HCO 7020 Module 3 Strategic Alternatives Written Assignment Example

Merge, Refocus or Hold On: Choosing a Strategy for a Rural Hospital With a TOWS Matrix and Five Weighted Criteria

Student Name

MBA in Healthcare Management, Thomas Edison State University

HCO-7020: Strategic Management within a Healthcare Organization

Mentor Name

Month Day, Year

Merge, Refocus or Hold On: Choosing a Strategy for a Rural Hospital With a TOWS Matrix and Five Weighted Criteria

Module 2's environmental analysis for Skylands, the composite 140-bed hospital at the center of these assignments, identified four urgent issues: Medicaid changes likely to raise the uninsured share, competitors capturing outpatient and specialty care, a costly and shrinking obstetric unit of the kind many rural counties have already lost (Hung et al., 2017), and growing needs among older residents. This assignment generates strategic alternatives, classifies them using the strategy types in Ginter et al. (2018), scores them on criteria fixed in advance and makes a recommendation.

Generating Alternatives With a TOWS Matrix

A TOWS matrix crosses internal factors with external ones so that each pairing suggests a strategy (Weihrich, 1982). Skylands' strengths are its 24-hour emergency department, the only one in its part of the county, its long community trust and a well-regarded orthopedic and rehabilitation program. Its weaknesses are small scale, a thin specialist bench and an obstetric unit that loses about $3.1 million a year. Opportunities include an aging population, unmet behavioral health needs, telehealth and possible state rural funds; threats include Medicaid changes, competing systems and labor costs.

Pairing these produces strategies. Strength-opportunity combinations suggest expanding senior and rehabilitation services and behavioral health, building on community trust and location. Weakness-opportunity combinations suggest affiliations or telehealth to add specialists without hiring them. Strength-threat combinations suggest defending emergency and inpatient services as the hospital's distinctive role. Weakness-threat combinations suggest either joining a larger system or reducing services, such as obstetrics, where the hospital cannot compete or sustain quality.

Three Strategic Alternatives

From the matrix, three alternatives emerge, which the course text's categories help name precisely (Ginter et al., 2018).

Alternative A is to merge into one of the larger regional systems, a cooperative market entry strategy. The system would bring capital, specialists and purchasing power, and would likely consolidate some services at its larger hospitals.

Alternative B is to remain independent while refocusing: retrench by closing inpatient obstetrics, a contraction strategy, while preserving prenatal and postpartum clinics and emergency capability for unexpected deliveries; pursue product development and related diversification in senior care, rehabilitation and behavioral health; and form a clinical affiliation, a cooperative alliance, with an academic medical center for cardiology, telestroke and specialist telehealth.

Alternative C is to maintain the status quo while cutting costs, a maintenance-of-scope strategy relying on efficiency to absorb losses.

Evaluation Criteria

Ginter et al. (2018) emphasize evaluating alternatives against criteria agreed in advance, so that the choice reflects the organization's mission rather than the preference of whoever argues most forcefully. The board approved five criteria and weights: preserving local access to essential services (30 percent), financial sustainability over five years (25 percent), quality and safety (20 percent), feasibility given capital and staff (15 percent) and fit with the mission and community values (10 percent). Each option then received a score between 1 and 5 on every criterion.

Interpreting the Scores

Alternative C scores well on access and feasibility in the short term but fails on financial sustainability and quality: continuing a low-volume obstetric unit raises safety concerns as well as losses, and cost cuts alone cannot offset declining volume. Alternative A offers the strongest finances and good quality but lower scores on local access, because systems often consolidate services at central hospitals, and on community fit, given residents' attachment to an independent hospital. Alternative B scores highest because it addresses the financial problem by closing the largest loss, meets growing local needs where the hospital has advantages, and gains specialist depth through an affiliation without giving up local governance.

The scores are judgments, and the closest alternatives differ by only 0.40. A sensitivity check helps: if financial sustainability were weighted at 35 percent and access at 20 percent, Alternative A would score 3.80 against B's 4.00, still second. The choice therefore holds up when the weights shift within reason, though a steep fall in finances could overturn it.

Recommendation and Conditions

The board should choose Alternative B, with conditions. Closing obstetrics must include a transition plan: continued prenatal care in Sussex County, agreements with regional hospitals for deliveries and high-risk care, transport protocols, and emergency department readiness for precipitous births, which federal emergency care law requires. The affiliation agreement should specify telehealth coverage, specialist clinics and referral protocols that keep routine care local. And the plan should include a trigger: if operating margin remains below minus 2 percent for two consecutive years, the board will reopen Alternative A from a position of planning rather than crisis.

Conclusion

A TOWS matrix and the course text's strategy types produced three clear alternatives, and weighted evaluation favored remaining independent while closing obstetrics, expanding senior and behavioral health services and affiliating for specialist care. The choice holds under reasonable changes in weights and comes with conditions that protect patients during the transition and a trigger for reconsidering a merger if finances deteriorate.

References

Ginter, P. M., Duncan, W. J., & Swayne, L. E. (2018). Strategic management of health care organizations (8th ed.). Wiley.

Hung, P., Henning-Smith, C. E., Casey, M. M., & Kozhimannil, K. B. (2017). Access to obstetric services in rural counties still declining, with 9 percent losing services, 2004-14. Health Affairs, 36(9), 1663-1671. https://doi.org/10.1377/hlthaff.2017.0338

Weihrich, H. (1982). The TOWS matrix: A tool for situational analysis. Long Range Planning, 15(2), 54-66. https://doi.org/10.1016/0024-6301(82)90120-0