Strategic Analysis for Resource Allocation Decisions in Health Care Organizations

By Graf, Lee; Hemmasi, Masoud et al. | Journal of Managerial Issues, Spring 1996 | Go to article overview

Strategic Analysis for Resource Allocation Decisions in Health Care Organizations


Graf, Lee, Hemmasi, Masoud, Strong, Kelly C., Journal of Managerial Issues


Recent trends in the health care industry suggest that fundamental change is inevitable in the near future. Businesses across America have become aggressive participants in cost containment initiatives (Bergthold, 1990). Additionally, governmental bodies continue to establish rate setting policies as evidenced by the more than thirty states which formed health care cost containment commissions (Eyster, 1984). At the federal level, the presidential administration has proposed a revolutionary restructuring of health care delivery and payment, and the Democratic and Republican caucuses of Congress have proposed rival plans for major change.

Calls for cost containment, legislated managed competition plans, and the emergence of purchaser alliances demanding increased financial accountability all suggest a greater need for sound business principles, including strategic planning and resource allocation models, within health care organizations. The current study briefly reviews the literature on strategic planning in health care administration and proposes an external/internal resource reallocation model using Importance-Performance-Awareness (IPA) mapping as a decision aid for hospital managers. The use of an IPA map can provide valuable information to the health care organization executive facing a turbulent and uncertain operating environment. After a review of the literature, the IPA methodology is described along with an example of IPA mapping within the health care industry using responses from 602 individuals in a Midwestern community. The article closes with a discussion of IPA's usefulness in assisting the strategic management and resource allocation tasks of managers in a broad array of industries outside health care. The application of IPA mapping in a hospital situation is meant to illustrate the potential usefulness of the methodology in helping managers efficiently utilize scarce resources and valuable organizational capabilities.

STRATEGIC PLANNING IN HEALTH CARE ORGANIZATIONS

The most critical problem area facing hospital administrators today is associated with business and financial management, particularly the need to control expenses and conserve resources (Agho, 1992). However, issues labeled as "business and financial problems" were identified as among the most problematic areas in studies conducted in 1961 (Levey and McCarthy, 1962), 1963 (Dolson, 1965), and again in 1978 (Carper, 1982). It would appear that issues of management effectiveness and organizational performance have been considered problems for the last thirty years in health care administration. However, the "business and financial problems" facing health care administrators today are very different from the types of issues confronting health service organizations twenty or thirty years ago.

Currently, the health care industry is in the midst of a structural revolution that is reshaping the financing and delivery of health services, driven largely by a shift in market power to external constituencies such as government agencies and large businesses (Bergthold, 1990). Thus, the emphasis on business skills is now centered on external surveillance and internal efficiency assessment along with strategy formation and planning (Hudak et al., 1993). This trend is in contrast to the "business and financial problems" entailing revenue enhancement and domain expansion which were common in the 1960s and 1970s (Bergthold, 1990).

Even though external surveillance and internal assessment issues are becoming the predominant concern of health care administrators, the management tools utilized by these professionals have not kept pace. For instance, less than half of the hospitals currently using strategic planning conduct any form of environmental analysis, fewer than one in five do general consumer surveys, and only 27 percent include budget and resource allocation processes in their strategic planning practices (Zallocco and Joseph, 1991). …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Strategic Analysis for Resource Allocation Decisions in Health Care Organizations
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.