HCM FPX 5312 Assessment 1 Analyzing the Impact of the External Healthcare Environment on an Organization

Executive Summary/Abstract

Write in detail an introduction to the Course Project in a single paragraph. This is the last component written. Be sure to delete these instructions before submitting for Assessment 5.

Organization Overview

The Appalachian Regional Healthcare System (ARHS) is a critical health service provider to a large, dispersed, rural population across the Appalachian region. In response to the need to improve access and the standard of care in less-served geographical regions, ARHS provides an extensive range of hospital, clinic, and specialty services in rural communities (Appalachian Regional Healthcare, 2024). This range addresses primary and emergency care, chronic management, and community health services for populations with inadequate health care systems. Like almost all rural health care systems, these challenges limit service and sustainability.

Recruiting and retaining medical staff continues to be a major issue for ARHS, especially given its geographic isolation and lower staffing incentives compared to urban hospitals. Medical staffing shortages threaten critical services, including the Emergency Department (ED) and Surgical Centers (Pourmand et al., 2023). Locum tenens physicians can be an intermediate gap filler, and telemedicine can be a longer-term solution to improve access to specialty services for the community care ARHS is striving to provide. Adoption of telemedicine will also assist ARHS in managing a chronic financial challenge of compliance with new, costly hospital regulations. ARHS is a nonprofit rural hospital, and expensive changes to governmental requirements for Operations and Electronic Health Records (EHRs) can be problematic (Aguirre et al., 2020). ARHS will have a lower financial outlay for regulatory compliance with telemedicine as a choice. Use of rural telemedicine, coupled with available state and federal grants, will help ARHS implement telemedicine.

ARHS also experiences high patient outmigration and limited revenue problems as services are offered in the urban centers. Patients are outmigrating from services ARHS needs to keep in order to prevent the closure of critical services (Bem et al., 2019). Telemedicine will help retain local patients and provide high-value services that will help satisfy regulatory requirements and provide revenue for ARHS.

There are multiple challenges that the Comprehensive Telemedicine Program at ARHS aims to alleviate related to recruitment, retention, and regulatory compliance. The project would offer tele-ED services to ARHS and provide Emergency Department (ED) consultative services. This allows ARHS to sustain ED services with limited on-call ED staff (Tresenriter et al., 2021). Further, ARHS would be able to provide virtual consultations for the specialties of cardiology, neurology, and mental health, thereby decreasing the out-migration of patients from ARHS. The program would also offer telehealth staff training, thereby providing ARHS the opportunity to maximize the limited staff it currently has.

PESTLE Analysis

A system of a variety of external factors impacting both operations and strategies characterizes the ARH system, a nonprofit health provider. A PESTLE analysis identifies these factors and the impacts of the Political, Economic, Social, Technological, Legal, and Environmental considerations. ARH is politically impacted by regulations at the Federal and state levels of health care that dictate Medicaid, Medicare, and the Affordable Care Act (ACA) compliance (Centers for Medicare & Medicaid Services, 2024). ARH is dependent on the Rural Health Care Act, as it authorizes the funding needed and access to telehealth services for rural, medically underserved areas (Gizaw et al., 2022). Changes in the legislation of ARH’s services are impacted by the sustainability of the Rural Health Care Act.

The decline of the coal industry, among others, creates a lack of financial resources in surrounding areas, adding to the economic burden on the healthcare system. ARH patients use government-funded insurance programs, causing less revenue for the healthcare system. As the largest employer in Southeastern Kentucky, ARH’s health status determines the region’s economic health as it provides income and jobs (Appalachian Regional Healthcare, 2024). ARH has to strike a balance between fiscal health and meeting the essential needs of the community, especially for the programs that serve uncompensated care. This particularly challenges the sustainability of the organization.

ARH has the goal of serving a critical function in the region by addressing health issues that include high levels of chronic illness and substance abuse disorders. This function is aligned with the organization’s purpose of serving and improving the health and wellness of the community. Concerns about mental health and the stigma that surrounds it are also present in the community, and the resiliency that the community demonstrates is sometimes a barrier to accessing healthcare services. ARH has focused on providing services that improve healthcare access as well as trust in the system. With a reported increase in the community’s elderly population, ARH is also focusing on managing and providing services to older persons and those with chronic illness as a community-focused organization.

