Strategic Alternatives Project

Posted: January 4th, 2023

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Strategic Alternatives Project

Executive Summary

Surgical Associates is a surgical practice that has enjoyed a successful business spanning over 30 years, but is challenged by poor branding, which promotes individual surgeons rather than the company brand. A scan of the macroenvironment and microenvironment around and within the company is conducted using the PEST analysis, the Porter’s five forces analysis, and the SWOT analysis. The findings from these analyses determined that Surgical Associates does not use digital and mobile technologies to advance its competitive advantage, thus being exposed to fierce competition. In addition, while the surgeons at the company have laparoscopy skills and perform minimally invasive surgeries as its source of competitive advantage, these advantages were not capitalized sufficiently through technology-enabled collaboration that would present the surgeons as a formidable surgery team. Therefore, three strategic recommendations, namely the implementation of an online bill pay service, use of social media marketing, and use of telesurgery, were identified as the alternatives that can address the issues confronting Surgical Associates. From these alternatives, telesurgery is recommended as the best strategy that can achieve this objective and enhance the company’s competitiveness. This alternative was chosen because it would leverage the existing skill-sets of the surgeons while providing an opportunity for corporate branding using social media marketing to advance the firms competitive advantage. The implementation plan begin with installing a virtual private network and a mobile control system and training the surgeons in telesurgery. Also, strategic partnerships with other surgeons would enable surgeries to be performed on far-flung patients along with an aggressive social media marketing campaign would popularize the telesurgery service and promote the brand of Surgical Associates, while enabling its metrics to monitor and measure the success of telesurgery.     

Issues and Outlook Profile

Surgical Associates of the Mid-Cities (Surgical Associates) is healthcare company located in Grapevine, Texas, and brings together 6 general surgeons and 1 physician assistant. The company states that it provides “excellent surgical care combined with empathy and compassion” as its motto. It also states that “we promise to take care of you and treat you like we would want to be treated ourselves” to demonstrate their commitment to excellence. Its surgeons are all Fellows of the American College of Surgeons (FACS) and certified by the American Board of Surgery, in addition to specialty certifications in colon, rectal and vascular surgery. Although the surgeons at the firm offer general surgery services, they also specialize in colon, rectal, and vascular surgery along with laparoscopy. Besides, the company is affiliated to 6 hospitals, offering round the clock services to 3 hospitals and three others over the weekends.

The practice has existed for more than three decades with one of its members having joined in 1987, and attends to about 700 patients every month. Consequently, Surgical Associates’ competitive advantage is in its extensive use of minimally invasive surgery techniques and robotics. Moreover, it enjoys a good reputation, which accounts for about 239 referrals each month. Consequently, its revenues rose by $600,000 between 2018 and 2019 to reach $2.7 million.

The strategy of Surgical Associates is to showcase the expertise of individual surgeons and use positive customer reviews as word-of-mouth to attract clients. In addition, the team of surgeons is highly skilled in various fields and conversant with the latest surgery techniques, such as laparoscopy and robotic surgery. Therefore, the company can attend to diverse medical conditions and provide clients with several surgical options between traditional and minimally invasive surgical procedures. However, the company approaches surgery very traditionally, preferring to book appointments with patients and meet them face-to-face. The rapport created with the clientele is responsible to the impressive number of referrals the company receives every month, which is indicative of the good reputation and high trust levels by customers. This strategy is likely to grow the number of clients and revenues in the next few years. However, with increasing competition, the company needs to project it brand in the marketplace more and use its online presence more strategically to leverage the digital behavior of customers.

Analysis of External and Internal Environments

Macro-environmental Trends

The macro-environmental analysis focuses on the surgery industry in which Surgical Associates of the Mid-Cities operates within the healthcare sector. A PEST analysis examines the political, economic, social, and technological factors that influence the general surgery industry in the United States.

