What Are Internal and External

Environments?
If there is anything that is steadfast and unchanging, it is change itself. Change is inevitable, and
organizations that don't accept change and that make adjustments to their business model
based on changes are doomed to fail. There are events or situations that occur that affect the
way a business operates, in a positive or negative way. These events or situations can have
either a positive or a negative impact on a business and are called 'environmental factors.'
There are two types of environmental factors: internal environmental factors and external
environmental factors. Internal environmental factors are events that occur within an
organization. Generally speaking, internal environmental factors are easier to control than
external environmental factors. Some examples of internal environmental factors are as
follows:

Management changes

Employee morale

Culture changes

Financial changes and/or issues

External environmental factors are events that take place outside of the organization and are
harder to predict and control. External environmental factors can be more dangerous for an
organization given the fact they are unpredictable, hard to prepare for, and often bewildering.
Some examples of external environmental factors are noted below:

Changes to the economy

Threats from competition

Political factors

Government regulations

The industry itself

The SWOT Analysis

SWOT is a structured planning tool that can be used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in running a business venture. Using a SWOT analysis can
be used to help a business determine the advantages or disadvantages of changes they want to

make based on internal and external factors. A SWOT analysis can be broken into two distinct
parts. The strengths and weaknesses are based on internal environmental factors.
Opportunities and threats are based on external environmental factors.

An organization's internal environment is composed of the elements within the

organization, including current employees, management, and especially corporate
culture, which defines employee behavior. Although some elements affect the
organization as a whole, others affect only the manager.

Speakers Notes: Strategic planning is widely used in many industries

particularly in health care. Cleverley, Song, and Cleverley (2011) states that
there is not an agreement among leading experts regarding strategic
planning definition, first, a statement of mission or goals (or both) is required
on to provide guidance to the organization, and second, a set of programs or
activities to which the organization will commit resources during the planning
period is defined. In order to stay competitive and viable with swift changes
in reimbursement with the third-party payers the organization needs to
identify areas or programs requiring modernization with a cutting edge
technology in providing service to the community. Third-party payer like
Medicare provides incentives to organizations that are able to control their
cost. In order to maximize profitability in an organization, it is essential to
identify programs that have the highest benefit to the community with good
return on investment. Eli Medical Center (EMC) is currently evaluating new
programs and existing programs for acquisition or upgrade. The strategic
planners at EMC will use S.W.O.T analysis in reviewing their plans. Huber
(2010) states the SWOT analysis often leads to future strategies in which the
organization determines to the following:
v

Build on strengths

Resolve or minimize weaknesses

Exploit opportunities

Avoid threats

Huber (2010) added the SWOT method is one of the most popular ways to
develop strategic plans for an organization. The more carefully the analysis
done, the more reliable the strategic plan.
This presentation aims at identifying the strengths and weaknesses of EMC,
identify one opportunity and threat to each of the six external factors
(Technological, Political, Competitive, Regulatory, Social, Economic), propose
two initiatives for the organizations strategic five-year plan, justify allocating
resources for these initiatives, explain the effect of the external environment
on strategic planning, and explain the role of leadership in strategic
planning.

Paying for medical care can be difficult, especially for patients who lack
health insurance. Our organization has created a program designed
especially to help patients in financial difficulty. We provide one-on-one
financial counseling to help patients gain access to different types of medical
assistance, including Medicaid, charity funds, and other state and local
programs. We also offer a discount program for uninsured patients who do
not qualify for Medicaid.
Our organization was named one of the top 15 Health Systems by Thomson
Reuters, a group, well-known as a leading provider of information and
solutions to improve the cost and quality of health care. To be nominated for
this award an organization has to have good clinical outcomes, an excellent
rating in patient safety, and patient satisfaction.
Our organization is dedicated to educating members of the community on
ways to improve their health. We believe that health education enhances the
quality of life for all people and reduces certain diseases, such as diabetes,
HTN and CVA. We also work to reduce patient costs and frequent visits to the
hospital by focusing on health education. Eli Medical Center (EMC), a multistakeholder organization has the dedication to promote quality health care
by setting goals for performance improvement. The organization proposes
two initiatives for the organizations strategic five- year plan. First is to be an
organization with exceptional staffs. Patients come to the hospital for one
reason, for treatment, and to get better. The hospital needs knowledgeable
doctors, nurses, and staff to provide superior medical services and
outstanding patient care. It also needs a health care team that places the
highest value on patient safety including the efficiency in hospital

operations, clinical outcomes, and patient satisfaction. With excellent staff,

patients have fewer complications, better survival and lower mortality rates
and increased satisfaction with care.

Receiving quality health care is important to patients in maintaining and

restoring health. The hospital needs to deliver high quality care that
encourages health care staff in identifying the problem, administering care,
evaluating the cause, and using that information to improve quality care to
patients. The important ingredient of quality health care is for patients to
work with health care professionals and hence have a control over their care.
The patients including their family need helpful and necessary information in
deciding how to obtain the health care.

A weakness in most if not all health care organizations is the lack of control
over hospital costs. Most health care providers, apart from their business
administration or pharmacy department, have little data on how much
patients are charged for medicine and hospital stays. Most nurses, doctors,
and the patients dont really know how much the hospital has charged until
the patient receives a bill in the mail. So our organization encourages health
care providers to contact different departments such as the pharmacy, lab,
or hospital billing office who which often times will coordinate with the
nursing staff to provide staff with payment information for patients.
Inadequate staff is a major concern in the health care system because it
affects patient safety and the quality of care delivered. Some research
studies have found a relationship between inadequate staff and higher rates
of adverse patient outcomes, especially in the areas of patient safety, falls,
and pressure ulcers.

