FACHE Board of Governors Exam Study Group

1. FACHE Board of Governors ExamStudy Group Business Morris R. Fansler, MPA, FACHE Director, Strategic Marketing & Research Main Line Health 484.580.1032 fanslerm@mlhs.org

2. Agenda • Who is Morris? • Objective, Purpose and End state • Business BOG Module Blueprint • Study material on Business Module • Additional references • Review sample questions

3. Business Module • Objective • The FACHE study group will use their knowledge and experience to thoroughly study the Business Module of the BOG Exam • Purpose • To achieve a level of comprehension valuable to both our exam prep and our professional development • End state • Study group members will be able to pass questions from the Business Module

4. Knowledge Blueprint: Business 20/18 of 200 questions • Knowledge of strategic planning process • Knowledge of business planning • Knowledge of socioeconomic environment in which organization functions • Knowledge of marketing principles & tools • Knowledge of media relations, advertising & community relations

5. Knowledge Blueprint: Business • Knowledge of techniques in negotiating contracts • Knowledge of potential impacts of business decision making on operations, healthcare, HR & quality of care • Knowledge of policies and procedures

6. Basic Statistical Analysis

7. Basic statistical analysis • Statistical analysis provides the empirical tools to make sound decisions. • Most basic of these are measures of central tendency: the median and mean. • The median is that number above and below which 50 percent of scores fall. • The mean refers to the arithmetic average of all scores. • The mode is the most common or frequent score or number.

8. Basic statistical analysis • Important to have some expression of the spread of scores within any group to evaluate more completely the group of data • This distribution of scores is commonly called variability. • Range shows the distance between the highest and lowest score in the group • However, variability of scores is best represented by the standard deviation around the mean.

9. Basic statistical analysis • Another tool is the control chart. It allows one to monitor, control and improve process performance by examining variation over time. • The control chart will show the process mean (centerline) and the fluctuation or variation of data. Upper and lower control limits are set to indicate “statistical control” wherein normal variation is expected. • Points outside the control limits may indicate problems that should be studied.

10. Control Chart Example

11. Basic statistical analysis • One final tool to consider is that of regression analysis. This technique uses a mathematical equation to show the relationship between sets of data or variables. • This relationship is depicted by a regression line that, when extended out into the future, can be used for health planning (e.g., forecasting of patient demand).

12. Regression Analysis Example

13. Strategic planning principles

14. Strategic planning principles • Planning is defined as anticipating the future, assessing present conditions, and making decisions concerning organizational direction, programs, and resource deployment. • Also known as strategic management because planning must be integrated with other management functions (organizing, directing, controlling, staffing, and decision making.)

15. Strategic planning process

16. Strategic planning process Assessment • Review or establishment of vision, mission, values, and guiding principles. • External assessment of market, competition demographics, environmental conditions, and technology as well as determination of customer or stakeholder needs and expectations. • Internal assessment of strengths and weaknesses of the organization, including its financial status.

17. Strategic planning process Planning • Development of a plan based on the assessment. The plan would include goals, specific objectives, metrics to assess success in reaching goals and objectives, and a delineation of resources needed to accomplish goals and objectives • Enhancement of the plan using the principle of “catch all” whereby drafts of the plan are reviewed by all major departments and services

18. Strategic planning process Implementation • Leaders establish the organizational culture, communication, rewards system, support structures and policies to ensure that the plan is effectively implemented • Departments develop their own plans based on the organization’s strategic plan • Cross-functional teams are established, if necessary, to plan and implement major systems change across the organization • Individuals are held accountable for the implementation of plan

19. Strategic planning process Evaluation and Continuous Improvement • Measurement of results of plan against goals and objectives • Evaluation or analysis of results • Change/modification of plan based on the analysis of results

20. Business Plan Development and Implementation

21. Business Plan Development and Implementation • A business plan is used as a vital communications and planning tool to channel efforts for a particular project or initiative. • A business planning process enables a standardized process for market and data-driven comparisons of existing and proposed programs.

22. Business Plan Development and Implementation • Business planning process: • Assess your current situation • Decide what you want to accomplish by drafting your objectives • Ensure all have input into the process • Discuss whether your business planning process is meeting objectives

23. Business Plan Development and Implementation • Business planning document: • Description of the project, situation, target market and objectives. • Specific steps needed to accomplish the project or program along with a timetable (milestones) for implementation.

24. Business Plan Development and Implementation (2) • All costs relevant for the project should be delineated: • Operational, capital, or other resources needed • Financial impact of the project: • Break-even analysis, net present value, etc • Measurement component: • Utilization, revenue, expenses, etc

26. Basic Business Contracts

27. Basic Business Contracts • Contracts occur in a variety of situations: • Supplies • Equipment • Services • An agreement between two or more parties that identifies rights and obligations

28. Basic Business Contracts Four elements of a valid contract: (1) An agreement is reached after an offer is accepted (2) There is consideration or something of value in the agreement 3) The agreement is reached by parties who have the legal capacity to contract 4) The contract’s objective/purpose is lawful

29. Basic Business Contracts • When a party does not perform certain performance requirements of the contract, a breach of contract can occur, usually resulting in a remedy (e.g., money damages) for the aggrieved party. • Breaches can be avoided through careful drafting and negotiating of contract provisions.

