The National Health Service, more commonly known as the NHS, is the United Kingdomâ€™s all-in-one healthcare system. The NHS provides comprehensive, free care to all of the countryâ€™s residents, and has been running for more than 50 years. However, recent years have repeatedly shown numerous struggles raging within the NHS: between a lack of qualified staff and tough financial standings, the government organization may seem like itâ€™s seriously in need of reform. (Pestle Analysis, 2019).
Pestel model is a framework that categorizes and analyzes an important set of external factors (political, economic, sociocultural, technological, ecological, and legal) that might impinge upon a firm. These factors can create both opportunities and threats for the firm (Rothaermel, 2019).
Political: Political factors result from the processes and actions of government bodies that can influence the decisions and behavior of firms (Rothaermel, 2019).
Perhaps the biggest question mark in current UK politics is that of Brexit. The United Kingdomâ€™s decision to leave the European Union is set to have widespread consequences on society, and that includes public institutions such as the NHS. A number of articles have been published speculating how Brexit might impact the NHS, but nothing is sure just yet. For example, there are uncertainties surrounding how medication and equipment originating from the EU will be brought into the UK. Perhaps a more serious issue is that of staffing: with a great number of medical professionals originally from other European countries, there are concerns that the NHSâ€™ workforce might take a hit if Brexit results in stricter or less favorable living conditions for foreigners. (Pestle Analysis, 2019).
Economic: Economic factors in a firmâ€™s external environment are largely macroeconomic, affecting economy-wide phenomena. Managers need to consider how the following five macroeconomic factors can affect firm strategy: growth rates, levels of employment, interest rates, price stability and currency exchange rates (Rothaermel, 2019).
Following the 2008 financial crisis, the entire world has experienced an economic downturn. Of course, the United Kingdom was in no way immune to this economic setback, and this is something that has impacted the NHS. For more than a decade, the NHS is said to have been facing financial troubles (due to economic reasons as much as regulatory ones). This makes it difficult for the NHS to provide a sufficient quality of care to its patients. The biggest manner in which this has manifested is in a serious lack of qualified staff. With mediocre salaries, the NHS has never been a particularly attractive workplace for clinical professionals. (Pestle Analysis, 2019).
Social: Sociocultural factors capture a societyâ€™s cultures, norms, and values (Rothaermel, 2019).
Across the world, a common phenomenon is that of an aging population. As healthcare improves, the average age of populations is increasing. Although this is very much a good thing, an older population tends to have more health problems. Conditions like diabetes and various cancers tend to develop in later stages of life and can be extremely costly to treat or manage. As a result, the UKâ€™s aging population is placing an additional strain on the NHS. (Pestle Analysis, 2019).
Technological factors capture the application of knowledge to create new processes and products. Major innovations in process technology include lean manufacturing, Six Sigma quality, and biotechnology (Rothaermel, 2019).
With new technologies being developed left, right, and center, healthcare is slowly being improved. Scanning tools are more affordable than ever, making them a staple of hospitals and clinics. Various pumps and tools for treating or managing conditions are being developed, decreasing morbidity. Overall, these technological improvements in the healthcare space are a positive for all parties involved. Not only do patients receive a higher standard of care, but government organizations like the NHS are able to speed up and automate more clinical tasks. (Pestle Analysis, 2019).
Ecological factors involve broad environmental issues such as the natural environment, global warming, and sustainable economic growth (Rothaermel, 2019).
Environmental sustainability practices have both environmental and financial benefits for healthcare organizations. Many hospitals are now seeking LEED certification for environmentally friendly building design; waste disposal programs are also coming under scrutiny. Leadership in the areas of green environment practices also illustrates corporate social responsibility (CSR)â€”which should be a key part of any strategic plan. (ClearPoint Strategy, 2020).
Legal: Legal factors include the official outcomes of political processes as manifested in laws, mandates, regulations, and court decisionsâ€”all of which can have a direct bearing on a firmâ€™s profit potential (Rothaermel, 2019).
A growing trend across the world is that of litigation â€” in all sorts of circumstances. However, more so than ever, patients (or family members) who are unsatisfied with the quality of their care are taking to courts to seek retribution. This is a phenomenon the NHS is no stranger to: the UK has seen a growing number of healthcare-related lawsuits, and the upward trend shows no signs of stopping. Unfortunately, this presents a new, hefty expense for the healthcare body as itâ€™s forced to invest in expensive legal defenses and pay out numerous settlements. (Pestle Analysis, 2019).
The United Kingdomâ€™s National Health Service is in a tough spot: with Brexit uncertainties, financial struggles, an aging population, and growing numbers of legal claims, it may seem like nothing is going the right way. Thankfully, changes in technology may make it easier for the body to provide quality healthcare. It does, however, seem that the NHS will need a good deal more financing if itâ€™s set to meet growing expectations. (Pestle Analysis, 2019).
The healthcare organization environment can be classified into internal and external environments. Internal environment refers to the working environment in which a healthcare service is provided (healthcare organization) and the resources and facilities required for providing services. External environment refers to the environment surrounding healthcare organizations that affects their performance and quality of services. A better understanding of factors influencing quality of medical service can pinpoint better strategies for quality assurance in medical services. Individual, organizational and environmental factors enhance or inhibit the quality of medical services. Quality of medical services depends on the personal factors of the physician and patient, and factors pertaining to the healthcare setting and the broader environment. ( Mosadeghrad, 2014).