Political Factors

The surgery industry is exposed to changes in government regulations, especially those that seek to protect patients against medical malpractices and patient exploitation. For instance, Senate Bill 1264, which came into effect in January of 2020, seeks to protect patients from surprise billings presented by out-of-network health insurance providers. The patients are excluded from billing disputed between healthcare providers and state-regulated health insurance plans. Consequently, the two entities negotiate prices for out-of-network care. Similarly, the elimination of the individual mandate that became effective in 2020 after being formulated in 2017 is projected to reduce Medicaid enrolment by 2.8 million people, thus lowering healthcare coverage (Eiber and Nowak). This would make surgery inaccessible to many Americans while reducing the demand for nonessential surgery, thus reversing the requirement that all United States residents obtained health coverage or pay a penalty. Although this policy change intended to lower health cover premiums under Affordable Care Act (ACA) to enable more healthy people to enter the health insurance market, it is projected to increase the premiums for bronze plans by 3%, thus making health coverage unaffordable for millions of needy Americans (Eiber and Nowak).

In addition, the Joint Commission’s requirement for prompt notification to the Medicare Administrator Contractor upon any changes in the healthcare organization, such as ownership, location, cite of care, services, and components, is cumbersome to providers of surgery services. Other changes in The Joint Commission’s standards are likely to impact on the efficiency of service delivery for surgeons.  

Economic Factors

Economic conditions impact the utilization of surgery services. Economic downturns make many surgery services inaccessible and lower the demand for non-essential surgery because people cannot afford them. In turn, critical surgery places a high financial burden on patients and their families, especially those without a health cover and whose plans do not cover the surgery services. Altogether, economic shifts make the demand and ability to pay for surgery unpredictable, thus straining the operational strategies of surgery firms. Notably, the ongoing coronavirus pandemic has thrown millions of Americans out of work and caused unemployment to rise by about 1% from 3.5% to 4.4% between February and March of 2020 (Bureau of Labor Statistics 1). Recent reports indicate that the real unemployment rate stands at 20.6%, the worst since 1934, with 26.5 million people having lost their jobs since the covid-19 pandemic, increasing the number of unemployed to over 33 million (Lambert). This will lower the demand and affordability of surgery services in the future, until the pandemic is eliminated and the economy recovers.    

Social Factors

Demographic shifts are likely to change the demand for particular surgery procedures. Notably, the aging population in the country is expected to present an increase in heart, cancer, eye, and bone-related surgery. Bates and Divino (149) noted that surgeries performed on individuals above 65 years comprised over 40% of all the surgeries performed in the United States. However, other surgeries, such as otolaryngology and shoulder arthroplasty, continued to be performed predominantly on the youth, and were bound to increase in tandem with surgical technology advancements (Floyd et al. 41; Padegimas et al. 1860). In the same vein, surgical procedures, such as bariatric surgery, is being used increasingly to treat obesity due to its promotion by physicians as a viable option and inclusion in Medicare and Medicaid coverage (Heuser).

Moreover, patients increasingly preferred minimally invasive and noninvasive surgery procedures because then reduced in-hospital stays and left no scars in the body. This was leading to increase in the demand for cosmetic surgery. Besides, the increased demand for speedy recoveries and risk reduction will propel advancements in minimally invasive and noninvasive surgery the techniques in future (Mangone et al. 546).    

Technological Factors

Technological advancements were revolutionizing the way surgeries were performed. Notably, minimally invasive and noninvasive techniques and equipment, along with robotics, were advancing with lightning speed (Brodie and Vasdev 4; Mangone et al. 546). Specifically, laparoscopy reduced blood loss, wound complications, and post-operative ileus and rehabilitation (Bates and Divino 149). Besides, it enables pediatric surgery survey that was previously challenging, to be performed because of the miniaturization of tools and increased precision (Rothenberg 234). Similarly, new robotic technologies, such as the da Vinci system, which enables the conducting of surgeries remotely, have entered the market and popularized telesurgery (Brodie and Vasdev 4). For instance, this robotic system has increased the number of general surgeries by 32% between 2017 and 2018 (Heuser 18). Likewise, the advancements of information and communication technologies and the wide permeation of mobile devices have occasioned the growth of telemedicine, allowing physicians to increasingly deal with clients remotely.  