Telemedicine allows ARH to offer additional services to distant communities and solve issues related to specialty services and physician shortages. Along with telemedicine, ARH must install and optimize its EHR system to remain compliant and operate more efficiently. Although it is a large investment, data from ARH’s Community Health Needs Assessment (CHNA) has enabled ARH to plan more effectively and allocate its limited resources and funds in a way that enhances ARH’s community health outcomes (Appalachian Regional Healthcare, 2024).

Legal and environmental factors influence ARH’s healthcare delivery and business model planning. ARH legally must provide services to meet the criteria for patient privacy and staff and facility requirements, all of which would incur a significant draw on resources (Gharra et al., 2022). As a nonprofit, ARH would have to trade off its community service obligations against the need for financial viability, all of which would be covered by its nonprofit status. Telehealth policy for ARH directly impacts staff, financial, and resource allocations, while regulatory changes (especially Medicaid) set the framework for ARH’s long-range plans and resource allocations (Anawade et al., 2024). ARH provides services where it has to contend with the remoteness of its service area and the environmental factors impacting health, necessitating the use of telehealth to reach patients. There are also environmental health issues in ARH’s service area from coal mining, leading to the necessity for ARH to offer specialized care for the region’s health needs.

Based on the factors mentioned, ARH employs telemedicine to meet the dual challenge of increased healthcare access and cost containment, while being responsive to the staffing and patient access issues. ARH has the technology and the policy environment, along with government incentives, to implement telehealth (Tresenriter et al., 2021). There are dynamics of cultural adaptability, which require ARH to educate and outreach in a way that fosters patient acceptance and trust of virtual care.

Using telemedicine, ARH can further its goal of providing quality healthcare to more at-risk patients by improving patient retention, increasing access to specialty healthcare, and decreasing cost burdens on patients (Tresenriter et al., 2021). This also positions ARH to be a pioneer in healthcare innovation and access in the Appalachian region, in particular because of its goal to lead the way to more innovation and improved health outcomes in its region.

External Macro-Environment Challenges and Opportunities

Political Factors

Several macro-environmental factors affect the external environment of ARHS and its telemedicine program. Within the political arena, there is increasing support for telehealth. The Centers for Medicare and Medicaid Services (CMS) offers an opportunity for ARHS to expand its programs with federal $ reimbursement. Therefore, future developments in policy can have a negative effect. Within CMS, reimbursement for telehealth has increased significantly due to the COVID-19 pandemic, where telehealth services increased by 63 times in the year 2020 (Saharkhiz et al., 2024). Large policy changes have already created a positive impact on access for rural healthcare.

Economic Factors

The rural Appalachian economy is challenged by low incomes and a lack of technology; this negatively impacts the potential for telemedicine adoption. Conversely, the operational expenses of ARHS can be reduced by the adoption of telemedicine, making it a financially viable option. According to the Population Reference Bureau (PRB), 3 of every 10 households in rural Appalachia do not have access to broadband internet (Population Reference Bureau [PRB], n.d.). This presents a major obstacle for the adoption of telehealth.

Social Factors

The social dimension of the region presents transportation barriers to healthcare as well as health inequities; however, telemedicine has the capacity to overcome these barriers, especially for the chronically ill and aging populations. Chronic illnesses affect 60% of the adult population in the United States, where 40% of this population comprises adults with multiple chronic illnesses.

Chronic illnesses are America’s leading cause of disability and account for the largest portion of the country’s annual $4.1 trillion expenditure on healthcare (Carney, 2023). Rural medicine faces unique challenges related to a lack of public transport. Thus, the introduction of telemedicine as a means of overcoming transport-related issues has great potential.

