HCM FPX 5312 Assessment 2 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 vital to the many diverse rural communities that populate the Appalachian Region. ARHS provides rural communities with access to hospitals, clinics, and specialty services. Additionally, many rural communities face challenges attracting and retaining specialty services; thus, ARHS also focuses on specialty services (Appalachian Regional Healthcare, 2024). ARHS meets many needs, including primary care, emergency services, chronic disease management, and community health services. These services are especially needed in rural communities with limited or no access to health care. ARHS faces many of the same challenges that affect health care systems in rural communities. These challenges affect ARHS’s ability to sustain services and meet the needs of the communities it serves.

The geographic isolation of ARHS, combined with little incentive compared to urban facilities, further complicates the staffing of both the medical and nursing workforce. This staffing issue has an impact on potentially closing the ED and Surgical Center services (Pourmand et al., 2023). While ED and Surgical services are the most impacted, ARHS can continue to fill the staffing void by recruiting locum tenens doctors, while also creating a sustained system of care to address specialty services not accessible locally via telemedicine. ARHS has financial challenges, especially from the strain of regulatory changes that demand expensive EHR and facility upgrades. ARHS being a rural nonprofit hospital, expanded regulatory requirements are especially burdensome (Aguirre et al., 2020). ARHS can use telemedicine to lessen the financial burden of new regulatory requirements while also allowing ARHS to meet telemedicine regulatory requirements at a lower financial investment. Further, regulatory changes at the federal and state levels that encourage and support rural telehealth services may lessen the financial burden for ARHS.

Rural hospitals such as ARHS face the challenge of having to refer patients to larger urban hospitals, which limits the revenue of services offered and utilizes the revenue of the hospital, thus impacting financial sustainability. When basic services are threatened to be closed, this increases the financial burden (Bem et al., 2019). Offering high-value telemedicine services can be valuable in improving patient retention. Because telemedicine is an innovative service for rural hospitals, ARHS can use this service to further justify federal offerings to rural hospitals, thereby improving its financial sustainability.

The solution proposed here seeks to implement a Comprehensive Telemedicine Program within the ARHS. This Program would seek to enhance the recruitment and retention of ARHS staff and improve the organization’s regulatory compliance. The addition of tele-ED services would facilitate Emergency Department (ED) care consultations and allow ARHS to support the operational needs of the ED despite having a small on-call staff (Tresenriter et al., 2021). With the addition of telehealth services, ARHS would provide virtual specialist services in cardiology, neurology, and mental health, creating a significant decline in patient out-migration. Lastly, the Program would implement telehealth services and provide staff training, helping ARHS to maximize the available staff resources.

PESTLE Analysis

As a nonprofit health provider, ARH has many external factors influencing business operations and strategy. Performing a PESTLE analysis shows many of the external factors impacting ARH. ARH must comply with Medicaid, Medicare, and ACA legislation at the federal and state level. Compliance with rural healthcare legislation also has a positive impact on ARH. Such legislation provides funding and allows other means to serve the rural medically underserved populations, including telehealth (Gizaw et al., 2022). The positive or negative strain rural healthcare legislation and funding may have on ARH’s resources also has a direct impact on the sustainability of ARH. Eventually, ARH is limited to the supportive scope of legislation for rural healthcare in the Appalachian region.

The decline of the coal mining industry also has a direct impact on the services ARH is able to provide its patients, many of whom are on government-supported healthcare and serve to increase the negative impact on ARH’s revenues due to low reimbursement rates. Being the largest employer in southeastern Kentucky, ARH directly impacts the economy in the region by sustaining employment and supporting local income. (Appalachian Regional Healthcare, 2024). There is continued funding for community health needs and uncompensated care. This acts to further strain ARH’s ability to be responsive to the health needs of the community it serves and to remain fiscally sustainable.

Socially, ARH aims to enhance health and wellness across communities. As such, ARH is looking to address the increasing chronic health issues and substance use problems across the Appalachians. While there is a great deal of resiliency in the Appalachian people, it can act as an obstruction in terms of access to healthcare because of the stigma regarding mental health issues (Swan et al., 2020). ARH is looking to bridge the gap in mental health care, as well as the growing need for chronic care and geriatric care, especially as the population ages. These are all extensions of ARH’s commitment to serving the community.