Summary of macro-environmental challenges

The aging population presents one of the biggest challenges to Surgical Associates due to the high caseloads because it is will increase the number of older people requiring surgery. Unfortunately, elderly patients experience comorbidities that may complicate surgical procedures and extend recuperation time. Affordability of surgical procedures is another critical hindrance to the uptake of surgical options. Most people will only accept surgery when it is inevitable with the elective procedures being the preserve of the financially empowered due to its high cost. However, new technologies may help lower the cost of surgery and make it accessible to more people. 

Industry Drivers and Trends

Porter’s five forces analysis is used to determine the competitiveness and attractiveness of an industry as part of the macro-environmental scanning. Surgical Associates of the Mid-Cities operates in a specialty field of medicine, which is experiencing personnel shortages.

The threat of new entrants into surgery is low. Surgery is a highly-specialized profession whose skills take a long time to acquire and the shortage of general surgeons in the United States persists. These conditions place high entry barriers into the surgery profession. It is estimated that the United States will experience a nationwide deficit of 7,047 general surgeons by 2050 (Rapaport). Moreover, the profession is highly regulated by government and medical bodies such as Joint Commission and Medical Boards at the state level provide stringent conditions for licensure, which varies from state to state and across surgical services (Hunter, Weinstein, and Krupinski 317).

 The bargaining power of suppliers is high. The surgeons are the suppliers of surgery services and they often operate individually, in surgery organizations, like the American College of Surgeons, and under hospitals. The surgeon bodies and hospitals set the prices for surgery procedures, while health covers influence affecting the costs through cover variations. Childers, Christopher P., and Melinda Maggard-Gibbons (2) notes that operating room costs can vary between $7 to $100 per minute and that the cost of surgery of often clear after the procedure has been conducted.    

The bargaining power of buyers is moderate. Patients that require surgery have low bargaining power on the type of surgery or cost and therefore are unable to influence these in the market. However, the government enacts policies make surgery accessible and affordable while technology and medical research improve surgery options. However, these attempts are dictated by the industry providers, limiting the negotiation power of individual patients. 

 The threat of substitutes is low. The most critical surgeries, such as those involving the heart and kidneys, are often lifesaving and have no alternatives. Similarly, surgery is inevitable for some diseased tissues to eliminate the threats to life, which eliminates the threat of substitutes. Contrastingly, in some cases, medications, lifestyle modification, pain management, and alternative medicine offer limited alternatives to some conditions, creating some threat. 

The rivalry in surgery is intense. The few surgeons in the healthcare industry are overwhelmed by the high demand for their specialized services. Competition is stiff for non-elective, semi-elective, and elective surgeries owing to surgeon scarcity. The main competitors of Surgical Associates include individual surgeons in the state of Texas, and surgery practices, such as Surgery Group of North Texas comprising of 5 surgeons, Texas Surgery Group with 2 surgeons, Capital Surgeons Group with 11 surgeons, and South Texas Surgery Group with its 2 surgeons. The specialty areas for these competitors overlap, making competition more fierce and rivalry more intense.

Summary of industry challenges

Although surgery practice is very attractive, it is also highly competitive among the few practitioners available. Specialized surgeons are few as most of them are general surgeons who treat common ailments. In addition, technological and medical advancements have presented numerous surgical procedure options for patients to choose from, giving surgeon immense power and control over their profession and prices. In this respect, the most significant challenges facing Surgical Associates include the inability to differentiate their practice from others in the marketplace, the low use of technology to run the practice efficiently and increase patient throughput, and lack of certain specialty surgeons to increase the number of conditions addressed by the firm.     

SWOT Analysis

The SWOT analysis examines the positive and negative attributes of Surgical Associates based on its strengths and weaknesses as the internal factors that influence its operations, and opportunities and threats as the external factors that are likely to affect its operations in the future. Table 1 summarizes the findings of the SWOT analysis.

