A SWOT Analysis of Healthcare Legal Structure

Healthcare organizations must frequently fine-tune the strategy to sustain operational effectiveness and efficiency (Harrison, 2010). Healthcare service organizations (HSO) have multiple tools at their disposal to help with strategic planning and legal structure decision making (Harrison, 2010). A key tool used to assess HSO organizational strength, weakness, opportunity, and threat is known as the SWOT analysis (Harrison, 2010). Thus, SWOT analysis can serve as a framework for decision making.

The purpose of strategic planning is to realign and equalize both internal and external environment of an organization (Harrison, 2010). HSO achieve this equilibrium by assessing the legal structure, programs, and services at the backdrop of optimizing organizational functioning (Harrison, 2010). A SWOT analysis facilitates decision making, including examination and efficacy of the legal structure performance in an HSO (Harrison, 2010).

A major issue with Accountable Care Organization (ACO) is the needed level of collaboration and the reporting ability (Hastings, 2011). To identify organizational, legal structure, HSOs must consider obstacles such as “antitrust, fraud and abuse and exempted organization tax laws” using a SWOT analysis (Hastings, 2011, p. 1).Thus, HSO decision makers must study the broad range of ACO legal structure implication on the organization.

Strengths. Establishing effective legal structure objective has the potential to influence decision making and outcomes about clinical matters relating to ACO. The legal structure of ACO framework has the capability to enhance quality, cost efficiency, and improved coordination (Harrison, 2010). Improving quality and reducing costs are among the biggest draws to the ACO payment model (Fisher et al., 2012). Along with creating performance standards, the ability to allocate resources for the benefit of quality improvement and reducing cost, the ACO model works by creating a partnership among HSOs. When costs are reduced, and quality is attained, HSO's are recompensed based on overall performance.

Weaknesses. Having the right legal structure in place can help increase ACO level of integration. However, the current ACO model levels of coordination are undefined and therefore, need more defining (Hastings, 2011). Lack of standard reporting ability and measurement requirements can increase costs for ACO partners. Lapses in coordination among ACO partners causes communication barriers which in turn can translate to systemic coordination problems.

Opportunities. There is an opportunity for ACO partners to enter into a new business initiative. HSO often decide to join ACO’s because there is a financial incentive to do so (Hastings, 2011). The PPACA gives HSOs the incentive to help with ACO synchronize coordination that is expected to contribute to improved quality and costs reduction aims (Hastings, 2011). Simply explained, the PPACA incentives can encourage HSO to innovate, improve quality, and limit costs.

Threats. Failing to comply with the minimum standards will have negative percussions on HSO organizational functioning. Non-compliance with ACO regulation requirement will cause a legal liability, including antitrust, fraud and abuse problems for the organization (Hastings, 2011). Although, the Internal Revenue Service (IRS) gives ACO participants some tax leverage, other tax requirements increase tax liabilities for ACO participants (Hastings, 2011). Simply put, while there are some benefits to joining ACOs, external threats such legal and tax obligations create some regulatory barriers for HSOs.

References

Fisher, E. S., Shortell, S. M., Kreindler, S. A., Citters, A. D., & Larson, B. K. (2012). A Framework For Evaluating The Formation, Implementation, And Performance Of Accountable Care Organizations. Health Affairs, 31(11), 2368-2378. doi:10.1377/hlthaff.2012.0544

Furrow, B., Greaney, T., Johnson, S., Jost, T., & Schwartz, R. (2013). Health law: Cases,materials, and problems (7th ed.). St. Paul, MN: West Academic Publishing.

Harrison, J. P. (2010). Essentials of strategic planning in healthcare. Chicago, IL: Health Administration Press.

Hastings, D. (2011). The Medicare ACO proposed rule: Legal structure, governance, and regulatory sections. Retrieved from http://healthaffairs.org/blog/2011/04/05/themedicare-aco-proposed-rule-legal-structure-governance-and-regulatory-sections/