
make the most of social media:
1. Be helpful. Patients usually turn to social media because they
are afraid and need support or are confused because they cannot

3. get what they need from the organization's website or other
informational efforts.
2. Give patients the opportunity to weigh in on their
experiences. If patients complain, listen and try to address the
complaint directly and quickly. Intercede in a compassionate
and helpful way rather than as a “know it all expert.”
3. Refrain from traditional communication techniques (e.g.,
advertising, etc.). Avoid confusing “clinical speak.”
4. Listen to your instincts. Social media sites grow and thrive
organically. You will likely know when they are working and
when they are not. Do not be afraid to fail. Friends do not
expect perfection, the cost of entry into social media is low, and
the financial risks of failure are small.
Source: Chris Boyer, “Social Media for Healthcare Makes
Sense,” Frontiers of Health Services Administration 28, no. 2
(2011), pp. 35–41.
Week 2 Overview
In the case study you read last week, there was a problem that
needed a solution. Decision-making was driven by the urgency
to improve the performance of the emergency department of the
hospital. Quite a different type of decision is one related to
starting a new business.
Week 2 case study also illustrates two important parts of
evidence-based decision-making-research and quantitative
analysis.
· Demonstrate understanding of health care services delivery in
the United States.
· Demonstrate ability to properly utilize the concepts of health
care finance, economics, information systems management and

4. risk management in administrative decision making.
Take the Plunge?
Exurbia Health is a health system in the outer suburbs of a large
metropolitan area. Jim Lifton, the CEO of Exurbia, was
considering starting a new program in bariatric surgery. A
prominent surgeon on the staff of Exurbia spoke to Lifton about
bariatric surgery as a new procedure to treat obesity. Lifton
wanted a background briefing and recommendations regarding
the issue. He specifically wanted answers to the following
questions:
1. What is the current status of obesity in America?
2. What are the best programs doing to treat obesity? Where are
they?
3. What is the status of bariatric surgery in terms of efficacy,
safety, success, cost, and reimbursement issues?
4. What kind of physicians do this surgery? What kind of
training must they have?
5. Who should be involved in evaluating this program?
6. Are there other hospital services that will be impacted and in
what way?
7. Are there services or businesses not part of the hospital that
need to be taken into account or made a part of the program?
8. Are there downsides to discussing this openly? Might
someone take offense and who is most likely to do so?

5. 9. Who might be expected to be very supportive?
10. What should Exurbia do?
11. What plan should management present to the board of
trustees?
12. If it looks like Exurbia should go forward with a detailed
analysis and business plan, who should participate in
developing it and why?
Identifying the Problem
The first step listed in the decision-making model is identifying
the problem. That must also include identifying the outcome,
which is desired. The two questions must be married to fully
achieve an understanding of the problem.
What is the problem in this case study? Here are some
questions:
· What are the core issues facing Mr. Lifton?
· What is the desired outcome, what are the minimal outcomes
which are acceptable?
· How should he rank them in importance and urgency?
· Which problems or issues can be deferred and which cannot?
Exurbia does not have an apparent problem in the usual sense of
the term. That is, there is no event or situation with negative
effects that needs to be remedied. The decision to be made
relates to whether or not to introduce a new program in bariatric
surgery. The problem lies in the risks implicit in the decision.
The risk here is more defined by the desired outcome than is

6. defined by how to start a Bariatric Center.
Possible outcomes may include service expansion, service to the
community, feeding other departments in the hospital or purely
profit. However not understand and drive to the requisite
outcome will doom the project.
Starting a new line of business is one of the riskiest things an
organization can do. According to the Small Business
Administration, about 50 percent of all new businesses end up
failing. The reasons for failure are numerous but most often
entail one or more of the following:
· Undercapitalization
· Failure to create a proper business plan
· Underestimating the power of competitors
· Not accurately identifying the market the market
Established businesses, when they start a new venture, run the
risk of diverting their attention and energy away from their core
competency. This can lead to loss of primary business. New
endeavors absorb greater amounts of organizational energy,
attention, and resources during the development stage.
Resources are often diverted at the expense of established
programs.
Entering into a new medical business is even more risky.
Introduction of a new treatment carries not only the usual
business risk but also the added risk of adverse clinical
outcomes. For health care providers, a new business line may
place them in competition with their allies such as physicians or
employers in the community. Physicians may believe the
hospital is competing with them and decide to take their
patients to a competitor. A major employer may steer employees
away from the hospital.
Identifying

7. Solution
s
As you look for solutions you must employ a road map of types
which presents you with primary and alternative routes. It is a
common mistake to assume and then seek a single solution for
any problem which needs resolution. To that end be willing to
seek multiple solutions while at the same time rating those
solutions as to their practicality, expense, effort to be put in
place and time frame for which the solution will be able to
function. There are those times which are emergent and may
only be solved with a stop gap type solutions.
This may be a mechanism to essentially deal immediately with
the problem while affording more time for you and your team to
develop a more complete and practical solution set. Here the
real goal is to take measures to insure that the true problem, the
root of the problem, is being addressed with the solution. And if
that cannot be accomplished initially to understand that
additional resources, money and energy may well be required.
Using the navigation on the left, please proceed to the next