External healthcare environment consists of political, economic, social, technological, legal and environmental factors. For the healthcare centers, the customers are the patients and the various companies that they work with outside of the hospital, such as vendors, pharmacies, cleaning companies and so forth. They are considered to be external supply chain. The supply chain generally refers to the resources needed to deliver goods or services to a consumer. In healthcare, managing the supply chain is typically a very complex and fragmented process. Healthcare centers most often compete with other health centers in order to increase the number of new patients and retain both new and current patients. They can also choose to partner with another company. This method is called external strategic partnership. With an external strategic partnership, you are looking for a complementary relationship where both sides see rewards. An internal strategic partnership can help to create an organizational structure that promotes growth. (Reiling, 2018).
Healthcare supply chain management involves obtaining resources, managing supplies, and delivering goods and services to providers and patients. To complete the process, physical goods and information about medical products and services usually go through a number of independent stakeholders, including manufacturers, insurance companies, hospitals, providers, group purchasing organizations, and several regulatory agencies. These companies are considered stakeholders and they can either be internal or external.
Internal stakeholders are entities within a business (e.g., employees, managers, the board of directors, investors). External stakeholders are entities not within a business itself but who care about or are affected by its performance (e.g., consumers, regulators, investors, suppliers). External stakeholders are those who do not directly work with a company but are affected somehow by the actions and outcomes of the business. Suppliers, creditors, and public groups are all considered external stakeholders. By promoting efficiency in the healthcare supply chain, hospitals and physician practices can create substantial cost-reducing opportunities across their organization. (Lumen, 2018).
A common problem that arises for companies with numerous stakeholders is that the various stakeholder interests may not align. In fact, the interests may be in direct conflict. For example, the primary goal of a corporation, from the perspective of its shareholders, is to maximize profits and enhance shareholder value. Since labor costs are unavoidable for most companies, a company may seek to keep these costs under tight control. This is likely to upset another group of stakeholders, its employees. The most efficient companies successfully manage the interests and expectations of all their stakeholders. (Investopedia, 2021).
External Factors Analysis:
Political Factors: These are all about how and to what degree a government intervenes in the economy. This can include â€“ government policy, political stability or instability in overseas markets, foreign trade policy, tax policy, labor law, environmental law, trade restrictions and so on.It is clear from the list above that political factors often have an impact on organizations and how they do business. Organizations need to be able to respond to the current and anticipated future legislation and adjust their marketing policy accordingly.
Economic Factors: Economic factors have a significant impact on how an organization does business and also how profitable they are. Factors include â€“ economic growth, interest rates, exchange rates, inflation, disposable income of consumers and businesses and so on. These factors can be further broken down into macro-economical and micro-economical factors. Macro-economical factors deal with the management of demand in any given economy. Governments use interest rate control, taxation policy and government expenditure as their main mechanisms they use for this.
Social Factors: Also known as socio-cultural factors, are the areas that involve the shared belief and attitudes of the population. These factors include â€“ population growth, age distribution, health consciousness, career attitudes and so on. These factors are of particular interest as they have a direct effect on how marketers understand customers and what drives them.
Technological Factors:We all know how fast the technological landscape changes and how this impacts the way we market our products. Technological factors affect marketing and the management thereof in three distinct ways:
- New ways of producing goods and services
- New ways of distributing goods and services
- New ways of communicating with target markets
Environmental Factors: These factors have only really come to the forefront in the last fifteen years or so. They have become important due to the increasing scarcity of raw materials, pollution targets, doing business as an ethical and sustainable company, carbon footprint targets set by governments (this is a good example where one factor could be classed as political and environmental at the same time). These are just some of the issues marketers are facing within this factor. More and more consumers are demanding that the products they buy are sourced ethically, and if possible, from a sustainable source.
Legal Factors: Legal factors include â€“ health and safety, equal opportunities, advertising standards, consumer rights and laws, product labelling and product safety. It is clear that companies need to know what is and what is not legal in order to trade successfully. If an organization trades globally this becomes a very tricky area to get right as each country has its own set of rules and regulations. (Academy, P.)
Market Data Analysis:
Marketing data analysis is a technique where the business will take all the available information regarding the market and come up with a marketing plan. It is a very vital piece of activity for any sort of business. It also shows you how well you have done in the market using your current marketing techniques. It shows the progress and results of the past. Marketing data analysis also focuses on external and internal factors. It takes into consideration the strengths and weaknesses of the company and how they fare in the market you are going to compete in. Marketing data analysis gathers information from all marketing channels and consolidates it into one common marketing view. (PestleAnalysis, 2020). The data can be obtained from various websites such as NIH, National Center for Health Statistics, Centers for Disease control and Prevention and so forth.
The Healthcare Quality Improvement Act (HCQIA) provides immunity for medical professionals and institutions during conduct assessments.  The law originated partially due to a Supreme Court ruling involving abuse of the physician peer review process. To date, HCQIA continues to evolve as the act arises in courtrooms and justices deliver new rulings. Legislators enacted the law to protect medical professionals from peer review-related lawsuits and to encourage physicians to file official complaints after encountering unprofessional and dangerous peer conduct. (RegisCollege). This law does not necessarily impact the healthcare center in a negative way. The above law helps healthcare provide quality care to patients while improving their measures.
To achieving the objectives established in the previous assessment, the United Kingdomâ€™s National Health Service will need to improve their quality care and apply for different types of funding and grants in order to meet the growing expectations.
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