Table 1. SWOT analysis of Surgical Associates of the Mid-Cities

 BeneficialDetrimental
Internal factorsStrengths Highly dedicated staff comprising of 6 surgeons and a physician assistantCross-trained staff with a wealth of knowledge and good reputationAffiliated to several hospitals in TexasAbility to treat diverse patients with different surgery needsStrong referral systemLong-standing and consistent serviceCentral location in Dallas-Fort Worth metroplex for easy accessibility by patientsWeaknesses Low use of electronic health recordsCumbersome bill payment proceduresLacks an online payment platformPatients experience long wait-timesLack of employee incentivesLack of a cohesive marketing strategy because surgeons advertise their services individually rather than under the organizational brand Few operating hoursLacks employee training programsPunctuality is a challenge
External factorsOpportunities Adoption of telemedicineAdoption of telesurgery Increase in demand for noninvasive surgeryStrengthening of disease-based brandingThreats Technological advancementsChanges in insurance policies and coverage presenting affordability challenges

The SWOT analysis revealed several weaknesses that compromise the immediate performance and threats that endanger the future performance of the company. Notably, Surgical Associates manages its practice inefficiently due to the lack of use of digital technologies, which causes surgeons to take a long team dealing with patients even after the surgical procedure has been completed. Patients have to make follow-up visits to the firm or hospital at which the surgical procedures were conducted. Moreover, the firm sends physical bills to patients who have to write cheques to make payments. The firm also sends several letters to follow up on payments, which is a time intensive and consuming exercise that is inefficient. Similarly, the surgeons rely extensively on their reputation for market and therefore have not developed a marketing strategy that would create brand awareness and attract more clients. Moreover, the practice is not resilient enough to continue delivering services in times such as this one with population lockdowns because it relies on clients coming to the surgeons or to the hospitals that work with the surgeons. This limits the reach of the firm in the marketplace.

Development of Strategic Recommendations

The analysis of the internal and external environments in which Surgical Associates of the Mid-Cities operates. With Surgical Associates operating in a highly competitive environment, it is pertinent that it differentiates its services from those of its competitors, creates brand equity by interacting more with its clients and the public, and responds to the needs of clients. To this end, implementation of an online bill pay service, use of social media marketing, and use of telesurgery, are the three recommendations that can address the issues confronting Surgical Associates.

Online bill pay

Surgical Associates should introduce an online bill payment service though which patients can pay their surgery bills directly to the company’s bank account. Online bill pay allows patients to make payments using online platforms. This payment mode has several advantages to the company, the surgeons, and the clients. Firstly, the online bill payment service saves the company money used in billing and following up patients for payments. Considering that the surgeries bills are compiled at the end of the surgical procedures and care during patient recuperation, the company or the hospital in which the procedures were performed send their bills to clients through mail. The cost of sending bills adds to the total cost that patients pay for the surgical service. The online billing service can reduce the cost of issuing a $100 bill b up to 50 % (Furr). Secondly, the online payment mode saves the company and clients time. Currently, the surgeons have to wait for patients to receive their bills, write cheques, deposit the cheques to the bank, and wait for them to clear before the money is available. The online payment shortens this process dramatically, leaving the surgeons to concentrate more on their core duty of performing surgeries.

However, online bill pay presents some risks. Firstly, the credentials and passwords of clients can be stolen, compromising their privacy and security. Secondly, fraudsters can intercept online communication and transactions, which may lose the company, surgeons, and clients, money. Thirdly, online bills and payments can be erroneous and cause disputes, which may delay payments and damage the firm’s reputation. Online payment methods eliminate the need for face-to-face interaction between the client and the firm to discuss the surgery bills. Surgery bills are often complex because their contain several items, such as the cost of anesthesia, the cost of the hospital accommodation, the surgeons charges, and the cost of care post-surgery, which are difficult to be understood by many clients. Therefore, the firm needs to explain these bills to clients to foster willing payments and retain the reputation of the surgery practice. Consequently, disputes with payments fan damage the firm’s reputation and discourage its engagements with new clients, while losing existing ones.    