30. Marketing Principles and Tools

31. Marketing Principals and Tools • Marketing is critical to competitive advantage • Process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives. • Four P’s: • Product, Price, Promotion, Place

32. Marketing Principals and Tools • Defining key customer groups (market segmentation)and determining customer needs, expectations and buying behavior • Segmentation analysis can be done through analysis of socio-demographic variables such as age, gender, ethnicity and geographic location • Situational assessment is made often through a SWOT analysis that examines strengths and weaknesses of the organization as well as opportunities and threats in the current or future environment

33. Marketing Principals and Tools • Studies of market share, brand loyalty and brand recognition are now regularly done to better understand the competitive position of the organization as well as what changes may be needed in promotion or advertising.

34. Marketing Principals and Tools • Modifications in product strategy are often based on a portfolio analysis in which different service lines are evaluated with regard to their profitability, consistency with organizational goals and competitive position in the marketplace

35. Public and Community Relations

36. Public and Community Relations • Community or public perception can be a major factor in the survival of the healthcare organization • Any loss of support from the community will mean fewer patients, volunteers and donor support.

37. Public and Community Relations • Strategies to enhance public image: • Focus on personal interaction • improving the day-to-day interactions between patients and caregivers • Enhance employee morale • Pay attention to job satisfaction issues so that employees have a positive attitude about their jobs that, in turn, is conveyed to patients

38. Public and Community Relations • Connect with the community • Conduct health education programs at community sites • Dedicated hotline for patients to express their concerns • Public forums where community members can interact with organization leaders • Work with the media • Send out regular news releases and newsletters • Have members of the media sit on advisory panels

39. Public and Community Relations • Providing culturally sensitive care • Know and clearly understanding the demographics and culture of the different communities served • Ensuring a culturally diverse staff • Providing an interpreter service and translated materials

40. Organizational Policies and Procedures

41. Organizational Policies and Procedures • Policies and procedures provide ongoing guidance for members of the organization • Policies are intended to help organizations reach their objectives • Must be consistent with and support the organization’s mission, goals and objectives.

42. Organizational Policies and Procedures • Policies are of two types: • General policies apply to the entire organization • Operational policies pertain to a specific unit, department or service • Procedures define specific actions for organizational members • Sequence of steps to complete a task • Examples: Admitting, Discharging, Ordering supplies

43. Organizational Policies and Procedures • Good policies have a number of characteristics: • Consistent with larger organizational objectives • Impact is well thought out before they are formalized • Flexible so they can be applied in typical as well as unique situations • Ethical and legal • Reflect the values of the organization • Clear and understood • Consistent with each other

44. References / Study Materials

45. References Management and Business • Haimann's Healthcare Management, Eighth Edition, by Rose T. Dunn, FACHE • Healthcare Strategic Planning, Second Edition, by Alan M. Zuckerman, FACHE, FAAHC • Health Services Management: Readings and Commentary, Eighth Edition, by Anthony R. Kovner, Ph.D., and Duncan Neuhauser, Ph.D. • The Leader's Change Handbook, by Jay A. Conger, Gretchen M. Spreitzer, and Edward E. Lawler III (This book contains chapters covering several knowledge areas.) • Leadership for the Future: Core Competencies in Healthcare, by Austin Ross, LFACHE; Frederic J. Wenzel; and Joseph W. Mitlyng • Managing Health Services Organizations and Systems, by Beaufort B. Longest, Jr.; Jonathon S. Rakich; and Kurt J. Darr, J.D., Sc.D., FACHE • Mastering the Negotiation Process: A Practical Guide for the Healthcare Executive, by Christopher L. Laubach • The Well-Managed Healthcare Organization, Sixth Edition, by John R. Griffith, FACHE, and Kenneth R. White, Ph.D., FACHE

46. References All Modules: • http://www.ache.org/mbership/credentialing/EXAM/booklist.cfm Exam Prep three-book Study Set: • The Financial Management of Hospitals and Healthcare Organizations, Fourth Edition, by Michael Nowicki, EdD, FACHE, FHFMA • The Well-Managed Healthcare Organization, Sixth Edition, by John R. Griffith, FACHE and Kenneth R. White, PhD, FACHE • Human Resources in Healthcare: Managing for Success, Third Edition, by Bruce J. Fried, PhD and Myron D. Fottler, PhD • http://www.ache.org/pubs/redesign/productcatalog.cfm?pc=WWW1-2115S

47. Sample Questions

48. Sample questions – Section A 2. Successful approaches to strategic planning include: A) a well-written mission statement, long range plan, and fiscal plan, plus the history and discussion surrounding them B) avoidance of high-risk decisions C) not paying attention to the competitor's activity D) using rules and past experience as a guide to future action

49. Sample questions 7. Of the four following advertising media, which potentially has the maximum selectivity in reaching defined target audiences? A) Local radio B) Direct mail C) Network TV D) Outdoor advertising 8. To work effectively with the media, healthcare executives must: A) Be accessible at all times to the media B) Increase their knowledge of -and sensitivity to- the media's function C) Employ a public relations officer to control the release of all information D) Issue press releases on a timely basis

50. Sample questions 9. Which of the following is NOT one of the elements that are necessary for a contract to be valid: A) Terms of the offer and the acceptance must be identical B) Some "consideration" must be given (the price paid for the contract, not necessarily in the form of money) C) The purpose of the contract must be legal D) Terms of liability for breach of contract 10. In statistics, the term "median" means: A) The most common or frequent number. B) The number above and below which 50% of scores fall. C) The arithmetic average of all scores. D) (The sum of all of the scores) divided by (the number of scores minus 1).