INTRODUCTION Twenty-three-year-old Rachel MeKee complered her undergraduate degree in healthaics administration with an emphasis in planning and marketing. To her delight, she sos offered the position of assistant director of strategic planning and marketing califomia. Rachel wity Medical Centers (CMC), a large healtheare and eager to make an early impact. She was pleased that her new boss and mentor, Lindscy Chadwick-a seasoned healthcare veteran-seemed confident in Rachel's ability to process complex information and assume increasingly important responsibilitic, Lindsey understood the intricacies of CMC and the local healthcare market. Het. supervisor and members of the board had put her in charge of updating the organication's strategic marketing plan in response to important, ongoing changes in the local and regional markets. Lindsey assigned Rachel the important task of performing an environ. mental assessment and using the results to complete a strengths, weaknesses, opportunf. ties, and threats (SWOT) analysis and draft a summary of the organization's core strategic initiatives. From these important documents, Lindsey and Rachel would update CMC1 strategic marketing plan. From the outset, Lindsey advised Rachel to gather and assess relevant market information from various sources, including noted health industry publications; organization, statewide, and other publidy available databases; and interviews with executives, physician groups, insurance companies, regulators, and others. Like an investigative reporter, Rachel was directed to probe and dig for important and useful information that would ultimately provide a framework and justification for the organization's marketing plan. From her coursework in college, Rachel remembered that a marketing plan must include timely and accurate information about a marke's hcalthcare providers-notably hospitals and local physicians. She knew that a summary of key market demographics, including patient, employer, and insurance company profiles, was essential. A broad yet detailed understanding of the public at large and the political dynamics among the provider community also was vital. Finally, she needed to gain an overview of key industry trends. After four months of diligent study, networking, and thoughtful analysis, Rachel presented her environmental assessment to Lindsey. Her assessment included the following highlights. FRESNO MARKET BACKGROUND With a total population of 1.6 million people, the greater Fresno area had seen strong growth over the past decade - up 22 percent compared to 14 percent statewide. It was one of the poorest communities in California; the incomes of nearly half of the Fresno area population were below 200 percent of the federal poverty level. Educational attainment was also well below the state average; only 22 percent of adults held a college degree. Approximately 50 percent of the market population were Latino, 37.5 percent were white (non Latino), and 20 percent were foreign born. The health status of local/regional resident was generally not good; approximately 20 percent self-repotted fair or poos health watus. and more daan 27 pereent were living with arthma, diabetes, or both. The unemployment rate in the area was high and continuing to rise 15.5 percent of the population was out of wotk (up 5 percent over the previous year and 5 percent higher than the statewide aver. age). Although agriculture was a vital part of the local and regional economies, the largeat enployers in the market were publie-sector organizations, including Fremo County, the Giry of Fresno, and the Fresno school district. Two major healtheare systems_CMC and Suint Agnes Medical Center-were among the area's largest private employers (California HealthCare Foundation 2009). HOSPITAL/HEALTH SYSTEM PROVIDERS Mast of the hospitals in the region were not-for-profit or government/district hospitals. The freno community had an acute care bed capacity of 173 per 100,000 (slightly less than the sarewide average of 182 ) and an occupancy rate of 68 percent (grater than the statewide average of 59 percent). The major hospitals ran near capaciry at certain rimes of the year. The major hospital systems in Fresno County were CMC ( 800 beds across three hospitals), Saint Agnes Medical Center (more than 400 beds), and Kaiser Permanente Fresno Medical Center (165 beds). These hospital systems represented roughly 50,30 , and 10 percent of the hospital market, respectively. CMC and Saint Agnes served a large grographic area and enjoyed a referral base from several outlying counties. Historically, the retationship between CMC and Saint Agnes had been characterized by little collaboration and intense, long-standing competition bordering on animosity. While Saint Agnes was beared in the more affluent part of north Fresno and was often described as the "cash cow" of is 40 -hospital parent corporation, CMC' 500 -bed flagship facility was located in the heart of Fresno and, with its nine outpatient clinics, served as Fresno Councy's primary sfery net provider.' Financial losses at CMC's flagship facility were largely offset by highly profitable operations at its two sister hospitals located in more affluent communities to the norch and northeast. In recent years, CMC had reversed its negative financial performance and had become modestly profitable. Reports from the Office of Statewide Health Planning and Development indicated an increasingly unfavorable payer mix across all Fresno area hospicals - an indication of the communiry's high levels of poverty, lack of insurance, and Medi-Cal (similar to Medicaid) coverage. The Saint Agnes payer base was approximately 25 percent Medi-Cal. CMC-with its more than 30 -year contract with Fresno County to provide indigent care-reported that nearly 40 percent of its patients were covered by Medi-Cal. Major iaitiatives at CMC included the recent opening of 160 new beds at its flagship hospital, induding 56 neonatal intensive care beds. After opening a new patient tower, Saint Agnes added 36 neurosurgery and critical care beds. In some cases, new hospital construction wa aresponse to both capacity issues and compliance with state seismic standards. Both CMC and Saint Agnes also added new programs to stem the exodus of parients to out-of providers of services not previously offered within the community. Survey respondenrs' characterizations of the quality of care at Fresno area hosphal, ranged from poor to good. Many opted to leave the area when they got "really sick"; sudy showed that patients soughtrnearly $500 milion in medical care services outside onse greater Fresno area annually for a varicty of rasons, anotably long waility of care provided by area hospitals, In reectit years, area hospiats aligned thernselves with academic teaching programs