Environmental Analysis for WakeMed Hospital

EnvironmentalAnalysis for WakeMed Hospital


Environmentalanalysis for WakeMed Hospital


This reportprovides a comprehensive environmental analysis for WakeMed Hospital.The analysis develops against the backdrop of decliningreimbursements and increased demand for patient services. In thisregards, the analysis will determine the hospital’s capacity tocontinue to offer quality health care and remain monetarily stable inspite of the increased challenges. Established in 1961, the hospitalhas managed to offer the aforementioned services in its outpatientfacilities, Raleigh Campus, and Cary Hospital (WakeMed n.d.). Thecontinued dedication to quality service, has nevertheless facedchallenges in increased demand for services and decreasedreimbursements thus, the development of the environmental analysis.The analysis will look at the specific forces that have significanteffects on the hospital, internal factors that will shape thehospital, and strategies that will help in implementing acomprehensive strategic plan.

With a bedcapacity of 884, the hospital has numerous services around the urbanRaleigh, North Carolina specializing in various services such asorthopedics, critical care transport, cardiology, trauma, neurology,and physical rehabilitation (WakeMed n.d.). However, the changingdynamics and business environment accelerated by decliningsettlements from insurance companies means that the organizationshould develop a framework that will help the organization remainmonetarily stable. In this regards, the development of theenvironmental analysis will help the company determine areas ofweaknesses and opportunities as well as identify strengths that itcan utilize to provide a comprehensive strategic plan.

Specific forcesin the external environment

Swayne, Duncan,&amp Ginter (2012) and Kotler (2011) assert that an externalenvironment for any organization denotes the situation that theorganization does not have considerable control, but external forcesinfluence the manner in which the organization operates. As such, theassessment of the macro environmental or external environmentsituation is significant as it offers a dynamism on the way anorganization can operate. WakeMed Hospital does not exist in avacuum, but is set in North Carolina and against a heavily linkedpattern (WakeMed n.d.). The existing setting provides the manner inwhich the hospital operates thus, the notion of external environmentis a significant deliberation for WakeMed as it seeks to remainfinancial stable. By conducting a PESTEL analysis, the hospital hasmanaged to highlight the most specific forces that affect itsoperations namely administrative or legal and technology forces.

Today, thehospital main challenges come because of increased demand forservices and declining settlements from insurance companies.According to Anderson (2014), the introduction of Affordable CareAct (ACA) in 2010 together with Education Reconciliation Actsignified an overhaul of the America’s healthcare system. Upon itspassage, the ACA led to the increase of affordable and quality healthinsurance, lowered insurance premiums or rates, and expanded theprivate and public insurance coverage, ultimately reducing the costof healthcare in the country. However, the reduction in the cost ofhealthcare and increased insurance cover for people meant that demandfor healthcare had increased albeit a slow growth in the number ofhealth facilities. In addition, the passage of the act meant thatfocus had changed from quantity to quality, which led to increasedcompetition across the healthcare sector.

These changesmean that the administrative or legal factors have had significanteffects on the hospital. In fact, Anderson (2014) contends that theadministrative environment has offered a context within which thehospital operates i.e. the hospital operates within the processestermed in the ACA and other legislations touching on Medicaid andMedicare. The administrative environment has not had anyconstitutional restraint on the organization, but it has put specificlegislative mandates and goals that govern the structures andoperations of the firm. Swayne et al. (2012) assert thatadministrative environment can have significant effects on theoperation of any organization as it provide for a framework ofsupervision and operation. The government plays a great role insupervising the roles of healthcare facilities especially in relationto Medicaid and Medicare thus, the administrative environment willhave a significant impact on the ability of the hospital to meet theincreased demand and manage to have an inclusive context on thereimbursements from insurance companies.

On the otherhand, the technological environment continues to shape the structureand operations of organizations in the healthcare system. Theincreased demand for healthcare services means that hospitals willhave to engage proactively in order to meet the increased demand andcontinue to offer quality service. Yüksel (2012) asserts that thelevels and types of technology in a certain sector give insight intocomprehending the capacities of an organization. In this regards,WakeMed (n.d.) maintains that it deals with healthcare facilitieswithin North Carolina thus, it depends greatly on nationalinfrastructures such as water, transport, energy, and technologiesespecially those that concentrate on research paradigms. However, theorganization must streamline its operations and seeks to developtechnologies that will ensure it meet increased demand.

Most healthcarefacilities across America have identified innovative ways andtechnologies that will help them offer quality service and meet theincreased demand for healthcare services. It is against this backdropthat WakeMed hospital must strive to develop technologies that willnot only allow the hospital to cover more patients but also reducethe cost of operation. In fact, Yüksel (2012) maintains that it issignificant to comprehend the level of technology in theorganizational context as well as whether such innovative skills havean association to computer literacy and highly developed methods. Inaddition, the organization should put into consideration theprocesses involved in its operations for the technology to meetdemand and offer effective solutions to settlements from insurancecompanies. As aforementioned looking at the challenges facing theorganization and the framework employed in the sector, administrativeand technology environment will have the most significant effect onthe organization.