8. page.
Making Decisions
How will Lifton identify and evaluate solutions? Here are some
questions to guide the analysis.
What are the implications of each of the treatments for obesity?
What impact may the solutions have on others who serve the
obese community?
What are the criteria for ranking options?
What is the relative importance of quality, profitability,
physician acceptance, competition, and risk?
Whenever one considers entering into a new business one
should develop a comprehensive business plan, beginning with a
comprehensive study of the business. The decision must rest on
reliable information. You can define the information you need
through a set of questions that must be answered. The following
questions are just a few examples. You can think of more.
What is bariatric surgery and how does it work? Is the surgery
safe? What are the risks? Does it work? How does it compare
with other obesity treatments? What do medical and regulatory
authorities say about all this?
What is the market for this surgery? How many people suffer

9. from obesity? How many of them need bariatric surgery? What
is the demographic profile of potential candidates for this
surgery?
What is the cost of the surgery? How many people who need the
surgery can afford to pay for it? Do third-party payers cover
this procedure? Which ones cover it and do they operate in the
relevant area?
What is the competition? Do any other organizations in the area
offer bariatric surgery? What is their capacity relative to the
estimated size of the market? In other words, is there room for
one more bariatric surgery program?
What investment is necessary to start the new program? What is
the estimated utilization? How soon can the program start
showing profits?
Before you read further, try to find some of this information, or
just identify the sources of information. Among the readings
this week, there are some sources of information and you will
find some on your own.
As you conduct research, the information suggests solutions.
Keep these aside and continue your research. Be wary of being
convinced by just one piece of information leading to just one
solution. Make sure you read more and explore other solutions.
Using the navigation on the left, please proceed to the next
page.

10. Quantitative Analysis
A great deal of the information that you will use in decision-
making will be numerical. You will need an understanding of
elementary statistics to analyze such quantitative information.
Let us see this with a simple statistic, the extent of obesity and
overweight in America. You will find varying estimates of the
number of overweight and obese people in the population
statistics in the Health, US, 2004, by the National Center for
Health Statistics (NCHS) show the following percentage of
overweight and obese adults.
The incidence of overweight and obesity show a sudden
increase after 1976-80. The increase is even greater in states
like Maryland and Mississippi. The moment you see this graph,
you should ask why there was this sudden change. Did dietary
habits change during the period 1980-88? Did physical exercise
decrease during this period? One of the first things you should
check is the definition of overweight and obesity. If the
definition changed, the same people might be classified

11. differently.
If the statistics are based on a sample survey, you will need to
evaluate the sample. Is the sample large enough? Is it
representative? Does it have characteristics similar to the
population group of interest to you? For example, suppose your
hospital is in an area with a specific dietary tradition, say, a
higher proportion of fruits and vegetables in typical meals. Are
the results of a national sample survey applicable? Would you
adjust the numbers in the survey? How will you estimate the
variance?
Using the navigation on the left, please proceed to the next
page.
The New Program
After almost a year of critical analysis, the committee unveiled
a comprehensive program for weight management.
The weight management program includes:
· Community education programs.

12. · Weight screenings including blood pressure, diabetes testing,
and body mass indexing.
· A continuum of programs from weight counseling, nutrition
advice, cooking classes, fitness programs (yoga to weight
training to running), to psychiatric and psychological
counseling and group therapy.
Bariatric surgery is a part of this program.
· Clients for whom all other measures fail are given the option
of being screened for bariatric surgery.
· All receive a psychiatric evaluation to determine their
probability of making the necessary lifestyle alterations
required by the surgery.
· All receive extensive physical examinations including cardiac
evaluation, anesthesia consult, and sleep apnea testing.
· All surgical patients are briefed extensively about the
postoperative course and the dramatic lifestyle changes
required. They observe videos of the procedure and taped
remarks of previous patients. They are encouraged to talk with
former patients who serve as volunteer counselors.
· Surgical candidates are given a list of qualified surgeons to
choose from.
The economics of the program are as follows:
· The charges include fees for implantables.
· Those candidates who are not covered by a third-party payer
are offered special rates comparable to third-party

13. reimbursement as well as financing options.
Quality control is always important, and more so for a
procedure that has some opponents.
Administrative and managerial issues are also addressed.
· The program is managed and owned by Exurbia.
· Exurbia markets the program under its brand.
Week 2 Summary
This week's case study illustrates two important parts of
decision-
making—research and quantitative analysis.
Using the navigation on the left, please proceed to the next
page.

14. · Service area competitor analysis
· Internal environmental analysis and competitive advantage
Following web article:
Chalkidou, K., Lord, J., Fischer, A., & Littlejohns, P. (2008).
Evidence-based decision making: When should we wait for
more information? Health Affairs, 27(6),
642-1653. doi:10.1377/hlthaff.27.6.1642