Strategic Audit Miller

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Strategic Audit Project
April 27, 2010
Table of Contents
I. Current Situation

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A. Current Performance
B. Strategic Posture
II. Corporate Governance
A. Board of Directors
B. Top Management
III. External Environment: Opportunities and Threats
A. Societal Environment
B. Task Environment
C. Summary of External Factors
IV. Internal Environment
A. Corporate Structure
B. Corporate Culture
C. Corporate Resources
1. Finance
2. Operations and Logistics
3. Information System
D. Summary of Internal Factors
V. Analysis of Strategic Factors
A. Situational Analysis
B. Review of Mission and Objectives
VI. Strategic Alternatives and Recommended Strategy
A. Strategic Alternatives
B. Recommended Strategy

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VII. Implementation
VIII. Evaluation and Control
IX. Appendix
A. Flow chart
X. References
Current Performance

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The corporate structure for OhioHealth is complex due to the layers of managing levels.
OhioHealth is a large organization which consists of several hospitals and home healthcare. The
organization also has affiliations with surrounding hospitals within a thirty mile radius. Profits
are increasing regardless of the economic decline. Due to the nature of the business, people
always need healthcare services, and rate of return is almost guaranteed.
Strategic Posture
Corporate strategy appears to be a continuous growth through affiliations and mergers of
hospitals. Business strategy emphasizes ‘systemness’ throughout the organization to improve
competition by creating a system wide unification of services provided. The functional strategy
includes the maximizing of productivity through unifying tests and procedures, developing
specific areas to perform the tests and procedures, and batching tests to be more effective and
cost efficient. Every strategy is consistent with each other and the organizations mission.
Patient surveys and employee performance evaluations are utilized to support the mission
internally and externally.
Policies are based on a broad guideline; however, specific standard operating procedures
are utilized for specific departments within the hospitals. All OhioHealth employees are
expected to project the broad guidelines, which are; honor, patient care and consideration, build
trusting relationships, exceed customer expectations, and add value to interactions with
customers. Externally and internally the policies are consistent. Generally, the clinical or
technical side of the organization has more patient contact, which means the ethical values are
stressed more with these employees. Recognizing the need for the unification of healthcare with
the business, OhioHealth has done a great job in incorporating their values into the everyday
work atmosphere.

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Board of Directors
OhioHealth’s Board of Directors is the executive staff members who were hired by
shareholders. The internal corporate executive staff includes: Chief Executive Officer, Sr. Vice
President and Chief Strategy Officer, Senior Vice President for Human Resources and
Organizational Development, Senior Operations Officer, OhioHealth Neighborhood Care, Senior
Vice President and Chief Communications Officer, Chief Information Officer, Executive Vice
President and Chief Financial Officer, Executive Vice President and Chief Operating Officer,
President OhioHealth Foundation and Senior Vice President, External Affairs, Senior Vice
President & General Counsel and Assistant Secretary, Chief Medical Officer, and Vice
President- Mission & Ministry (OhioHealth online, 2009). External shareholders are
unidentified board members.
Board members are actively involved in the organization. Most are highly educated and
have the skills and knowledge necessary to lead the organization. Each member of the board has
been involved with the company for years. Strategically, the board members monitor internal
and external developments which may cause changes within the facility. Board members
examine and evaluate management’s proposals and make decisions that will benefit the
company. Through the mission statements and goals of the organization, directors specify the
strategic plans given to managers.
Top Managers
Top managers are responsible for their hospitals growth, but are not responsible for the
corporation’s performance. Most top managers have been in their current positions for many
years and have been internal promotions. There are times when external candidates are hired,
but it is a rarity.

