Using the SWOT analysis grid and the 6-section AMA format, analyze the following case. Be sure to identify and categorize information and its relevance to either in external environment for opportunities and/or threats or its relevance to the internal environment for strengths and or weaknesses.
Domicile Home Health (DHH):
Maribeth Amato, executive direct of Domicile Home Health (DHH), is trying to determine her strategies. She’s sure changes are necessary but she is not sure how much change is needed.
DHH is a not-for-profit organization that has been the only agency operating in the local community – with varying degrees of success – for the past 25 years, offering nursing services in clients’ homes Some of the revenues come from United Way (to pay for those needing emergency nursing services for those who cannot pay), private charitable donations, and clients who pay out-of pocket for DHH services. The balance of revenues, about 90% of the DHH $4.2 million annual budget, comes from charges made to third-party payers, including health insurance companies (HMOs and PPOS), and the federal government for Medicare or Medicaid services.
Maribeth has been the executive director of DHH for two years. She has developed a well functioning organization able to meet requests for services from local doctors and discharge officers at local hospitals. Other business comes from past client referrals or potential clients needing nursing services who find DHH in the phone book or through on-line search engines. Maribeth primarily relies on the DHH website and has an advertisement in the local phone book. She makes regular visits to local hospitals and doctors who regularly refer clients and has become very active in the community, such as scouting and sports clubs, and senior citizens organizations spreading the word of the DHH mission. She has also developed at of volunteers who are willing to assist in any community programs.
The last two years have been a rebuilding period as the prior executive director had personal problems that lead to a weakening of the agency’s image with local referral agencies, doctors, and hospitals. Now the image is more positive and Maribeth has been concentrating on building relationships with all relevant stakeholders in the local community. By definition and IRS status, DHH is a not-for-profit organization but still must cover all costs: payroll, billing, rent, telephone/internet, etc. Demand has been growing steadily at about 10% annually and DHH is now breaking even with a slight surplus but it doesn’t have much of a cash cushion to fall back on if 1) the demand for services declines, 2) the government changes its rules either for what services will be covered or the limits on what will be paid for services, 3) new competitors enter the market. In fact, the last possibility concerns Maribeth greatly. Some hospitals, squeezed for revenues, are expanding into home health care – especially nursing services as patients are being released earlier from hospitals because of payment limits of government agencies. For-profit organizations, such as Manpower and Kelly Home Care Services are expanding around the country to provide a complete line of home health care services, including nursing services of the kind offered by DHH. These for-profit organizations appear to be efficiently run, offering similar services at competitive and sometimes even lower prices than some not-for-profit organizations. And they seem to be doing this at a profit, which suggests that it would be possible for these for-profit organizations to lower prices should not-for-profit organizations try to compete on price.
Maribeth is considering whether to ask her board of directors to allow DHH to offer a complete line of home health care services beyond nursing services into what she calls ‘care and comfort’ services. Currently DHH is primarily concerned with providing professional nursing services in the client’s home. many of the DHH nurses have said that they found themselves doing ‘care and comfort’ services – including preparing meals and bathing and dressing clients – because many clients are elderly and living alone and often can’t do many of the domestic activities required in the home. DHH nurses are much too expensive for routine home health care activities. The full cost of a nurse to DHH, including benefits and overhead, is about $85 per hour. Registered nurses provide such services that only a registered nurse can do (such take the patients’ vital signs, and deliver and administer prescriptions such as insulin). The state government’s regulatory agency requires that a registered nurse make a once-a-week home visit to those patients receiving Medicaid benefits and perform the administrative requirements such as filling out health reports on the client. A registered nurse is not needed for ‘care and comfort’ services. All that is needed is someone who can be Red Cross certified and bonded, has an ability to get along with all types of people, and is willing to do this type of work. Maribeth believes a mature person can be trained, certified, and bonded very quickly to do the job of following the instructions and general supervision of of a physician, nurse, and family member. The full cost of aides would be approximately $18 per hour for short visits and $120 per 24 hours for a live-in aide who has room and board provided by the client.
The demand for all health care services has been growing. With the number of elderly, dual-career families, and single heads-of-household increasing at an average 10% per year and the trend is, with people living longer, expected to continue. Maribeth has occasionally recommended organizations and individuals that provide care and comfort services to those clients who need it. There are also numerous clubs and organizations that provide volunteers to provide meals and care and comfort services to those that can’t afford to pay. DHH is capable of providing nursing services in emergency, long-term disability, and regular periodic visit situations. Private insurance companies are offering more options for long-term disability and elderly care.
Maribeth is concerned that a new full-service home health care organization will enter into the market and be a single source for both nursing and less-skilled home care and comfort services. This has happened in several cities but not in the DHH community. Maribeth fears that this might be more appealing to hospitals and other referrers. In other words, Maribeth can see the possibility of losing business as well as nurses if DHH does not offer a complete line of home health care services. This would cause real problems for DHH because overhead costs are more or less fixed. A loss in revenues by as little as 10% would require some cutbacks such as layoffs of nurses and administrative staff and reducing office space. When a client contacts or is referred to DHH, Maribeth contacts and provides the client information to one of the nurses who then goes directly to the client’s home.
Maribeth believes another reason for expanding beyond nursing services – using paraprofessionals and less-skilled personnel – is to offer a better, broader service to her existing clients and increase the efficiency of the office, staff, and technology she has developed over the past two years. Maribeth believes that DHH could easily handle twice as many clients without straining the current organization.It would be necessary to add some staff if the expansion were quite large. But this increase in overhead would be minor compared to the present proportion of of total revenue that goes to covering overhead. In other words, DHH survival would be assured as additional clients or increasing the services provided to current clients would increase revenues, provide a cash cushion to off-set fluctuations in demand, and provide more job security for all DHH employees.
Further, Maribeth believes that when DHH is successful in expanding to a full line of home health care services, it could provide services to many people in the local area who aren’t able to pay. Maribeth says one of the worst parts of her job is refusing services to clients whose third-party benefits have run out or for whatever reason are unable to pay. She is uncomfortable in cutting off service to a client. but must schedule nurses to clients that generate revenues if she is going to cover expenses, make payroll, and pay the rent. Maribeth believes that by expanding, she will be able to provide services to more people who cannot pay. This excites Maribeth because her training and experience as a nurse has instilled a deep desire to service people in need whether they can pay or not. This has been the DHH mission since Maribeth started at DHH. There has been pressure to cut off services to people who cannot pay and has been the root of disagreements between Maribeth, the nurses serving the clients and the board of directors.
Maribeth knows that the expansion would require many decisions regarding the pricing of services, pay for the staff: nurses, paraprofessionals, and aides. DHH would also have to inform, persuade, and remind DHH stakeholders and the change in the DHH image and mission. These issues don’t bother Maribeth and she thinks she can handle them. She is sure that offering a complete line of home health care services can be done by DHH at competitive prices.
Maribeth’s primary concern is whether the change is right for DHH – basically a nursing organization. DHH’s whole history has been oriented to providing nursing services. Nurses are dedicated professionals who bring high standards to any job they undertake. The question is whether DHH should offer any services beyond nursing services. She know she must have a strategy to bring to the board and staff.
Using the American Marketing Association’s approach. conduct a SWOT analysis and develop the DHH marketing strategy.