Internal factors

The future ofthe organization as well as the healthcare within the organizationwill depend on several factors such as technology employed, theculture of the organization, organizational behavior, communication,and employment engagement practices employed to motivate employees.However, the scope and importance of the factors will differdepending on the issues facing the organization. The management ofthe organization and its employees need to cultivate anorganizational culture that seeks to promote teamwork, efficiency,integrity, and professionalism (Day, 2012). In this regards, internalcommunication grounded on effective information system and anembedded organizational culture will ensure that the organizationprepare for the future of the healthcare. Effective communicationcomprising of interpersonal and intrapersonal relations,philosophical policies, subordination, delegation, and engagementmeans that all employees in the organization will undertake to offerservices effectively. In addition, Swayne et al. (2012) contend thatorganizations with effective structures of communication manage tooffer their services effectively as well as remain cognizant of theneeds of consumers. In fact, an effective internal communication willallow employees to feel recognized and engaged hence, they willremain courteous and respectful to both the management and patients.

On the otherhand, Anderson (2014) says that the passage of ACA meant that medicalfacilities had to change their structures and policies to parallelwith the demands of the act hence, the organization will have toconsider its structure in understanding its future. Structuring theorganization to suit the demands of consumers as well as ensure theprovision of services in an effective manner will allow theorganization’s management to understand the needs of both theemployees and consumers. In fact, the collaboration among employeesand the extent of their commitment to work depends solely on thestructure chosen thus, the structure of the organization willdetermine its future.

Impact ofexternal and internal environment

With both theexternal and internal environment forces in mind, the administrationcan rationally develop, a set of strategic values that leveragestrengths of create competitive advantage and creating efficiency.Eden &amp Ackermann (2013) and Kotler (2011) assert that usingframework analysis, together with the necessary external and internalinvolvements, enterprises are capable to create plans, whichvigorously exploit on this information in search of competitiveadvantage. As such, the external and internal environment will allowthe organization to have a strategic&nbspdevelopment,which&nbspnecessitates enterprises to comprehend the opportunitiesand threats found in the external environment and&nbspscale&nbspthesealongside the strengths and weaknesses of the organization. In fact,the relation between internal and external factors as shown in theSWOT analysis below, will allow the organization to piece togetherthe perfect technique in which its strengths will help it captureopportunities while counterpoising pressures or threats and remedyingweaknesses.

Day (2012)maintains that this merging of external and internal factors insearch of competitive advantage is a constant procedure, as theorganization must progress and adjust with the environment. In thisregards, the internal and external forces mentioned will allow thecompany to develop strategic management in pursuit of change, whichwill ensure financial stability and competitive advantage.

Recommendationfor a strategic plan

External Opportunities (O)

  • Development of new legislations governing the operations of hospitals

  • Institution of advanced product

  • Increased demand for healthcare services

  • Collaboration other partners

External Threats (T)

  • Competition from other medical facilities

  • Reduced settlements from insurance companies

  • Rivalry with other organizations

Internal Strengths (S)

  • Strong market position

  • Increased government support

  • Extensive service chain

  • Momentous retail technology

SO (Maxi-Maxi strategy

  • Utilization of technology to meet increased demand for services

  • Employment of more professionals and development of more infrastructures to meet demand

ST (Maxi-Mini strategy)

  • Collaboration with government institutions

  • Offering flexibility

Internal Weaknesses (W)

  • Low financial muscle

  • Small infrastructure platform to meet demand

  • Lack of a regulated platform

WO (Mini-Maxi strategy)

  • Reaching new markets

  • Opening a new facility for neurology

WT (Mini-Mini strategy)

  • Announcing free facilities

  • Raising cash

Eden &ampAckermann (2013) define a strategic plan as a situational analysisconcept that considers the internal weaknesses and strengths of anorganization as well as external opportunities and threats to offer acourse of action. Looking at the SWOT analysis above, it is importantto note that the organization has several opportunities and strengthsthat it can use to overcome its threats and weaknesses. In thisregards, the organization should develop a strategy that involvesopening a new facility and developing technologies that will ensureit remains financial stable. To achieve this, Day (2012) recommends aStrategic Leadership Innovation plan that engages all employees inproviding quality service to patients. In addition, the plan willensure that the organization has an effective communication structureand organizational behavior for effective operation. The plan willallow the organization to increase service level as well as increaseefficiency.

Strategic Proposal


Communication structure




New facility





Development of new technology and structure





Social Responsibility plan






0-2 years

2-4 years

4-6 years

6-8 years

8-10 years


Anderson, A. (2014, March 18). The Impact of the Affordable Care Acton the Health Care Workforce. Retrieved January 24, 2015, fromhttp://www.heritage.org/research/reports/2014/03/the-impact-of-the-affordable-care-act-on-the-health-care-workforce

Day, G. S. (2012). Aligning the Organization with theMarket.&nbspReflections on the Futures of Marketing.

Eden, C., &amp Ackermann, F. (2013).&nbspMaking strategy: Thejourney of strategic management. Sage.

Kotler, P. (2011). Reinventing marketing to manage the environmentalimperative.&nbspJournal of Marketing,&nbsp75(4),132-135.

Swayne, L. E., Duncan, W. J., &amp Ginter, P. M. (2012).&nbspStrategicmanagement of health care organizations. John Wiley &amp Sons.

WakeMed. (n.d.). History of WakeMed. Retrieved January 26, 2015, fromhttp://www.wakemed.org/landing.cfm?id=1588and http://www.wakemed.org/landing.cfm?id=40

Yüksel, I. (2012). Developing a multi-criteria decision making modelfor PESTEL analysis.&nbspInternational Journal of Business andManagement,&nbsp7(24), p52.

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