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Top managers do not interact as much as expected with lower management. Their
objective is to pass on the involvement to the Vice Presidents of each facility. Assumedly, top
managers interact more often with board members.
Social responsibility in a healthcare setting is expected. This does not mean every
decision made is ethical. Questioning ethics is normal; however, when a hospital uses words like
‘re-aligning positions’ there tends to be reasons for worry. The state of Ohio gives companies
the right to hire or fire. At this point, what they do can be considered ethical. Social
responsibility to patients falls under legal regulations. Still, social responsibility to the
environment can be an advantage in gaining a larger customer base. This can be an
environmental ethics which OhioHealth is concerned with.
OhioHealth has distinct needs where future challenges are concerned. Top managers and
executives seem to have tunnel vision. There are times when the organization’s leaders need to
re-evaluate and do not. Bureaucracy is an issue because the company is not as flexible as it
needs to be. Due to these issues, top management is not as skilled to cope with changes. In fact,
with the new healthcare changes about to occur, OhioHealth will have more difficulties in
moving towards the future.
Societal Environment
Healthcare organizations, such as OhioHealth, are facing more environmental forces than
ever. The healthcare reform which is taking place, due to the Obama Administration, is forcing
healthcare facilities to anticipate the outcome and prepare for changes. Flexibility in healthcare
organizations will become more important. This is the major external environmental issue facing
all healthcare organizations currently.

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Economically, the USA is in a crisis. Although this may be considered a threat, it will
become an opportunity as the economy recovers. Ethically, the business part of OhioHealth’s
organization must work toward increasing profits for shareholders. Yet ethics in the professional
area is focused on the patient’s rights and healthcare recovery regardless of payment for the
services. These are opposing views, but must be combined to create a unified healthcare facility.
Technology is an opportunity to increase testing volumes, while giving cost efficiency
and accuracy in testing. Technological advances can be a threat when a competing facility is
able to obtain the advancements and the other is not. Ethically, the better the treatment, the
better OhioHealth can improve the health of every patient.
OhioHealth’s organization upholds the legal guidelines. The political aspect is a
considerable threat to the running of healthcare institutes. Procedures and policies must follow
the guidelines set forth by government agencies. Looking at the future, if an organization can
make quick changes once the healthcare reform takes effect, it can be considered advantageous
by giving the company an edge over other facilities. Government agencies work to keep the
ethics in healthcare organizations.
The ‘baby boom’ of the 50’s means a larger number of middle aged Americans (Hunger
& Wheelen, 2007, p.35). Looking at the future, this is an opportunity for OhioHealth’s
organization to increase profits due to the number of elderly patients, which will need more
health care. On the opposite side, there will be an increased need for healthcare professionals
with a great possibility of not having enough people to fill the positions.
Task Environment
Several forces are involved in industry competition. As Michael Porter said, competitor
intensity is what the corporation is concerned with (Hunger & Wheelen, 2007, p.39). The

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strength of the forces will determine if they are a high risk or low risk for the organization. When
all the risks are combined, the healthcare organization can determine what the long-term profits
can become (Hunger & Wheelen, 2007, p. 39). By knowing what threats restrict the profits,
OhioHealth can create strategies to lead to them.
The economy is the immediate key factor which is affecting the healthcare organization.
Indigent patients have increased due to inability to pay for healthcare services. There is a loss of
jobs which mean loss of healthcare insurance. People are not as willing to get treated. Future
threats are coming in the form of healthcare reform. Uncertainty of what the reform will entail is
difficult to foresee.
Opportunities will come from the recovery of the economy. When people are able to
obtain healthcare insurance from jobs, there will be an increase in preventive maintenance.
Patients will want to get regular check-ups and take care of chronic conditions.
Summary of external factors
OhioHealth competes with OSU hospital, and MT Carmel. The laboratories it competes
with are Mayo Clinic, Lab Corp, and Quest Diagnostics. The opportunities reside within the
types of testing performed, the specialists, quality physicians and personnel, and the type of
treatments given. OhioHealth’s quality is favorable. If OhioHealth wants to compete with the
larger national laboratories, they must obtain the analyzers necessary to perform the tests which
are usually sent to the reference labs.
Within the threats category, the major factor is the strong reference lab presence.
Competing with these companies can be difficult because Lab Corp and Quest Diagnostics are
well known and established. Technological advances are ever increasing in the health field. The

