An Important Business and Management Tool
In today's episode, John describes why the SWOT Analysis is an important tool for physician leaders and how to use it for project and strategic planning.
The process of shifting to a nonclinical career often involves learning and applying new business knowledge and skills. Most physicians have not been exposed to formal project management or strategic planning concepts during their medical education. The SWOT Analysis is a well-known business tool that is easy to learn and implement.
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Building a Stronger Skill Set for Career Advancement
This week, John emphasizes the importance of acquiring new skills to enhance one's professional profile. The focus is on business skills crucial for executive and management positions. John suggests that expanding one's skill set in negotiating, contracting, health law, management principles, HR principles, and leadership can significantly enhance attractiveness to employers in the healthcare sector.
Mastering the SWOT Analysis in 15 Minutes
By sharing personal experiences and using a hypothetical healthcare scenario, John illustrates how SWOT analysis can be effectively applied to make informed decisions. Below is an example discussed during the presentation.
Decision Whether to Expand Healthcare Services
Scenario: John recounted a situation where his team needed to decide whether to expand healthcare services (urgent care) into a new area.
– Strengths: The organization was the largest and most successful hospital in the community, with a significant financial advantage, brand recognition, and a successful history of physician recruitment.
– Weaknesses: Lack of experience in urgent care, ongoing strategic initiatives such as starting an open heart program, recruiting a new radiology group, and completing a new wing addition to the hospital.
– Opportunities: Rental space availability, community demand for more physicians, and a supportive medical group interested in expanding primary care services.
– Threats: Large uninsured population, potential external competitors, and concerns about the reaction of the existing medical staff.
By considering the above factors that were discovered during a SWOT Analysis, our team was better able to make an informed decision about the risks and benefits of proceeding with the planned expansion. Based on this analysis, our health system decided to move forward with this initiative.
Using a SWOT Analysis in Other Situations
Doing a SWOT analysis is also very useful in the context of regular strategic planning meetings. When dealing with various strategic initiatives a SWOT analysis of each can be part of the decision-making process for allocating resources to specific projects. A SWOT Analysis will help identify priorities, assess the potential impact of each one, and help decide how to allocate resources effectively.
Summary
John illustrates how SWOT analysis can be effectively applied to make informed decisions in the healthcare sector. It is a simple process that any healthcare leader can learn to do. And it makes a great addition to your portfolio of management and leadership skills needed to land your first executive position.
NOTE: Look below for a transcript of today's episode.
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Links for Today's Episode:
- How to Pursue a Nonclinical Career in Hospital Management – 080
- How to Deploy a Powerful Tool to Identify Goals – 054
- From SWOT Analysis to Inspired Goal Setting
- When to Use a SWOT Analysis
- Dr. Debra Blaine's Coaching Services
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Transcription PNC Podcast Episode 336
Add the SWOT Analysis to Your Growing Skill Stack
John: It's a good idea if you're thinking about moving into some other area that you might consider obtaining new skills that you can stack on your existing skills, and that makes you more attractive to certain types of jobs. And a lot of those skills and a lot of that knowledge is basically business skills and information. In fact, I was thinking about this earlier and much of what I'm going to talk about today, the types of skills that you might want to accrue, we talked about last time. You're pretty much going to find those if you happen to be a member of the American Association for Physician Leadership, including a leader in an executive position. So, you're going to need to know all of those business skills like negotiating and contracting, health law, and management principles, HR principles, leadership principles, and so on and so forth.
Today, I want to give you a little mini MBA course in 15 minutes. This is a session in which we are going to talk about SWOT analysis. What is a SWOT analysis? Now, I remember probably sitting in a room one day, I think it was shortly after I became VP for medical affairs. I was in the C-suite, and I was listening to these conversations. I was acclimating to this new job, and I heard somebody talk about, "Well, we've got to do our budgeting at the end of the year here, and we're going to be setting some management goals and so we need to do a SWOT analysis. Then we can be prepared to move forward on that." I'm thinking "SWOT analysis, that sounds pretty... Is that like a SWAT team or something?" But for those that know what it is, you're kind of chuckling because the SWOT analysis sounds like some really great tool, but it's been around forever.
The SWOT just simply comes from the acronym of what you're doing when you're doing a SWOT analysis. And that is for whatever problem you're looking at, you're trying to solve and maybe develop a set of goals or make a decision about, you're just going to look at these factors which have been shown to be important in decision making about whether to proceed with something like this or not, or choose from among a multitude of options. We got 10 different things we want to do. How do we figure out which of those 10 are the highest priorities? Well, you could do a SWOT analysis. There's lots of ways that a SWOT analysis is used.
