External Environment and Healthcare Planning

External Environment and Healthcare Planning

Accountable health care leaders must respond to external factors in a way that is advantageous for the organization and the community. While health care organizations must strive to improve their financial positions, it should never be at the expense of the populations they are serving. For this Assignment, examine the following scenario and consider strategies to limit the negative impact of external factors and improve organizational success.

Scenario: A small independent hospital in rural Georgia is seeking to attain Magnet Status. This designation demonstrates to stakeholders that the organization is committed to delivering high-quality patient care. With this designation, the organization can easily attract and retain a highly-engaged clinical staff. Moreover, it provides the organization an opportunity to market itself to potential patients as the place to receive top-quality care. This means that the organization could realize a greater market share of insured and private pay patients traveling as far as 100 miles just to receive the quality services. It also positions the organization to enter into joint ventures with physician groups eager to provide new services, which would lead to increased revenue streams.

External Environment and Healthcare Planning

Although the designation sounds like a great opportunity for the organization, the board of directors is split on their support of this designation. The board members in support of the designation understand the great value that this program will bring to the facility; however, those in opposition learned from a research study that non-magnet hospitals had better infection control and less post-operative sepsis. They also learned from another study that working conditions in a magnet facility are not better than those in non-magnet facilities. Therefore, the dissenting directors have concluded that the organization should not invest its time and resources to seek this credential. The CEO must get support from an overwhelming majority of the board to move forward with pursuing this designation.

To prepare:

Review the provided scenario and consider external environmental factors that may impact the organization’s strategic planning (e.g., policy and economics, laws and ethics, health care quality, and population health).

Note: Your Assignment should show effective application of triangulation of content and resources in your conclusion and recommendations.

The Assignment

In a 2-page executive summary, do the following:

  • Identify and evaluate the impact of external environmental factors on the strategic planning of the organization in the scenario.
  • Recommend strategies to address these external factors and limit their influence on organizational operations.

Required Readings

Walston, S. L. (2018). Strategic healthcare management: Planning and execution (2nd ed.). Chicago, IL: Health Administration.

  • Chapter 7, “The External Environment and Its Relationship to Strategy” (pp. 151-180) Note: This chapter was assigned in Week 3. Please review it for this week.

Wayland, M. S., & McDonald, W. G. (2016). Strategic analysis for healthcare: Concepts and practical applications. Chicago, IL: Health Administration Press.

  • Chapter 6, ““Five Forces in an Industry” (pp. 33–38)
  • Chapter 7, “PEST Analysis of the Environment” (pp. 43–45)
  • Chapter 23, “Ansoff Matrix” (pp. 151–152)

Cheng, W.-H., Kadir, K. A., & Bohari, A. M. (2014). The strategic planning of SMES in Malaysia: A view of external environmental scanning. International Journal of Business and Society, 15(3), 437–446.

Note: Retrieved from Walden Library databases.

Górecka, D., & Szalucka, M. (2014). Application of MCDA methods and stochastic dominance rules in the entry mode selection process in international expansion. Multiple Criteria Decision Making, 9, 5–31.

Note: Retrieved from Walden Library databases.

Metcalfe, L., & Lapenta, A. (2014). Partnerships as strategic choices in public management. Journal of Management & Governance, 18(1), 51–76.

Note: Retrieved from Walden Library databases.

Pliskie, J., & Wallenfang, L. (2014). How geographical information systems analysis influences the continuum of patient care. The Journal of Medical Practice Management, 29(5), 282–285.

Note: Retrieved from Walden Library databases.

Rajan, D., Kalambay, H., Mossoko, M., Kwete, D., Bulakali, J., Lokonga, J.-P., … Schmets, G. (2014). Health service planning contributes to policy dialogue around strengthening district health systems: An example from DR Congo 2008–2013. BMC Health Services Research, 14, 522–536.

Note: Retrieved from Walden Library databases.

Urban, B., & Mothusiwa, M. (2014). Planning flexibility and entrepreneurial orientation: A focus on SME performance and the influence of environmental perceptions. Management Dynamics, 23(1), 58–73.

Note: Retrieved from Walden Library databases.



External Environment and Healthcare Planning


Like other businesses, the operations of healthcare facilities are surrounded by both internal and external environment.  Unlike internal factors, external factors emanate from outside and the firm does not have control over them. Better knowledge on external factors influencing the operations of the facility can enhance development of better strategies for improving services (Walston, 2018). The paper tries to depict issues related to the external environment of a small rural hospital in Georgia.

Impact of External Environmental Factors

Firstly, the facility’s strategic development will be affected by the legal environment. Policies set by healthcare controlling institutions at the State and Federal level require that facilities should engage in quality and safe practice. To get higher patient ratings and support of evidence-based activities, the facility needs to attain the Magnet Status. Secondly, the economic environment is also essential. In the scenario, the facility operates in the rural area, which has a lower economic status than the urban area. Under the current status, it is small in size, making it hard to enjoy economies of scale. Therefore, the firm needs to make a decision that will enable it to be sustainable under the economic environment (Cheng, Kadir, & Bohari, 2014)


In terms of technological factors, many facilities in the United States are applying technologies such as robotic surgery, virtual information storage, and online payment of patient services. This feature makes it necessary for the management to develop strategies to align with the current technological applications in healthcare.  From another perspective, the firm is small in size and is situated in the rural area. This issue affects its competitive position in terms of rivalry with other facilities and its bargaining power to the customers. An increase of larger facilities in the region will make it difficult for the organization to operate well. Therefore, it needs to change its style of operations to increase its competitiveness. The facility is also affected by demographics as the population needs require better health outcomes (Vecchiato, 2015).

Strategies to Address the Factors

A significant strategy to address the issues is a change in the cultural and structural set up. This strategy is aimed at having a culture that appreciates changes in the environment. The organization my also need to develop overall cost leadership through aggressive development of efficient-scale operations, engagement in cost reduction, and reduction of other activities that would lead to more economic challenges. In addition, the facility should also engage in differentiation strategy. This plan involves developing something new. From this perspective, having a magnet status may be essential as many facilities in the rural areas may be lacking it (Vecchiato, 2015).

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The facility also needs to engage in market development. Being a rural organization, it needs to engage in more aggressive ways of promoting its services to a wider area. This would enable it to penetrate to other areas t the State and Federal levels (Vecchiato, 2015). The firm also needs to improve its information system. This would enable it to provide suitable information to all stakeholders and enhance better decision making. Innovation is also another strategy that may improve the status of the firm. This aspect needs the firm to engage in creative operations.  When complemented by a change in the organization’s culture, it will enable the facility to have sustainable operations with the changing external environment (Urban & Mothusiwa, 2014).


The scenario reveals that external environmental factors are important in determining the types of strategic plans for organizations. The healthcare sector is a dynamic area where shifts in external environment occur frequently. For the facility to improve its operations, aligning its strategies to the environmental changes is paramount.



Cheng, W.-H., Kadir, K. A., & Bohari, A. M. (2014). The strategic planning of SMES in

Malaysia: A view of external environmental scanning. International Journal of Business and Society, 15(3), 437–446.

Urban, B., & Mothusiwa, M. (2014). Planning flexibility and entrepreneurial orientation: A focus

on SME performance and the influence of environmental perceptions. Management Dynamics, 23(1), 58–73.

Vecchiato, R. (2015). Creating value through foresight: First mover advantages and strategic

agility. Technological Forecasting and Social Change101, 25-36.

Walston, S. L. (2018). Strategic healthcare management: Planning and execution (2nd ed.).

Chicago, IL: Health Administration.




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