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costs of these up and coming analyzers are too expensive for most healthcare facilities. The only
way OhioHealth can compete is by growing further to become a national organization.
The future of the company depends upon: expanding, working on marketing to exploit
their resources, increasing trends through contracts with affiliate hospitals and medical groups,
and strengthening its public relations by looking at the economy to determine pricing. These
areas will be important to the company’s ability to compete.
Corporate Structure
Currently at OhioHealth, the decision making within the technical departments are done
primarily by the managers. However, since APExS is attempting to create ‘systemness’ or unity
throughout the organization, a model will soon be implemented to make sure all of the hospitals’
technical departments do the same testing, use the same equipment, and that staffing is
appropriate for size. On the business side, the presidents of each hospital work to maintain the
organizations mission and goals. The major decisions are made by the board of directors, which
are then transferred onto the presidents. I would consider OhioHealth to be a divisional structure
which has many related industries within the healthcare field (Hunger & Wheelen, 2007, p. 61).
From direct observation, OhioHealth’s organization attempts to compete with the
reference laboratories. The organization wants to be completely self-sufficient by attempting to
cut out the send out testing and perform them on their own. By doing this, the other hospitals
that would normally send out specific tests to Mayo Clinic or Quest Diagnostics, are now
sending these tests to Riverside Methodist Hospital to perform. The organization is creating its
own centralized reference lab and creating satellite labs in the hospitals. This is a type of
marketing mix which will give the organization a competitive advantage (Hunger & Wheelen,
2007, p.64).

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Corporate Culture
OhioHealth’s corporate culture has been changing as the company continues to rapidly
grow. The CEO has changed from a man who based his position on the importance of a hospital
having a healthy heart, to a man who is geared toward increasing profits. Changes in missions
and values, has caused many employees to feel the organization has two specific ideals; one for
the business, cut throat world; and one for the technical personnel who have patient contact.
Issues come in the form of integration of the rapidly increasing number of affiliates and hospitals
within the organization.
I have witnessed a complete lack of cost effective foresight and ethics. This is definitely
not a good guide for appropriate behavior within the organization. A riff between the two sides
has become a chasm of disrespect for management and administration. I foresee a breakdown in
the organization.
Hunger and Wheelen have stated the influential powers of managers are based on their
behavior. If this type of behavior continues, OhioHealth’s strategic directions are going to
continue to shift, and not for the better. A bridge needs to be built between the employee and
management/administration before the issues become irreversible. This culture is not consistent
with objectives, strategies or policies.
OhioHealth attempts to bring diversity into the organization, but it is not reaching
employees. There are diverse or multicultural groups of people. As a strategy, it is lacking
because not all managers are able to handle the differences in ethnic cultures and backgrounds.
Unity can only exist if managers and administration are taught to become part of the solution, not
part of the problem.
Finance

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OhioHealth’s financial strategies and policies are not clearly stated. The objectives are
implied through the rapid growth with acquiring hospitals and affiliates; to increase profits. The
programs within the organization are to unify and integrate the hospitals to obtain maximum
efficiency for cost effectiveness. The mission is to create a facility where physicians want to
work and people want to be treated (OhioHealth online, 2009). Externally, OhioHealth appears
to be meeting their objectives. Internally, it appears as though the company is so focused on the
rapid growth, that the corporate group acquired tunnel vision and is missing some of the internal
issues. However, their mission and goals are centered on; compassion, honoring the value of
every human, and working towards the patients better health (OhioHealth online, 2009).
OhioHealth has earned awards at Doctor’s Hospital and Riverside Methodist for achieving
excellence in patient safety and satisfaction, operating efficiency, and financial performance
(OhioHealth online, 2009).
The Columbus health system, OhioHealth, has been praised for its strategic growth and
the strength of its balance sheet (Columbus Business First, 2007). However, by July of 2009, it
was expected that OhioHealth would experience more debt (Columbus Business First, 2007).
The trends show that up to January of 2009, there was a steady increase in the strength of
OhioHealth’s balance sheet (News by Quote Media, 2009). The organization is still performing
to standards. The analysis supports the strategic decisions. Because of the increasing strength of
the balance sheet, OhioHealth has a competitive balance when compared to other hospitals in the
area. Financially, the performance of OhioHealth is excellent as compared to other hospitals.
Human Resources Management
OhioHealth does not have the duties of HRM clearly stated. Human Resources work to
find potential candidates for positions within the hospital. This works in conjunction with the