Now, I will mention this. You may want to read about this, and actually, even Wikipedia does a pretty good job describing this, but you can look it up on Google. You can find almost any kind of business management book will have it. I'm sure it's taught in schools that provide MBAs and MMS and MHAs and things like that.
But the SWAT simply refers to the S is Strength. The W is Weaknesses. The O is Opportunities, and the T is Threats. And so, you take whatever it is that you're dealing with and you bring it through that process. I'll tell you when we use this frequently. I would use it with my managers, and sometimes the senior team would use it to develop a maybe an hour or two session at our strategic planning meetings.
Now we had biweekly or weekly strategic planning meetings. Then we would do a SWOT analysis every time at that, although we could do it at a particular meeting. But if we did an annual, you would call more of a management goal meeting, because the old days we did strategic initiatives that would be looking out three to five years. And there's still sometimes where that's important to do, but generally we're doing year by year.
And that's that short term strategic analysis and plan became really the management plan, which meant that every V line goals that the superior had decided we were going to do for that year coming up. We usually did this towards the end of the year, although not quite at the end because we wanted to know what these initiatives would be before we actually set the budget, as opposed to saying, "Well, I think we're going to extend our hours on weekends." You could do that without necessarily a huge budgetary impact. And in that case, the revenues would offset the expenses anyway. But still, even there, you might want to do that.
I've written about in the past an example of what this might look like. So, I'll just give you an example and we'll walk through it. Let's say that we were in a group, either a private group or part of a hospital medical group, and we decided that we were going to do a SWOT analysis to decide whether we should proceed with an expansion into a new primary care or urgent care service in a new area that we hadn't been in before. We're like, "Okay, we're in a hospital, we have a competitor hospital basically within walking distance. There are some other competitors out further, but basically we have that to contend with." And then we have to consider all the factors that might go into whether we can and should do this. Do we have the budget for it? Are we growing? Do we want to grow? Do we have staff for it? And so forth.
So, let's see what the SWOT analysis might look like. And this is just a partial SWOT analysis, but we're looking at this. And so, let's talk about in a brainstorm about our strengths. At the time, we were definitely the biggest hospital of the two and the most successful I would say in the community. We had a much bigger bottom line. We had $300 or $400 million net revenues, and the other one maybe had a third of that. We had employed a base of physicians. We were fairly successful at recruiting physicians. We had a very healthy bottom line for the last five years. We were making money unlike other hospitals in the state of Illinois who many were losing money.
And what are the other strengths? We had a great brand recognition. We had gone through some marketing consultations in previous years. We had some pretty tight branding and marketing. We had good logos and they had been consistent color palette and that sort of thing. Like I said, the finances were strong.
And then the other thing is, do we have physicians interested in this? And we did have those inside the medical group, the primary care doctors already interested in finding new locations to do this. And if we looked at who was in our team right now, the team that was running the group had a lot of depth. And so, we could take on, we felt in that situation, pretty readily expanding into a new territory. Now, we would also have to decide things like "Are we going to build or are we going to lease some space? How much do we want to commit to this from a budgetary standpoint? Is it going to be enough?" But so far so good.
Now, weaknesses. At the time we were looking at adding an urgent care clinic. Basically we had no experience in urgent care. We were not doing any urgent care. There were some urgent cares in the periphery of our service area. They were all either independent, freestanding, individual urgent cares or large regional groups that we're expanding. And it's a little different competing, let's say, with an urgent care that's run by an entrepreneur as opposed to an urgent care run by a hospital, which typically loses money, but they make it up on the referrals and that kind of thing. No expertise in that.
We had already several pretty pressing strategic initiatives. I don't remember exactly, but let's say that we were do starting an open heart program and we were in the process of recruiting new radiology group and we were still finishing up the addition of a new wing to the hospital. Those are weaknesses because there's a lack of depth in terms of the ability to manage something at maybe a higher level management directors and VPs because we had these other big projects going on because we didn't have the experience.
And the other thing is we were really having trouble at that time recruiting staff fast enough to maintain and keep up with our growth. The area we were looking to go and didn't have urgent care. In fact, the general area around us didn't have urgent care. We were looking at ways to prepare for value-based contracting or prepaid plans, keeping costs down basically which means keeping people out of the emergency room, which is basically what primary care and urgent care does if you have enough capacity. Shunt those people. That's one opportunity we had never pursued before.