From a technological standpoint, ARH can leverage new telemedicine technologies to improve access to healthcare for remote Appalachian communities. Telemedicine can solve the problem of limited specialists and other resources, in addition to providing a way to serve communities that are hard to reach. While telemedicine and other technologies used to create an electronic health record (EHR) system can be expensive, they are necessary for ARH to operate and be in compliance with regulations. ARH is using data from its Community Health Needs Assessment (CHNA) to design targeted programs and use resources in a way to improve community health. This is an example of data-influenced program planning (Appalachian Regional Healthcare, 2024).

ARH accounts for legal and environmental factors within the framework of healthcare delivery and strategic planning. Legally, ARH must contend with numerous resource-consuming requirements for the protection of privacy for patients, the credentialing of staff, and the standards for the operation of health facilities (Gharra et al., 2022). As a nonprofit, ARH must balance the expectations of the community in need of service with the requirements for maintaining the financial viability of the organization, benefiting from the legal safeguards for nonprofit service organizations. As Medicaid is expanded and the policies around telehealth are formulated, ARH must direct its resources in order to be positioned to respond with strategic, long-term plans, making an awareness of the regulations imperative (Anawade et al., 2024). Environmentally, ARH must support the provision of health services to remote, high, and inaccessible regions due to the impacts of coal mining on health and respiratory illness, through the provision of specialized health services to meet the health care needs of the region.

Despite these challenges, ARH has proactively approached these challenges of service provision through improved access to care and reduced costs via telemedicine. With the support of new technologies and the reimbursement policies of the government, telemedicine is within the reach of ARH (Tresenriter et al., 2021). Community cultural norms are a factor of significant importance, and, therefore, ARH must work to earn the patient’s trust to accept virtual care.

Arkansas Rural Health (ARH) has the opportunity to implement new technology to achieve patient retention goals, allow access to specialty services, and save costs. It allows ARH to accomplish its goals of providing quality healthcare and high-quality services to people who live and work in rural communities (Tresenriter et al., 2021). The innovation will also enable ARH to become a leader in innovative healthcare and accessible services in the Appalachian regions of the community, which is aligned with ARH’s goal of improving health status in the community.

External Macro-Environment Challenges and Opportunities

Political Factors

Various macro-environmental factors shape the external conditions for ARHS and its telemedicine program. Political sponsorship of telehealth is on the rise, and the Centers for Medicare and Medicaid Services (CMS) offer ARHS an avenue to broaden its initiatives with federal reimbursement, although future policy changes may create threats. Telehealth reimbursement has skyrocketed during and after the COVID-19 pandemic, with telehealth encounters increasing 63 times in 2020 (Saharkhiz et al, 2024), according to CMS. These telehealth reimbursement initiatives have been a substantial policy change to expand access to rural healthcare.

Economic Factors

From an economic perspective, rural Appalachia presents problems of low income and insufficient means of access to technology, which will slow the acceptance of telemedicine. Nonetheless, ARHS can reduce organizational expenses and thus make telemedicine a financially viable option. According to the Population Reference Bureau (PRB), 30% of rural Appalachia families have no access to broadband, which presents the largest telehealth adoption challenge (Population Reference Bureau, n.d.).

Social Factors

From a social perspective, the transportation gap in health care creates inequities, and telemedicine is an attractive option to cross these barriers for the older and chronically sick populations. Chronic illnesses affect 60% of U.S. adults, with 40% of that population having multiple chronic illnesses.

Chronic diseases are the leading cause of disability and account for the largest share of the $4.1 trillion bill for annual healthcare costs (Carney, 2023). In particular, the need for personal transportation to attend healthcare appointments leaves many rural residents with few, if any, viable options. Telemedicine can address the rural transportation challenge.

Technological Factors

The increasing number of portable devices can make ARHS more accessible, but infrastructure and training costs will have to be covered. Increased smartphone use is driving an ARHS expansion. In 2024, 97% of U.S. adults owned smartphones (Pew Research Center, 2024b). ARHS will be able to offer telemedicine to an even larger portion of the U.S. population, given that patients will be able to connect for virtual appointments on their personal devices.