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organizations strategies. Through opinion surveys, HR is able to detect unhappy employees and
work towards rectifying the situation. Generally, HR backs management and administration. In
the past HR was used to help the employee by fixing conditions and finding issues, but it has
been more structured around the policies, priorities and mission of the company. Externally and
internally, it appears to be performing their jobs efficiently.
Turnover is a constant threat. The laboratory is always working short handed due to the
technologists performing 80 percent of the blood draws instead of performing the testing. HR
needs to post the job accurately so the turnover does not happen as much. The job should be
posted as a technologist who is able to perform phlebotomy daily as a primary job in the
description. If not changed to an accurate job description, the future trend will be more
turnovers. This does not give the company a competitive advantage, nor is it supporting the
mission. Financially, HR is in opposition to the cost efficiency of the company.
Throughout OhioHealth, the HR department is more organized and works towards the
organizations goals. Yet, when one hospital’s HR department is causing problems, the entire
organization will suffer. Compared to other organizations, I believe HR is performing the same.
Diversity in multiculturalism is an important part of OhioHealth. There are many
cultures represented within the organization, and the company prides itself on the diversity.
Information Systems
IS supports the organization of information throughout OhioHealth. By providing an
easily accessible computer program, everyone is able to complete their tasks with accuracy and
make decisions quickly. The objectives and strategies are not clearly stated, but implied through
the performance of programs created and utilized. These systems are consistent internally and
externally within the organization. Currently, the IS department is working towards creating a

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unified system which will be used in all of the hospitals within OhioHealth. As the program
progresses, the organization will see an increase in managements ease in making decisions.
Within the near future, the organization will be well equipped to perform their duties will
accuracy and precision. Competitively, this will be an advantage.
The IS manager is expected to keep the databases clear of viruses and protected.
OhioHealth holds the IS manager accountable for any glitches in the system and expects quick
and efficient restorations of computer problems. Without these personnel, the company would
not be able to strategically perform. The IS department the central nervous system of the
organization.
Summary of Internal Factors
OhioHealth’s strengths are in their resources. Excellent physicians and quality technical
personnel help build OhioHealth into major competitor. Employee skills and their compassion
are the keys to a successful service oriented business. Financial management personnel are on
top of the issues and are able to keep the organization floating above water. Without the
strengths of these people operating the company, the organization would be struggling to
survive.
Weaknesses come from those few managers who are not exhibiting the values the
company wants. There are some issues that fall through the cracks, and if the employee’s
become even more upset over management, there is potential for the organization to lose quality
technical people. HR needs to be more active in evaluating the performance of management to
strengthen the company’s internal values and goals. Another weakness comes in the form of
upper management/administration’s inability to see obvious problems because of tunnel vision.
OhioHealth needs a ‘secret shopper’ to pick out these weaknesses so there is a chance to fix the

