MGT501 Business Environment Assessment Assignment One – Environment Scan Part A Individual/Group Individual Length 1500 words Learning Outcomes This assessment addresses the following subject learning outcomes: a) critically evaluate the effect of the ext

This report is an analysis of external environment of Sunshine Coast University Hospital in Birtinya, Queensland. The report aims to find out what external factors are and how they can influence the operation and sustainability of the hospital. PESTEL model and Porter’s Five Factor model are used to determine those factors.

The PESTEL model identifies what aspects of political, economic, sociocultural, technology, environment, and legal factors are likely to have significant on the operation of the hospital. The Porter’s Five Factor model is used to determine how strong the competition, threat of new entrant, threat of substitutes, bargaining power of supplier, and bargaining power of buyer.

Table of Contents Executive Summary i 1 Introduction 1 2 PESTEL Analysis 2 2.1 Political Factors 2 2.2 Economic Factors 2 2.3 Sociocultural Factors 4 2.4 Technological Factors 5 2.5 Environmental Factors 5 2.6 Legal Factors 5 3 Porter’s Five Force Analysis 6 3.1 Competition 6 3.2 Threat of new entrants 6 3.3 Threat of substitutes 6 3.4 Bargaining power of Supplier 6 3.5 Bargaining power of Buyers 7 4 Conclusion 7 References 8

The influence of external environment to a business operation is undeniable; therefore, business must have an insight of external factors that may affect their operation as well as how much influence it may have on the operation of the business.

This report aims to provide an analysis of external environment of Sunshine Coast University Hospital, located in Birtinya, city of Caloundra. Sunshine Coast University Hospital (SCUH) had first patients on 21 March 2017 and was officially opened on 19 April 2017 by the Queensland Premier and Minister for Health and Minister for Ambulance Services (Sunshine Coast Hospital and Health Service, 2017). SCUH is a tertiary, teaching hospital servicing all parts of the Sunshine Coast and Gympie regions. SCUH opened with 450 beds and it plans to grow to 738 beds by 2021.

Services at SCUH including:

· Emergency department (24hr)

· Cancer care

· Specialised medical and surgical services

· Trauma service

· Paediatric service

· Maternity services

· Special care nursery

· Rehabilitation

· Renal dialysis

· Mental Health and Addiction

· Interventional and diagnostic clinical support services

· Specialist ambulatory care services

· Allied health

Stage 2 of the plane will commence in July 2018 and the hospital will expand to more than 600 beds. More services will commence at this stage.

From service commencement to the end of June 2017, SCUH had provide treatment for more than 16,000 patients presenting to the emergency department, had more than 700 babies born, over 50,000 outpatients were assessed and treated, approximately 18,000 admitted patients was treated and discharged.

The tools which are used to analyse the external environment of SCUH include PESTEL model, and Porter’s Five Factor model. These model will be used to determine what external environmental factors and how they can affect the operation and performance of Sunshine Coast University Hospital.

The influence of political factor on health industry mainly comes from the funding decision and changing legislation. Political stability is always an important factor, any change of the head of state can affect healthcare sector. Each Prime Minister and their party have different strategy and agenda that drive their actions. This will affect the funding of the health care industry, hence, will affects the operation of the SCUH.

Other political factors that may influence the operation and performance of SCUH including the future changings of taxation law. While Mr Turnbull’s government proposes a plan to cut the tax rate to 25% for business with turnover under $10 million, Mr Bill Shorten wants to keep current corporate tax rate for school and hospital funding. Changing tax rate will influence future tax revenue, hence, may affect future funding for health sector.

Among the aspects of economic National and Local economic situation have the biggest influence on the operation and performance of SCUH. As illustrated in the pie chart below, public hospital services in Australia is funded by the federal government, state government, private funding. The biggest share belong to federal and state governments. This means the national and local economic situation strongly influence the amount of fund that is located to SCUH.

Figure 1: Health service - Funding and Responsibility 2013-14.

Source: Australian Institute of Health and Welfare 2016

The QLD Budget Papers 2018-19 (2018) state that the Total Estimated Cost that QLD government spent on SCUH is $1,87 billion and the State government plans to invest $34.5 million in new and expanded services at the Sunshine Coast University in 2018-19 financial year (QLD Government, 2018).

Changing demographic, rise of prevalence of chronic diseases amongst the population, and changing customer expectation are the greatest sociocultural factors that the hospital has to pay attention and plan their operation accordingly.