It just so happened there was rental space available at several locations in the town in which we were looking to put the urgent care. And we had heard that the community definitely wanted more physicians. We probably should have done a little more digging on that, whether what type of physicians, but basically they just wanted physicians because there was a lack of. This place is a good 30 minute drive outside of the main area where our hospital was located, and it was pretty rural, but still had some population density there.
Now the threats. That's T. The threats for the SWOT analysis could be things like, again, you just look all those areas, finance, growth, marketing, branding, reputation, quality, staffing and HR issues. All those things. And now you look at the threats. Mostly we're looking at threats that are coming from outside, but one threat is that there was a very large uninsured population. Sometimes that could be tricky in terms of how to set it up and how to make sure that you could serve the needs but not lose a lot of money in the process.
The second threat was that we had heard there were both competitors external to our market looking to expand potentially. And then also at the other hospital and in a group of primary care physicians thinking of doing it themselves. They were probably going to start it on their own, in their own offices and expand maybe into this other thing. We need to be aware about that.
And the other threat that we came up with at that time was the fact that our medical staff might not like this idea of us recruiting more and more physicians because a lot of the medical staff at that time were still private medical staff. They were not employed. And so, they would feel threatened by us and they could do things that would make it difficult. They could say, "Okay, we're taking all our business dealer hospital because they're not hiring physicians as much as you are to compete with us. So, those are the kind of examples of some of the strengths, weaknesses, opportunities, and threats.
Now you do that for five or six or seven different projects that you're thinking about. And then by balancing those out and really get into the financial piece, you'll need a pro forma or at least a thumbnail sketch of what the cost of the different projects are, and then what's the return on a clinic or something that might take two or three or four years to really break even. If you add a new service line and get to be successful in three or four months, then you're going to get the return on investment more quickly.
What we would do from taking that SWOT analysis, we would take that to the next step of goal setting so that this is how we would translate it. We would use language like this. For my department, how can we utilize our strengths and acts to take advantage of the opportunity? That's the strengths, the S. How can we utilize our strengths in this A, to minimize the threat coming from B, or how can we take advantage of the opportunity to Z minimize our weaknesses in V.
Let me just give you some examples. This is how we would phrase things if we're going to put some of these together. Following what I just mentioned, I'd say for my department, this would be a manager talking. I had usually between four and eight departments reporting to me. But for my department, how can we utilize our financial strength and strong interest by the medical group to staff an urgent care clinic? Again, how can we utilize our strong management team? That was one of our strengths, to minimize the threat of the large percentage of uninsured in the market. Somehow take care of the uninsured, we've got a good team, we need to leverage them.
Another example, how can we take advantage of community support to minimize our weakness, which is difficulty in recruiting support staff. How do we get the community to help support us getting staff in? And there are big ways to do that. That's where I'm going to end it. But this is something that like I said, you can learn about pretty much anywhere, any business book. You can actually do some business courses at the AAPL that we'll talk about this.
But for a quick review and definition of all the terms, then I would just say go to Wikipedia and look up SWOT analysis. And whatever job you're in and you're being asked to participate in a planning session or to provide feedback. Because I've done this, I am on the board of a hospice and we were doing a strategic plan one year and I said, "Hey, if you want me to take the team through a SWOT analysis, we'll go through the whole thing, all these different areas for where the hospice is in terms of strengths, weaknesses, opportunities, and threats." And we used it for the management team to develop their goals for the following year. And since I had done several SWOT analysis and I thought, "Well, let's have him lead this one and then we can get someone next time to lead it for the rest of the team."
All right, that's all for today. Thank you for listening and I will see you next week. Thank you for listening and watching.
Sign up to receive email reminders, news, and free stuff every week!
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Transcription PNC Podcast Episode 336
Add the SWOT Analysis to Your Growing Skill Stack
John: It's a good idea if you're thinking about moving into some other area that you might consider obtaining new skills that you can stack on your existing skills, and that makes you more attractive to certain types of jobs. And a lot of those skills and a lot of that knowledge is basically business skills and information. In fact, I was thinking about this earlier and much of what I'm going to talk about today, the types of skills that you might want to accrue, we talked about last time. You're pretty much going to find those if you happen to be a member of the American Association for Physician Leadership, including a leader in an executive position. So, you're going to need to know all of those business skills like negotiating and contracting, health law, and management principles, HR principles, leadership principles, and so on and so forth.