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issues and create a well-balanced organization. A healthy organization is flexible enough to
accept constructive criticism.
Situational Analysis
OhioHealth’s greatest strength is their ability to give quality services, and their qualified
and professional physicians and technical personnel. Exploiting these resources will be
advantageous to the organization. Quality can increase profits and aid the company in expanding
in the future, which is an opportunity. Strategically, opportunity resides within a specialty
hospital for women’s care. Currently, Columbus does not have a women’s hospital which treats
newborns while promoting the health of women. This idea would assist OhioHealth in
establishing their newly built Dublin Hospital. Creating this specialty hospital will give the
public what they need, while moving the company into the future. This will then turn into one of
their strengths.
Review of Mission and Objectives
OhioHealth, just as any hospital, has a mission to improve the health of every patient who
comes to the facility for treatment (OhioHealth online, 2009). Objectives are to give quality
treatments while earning enough revenue to retain professional personnel and increase growth.
The mission and objectives are appropriate with key strategic factors; yet, they may also cause
problems. Realistically, a hospital is unable to improve every patient’s health, and due to the
rapid growth, it will cause a strain in revenue during these economic times. I believe the hospital
needs to change the mission to be more realistic by saying, ‘The mission of the hospital is to
create an environment for optimum health benefits of the patient’. This creates a broader view
which is more realistic. It does not give patients faulty beliefs that the hospital is able to improve
every patient’s health.

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Objectives of the hospital should be centered on the patient, and not on the physicians or
the board members (King, 2009). When OhioHealth is able to utilize funds in creating an
atmosphere which is more conducive to patient health, the organization will necessitate a change
to a futuristic objective. Patients are not able to get all of their questions answered quick enough
to make informed decisions where their health is concerned. Nurses and doctors are too busy to
give the time required, which means a new system needs developed. After this happens, the
effects of the change will be an increase in the reputation of the hospital, and therefore, it will
meet its original objective of increasing revenue.
Strategically, OhioHealth is behind because they only consider the present and future
growth potential. It does not have a long lasting plan in place to earn the revenue required. The
organization should review future trends and make changes to fit in with them. Effects of their
tunnel vision will be detrimental to the organization. Effects of the change are increasing
revenue and better patient care. This is a winning result.
Strategic Alternatives
OhioHealth needs to revise their objectives. Although the current objectives have
enabled the organization to expand into a larger corporation, OhioHealth has out-grown their
current objectives and needs to re-evaluate their stage of development. Simply put,
implementing current strategies, which have been used for the past ten years, are out-dated. The
corporate structure needs to be replaced with a person who is able to keep the organization in the
growth stage. Currently, the organization is walking the line between growth and decline, while
skipping the maturity stage. The company grew too fast without considering organizational
structure. Traditional structures within the organization are not flexible enough to create a new
strategy (Hunger & Wheelen, 2007, p.130).

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A major feasible strategy would be to restructure the management into a matrix instead of
the traditional structure they currently have. The ‘good ole boy’ mentality has to be replaced
with personnel who have the credentials and experience. Bureaucracy within the organization is
keeping the organization from being open and flexible enough to change with the stages (Hunger
& Wheelen, 2007 p.3). Corporate scenarios can be created, but with the tunnel vision and
bureaucracy, the organization is unable to view the changes necessary to maintain strength.
Developing strategic flexibility is what needs to be incorporated, but the company will not be
able to shift to a more dominant strategy until key administrators are replaced. A new CEO
would be a triggering event to stimulate a new strategy (Hunger & Wheelen, 2007, p.5).
OhioHealth’s administrators seem to fear change or any deviation from current plans.
Recommended Strategy
OhioHealth’s short-term functional strategy would be to begin restructuring the
organization through hiring new administrators and changing its focus from profits to customer
service. The organization has begun to restructure through the use of the APExS system to
create a consistent program which will be utilized in every hospital. This is a short-term goal to
locate problems in unifying the entire organization. The policies being developed should be
based on unifying all services, procedures and policies to keep the organization under one
specific system and not many different systems. Currently, OhioHealth is implementing their
program decently, but it could go bad if not watched consistently and carefully. OhioHealth is
teetering on the edge of growth and decline while bypassing the maturity stage. It is a precarious
situation. The organization has the potential to survive and continue to grow with the proper
structure.
Programs

