Strategic Management in Healthcare Organizations

Strategic Management in Healthcare Organizations

Most if not all governments desire to offer affordable medical services to their populace. In the US, this is one of the main spending avenues as the government embarks on ensuring that every American has access to quality healthcare services at affordable rates. To achieve this goal, the United States government launched two programs, Medicare and Medicaid, which offer medical and health-related services to different groups of people in the US. Medicaid and Medicare are both managed and supervised by a special department of the U.S. Department of Health and Human Services, which is the Center for Medicare and Medicaid Services (CMMS). Through these programs, the government has come up with initiatives aimed at promoting strategic management in healthcare organizations (Lipsky & King, 2010). In the subsequent sections, this paper discusses the history, benefits, and barriers associated with the implementation of strategic management in healthcare organizations in the State of Rhode Island.

History of Patient Centered Medical Home (PCMH)

The Patient Centered Medical Home is said to be a model of care based on the tenets that embrace the objectives of the design of the Future of Family Medicine, The Wagner Care Model, the Institute of Medicine, and the mutual relationship between these employers and their employees. This model of care rides on the good reputations upheld by Medicaid and Medicare. PCMH is thought as the best remedy for issues challenging healthcare provision that include the alignment of patients and physicians, elaborate models of improving care, and the alignment of public and private payment systems (RGC, 2007).

The phrase “medical home” was first coined by the American Academy of Pediatrics (AAP) in 1967. Initially, this term was enshrined in the AAP policy and was used to describe where the medical information patients were stored. Gradually, the phrase was expanded to incorporate the role played by family members in the provision of accessible healthcare that is family-centered, comprehensive, coordinated, compassionate, continuous, and culturally acceptable. An operational definition was added in 2002 by the AAP to define or enlist the specific activities that should be found in a medical home (RGC. 2007).

Another milestone in the development of medical homes was in 1978 when the World Health Organization (WHO) met to deliberate on some basic principles of a medical home and its significance in the provision of primary care. The WHO declaration coined a definition for primary care in which it categorically states that primary care is the key to the attainment of acceptable health. The declaration adds that “acceptable health” is a state of complete mental, physical, and social being, and is a basic human right. The declaration further asserts that the attainment of the highest level of health is the cardinal social goal in the world. Consequently, the WHO chose to locate primary care at the epicenter of the healthcare system and closer to home and, by doing so, the WHO came up with a new definition for primary care. According to the Levine (2013), primary health care is the basic healthcare that is founded on scientifically sound, socially acceptable and practical technology and methods that are availed universally to families and individuals. Primary health care is the first level of contact for its beneficiaries, who benefit from the governments bid to bring the national health system close to where the patients are found.

The WHO further described primary care using points that have since been incorporated into the PCMH concept. Accordingly, the WHO asserts that primary care:

  • Considers the economic, political, and sociocultural conditions of a country and its communities and applies the results that have been gathered via biomedical, social, and health care research and other related experiences;
  • Identifies and deals with the core health problem in the targeted community and provides preventive, rehabilitative, and curative services, when and as needed.
  • At the very least, it entails some basic education regarding the prevailing health challenge and the method of preventing, managing, or controlling them.
  • Involves other sectors and subsectors that are related to the health sector; these include agriculture, food industry, water and irrigation, education, public works, communication among others;
  • Promotes community participation in the planning and management of the primary health care program;
  • Should gain support of a robust , mutually supportive and functional referral system, which will in turn lead to progressive improvement in the access of affordable and progressive medical care for all.

These PCMH concepts were incorporated in the 1990’s Institute of Medicine (IOM) publication paving way to the development of a specialty branch of health care that came to be known as Family Medicine. In the year 2002, Family Medicine commissioned a study aimed at developing strategies for the transformation and renewal of the discipline with hopes of meeting the ever-increasing needs of patients in an ever-changing health care environment. This study came up with a recommendation that all Americans should have access to a personal medical home that will serve as the focal point through which every American will access their chronic, acute, and preventive medical care services.

The Chronic Care Model developed by Ed Wagner was another important contributor to the development and establishment of the PCMH. There are certain elements of Wagner’s model that have been found to improve the cost-effectiveness and quality of care for patients suffering from chronic conditions (Rakel R, & Rakel D, 2011). In the year 2004, the American Academy of Family Physicians (AAFP) proposed amendments to Wagner’s model so that they could apply it broadly to primary care. Wagner’s model also contributed insight on how the new expanded model can best serve patients with complex chronic conditions. The AAFP have since agreed on the seven core characteristics of a medical home. These include a personal physician, a whole person orientation; physician directed medical practice; coordinated and integrated care; enhanced access; quality and safety, and payment reform (Rakel R, & Rakel D, 2011).

Strategic reasons for a primary care practice to pursue the development of a PCMH

The primary care practice in the State of Rhode Island has every reason to embrace and pursue the development of a PCMH. Firstly, this model is collaborative in nature and it will ensure that the end recipient of the care is well benefited. Secondly, a PCMH model ensures that health care services are made available to as many people as possible. By embracing and implementing the PCMH model, the primary care practice will be increasing its client base, which will translate into more income for the practice. Thirdly, the primary care practitioners are often inspired to embrace PCMH by the bonuses that are given to practitioners that accurately and efficiently apply the PCMH model in their practices (Rakel R, & Rakel D, 2011).