Today, I want to give you a little mini MBA course in 15 minutes. This is a session in which we are going to talk about SWOT analysis. What is a SWOT analysis? Now, I remember probably sitting in a room one day, I think it was shortly after I became VP for medical affairs. I was in the C-suite, and I was listening to these conversations. I was acclimating to this new job, and I heard somebody talk about, "Well, we've got to do our budgeting at the end of the year here, and we're going to be setting some management goals and so we need to do a SWOT analysis. Then we can be prepared to move forward on that." I'm thinking "SWOT analysis, that sounds pretty... Is that like a SWAT team or something?" But for those that know what it is, you're kind of chuckling because the SWOT analysis sounds like some really great tool, but it's been around forever.
The SWOT just simply comes from the acronym of what you're doing when you're doing a SWOT analysis. And that is for whatever problem you're looking at, you're trying to solve and maybe develop a set of goals or make a decision about, you're just going to look at these factors which have been shown to be important in decision making about whether to proceed with something like this or not, or choose from among a multitude of options. We got 10 different things we want to do. How do we figure out which of those 10 are the highest priorities? Well, you could do a SWOT analysis. There's lots of ways that a SWOT analysis is used.
Now, I will mention this. You may want to read about this, and actually, even Wikipedia does a pretty good job describing this, but you can look it up on Google. You can find almost any kind of business management book will have it. I'm sure it's taught in schools that provide MBAs and MMS and MHAs and things like that.
But the SWAT simply refers to the S is Strength. The W is Weaknesses. The O is Opportunities, and the T is Threats. And so, you take whatever it is that you're dealing with and you bring it through that process. I'll tell you when we use this frequently. I would use it with my managers, and sometimes the senior team would use it to develop a maybe an hour or two session at our strategic planning meetings.
Now we had biweekly or weekly strategic planning meetings. Then we would do a SWOT analysis every time at that, although we could do it at a particular meeting. But if we did an annual, you would call more of a management goal meeting, because the old days we did strategic initiatives that would be looking out three to five years. And there's still sometimes where that's important to do, but generally we're doing year by year.
And that's that short term strategic analysis and plan became really the management plan, which meant that every V line goals that the superior had decided we were going to do for that year coming up. We usually did this towards the end of the year, although not quite at the end because we wanted to know what these initiatives would be before we actually set the budget, as opposed to saying, "Well, I think we're going to extend our hours on weekends." You could do that without necessarily a huge budgetary impact. And in that case, the revenues would offset the expenses anyway. But still, even there, you might want to do that.
I've written about in the past an example of what this might look like. So, I'll just give you an example and we'll walk through it. Let's say that we were in a group, either a private group or part of a hospital medical group, and we decided that we were going to do a SWOT analysis to decide whether we should proceed with an expansion into a new primary care or urgent care service in a new area that we hadn't been in before. We're like, "Okay, we're in a hospital, we have a competitor hospital basically within walking distance. There are some other competitors out further, but basically we have that to contend with." And then we have to consider all the factors that might go into whether we can and should do this. Do we have the budget for it? Are we growing? Do we want to grow? Do we have staff for it? And so forth.
So, let's see what the SWOT analysis might look like. And this is just a partial SWOT analysis, but we're looking at this. And so, let's talk about in a brainstorm about our strengths. At the time, we were definitely the biggest hospital of the two and the most successful I would say in the community. We had a much bigger bottom line. We had $300 or $400 million net revenues, and the other one maybe had a third of that. We had employed a base of physicians. We were fairly successful at recruiting physicians. We had a very healthy bottom line for the last five years. We were making money unlike other hospitals in the state of Illinois who many were losing money.
And what are the other strengths? We had a great brand recognition. We had gone through some marketing consultations in previous years. We had some pretty tight branding and marketing. We had good logos and they had been consistent color palette and that sort of thing. Like I said, the finances were strong.
And then the other thing is, do we have physicians interested in this? And we did have those inside the medical group, the primary care doctors already interested in finding new locations to do this. And if we looked at who was in our team right now, the team that was running the group had a lot of depth. And so, we could take on, we felt in that situation, pretty readily expanding into a new territory. Now, we would also have to decide things like "Are we going to build or are we going to lease some space? How much do we want to commit to this from a budgetary standpoint? Is it going to be enough?" But so far so good.
Now, weaknesses. At the time we were looking at adding an urgent care clinic. Basically we had no experience in urgent care. We were not doing any urgent care. There were some urgent cares in the periphery of our service area. They were all either independent, freestanding, individual urgent cares or large regional groups that we're expanding. And it's a little different competing, let's say, with an urgent care that's run by an entrepreneur as opposed to an urgent care run by a hospital, which typically loses money, but they make it up on the referrals and that kind of thing. No expertise in that.