Legal Factors

The set of laws that ARHS is subject to, as well as the need to remain compliant with HIPAA and other telehealth regulations, will continue to place restrictions on the services ARHS can offer. Legal challenges such as interstate telehealth restrictions and the licensing of out-of-state healthcare service providers will limit the services that ARHS can offer.

Environmental Factors

Telehealth services are in high demand and constrained by the physical and topographical limitations of the Appalachian Region. The healthcare service offerings of ARHS are constrained by the physical limitations of roads and healthcare facilities as well as the need to expand traditional services.

Data Supporting Telemedicine

Growth in Telehealth Services

During the COVID-19 outbreak, people rapidly accepted telehealth services. Telehealth services, which were earlier used for about 1% of health care visits, became 80% of health care visits in regions most affected by the pandemic during the period of March-April 2020 (Karimi et al., 2022). According to a study used in the presentation, a report by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) noted that a dramatic increase of 63 times was observed for telehealth services used by older adults in the USA (Karimi et al., 2022).

Internet Connectivity Growth

According to the Pew Research Center, 95% of American adults have internet access (Pew Research Center, 2024a). This suggests that the feasibility of expanding access to telemedicine can be found in rural areas, though gaps are still large.

Computer Ownership Rates by Age and Income

According to IBIS (2022), the majority of households with at least one computer have householders under 50, and households with incomes exceeding $100,000 have 98% or more households with at least one computer. Households with a computer are least likely to have a householder over 65 years of age.

Cellphone Ownership

In the US, cell phone ownership is almost universal, as 99% of adults 18-49, 98% of 50-64 year olds, and 94% of 64+ year olds have a cell phone. Smartphone ownership is also high at 97% but falls to 89% and then 76% for the 50-64 and 65+ age groups, respectively (Pew Research Center, 2024b). There are a few adults, mostly older adults, who have a cell phone and not a smartphone, and 17% of older adults 65+ are in this group compared to 1-2% of the younger adults (Pew Research Center, 2024b). The use of cell phones to access the Internet is most prevalent among Americans with the least income and the least education.

Possible External Healthcare Factors that Impact Organizational Outcomes

Technological Trends

According to the Centers for Disease Control and Prevention (CDC), telehealth utilization increased by 154% in March 2020 over the previous year (Koonin, 2020).

Economic Trends

The average unemployment rate in rural Appalachian counties was 5%, compared to 4% in rural counties outside the region. Rural Appalachian counties recorded a median annual household income of $48,879, again lower than other rural areas of the U.S. ($59,550) by more than $10,000. Poverty was also greater in rural Appalachian counties at 19.5%, compared to 14.9% in rural counties in the rest of the U.S. Almost a fifth of the counties in the region were economically distressed or at risk. (Population Reference Bureau, 2024). From 2022 to 2031, the average annual growth for national health expenditures is estimated to be 5.4%, with health care expenditures projected to be 20% of the gross national product by the end of this period. Because of historically high Medicaid enrollment, it is anticipated that at least 92% of the population will be insured through 2023, and will drop to about 90% during the phase-out of the COVID-19 public health emergency to the end of the Medicaid emergency (Keehan et al., 2023).

Social Trends

According to the World Population Review (2024), Appalachia’s estimated population for 2024 is 1,371, and the estimated annual rate of population change is -1.15%. Since the 2020 census, Appalachia’s population has declined by -4.39% from 1,434. The average age of a resident is 32.4. The mean age of males is 37, and the mean age of females is 28.9 (World Population Review, 2024).

Strategic Implication of Trend Analysis

By analyzing these trends, ARHS can identify emerging opportunities and threats, which shape its strategic planning and allocations:

Opportunities

ARHS can take advantage of the expansion of telemedicine services, rural health care initiatives, and reimbursements from CMS in a number of ways. ARHS can capitalize on telemedicine growth and rural health initiatives to better serve and retain clients in a more sustainable manner. Growth areas create the ability to leverage federal grants and reimbursement programs, which will decrease the need for upfront investments.

Challenges

The area has low disposable income, high unemployment, and a digital divide. These will create challenges for ARHS to implement telehealth. In addition, the older population will need educational programs about telehealth to improve their health and technology literacy, as they will not be inclined to use telehealth services.