The supports given to the PCMH by various stakeholders in Rhode Island also play a crucial role in persuading primary care practitioners to develop towards a patient- centered care model. Supporters in the private sector are embracing PCMHs by creating insurance products and resources tailored for PCMHs. Primary practitioners that wish to benefit from such products and resources must develop their practices to simulate the PCMHs.

PCMHs also enjoy support of the local governments in Rhode Island. This in effect has seen these entities formulating health care policies that are geared towards the promotion of PCMHs in their area of jurisdiction. Primary care providers are also inspired to participate in the development of a PCMH model because of the broad support given to healthcare professionals who are operating under the model. Since the year 2007, several primary care physician associations and societies have embraced the PCMH model. The associations that include the American Association of Pediatrics, the American Academy of Family Physicians, and the American College of Physicians have endorsed principles anchored on the PCMH model (American College of Medical Quality, 2010). Another strategic reason as to why most primary care physicians are embracing the PCMH model of practice rests in the fact that such a model promotes the triple aim outcomes of better care, better health and lower costs of operations. Additionally, most primary care physicians appreciate the contributions made by the family and the community in the care of their patients. With this appreciation that primary care practitioners have opted to develop towards a PCMH model, whose core pillar is founded on the collaborative framework.

The Implementation Strategies

The best way to implement strategic change in a health care environment is by starting with steps that will increase care practice revenue. The earnings from these steps will facilitate the implementation of steps that merely enhance the health outcome. The Future of Family Medicine report published in the year 2004 champions for a new model that has eleven crucial elements. These elements include personal medical home, team approach to medical care, patient-centered care, removal of barriers to access, focus on improved quality and safety, defined services that will be offered by the practice, whole-person orientation, redesign of functional offices, advanced information systems, and enhanced modes of payment (American College of Medical Quality. 2010).

The report FFM report (2004) further proposes a number of steps that can be followed in the implementation of a PCMH model. These steps are discussed hereunder (Kuzel, 2009):

Step 1: Enhanced Documentation and Coding

Application of a level 4 code is important in hospitals. This is important because it will enable physicians and other health care practitioners to have the medical records of their patients in a place that it can be accessed with ease. On the other hand, improved documentation will ensure that all medical records are accounted for and this will in turn save the practice both time and financial resources.

Step 2: Hire more Healthcare Practitioners

Proper coding and documentation will help the practice save some revenue, which can be channeled towards hiring of more medical assistants and nurses. The point of hiring more nurses and medical assistants is to relieve the physicians of the tasks that can be handled by these new employees and enable them to keep making money for the practice by doing what they have been trained to do. By so doing, the practice will improve quality of service delivery and expand capacity.

Step 3: Implementation of Advanced- access scheduling

This needs to be implemented about six months after the additional staff has been employed. This will ensure that patients will be seen by the physicians they day they book for an appointment without cancellations and rescheduling. This will in turn boost patient satisfaction.

Step 4: Raise the number of patients attended to per day

By Increasing the number of patients attended to per day by about 5% , the practice would generate some additional income. This will also ensure that urgent cases are handled before they escalate to serious conditions.

Step 5: Expand working hours

By expanding working hours, the physicians will be able to see more patients and this will translate into more income or revenue for the practice.

Step 6: Install and Implement an EHR

Training of the staff on how to operate an EHR will improve on how to store and retrieve patient data from the system.

Step 7: Implement a systematic population-based care

This can be attained by compiling a chronic disease patient database and the implementation of some models that will help in the management of chronic cases.

Step 8: Purchase and Install a user-friendly patient portal

This will afford patients a new way of interacting with the practice environment. The patients will be able to access the self-service menu and perform some tasks that will save staff time and money.

Step 9: Create electronic linkages with local health systems

This system will help cut down on unnecessary testing and data entry. This automated system will relieve the support staff of the burden of having to enter the data manually and it will increase the physician’s practice capacity.

Assets and Barriers to Implementation

Some of the assets associated with the implementation of the PCMH model include reduction in operation costs, increase in physician capacity, and increase in revenue from improved systems. Conversely, three major barriers to implementation include lack of funds, complexity of the new system, and low morale on the part of the participants (Grumbach, & Grundy, 2010).

The health care facility can adopt a number of ways in dealing with the barriers. One of such ways would be to take a stepwise approach in the implementation. The facility can start by implementing the first steps that will generate revenue, which can be channeled to finance the subsequent steps. The health care facility can also conduct training and orientation programs to educate the staff on how the new systems work.



American College of Medical Quality. (2010). Medical quality management: Theory and practice. Sudbury, Mass: Jones and Bartlett Publishers.

Grumbach, K. & Grundy, P., (2010).Outcomes of Implementing Patient Centred Medical Home Interventions: A Review of the Evidence from Prospective Evaluation Studies in the United States.[online] Available at <> [Accessed on 11 Feb, 2014]

Kuzel, J., A., (2009). 10 Steps to a Patient-Centred Medical Home. FAMILY PRACTICE MANAGEMENT. [online] Available at <> [Accessed on 11 Feb, 2014]

Levine, A. I. (2013). The comprehensive textbook of healthcare simulation. New York, NY: Springer

Lipsky, M. S., & King, M. S. (2010). Blueprints family medicine. Baltimore, MD: Lippincott Williams & Wilkins.

Rakel, R. E., & Rakel, D. (2011). Textbook of family medicine. Philadelphia, PA: Elsevier Saunders.

Robert Graham Center (RGC). (2007). The Patient Centered Medical Home History, Seven Core Features, Evidence, and Transformational Change. [online] Available at <> [Accessed on 11 Feb, 2014]

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