We had already several pretty pressing strategic initiatives. I don't remember exactly, but let's say that we were do starting an open heart program and we were in the process of recruiting new radiology group and we were still finishing up the addition of a new wing to the hospital. Those are weaknesses because there's a lack of depth in terms of the ability to manage something at maybe a higher level management directors and VPs because we had these other big projects going on because we didn't have the experience.
And the other thing is we were really having trouble at that time recruiting staff fast enough to maintain and keep up with our growth. The area we were looking to go and didn't have urgent care. In fact, the general area around us didn't have urgent care. We were looking at ways to prepare for value-based contracting or prepaid plans, keeping costs down basically which means keeping people out of the emergency room, which is basically what primary care and urgent care does if you have enough capacity. Shunt those people. That's one opportunity we had never pursued before.
It just so happened there was rental space available at several locations in the town in which we were looking to put the urgent care. And we had heard that the community definitely wanted more physicians. We probably should have done a little more digging on that, whether what type of physicians, but basically they just wanted physicians because there was a lack of. This place is a good 30 minute drive outside of the main area where our hospital was located, and it was pretty rural, but still had some population density there.
Now the threats. That's T. The threats for the SWOT analysis could be things like, again, you just look all those areas, finance, growth, marketing, branding, reputation, quality, staffing and HR issues. All those things. And now you look at the threats. Mostly we're looking at threats that are coming from outside, but one threat is that there was a very large uninsured population. Sometimes that could be tricky in terms of how to set it up and how to make sure that you could serve the needs but not lose a lot of money in the process.
The second threat was that we had heard there were both competitors external to our market looking to expand potentially. And then also at the other hospital and in a group of primary care physicians thinking of doing it themselves. They were probably going to start it on their own, in their own offices and expand maybe into this other thing. We need to be aware about that.
And the other threat that we came up with at that time was the fact that our medical staff might not like this idea of us recruiting more and more physicians because a lot of the medical staff at that time were still private medical staff. They were not employed. And so, they would feel threatened by us and they could do things that would make it difficult. They could say, "Okay, we're taking all our business dealer hospital because they're not hiring physicians as much as you are to compete with us. So, those are the kind of examples of some of the strengths, weaknesses, opportunities, and threats.
Now you do that for five or six or seven different projects that you're thinking about. And then by balancing those out and really get into the financial piece, you'll need a pro forma or at least a thumbnail sketch of what the cost of the different projects are, and then what's the return on a clinic or something that might take two or three or four years to really break even. If you add a new service line and get to be successful in three or four months, then you're going to get the return on investment more quickly.
What we would do from taking that SWOT analysis, we would take that to the next step of goal setting so that this is how we would translate it. We would use language like this. For my department, how can we utilize our strengths and acts to take advantage of the opportunity? That's the strengths, the S. How can we utilize our strengths in this A, to minimize the threat coming from B, or how can we take advantage of the opportunity to Z minimize our weaknesses in V.
Let me just give you some examples. This is how we would phrase things if we're going to put some of these together. Following what I just mentioned, I'd say for my department, this would be a manager talking. I had usually between four and eight departments reporting to me. But for my department, how can we utilize our financial strength and strong interest by the medical group to staff an urgent care clinic? Again, how can we utilize our strong management team? That was one of our strengths, to minimize the threat of the large percentage of uninsured in the market. Somehow take care of the uninsured, we've got a good team, we need to leverage them.
Another example, how can we take advantage of community support to minimize our weakness, which is difficulty in recruiting support staff. How do we get the community to help support us getting staff in? And there are big ways to do that. That's where I'm going to end it. But this is something that like I said, you can learn about pretty much anywhere, any business book. You can actually do some business courses at the AAPL that we'll talk about this.
But for a quick review and definition of all the terms, then I would just say go to Wikipedia and look up SWOT analysis. And whatever job you're in and you're being asked to participate in a planning session or to provide feedback. Because I've done this, I am on the board of a hospice and we were doing a strategic plan one year and I said, "Hey, if you want me to take the team through a SWOT analysis, we'll go through the whole thing, all these different areas for where the hospice is in terms of strengths, weaknesses, opportunities, and threats." And we used it for the management team to develop their goals for the following year. And since I had done several SWOT analysis and I thought, "Well, let's have him lead this one and then we can get someone next time to lead it for the rest of the team."
All right, that's all for today. Thank you for listening and I will see you next week. Thank you for listening and watching.
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