Ineffective communication between health care providers and patients is a

major problem in health care, and it compromises patient care. It is also a

contributing factor in medical errors and sometimes may cause patients

harm. Some basic factors that can influence the way staff communicate with
each other are fatigue, stress level, personalities and attitudes, and
distractions and interruptions. Staff needs to look for these things when
caring for patients.
The nurse to patient ratio is one of the biggest issues among thousands of
hospitals all across the nation. Most states have considered enacting laws to
establish a hospital nurse to patient ratio. California is one of the first states
since 2005 to establish such a rule (Clark, 2005). Most people believe that
lower nurses to patient ratios such 1:1 in intensive care units and 3:1 in step
down units, and a 4:1 in medical surgery units are safer for nurses to
provide adequate and safe care to patients. With a lower nurse to patient
ratio, nurses have more time to care for patients to improve patient
satisfaction and reduce medical errors, such as medication mistakes and
miscommunication among staffs. As the nursing shortage get worse,
hospitals will need to come up with different ways to help support the
nursing professions and lack of unity between computer system and paper
work is one of the major problem for nurses in the hospital system, especially
with physician order. If the right technology is implemented it can help make
a positive change in the way nurses deliver care to patients, and allow
nurses to concentrate more on direct care and less on paper work.

Technological: Recent developments

What technological developments or trends are affecting or could affect the industry?
The government is making a big push on the healthcare industry to modernize it by conducting
its business operations using advanced technology with the use of Electronic Medical Records
(EMR). Health care organizations have to comply by 2015 otherwise the organization will be
penalized for non-compliance and those who have already successfully rolled out the program
will receive incentives. The process of implementing EMR is expensive and extensive and
requires extensive staff training, to earn their buy-in and embrace the change. One of the
weaknesses of EMC is a discord between the computer system and paper work. EMR clinical
liaisons and trainers need to identify opportunities in resolving this problem though additional
training and providing super-users accessible for guidance.
Political: Pricing regulations
What are new pricing regulations mandated by third-party payers needed by EMC to comply
with to improve profitability in meeting its mission and programs?

Under Prospective Payment System (PPS) the hospitals have an incentive to adopt cost-saving
technologies as it enhances quality of care. Although, technology upgrades happen swiftly, it is
essential for decision makers to consider what is the best option to maximize investment returns
through incentives given by third-party payers. With technological advances in treating medical
conditions it important to consider the operating cost to maintain the solvency of the program.
Cleverley, Song, and Cleverley (2011) state a project that cannot show a positive rate of return in
the long run should be questioned. With the decreasing reimbursement and low volume,
insolvent programs are eliminated to minimize organizations liability and focus on the core
program for long-term growth. Non-profit organizations have outpatient programs and
community outreach program beside inpatient program. Community outreach programs are
funded by grants but the employees has to be paid by the organization. Due to difficult economic
times grants can no longer fund such programs, therefore, some non-profit organizations have
been forced to let go of these programs to cut their future losses and focus on the core program to
remain viable in serving the community.

The hospital organization will recruit, train, develop, and retain the best
staff. Health care is one of the fastest growing segments of the economy and
recruiting the best staff is not easy. The hospital needs to provide adequate
education and training so that staff can improve skills. . The pay and the
benefits are not the only part of the equation that attracts and retain the
best staff. Leaders and managers should promote successful working
environment by encouraging, listening, and understanding the concerns of
their staff. Furthermore, workers need to feel like they are active contributors
to the healthcare team. Providing the necessary tools and equipment is also
important.

Health care professionals should work together in identifying errors or nearmisses and make the necessary corrections to improve the quality of health
care. The hospital administration should engage in activities that make the
system better and safer. This includes creating a patient survey in which
patients can evaluate the quality of care and promoting the use of bar coding
in administering medication to prevent and reduce medication errors.
Initiating an error reporting system that reduces not only medication errors
but also identifies quality problems and promotes a collaborative patient
registry that tracks the delivery of care and the outcomes, is essential.
Involving the patient and the family allows understanding and prevention of
future health care issues. Blaming individuals should not be the focus but
designing safety into the system that prevents future errors.

For any organization or business enterprise to remain viable, it is important

to not only focus on its internal workings but also study its external
environment. In other words, an organization is a product of its external and
internal environment. The healthcare world is a dynamic environment that is
constantly undergoing changes. To avoid unexpected losses or changes, it is
essential for an organization to be prepared to face whatever challenges may
come its way. Hence, a thorough analysis of extrinsic factors can allow the
organization to predict and anticipate opportunities and threats and hence
strategically plan ahead. According to Beaver (2007), an effective strategic
plan is based on a comprehensive assessment of the external environment.
Common external influences on the growth of an organization include
globalization, increased consumer expectations, technological advances
and increased competition (Banham, 2010, p. 19). As evidenced by the
SWOT analysis, EMC faces various regulatory, social, economic, political,
technological and competitive influences that can hamper or enhance its
growth and viability as a healthcare organization. Based on the analysis, the
organization should strategically set goals and draw up a budgetary plan for
the upcoming fiscal years.

Conclusion

Strategic planning is a collaborative process among board of trustees,

executive management, and departmental managers in order to achieve the
desired outcome of a program. Eli Medical Center worked on innovative
approach using SWOT analysis to meet the needs of the community while
trying to maintain profitability of its programs. To maintain solvency EMC
was able to identify its strengths, weaknesses, opportunities, and threats.

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