Conducting an Environmental Analysis

Conducting an Environmental Analysis

Environmental Analysis

The reimbursement of health care services under the U.S health care system has come under severe downward pressure in the recent past due to various factor including internal as well as external factors.

Prior to this, there was a widespread criticism about the “greed” of hospitals and others health care providers leading to a severe rise in the cost of healthcare in the U.S. To this; the U.S Congress reacted by instituting health care payments control.

The consequence of this has been the decreased payments within the health care system, including to both the provider as well as the receiver.(Association, 1997)

External environment forces

The providers of health care which includes hospitals, physicians and others today are facing hurdles in receiving their deserved reimbursements as the receivers’ payer now have cut reimbursement rates and have also put up stricter standards for making claim submission and payments processes.

The greatest financial challenges’ faced by healthcare provider in the U.S health care system today is the declining reimbursements.

This challenge has been impacting public as well as private health care providers in the U.S and has been true across all the payers.

This has resulted in a severe decline in the margins that the healthcare providers have been receiving in the past. Along with this, the patient co-pays have also been increasing gradually.


The dual problem has compounded by an increase in the number of patients who are either uninsured or underinsured.

The worst consequence of this overall situation is that many of the health care organizations in the U.S healthcare sector are now forced into a financial debt cycle.

It was during the 2008 Presidential elections that health care insurance reforms came to be one of the most debated issues for the future President to work on.

In 2008, according to estimates, over 46.3 million citizens of the U.S were out of the protection ambit of healthcare insurance. The then President Barak Obama thus took on the challenge to drastically overhaul the entire healthcare system in the U.S.

Declaring that he was determined to the last, then President Barak Obama signed the Patient Protection and Affordable Care Act of 2010 (PPACA) into law and thus bringing in a new era in U.S healthcare.

Internal environment forces

The Patient Protection and Affordable Care Act of 2010 (PPACA) represented a significant healthcare policy initiative in the history of the U.S health care systems.

The act provided for extending healthcare coverage to all Americans by removing pre-existing healthcare conditions and regulations and also by reviewing the standards of health care in order to enhance coverage in the system.



It is true that some of the features of the Act did result in increased availability and efficiency of healthcare in the U.S health care system. However, there are various other provisions that have drastically affected the delivery of the health care in the U.S. Especially the provisions regarding the physicians and their reimbursement. This has affected the ability of physicians to in continuing to provide for better healthcare.

The Patient Protection and Affordable Care Act of 2010 (PPACA) makes changes to the health care profession and economic factor by making drastic changes to the reimbursement provisions. Prior to the act, physicians worked under the fee for the service system under which the bill was reimbursed by the insurance company for the service provided.

Under the new system, the Patient Protection and Affordable Care Act of 2010 (PPACA) formulates a value-based reimbursement system. It provides for the calculation of the payment based upon the quality of the work furnished than less quantity.

It requires the physicians and the hospitals involved in the service of the patient to provide a report of the outcomes of their patients to government bureau which according to the value provided will determine the reimbursement by a quality index that is predefined.

Although the traditional view of, the Patient Protection and Affordable Care Act of 2010 (PPACA) includes terms that deal directly with patients, both of these changes to reimbursement will eventually affect the average physician and impact the margins of health care organizations like hospitals’, nursing homes and others. (Kulshrestha, 2013)


The Impact of internal and external forces

In the backdrop, these external factors affecting the profitable of the organizations involved in healthcare, adjusting internal factors and considering them according to the situation can help prepare the organization for better future.

Any successfully integrated institution has a very well developed and a broadly shared institutional culture which is deeply rooted into the common vision and values. Upholding these values religious in the operation of the institution serves as a touch point to help resolve the inevitable internal conflicts that arise among the multiple actors involved.

Such vision and values include a broader concern for both quality of the service provided and also the costs associated with the same delivery. Internalizing a sense of long-term responsibility and reputation among the workforce makes the workforce feel a sense of ownership of the organization and enhances commitment to performance.

Transparency and collective actions to improve overall performance can also be a significant internal factor to enable the organization to better prepare for the future.

Internally, enhancing the brand loyalty of the organization for quality and cost effectiveness is another consumer-oriented move that can help the organization prepare better for the future and help overcome the hurdles’ posed by external environment factors, including the impact of the Protection and Affordable Care Act of 2010 (PPACA).

Private capital also tends flow readily to support organizations that deliver a positive consumer experience.(Jarousse, 2014)


The manager’s strategy

The organizational manager plays a vital role in overseeing multiple departments and functions that are part of the regular operations of any healthcare providing organization.

Coordinating teams and implementing innovative approaches on a day-to-day basis are among the core practices that are part of the role of a healthcare manager in order to ensure that hospitals are successful as well as profitable.

Health care organizational managers juggle with several responsibilities including planning, directing, and coordinating other practitioners, departments, and groups.

It is this multi-perspective role of an organizational manager that becomes a pivotal point in implementing and maintaining the momentum of the strategic plan.

Further, another important aspect of the healthcare organizational manager’s role which involves driving healthcare innovation in the hospital can also play a crucial role in the entire process of implementation and maintenance of the momentum of the strategic plans.

For instance, reducing death rates among emergency and trauma care patients as the result of management led innovation, could be such an indicator.

“Eradicating waste of all kinds is at the core of lean management approaches. Healthcare managers are needed to facilitate the implementation of these innovative approaches”. (“What do hospital health care managers do?” 2016)




Association, A. S.-L. (1997). ASHA corporate partners. Retrieved January 25, 2017, from

SPi Healthcare,Insights. Retrieved January 25, 2017, from

Kulshrestha, S. (2013). From physician to patient: The effects of the patient protection and affordable care act (PPACA). Inquiries Journal, 5(06), . Retrieved from

Jarousse, L. A. (2014, September 8). Take A look at how market forces will impact health care. Retrieved January 25, 2017, from

What do hospital health care managers do? (2016, August 31). Retrieved January 25, 2017, from

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