Social media marketing

Surgical Associates should leverage social media marketing to address the marketing deficiencies of the current strategy. Social media presence presents several advantages that can improve the marketing effectiveness at Surgical Associates. The pros of social media marketing include, firstly, its cost-effectiveness. Social media platforms are easy and cheap to set up, saving the company money by reducing the marketing budget (Radu et al. 44). Secondly, social media marketing has a wide reach because it targets many clients, who are increasingly using social media platforms to share information and experiences. The social media penetration in the United States stands at 79%, with Facebook being the most popular social networking site (Clement). Thirdly, social media marketing is convenient because it can reach the targeted audience though mobile devices in any location that has internet connectivity. Fourthly, social media marketing connects well with a website thus directing traffic towards the company’s website, which allows clients to access more information about the firm and its services. Fifthly, social media marketing promotes the engagement of the firm and surgeons with its clients, which promoting referrals through electronic word of mouth (eWOM) (Teng et al. 77). Since Surgical Associates relies heavily on referrals from satisfied clients, social media marketing can increase the number of referrals to the firm significantly. Sixthly, social media marketing will build the brand of Surgical Associates, which is currently overshadowed by the branding of individual surgeons at the firm. Specifically, it increases brand awareness by exposing large number of people to the brand of Surgical Associates. In turn, this enhances brand familiarity, which initiates conversations among the targeted clients.     

However, social media marketing has a downside. The brand of Surgical Associates can be damaged through conversations shared by people who have had negative surgery experiences or competitors who want tarnish the company’s brand. Negative sentiments linger for long on social media networks, and may go viral, discouraging people from dealing with the firm and its surgeons. Moreover, social media marketing requires that content is kept fresh, current, and persuasive to deliver the desired effects. This can be time consuming for organizations with limited expertise in handing their social media presence.  

Telesurgery

Surgical Associates should use telesurgery to attend to clients that cannot travel to the firm’s premises or hospitals that work with the firm. Telesurgery is a technology-based surgery approach that uses robotic and wireless technologies to connect patients and surgeons that are separated physically by great distances (Choi, Oskouian, and Tubbs 1). Sheetz, Claflin, and Dimick (4) noted that the uptake of robotic surgery had increased exponentially across many surgical procedures between 2012 and 2018. Precisely, robotic surgery had increase over 8-fold in this period, rising from 1.8% to 15.1% in proportional useage in hospitals in the United States (Sheetz, Claflin, and Dimick 4). However, telesurgery presents several benefits and detriments.  

In this respect, telesurgery would present several benefits to the firm and its clients. First, telesurgery would help Surgical Associates to expand its services beyond its locale of operations. That way, Surgical Associates can deliver services to far-flung clients in the United States that are unable to travel to Texas or those that require immediate attention that makes travelling difficult and life-threatening. In turn, this would eliminate the financial burden and dangers relate to travel by patients (Choi, Oskouian, and Tubbs 2). More significantly, telesurgery would be particularly useful during the ongoing travel bans due to the prevailing coronavirus pandemic. It would enable the company and its surgeons to deliver surgery services despite the limitations presented by lockdowns and travelling discouragements prevailing in the country.   

Secondly, telesurgery would enable the surgeons to work as a team without having to be physically present during surgery procedures. Such collaboration would not only improve the efficiency of surgery procedures but also improve the reputation of Surgical Associates, which in turn would attract more clients when positive client experiences reach new clients.

Thirdly, telesurgery uses robotic technology, which improves the accuracy of surgical procedures. Consequently, the surgical outcomes would improve, thus promoting the positive client experiences with the firm. Already, the firm has the da Vinci Surgical System and its surgeons are conversant with it. Moreover, the firm and its surgeons promote their minimal surgery procedures, which are in great demand by the market. However, efficient use of this technology by the team of Surgical Associates’ surgeons is yet to be explored fully.

