Ass1MST9

Example Internal-External Matrix

The matrix below depicts an HSO with the following total factor evaluation scores:

• Total External Factor Evaluation (EFE) Score = 2.275

• Total Internal Factor Evaluation (IFE) Score = 2.400

The intersection of these scores occurs in the center cell of the matrix which is

aligned with “Hold and Maintain” organizational strategies.

Weighted IFE Score

Strong 3.0–4.0

Average 2.0–2.99

Weak 1.0–1.99

W e

ig h

te d

E F

E S

c o

re

H ig

h

3 .0 – 4

.0

A A B

M e

d iu

m

2 .0 – 2

.9 9

A

C

L o

w

1 .0 – 1

.9 9

B C C

Implied Strategies

A Grow and Build Forward integration, backward integration, horizontal integration, market development, product/service development, market penetration

B Hold and Maintain Market penetration, product development, joint venture

C Harvest and Divest

Retrenchment, divesture, liquidation

2.400

2 .2

7 5

HSO

Examples of Implied Strategy Applications

The examples below describe various ways different types of HSOs might employ the strategies outlined in the Implied Strategies Table.

Integration Strategies

• Forward integration: [Grow and Build]

o A medical practice HSO creates a transportation service to bring

customers to and from its offices.

o A community hospital HSO creates a for-profit subsidiary to enter the DME

and Pharmacy consumer market.

• Backward integration: [Grow and Build]

o A regional medical HSO creates an insurance subsidiary to facilitate

customer bonding via HMO/PPO business.

o A hospital HSO buys medical practices to actively enter the

patient/consumer [preadmission] portion of the healthcare market.

• Horizontal integration: [Grow and Build]

o One HSO system merges with or acquires another HSO system in order

to maximize the utilities of scale and scope of services.

o An insurance HSO is purchased by a regional referral medical HSO to

gain economies of scale and scope in the market.

Intensive Strategies

• Market development: [Grow and Build]

o Pricing: A durable medical equipment (DME) HSO implements a two-

tiered pricing system for cash or insurance payment.

o Distribution: A medical practice HSO signs a contract with a local high

school to provide athletic physicals and team sports coverage.

o Branding: An orthopedic medical practice HSO creates a media campaign

to identify itself as the provider of choice for runners.

o Promotion: A Level II Trauma Center HSO offers a Speaker’s Bureau for

Community Organizations to request presentations.

o Sales: A large medical HSO offers used office equipment to the public at

significant discounts.

o Product Development: A university healthcare HSO produces software

that is marketed to medical practitioners.

o Marketing: An OB/GYN HSO provides maternity and baby clothing for sale

in its offices.

o Target Market: A community hospital HSO offers a Silver Sneaker

program to seniors.

o Niche: A community, healthcare HSO offers counseling and suicide

prevention services.

o Mass Marketing: A regional referral HSO sends flyers to all community

households offering discounted preschool physicals.

• Product/service development: [Hold and Maintain]

o A community hospital HSO develops a comprehensive breast care center

as a separate building on its campus.

• Market penetration: [Hold and Maintain]

o A university affiliated hospital HSO builds and operates medical offices in selected communities of its market.

Defensive Strategies

• Joint venture: [Hold and Maintain] o A physician practice HSO works with a surgical equipment company to

identify new tools and techniques for open heart surgery.

• Retrenchment: [Harvest and Divest] o A community hospital HSO closes all its outpatient clinics and reduces

overall staffing by 10%.

• Divestiture: [Harvest and Divest] o A DME HSO sells its entire line of lift chairs to a competitive DME

business and exits that market.

• Liquidation: [Harvest and Divest} o A parent holding company HSO sells its for-profit, real estate holding

subsidiary to a national real estate corporation.