Technological Factors

From a technological standpoint, all the ARHS has to plan for is the demand for infrastructural investment and training as a result of increased accessibility to ARHS posed by the widespread availability of portable devices and the Internet. The increased popularity of smartphones poses a unique advantage to ARHS, as in 2024, 97% of American adults owned a smartphone (Pew Research Center, 2024b). Thus, ARHS will be able to offer its telemedicine services to a larger segment of the population and conduct virtual consultations through patients’ smartphones.

Legal Factors

The HIPAA regulation, along with other telehealth laws, will pose challenges to the provision of telehealth services. The legal environment, such as the regulations on interstate travel and the restrictions on out-of-state healthcare service providers, will limit the health services that can be offered by ARHS.

Environmental Factors

The Appalachian Region’s heavily impacted, rugged topography creates infrastructural challenges coupled with increased telemedicine demand. Added geographical isolation further complicates the many challenges already presented to the Appalachian Region Health System (ARHS) in offering in-person services. Existing physical infrastructure, particularly roadways and medical facilities, limits the capability to extend traditional services.

Data Supporting Telemedicine

Growth in Telehealth Services

The COVID-19 pandemic caused a sharp increase in the adoption of telehealth services. In areas of high pandemic prevalence, the percentage of health-related visits conducted via telemedicine skyrocketed from below 1% to as high as 80% in the March to April time frame of 2020 (Karimi et al., 2022). Prior to this, the only form of telehealth services provided to Medicare recipients increased by 63-fold in 2020 (Karimi et al., 2022).

Internet Connectivity Growth

The Pew Research Center shows nearly all American adults (95%) now have access to the Internet (Pew Research Center, 2024a). This strongly suggests the rural sections of America have the potential to expand telehealth services.

Computer Ownership Rates by Age and Income

Households where the householder is under age 50 and where annual income was above $100,000 were the only segment to exceed 98% in having at least one computer (IBIS, 2022). The lowest segment to report at least one computer was among households where the householder was over age 65.

Cellphone Ownership

As of 2024, close to all adults in America own a cellphone. 99% of adults 18-49 years own a cellphone. Adults 50-64 years show 98% cellphone ownership, while 94% of adults 65 years and above own a cellphone. Moreover, 97% of adults 18-49 years own smartphones. However, smartphone ownership drops to 89% for adults 50-64 years and 76% for adults 65 years and above (Pew Research Center, 2024b). There are few cellphone ownership among older adults, and 17% of older adults 65 years and above own a cellphone but not a smartphone, while this percentage is 1-2% among younger adults (Pew Research Center, 2024b). More Americans, particularly those with lower income and lower educational levels, use cellphones to gain online access.

Possible External Healthcare Factors that Impact Organizational Outcomes

Technological Trends

The CDC cites a 154% increase in telehealth services in March 2020 relative to the prior year (Koonin, 2020).

Economic Trends

Average unemployment was 5% in rural Appalachian counties, compared to 4% unemployment in the rural counties outside the Appalachian region. The average annual income for a household in the rural Appalachian counties was $48,879. The average income for a household in the other rural counties of the U.S. was $59,550, meaning rural Appalachian households earned more than $10,000 less. Additionally, poverty was reported to be 19.5% for rural Appalachian counties, compared to 14.9% in the other rural counties of the U.S. Of the counties in the region, all but 20% were classified as distressed (Population Reference Bureau 2024). From 2022 to 2031, national health expenditures are projected to increase, averaging 5.4% per year, and are expected to account for 20% of the Gross National Product (GNP) in the year 2031. It is anticipated that at least 92% of the population will be insured in 2023 due, in part, to unprecedented Medicaid enrollment, and that this percentage will decrease to 90% after the COVID-19 public health emergency and its associated provisions end (Keehan et al., 2023).

Social Trends

Appalachia’s estimated population in 2024 is 1,371 people. Its population is estimated to decline by about 1.15% annually (World Population Review, 2024). Compared to the 2020 census population of 1,434, it is now estimated that Appalachia’s population has decreased by 4.39%. Of the population, 32.4% is estimated to be Appalachian’s median age. Of this population, males are estimated to be 37 years old and females are estimated to be 28.9 years old (World Population Review, 2024).