For ARHS to be sustainable, they must invest strategically to put telehealth into practice, advocate to the government for funding, and educate their patients/taught population on the use and benefits of telemedicine. In addition, the expansion of telehealth to serve the community, along with providing training to staff, will enhance the services available to the community and attract health professionals to the area.

The hospitals in the Appalachian Regional Healthcare System (ARHS) serve the rural populations in the Appalachian region that have difficulty accessing affordable healthcare as a result of age, illness, and inadequate coverage in Medicare and Medicaid. ARHS has difficulty with the external network supply because of location, and pharmaceutical and telehealth technology services are vital to both ARHS and its customers (Appalachian Regional Healthcare, 2024). The regional economy has a direct impact on revenue, and government insurance leads to lower reimbursement, and federal changes to healthcare have a negative effect on revenue. For all of these reasons, ARHS has a focus on preventative health, telehealth, and wellness services to reduce the need for referrals to outside healthcare services. ARHS has developed patient loyalty within their healthcare system due to their culturally and community-sensitive care, which has also helped to address the competitive nature of telehealth services and urban healthcare systems.

Strategic partnerships such as academic and community institutions improve services for grants and add the needed services for treatment and workforce. Internal stakeholders for ARHS are the staff and board members, and the external stakeholders are the patients, local government, healthcare advocates, and funders (Appalachian Regional Healthcare, 2024). Funding and services are sustained through HIPAA and the Medicare Telehealth Parity Act.

The policy review ARHS conducts on telemedicine and rural healthcare policy helps ARHS and its related services maintain fiscal sustainability.

Theories, Models, and Practices

An interprofessional synthesis of theories, models, and pragmatics is required to analyze the external healthcare environment of the Appalachian Regional Healthcare System (ARHS). The components of the PESTLE analysis capture the political, economic, social, technological, and legal environments, respectively. ARHS is supported by assessing the external environment factors critical to its operations. From the perspective of the political and financial dimensions of ARHS funding, ARHS is supported by Medicaid and Medicare, the two government-sponsored programs; therefore, ARHS must comply with policies outlined by the state and federal governments that affect funding for rural healthcare. Along with the above-described approach, Porter’s five forces model, which is described below, offers a means to assess the competitive power of urban healthcare and alter the revenue model to reduce the competitive power (Pangarkar & Prabhudesai, 2024).

The ARHS recipient client population has a high burden of chronic illness. Leininger’s Transcultural Care Theory supports the application of culturally and linguistically appropriate services to address the specific rural population’s social determinants of health (Petiprin, 2024). The technology of interest is Telehealth, which relates to Rogers’ Diffusion of Innovations Theory and describes a stepwise application of the four stages of a rural integrated medical system, the easier of the two to implement (Ledger & Bakhai, 2021). Stakeholder Theory is of particular interest in the context of both the internal and external ARHS interrelation.

Internally, models such as Herzberg’s Motivation-Hygiene Theory aid in the development of retention policies, which are crucial for this study as they address the retention of rural healthcare (Lee & Lee, 2022).

Externally, the management of positive working relationships with relevant community-based organizations, healthcare advocacy groups, and potential funders is essential in order to create a cause that not only serves the community but also optimizes the resources of the ARHS. This approach tackles the real health concerns of the Appalachian people and retains their faith in the ability of the ARHS to meet the health demands of the people, which is also the expectation of the funding agencies and other stakeholders. Creating interest among stakeholders aligns their purpose with the mission of ARHS, complemented with a focus on healthcare equity, organizational assurance, and stable operations. Finally, the healthcare supply chain and financing approach of ARHS offers an integration of value-based care and the Lean Six Sigma approach.

Value-based care focuses on getting the highest value for patients and meeting their needs concerning the type and amount of services offered. This approach is especially important for rural patients with multiple chronic diseases. This perspective correlates to the work methods of Centers for Medicare & Medicaid Services (2024). The experiences of ARHS with the design and delivery of telemedicine services, in alignment with the Triple Aim framework, fall especially within the health of the population and per capita cost categories. Revenues are protected through the use of telemedicine, while healthy outmigration is ensured (Institute for Healthcare Improvement, 2024). The integration of Lean Six Sigma & Deming’s PDCA cycle within the healthcare supply chain also justifies the elimination of waste for the timely delivery of medical supplies and equipment to remote locations (Barr & Brannan, 2024).