However, the major disadvantage of adopting a team-based telesurgery strategy lies in the high cost of equipment. Telesurgury robots are expensive to purchase and maintain, which can raise the running costs of the surgery practice. In addition, surgical robots require that the surgeons are trained further to use then skillfully and efficiently. Altogether, the use of surgery robots and telesurgery increases the cost of surgery, which is passed to the clients. For instance, a surgery procedure using the da Vinci robot costs between $3,000 and $6,000 over the cost of transitional laparoscopic procedures.     

Strategic Choice and Further Evaluation of Recommendation

Adoption of telesurgery is the best strategic choice that would address several simultaneously, the challenges confronting Surgical Associates, including the absence of a strong brand presence of the firm, minimal use of digital and online technologies, the disjointed marketing by individual surgeons, the negative sentiments from clients, the lack of training opportunities among the staff of the company, and the fierce competition from rivals in the surgery industry. Telesurgey has the potential of actualizing the company’s motto of “excellent surgical care combined with empathy and compassion”, which would deliver increased revenue and the much desired brand equity for advancing the firm’s competitive advantage.

Already, the surgeons at Surgical Associates are highly-skilled in the use laparoscopy for numerous surgical procedures and the organization should implement telesurgery urgently to fend of competitors. Telesurgery requires efficient networking, which can be achieved by adopting digital and mobile technologies. Notably, the availability of telesurgery would need to be promoted to clients through social media marketing. In this regard, implementing telesurgery would be reinforced when clients know about its availability, engage in online conversations through social media that would increase referrals, and promote the brand of Surgical Associates rather than that of individual surgeons.

Telesurgery is financially viable because it has significant returns on investment, which would offset the initial cost used to forge the networks and strategic alliances along with procuring surgery robots. Moreover, the success of telesurgery can be monitored by the amount of positive sentiments and reviews by satisfied customers, the increase in referrals, and consequently, the rise in revenues and client traffic. Social media provides metrics through which the key performance indicators can be identified and analyzed (Peters et al. 282).   

Strategic Implementation and Control Mechanisms

To implement telesurgery at Surgical Associates, a judicious strategic plan is required. Firstly, Surgical Associates should implement a virtual private network through which remote surgeries can be conducted. A telecommunications provider that can deliver broadband services with bandwidths exceeding 15Mbps is advisable (Cazac and Radu 138). In addition, Surgical Associates can start by acquiring a low cost portable control station from where remote surgeries can be performed before scaling up to more expensive equipment, once demand for teleoperations is established (Rassweiler 824). This would help the firm pilot telesurgery before committing more finances to expand the service. With this acquisition, the surgeons at Surgical Associates should be trained in the use of the control stations to enable them to use telesurgery robots to perform surgeries remotely. This should be accompanied by obtaining telemedicine licensure by the surgeons at the firm (Hunter, Weinstein, and Krupinski 315). At the same time, Surgical Associates should promote the availability of telesurgery through an aggressive social media campaign that targets existing and new clients. To this end, Surgical Associates should open social media accounts in Facebook, Twitter, and YouTube, through which clients can learn about the telesurgery services and engage with clients. These accounts should be interlinked with the company’s website to enable clients to navigate between social media and the website seamlessly. This would drive traffic to the company’s website from where more information about telesurgery can be obtained. 

Conclusion

Surgical Associates runs a surgical practice through six highly-skilled general surgeons. However, the success of the practice is threated by fierce competition and poor branding. Telesurgery is recommended as a strategy that would promote Surgical Associates as a brand, advance the company’s competitive advantage, and increase positive customer experiences and revenues. However, since telesurgery is a financially-intensive undertaking, Surgical Associates should begin by setting up a secure virtual private network and acquiring mobile control consoles to perform surgeries remotely. This should be accompanied by promotion campaign over social media to create awareness about the availability of telesurgery at the firm.

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