Changes in demographics

· Population growth - Sunshine Cost region is one of the area that have fastest growing population areas in Queensland. The population was 303,392 in 2016 and is estimated to be 386,692 by 2026 (The Sunshine Coast Council, 2018). The average annual growth is estimated to be 2.46%. This means more people will need to access the healthcare system.

· Aging population – in 2016, 19.5% of total population was aged over 65 years (59,391 persons). By the 2026, it is estimated this age group will increase to 20.8% (80,682 persons) (The Sunshine Coast Council, 2018). Higher percentage of residents aged over 65 years means more people are pr one to chronic diseases which associated with higher cost of healthcare.

The changing in demographic requires the SCUH to plan their infrastructure and facility to meet future demand.

Increasing prevalence of chronic diseases amongst the population

According to Australian Institute of Health and Welfare (2014 ) chronic diseases which belong to 4 major disease groups, including cardiovascular diseases, cancers, chronic obstructive pulmonary disease, and diabetes account for 75% of all chronic disease deaths, and cause significant ill health and disability in the Australian population. These diseases are commonly caused by smoking, physical inactivity, poor nutrition and harmful use of alcohol. It is evident that as people get older, the burden due to overweight and obesity is greater (Australian Institute of Health and Welfare, 2017). The rise of overweight and obesity people combined with a growing and ageing population will lead to increasing numbers of chronic diseases patients, rising the demand for more effective treatment methods and hospital services.

Advanced technology means patients can receive the most effective treatment for their disease. It may help the patients recover faster, hence, they can be discharged faster. This also benefit the hospital because when patients are discharged faster, more there will be more vacancy for other patients.

It is essential that the hospital abide by the environmental law to discharge the waste appropriately to avoid the spread of disease.

Employment law

According to Sunshine Coast Hospital and Health Service 2016 –2017 Annual Report (2018) total operating expenditure of all hospitals was approximately $990 million, and Labour and other employment related costs accounts for 62% of the operating expenditure. Because the separated figure for SCUH is not available, this general figure for all hospitals in Sunshine Coast, Gympie and Noosa regions is assumed to be correct in the case of SCUH. This shows that the change in pay rate under employment law will influent the operation of the hospital enormously.

Future legislation changes

Besides the changes of the employment law, SCUH should also be aware of future legislation changes and comply with legislations including:

· Environmental Protection Legislation

· Freedom of Information Legislation

· Health Practitioners Legislation

· Health Rights Legislation

· Health Services Legislation (Public Hospitals)

· Nursing Legislation

· Privacy Legislation

· Private Health Facilities Legislation

· Public Health Legislation

· Quarantine Legislation

· Therapeutic Goods Legislation

· Workplace Health & Safety Legislation

The threat of competition in healthcare industry is very weak, especially among hospitals. In the case of SCUH, the hospital was built to server the local residents so that they do not have to travel long distance for medical treatment, and the hospital help to ease the burden for Nambour hospital, which is another hospital in Sunshine Coast region.

The threat of new entrants in the hospital industry is extremely low because of the high level of capital requirement and complicated government approval process. Opening a new hospital at any size requires an extensive amount of capital.

Threat of substitutes in this case is very low because the patients who have to receive medical treatments have almost no other choice to cure their disease.

Bargaining power of supplier is very low because there are many suppliers that offer products in the healthcare industry.

Bargaining power of buyer is low if it is an emergency case, where they have to receive immediate treatment. However, if their illness do not require emergency treatment, they can choose to go with other hospitals or receive treatment overseas for better price or more advanced method.

In conclusion, the analysis using PESTEL model indicate that the instable of the government and economic situation can impact Federal and State funding for the hospital. Moreover, the hospital will have to face the challenges associate with growing population and aging population. The choice of inactive lifestyle and diets make more people living with chronic diseases, causing an increase in the need for healthcare services. Technology advancements benefit both patients and the hospital, therefore, the hospital should consider invest in new and equipment which can effectively treat cure the diseases. The company also need to make sure that their wastes is disposed correctly to avoid transmitting of diseases. They also need to comply with the laws and legislations that is required by the states and federal government. Porter’s 5 force models indicate that the all the five forces in this model have very little influence on the operation of the hospital. Using the results of this analysis, the hospital create a strategic plane to ensure their competitive advantages and sustain their operation.

Australian Institute of Health and Welfare 2014, Australia’s health 2014, Australia’s health series no 14, <https://www.aihw.gov.au/getmedia/8f7bd3d6-9e69-40c1-b7a8-40dca09a13bf/4_2-chronic-disease.pdf.aspx>.