ARHS seeks to enhance its service delivery responsiveness through the implementation of a Compliance Program Effectiveness (CPE) model in conjunction with the funding-related aspects of regulatory compliance, such as the recent changes in telehealth service delivery regulations. ARHS faces many challenges due to the unpredictable nature of government funding, the restricted workforce, the digital divide, and the rural-urban gap in healthcare coupled with technology. To overcome these challenges, ARHS is seeking to implement telehealth services for specialized care in addition to other funding opportunities through grants and collaborations, facilitating digital literacy training, and investing in training and compliance to meet the regulatory service delivery requirements.

Market Data Analysis

To create solutions for the challenges and opportunities regarding ARHS service delivery, a complete analysis of the health care market is necessary. Some examples of important data include the demographics of the local population, health facility usage rates, health outcome data, and health provider data. Some of the above-mentioned data may include income levels, employment rates, education levels, cognitive digital readiness, and health insurance coverage. These data will help determine health systems’ population coverage and accessibility. This will also help determine how health systems can use modern health technologies, such as telemedicine, to close the gap in health service delivery. The data on the costs and payment structures of Medicaid and Medicare, and patients’ satisfaction, will help ARHS improve health service delivery either through telemedicine or other means to those who have difficulty accessing health services (Jacobs, 2021). ARHS can achieve this by utilizing the data from different disciplines and fields to cover the information gaps. ARHS can utilize the data in its electronic health records and patient satisfaction surveys to determine the current state of its health service delivery.

Some sources of information for health outcomes and social demographic characteristics include the CDC, HRSA, and U.S. Census Bureau data and may be applicable to the targeted population. IMS Health, Medicaid, and Medicare, along with other data sources, provide information related to rural health care, especially the status, cost, and the common market reimbursement price. To analyze the rural health workforce, ARHS may utilize some reports of the AAMC and the Licensing Boards.

To maximize the usefulness of this information, it is necessary to integrate data from different sectors along with telehealth, epidemiological, and economic data to give a complete description of the needs and services available. The ARHS is in a position to use the available data in combination to assist resource allocation through prioritized decision-making. Continuous and systematic integration of different data sets allows ARHS to recognize the changing character of the target population and the services it offers, as well as the opportunities to provide positive impacts on health for the residents of Appalachia. It helps to identify the new opportunities and/or risks and the health services that can be optimally provided to the rural areas.

Examine health care market data for potential and existing challenges. Merge diversified and multidisciplinary information and perspectives. Assess information that supports and which contradicts (data, insights, and best practices) and make sense of it from multidisciplinary and multifaceted functional and strategic perspectives in depth and in breadth. Then utilize the information and insights obtained from the data to gain a better understanding of the context and make decisions that are grounded in evidence and rational. 

Expected length: 1–2 content pages.

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Evidence-Based Strategies

Emphasize trend tracking and market valuation, including the census, economic value, household type, etc. Incorporate what you learn from this analysis to evaluate the organization’s position in the external environment and to initiate a management plan, based on the external environment, pertaining to your topic. Propose three evidence-based, innovative solutions to capture the challenges and the opportunities of the organization in an ever-changing environment.

Expected length: 1–1.5 content pages.

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Evidence-Based Recommendations

In Assessment 1, you described particular challenges and opportunities facing the organization that you now need to address using evidence-based strategies. Use critical and analytical thinking to inform the development of three appropriate, evidence-based solutions that are logical and constructive to the challenges and opportunities. These solutions need to reflect the applicable, relevant evidence that may include data, insights, analyses, and best practices, and need to be applicable to all stakeholders and cross-functional teams. Ensure that the solutions consider the challenges and opportunities in the organizational context, and assess the relevant strengths, weaknesses, opportunities, and threats. Consider innovative, strategic, and sustainable approaches using systems thinking, and design the solutions to reflect your consideration of the different forces and the impact on the system as a whole.

Expected length: 2–3 content pages.

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Conclusion

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

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