SWOT analysis is a very helpful method used by organizations and businesses to know their strengths and weaknesses, it is also used to identify opportunities available to the business as well as the threats that the business faces. This tool is important in decision making as it provides the decision makers i.e. the executive board, the management and all other stakeholders in an organization with all the necessary information on what actions should be taken so that the business remains relevant in the ever changing market. SWOT analysis helps the organization to come up with strategies that will distinguish it from its competitors. It also helps the organization to eliminate threats that would adversely affect the organization or business.
Threats are any external factors that are beyond control of the organization and put the organization at a risk, as a result the organization should always have plans of dealing with such threats whenever they occur. Threats that hospitals or healthcare service providers can face include shortage of nurses, decrease in patient satisfaction, increase in accounts of receivable, decrease in demands of services and also competition. This threats needs to be analyzed so that the Executive Board can have a clear picture of how the above mentioned threats can affect their organization and how best they can be managed.
Shortage of nurses
Nursing shortage is the most common threat or challenge many hospitals face. This shortage can be due to a number of reasons which include an aging nursing staff hence many retire annually and are not replaced because there are few new students joining nursing (American Association of Colleges of Nursing, 2014). Another reason that can explain the cause of the shortage can be due to the rapid population increase that has led to a higher demand for better healthcare services this in turn has lead to an increased demand for nurses. To meet this increased demand, hospitals therefore need more nurses and especially those who have skills in specialized care. The shortage affects both patients and nurses, patients will not receive high quality healthcare service they need while nurses on the other hand will report increased cases of job dissatisfaction due to having to work for longer hours (Sigma Theta Tau International, 2015).
Decrease in patient satisfaction
This is also another threat facing hospitals the Executive Board should be aware. This is largely attributed to nursing shortage. When patients are not satisfied with the kind of healthcare services they are being offered, they will always avoid visiting that healthcare organization in future but instead choose to visit a hospital that will satisfy all their needs. This will affect the hospital’s reputation negatively. Patient satisfaction is also used to determine the quality of healthcare services given to patients in hospitals (Morris et al., 2013). It’s a factor that is considered while making payments for performance through Medicare reimbursements, hospitals that score high on patient satisfaction surveys therefore will receive more incentives.
Increase in accounts receivable
Accounts receivable refers to the money owed by debtors to an organization or a company for services or products sold to them on credit. Increase in accounts receivable can be a threat to any organization in a number of ways. One is that it affects the organizations or hospitals working capital and also shows that the organization is lenient in collecting debts. If the increase in accounts receivable continues for quite long the organization may in turn lack money or cash to undertake its programs which include paying salaries to staff as well as other bills (Ingram, 2015). This can affect adversely budgeting decisions.
Decrease in demand for services
This is also a threat because when there is a decrease in demands for services by consumers, the organization is going to incur losses or reduced profits. This decrease may be caused by the presence of alternatives which serve the same needs similar to the services offered by the organization. This will therefore affect the prices of services, the organization will have to lower the prices and provide other incentives e.g. discounts so as to increase the demand of its services.
This is the single most serious threat an organization can face. It arises when other organizations or companies are established which offer similar services and products. The major concern to an organization when it comes to completion is pricing and quality. To be able to compete and remain profitable in a market with steep competition, an organization should ensure that its products are of superior quality than those of other competing companies and should meet the needs of the consumers. Prices should also be affordable to the target customers for the organization to have a larger customer base than its competitors.
These are rules and policies that are put in place by relevant government agencies with the aim of creating conducive environment where business can thrive. Regulations also seek to protect consumers from exploitation by companies or business entities. Some regulations can be a threat to an organization due to the fact that it needs a lot of resources for compliance. For example some regulations sets standards under which products and services should be offered. Regulations normally change with time, this therefore means that sometimes organizations may be got unaware and risk losing license to operate for not complying with the regulations. The executive board should therefore be familiar with all the relevant regulations that affect its operations.
American Association of Colleges of Nursing. (2014). American Association of Colleges of Nursing | Nursing Shortage. Retrieved from http://www.aacn.nche.edu/media-relations/fact-sheets/nursing-shortage
Brent J. Morris, Alex A. Jahangir, & Manish K. Sethi. (2013). Patient Satisfaction: An Emerging Health Policy Issue. Retrieved from http://www.aaos.org/news/aaosnow/jun13/advocacy5.asp
David Ingram. (2015). How Accounts Receivable Impacts the Rest of Accounting | Chron.com. Retrieved from http://smallbusiness.chron.com/accounts-receivable-impacts-rest-accounting-75365.html
Sigma Theta Tau International. (2015). Nursing Shortage. Retrieved from https://www.nursingsociety.org/Media/Pages/shortage.aspx