Strategic Implication of Trend Analysis

Emerging threats and opportunities have the capability to shape the design and allocation of the ARHS plan.

Opportunities

An increase in telemedicine and funding for rural health initiatives (CMS reimbursement, etc.) create opportunities for ARHS to provide an improved service, enhance patient retention, and garner financial improvements. Use federal grants and reimbursable programs so there is no t an initial investment in the service.

Challenges

The economy is weak in disposable income and has high unemployment levels and a digital divide. This affects ARHS’s efforts to expand telehealth services. Additionally, an older population with no digital skills necessitates ARHS to implement teaching programs to elevate the adoption of telehealth to favor improved health outcomes.

In order to achieve service sustainability and operational efficiency, ARHS must consider all these areas and invest purposefully in telehealth. Additionally, ARHS must seek to supplement its technology with government grants while simultaneously educating its community about telehealth. Other than these, using data to expand telehealth in combined efforts with staff training will also improve ARHS’s service outreach to the community and help establish ARHS as a better place of employment.

Be sure to delete the above instructions before submitting Assessment 1. Do not work on the section below until Assessment 2.

Continue to evaluate the influence of the external healthcare environment on organizational outcomes, focusing specifically on the issue in question. Answering the who, what, how, and why of the external environment and using the PESTLE framework, consider the customers and the external supply chain, the world and healthcare systems as they affect the organization’s revenue models, the competitors, external strategic partners, the stakeholders, and the laws and regulations which affect and govern the organization. Using external healthcare systems knowledge and employing a range of strategies, theory and models, address the full spectrum of the external healthcare environment across the main and ancillary services. Indicate the risks and barriers in reaching the goals described in Assessment 1, and explain how you plan to mitigate and manage these risks and barriers.

Expected length: 1–2 content pages for Assessment 2.

Be sure to delete the above instructions before submitting Assessment 2.

Continue to develop this section throughout this course, synthesizing content for the final course project.

Market Data Analysis

Identify health care market data needs to examine these opportunities or challenges for the specific topic identified. Determine where to get the data and how to integrate data from multiple sources across various disciplines from differing perspectives.

Expected length: 2–3 content pages.

Be sure to delete these instructions before submitting Assessment 2.

Analyze health care market data to identify opportunities and challenges for health care organizations. Integrate information across disciplines from differing perspectives. Evaluate supportive and conflicting information (that is, data, insights, and best practices), integrating insights across disciplines from multiple diverse functional and strategic perspectives individually and holistically. Then use insights gained from the data to effectively understand the environment and make evidence-based decisions. 

Expected length: 1–2 content pages.

Be sure to delete these instructions before submitting Assessment 3.

Continue to develop this section throughout this course, synthesizing content for the final course project.

Evidence-Based Strategies

Analyze trends and valuations in the market such as decennial census data, economic value, and household composition. Use results from your analysis to understand the organization’s position in the external environment and develop your topic’s external environment-focused management plan. Identify at least three evidence-based, innovative strategies to address organizational challenges and opportunities in a dynamic environment.

Expected length: 1–1.5 content pages.

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Continue to develop this section throughout this course, synthesizing content for the final course project.

Evidence-Based Recommendations

Analyzing and reasoning critically, provide suggestions using the three evidence-based methods stated to answer the particular organizational issues and prospects you determined in Assessment 1. Create at least three coherent, well-supported solutions using the appropriate evidence (i.e., data, insights, analyses, or best practices) to systematically address the issues and opportunities in particular projects relevant to the stakeholders and all applicable cross-functional departments. Be sure to analyze the strengths and weaknesses of the internally available resources, the external opportunities and threats, and how best to address the same. Use innovative, strategic, and sustainable methods of systems theory to understand the various dynamics of the systems and how best to manage them.

Expected length: 2–3 content pages.

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Continue to develop this section throughout this course, synthesizing content for the final course project.

Conclusion

Summarize your overall course project. No new information should be included in your conclusion.

Be sure to delete these instructions before submitting Assessment 5.