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OhioHealth would benefit from utilizing a combination of the Management By
Objectives (MBO) and the Total Quality Management philosophy. TQM focuses on consistent
improvement and customer satisfaction which is what the future of healthcare is focused on
(Hunger & Wheelen, 2007, p 148). MBO uses functional objectives, corporate objectives and
created strategies to lining plans and performance (Hunger & Wheelen, 2007, p. 147). Because
OhioHealth has too much bureaucracy, the MBO benefit of reducing internal politics will be a
major benefit (Hunger & Wheelen, 2007, p. 148).
Budgets
Both programs can be utilized with minimal financial backing. TQM teams can be
created by asking associates to participate in the program. Training personnel can be part of the
orientation to the organization and can be done within a few days. Continuing education through
yearly reviews will keep the information fresh in employee’s minds. There would be a minimal
cost involved in creating the interactive program, but the benefits would out-weigh the cost.
Budgets can be easily agreed upon, and the time for implementation can be minimized by
utilizing employee orientation programs.
Procedures
Since everything is centered on patient care, Standard operating procedures (SOP) should
entail customer service and satisfaction first and foremost. Asking the patient if they have any
questions, what else could be done to make their stay easier or happier, and giving internet
websites to aid them in any questions they may have after leaving the facility, would be a quality
service. Every procedure should include discussing what is about to be done to the patient to
alleviate fears and concerns. Patients need to understand, which means asking them if they have
questions about it.

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Information Systems
Currently, OhioHealth’s information systems are not linked or created to be one system
wide program. As OhioHealth continues to work towards systemness, the information systems
will continue to change and develop. Stronger computer systems are necessary to provide
feedback. The systems within the organizations are able to implement programs and
performance evaluations, although not as well as it could be. Presently, the systems are able to
show strategic factors. When the organization is able to completely integrate all of the hospitals,
a unified system will be implemented.
Control Measures
OhioHealth uses incident reports, risk management, and corrective actions for the use of
controlling the behavior of employees. In moderation this can be a great tool to ensure quality
performance. There are managers, although, who tend to take the incident reports to such an
extent which creates animosity, anxiety, and hostility, and make employees feel they are being
attacked or micromanaged. Some OhioHealth managers are unable to interpret and understand
guidelines of proper control and rewards. To become more consistent, the organization needs to
have a training program set up to teach managers what constitutes as control. OhioHealth has
Power of One rewards used to thank those employees who have gone above the call of duty or
give exceptional care. This system is abused when managers do not understand what constitutes
a reward.
Appendix
Organizational Chart- Top managers at each healthcare facility in the OhioHealth Organization
answer to the Board of Directors. Under top managers is the pyramid hierarchy of V.P.’s, then
lower level management and employees.

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References

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American Medical Association's private sector advocacy department. (2002, December).
Retrieved April 8, 2010, from AMA Practice management center: http://www.ama-
assn.org
Columbus Business First. (2007, December 20). Retrieved April 13, 2010, from Business First of
Columbus:
http://columbus.bizjournals.com/columbus/stories/2007/12/17/daily25.html?jst=cn_cn_lk
Cost Leadership. (n.d.). Retrieved April 26, 2010, from Cost Leadership:
http://www.sm.au.edu/uploadfiles/1184016176_Cost%20Leadership.pdf
DeBlasio, S. L. (n.d.). Managed Care Contracts-Key provisions for providers. Retrieved April 8
, 2010, from
http://library.lp.findlaw.com/articles/file/01022/009722/title/Subject/topic/Health
Managed%20Care/filename/health 1 625
Hunger, W. (2007). Essentials of strategic management 4th edition. Upper Saddle River: Pearson
Education, Inc.
King, J. (2009, June 19). CNN Politics. Retrieved April 18, 2010, from CNN Politics:
http://www.cnn.com/2009/POLITICS/06/19/sotu.cleveland.clinic/index.html
News by Quote Media. (2009, January 16). Retrieved April 13, 2010, from News by Quote

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Media:
http://app.quotemedia.com/quotetools/newsItem.htm?webmasterId=91786&storyId=1511
9945&topic=BANKFINA
OhioHealth online. (2009). Retrieved August 20, 2009, from OhioHealth online:
www.ohiohealth.com

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