to suppore cliniyears, area hospials aligned chemselves with acading of care, enhance their reputations, and recruit more physicians to the market. Notable associations included CMC s formal affi) ation with the University of California, San Francisco, and Saint Agnes's affiliation with Stanford University for cardiology and neurosciences. Although Saint Agnes was widely regarded as the premier hospital in the matker, highly publicized recent outbreaks of methicillin-resistant staphylococcus aureus (MRSA) infections and Legionnaires' disease had raised questions about its patient carc and quality. PHYSICIAN AND ALLIED HEALTH COMMUNITY The greater Fresno area suffered from a notable shortage of primary care and specialist physicians, with 45 primary care physicians per 100,000 residents versus 59 statewide and 118 physicians overall per 100,000 residents versus 174 statewide. An aging physician workforce led market observers to expect shortages to worsen. Nurses and other allied health personnel were also in short supply, causing the federal government to classify most of the market as a health professional shortage area. Primary and specialty physician shortages invariably resulted in long appointment wait times - a key reason many insured patients sought medical care outside the local market. Wait times for dermatologic appointments, for example, were reportedly 9 to 12 months. Other specialists in short supply induded neurosurgeons, general surgeons, cardiologists, gastroenterologists, oncologists, otolaryngologists, ophthalmologists, and psychiatrists. Recruiting new physicians to the Fresno area was challenging because of various factors, including poor payer mix, poor reimbursement, ongoing hospital call coverage obligations, and quality-of-life considerations. Although many physicians already established in the market were overworked, they were apprehensive about losing market share and thus had little interest in recruiting. Many respondents reported that the physician shortage would have been even more acute if it were not for the many foreign-born physicians practicing in the Fresno area, notably natives of India and Pakistan. Many of these physicians were attracted by the area's sizable ethnic communities and focused their practices on patients from their own ethnic background. For various reasons, Fresno had few large physician practices. Most physicians opted to practice solo or in small groups of fewer than five physicians, and single-specialty 12ther than multispecialty groups were the dominant practice type. Although many com. muniry physicians maintained admitting and practice privileges at multiple hospitals, they generally concentrated their practice at one hospital. For years, emergency call coverage bad been a source of friction between area hospitals and physicians due to the expensive sipends hospials in many markets in California to provide call coverage. Unlike in many markets in California and clsewhere, formal integration between poysicians and hospitals was limited. Relationships generally were marked by strain and distrust. In recent years, CMC 's relationships with its primary physician groups had improved, whereas Saint Agnes's hospital-physician relationships had deteriorated. Hos. pitals efforts to attract and align area physicians were focused on joint ventures, many of which atilcd. Area physicians' lack of loyalty to area hospitals was evidenced by the extensive movement of various services-including imaging, orthopedics, plastic surgery, and endoscopy-out of hospitals and into physician offices or physician-owned facilities. Many repors suggested that physicians' ongoing dissatisfaction with area hospitals was the basis of this activity. PAYER/INSURANCE COMMUNITY In contrast to other California markets, the greater Fresno area only modestly embraced managed care. Even at their peak in the mid-1990s, health maintenance organizations (HMOs) and their variants never achieved dominance in the Fresno area, and their pres. ence shrank from roughly 30 percent in 2000 to 25 percent today. According to one sport, the absence of a strong HMO/ managed care presence meant that health system features common to other communities - formation of large multispecialty physician groups, dose hospital-physician alignment, provider familiarity with performance measurement and reporting, and aggressive care and utilization management - were not pervasive in the Fesno market. Only 46 percent of area residents (compared to 59 percent statewide) had private madical insurance, and 16 percent were uninsured. Medi-Cal enrollment was high in the Fresno area, at approximately 30 percent. Fresno's safety net was generally considered weak, fragmented, and inadequate for the needs of the population. Indeed, healthcare w2s considered a low priority for many of the area's county governments. Blue Shield of California and Anthem Blue Cross were the leading health insurers in the greater Fresno market. As in other regional markets, these health plans were under high pressure to moderare premiums. Many believed that doing so would be extremely challenging in the face of escalating hospital costs. Because some hospitals - notably Saint Agnes and CMC's Clowis Community Medical Center-were considered "must haves" by employer purchasets, these hospitals had strong negotiating leverage with area health plans. The Future of HeALtHCARE: Key INDUstry Trends Rachel recognized that healthcare is a dynamic and ever-changing industry whose future is difficult to predict. Her assessment summarized the key trends that would likely define healthcare's immediate future. THE ECONOMY Although the economy was slowly improving, it was expected to remain fragile due to continued high unemployment in the United States and Europe. The national economy was expected to impact both demand and supply dimensions of the healthcare industry (Valentine and Masters 2012). HEALTHCARE REFORM Various elements of the Affordable Care Act were implemented on schedule, including ventures into bundled payment, accountable care organizations (ACO5), and value-based purchasing activities. State health insurance exchanges loomed around the corner; many were in active development. This trend - with its focus on benefits and network development-needed to be monitored (Valentine and Masters 2012). HOSPITAL-PHYSICIAN ALIGNMENT Physician employment was expected to remain the preferred approach to hospitalphysician alignment. Some physician/medical groups would still favor independence, and most hospitals/health systems would need to balance a dual approach to meeting the needs of both independent and employed physicians. The need to clinically integrate employed and independent physicians would remain critical if hospitals/health systems expected to respond effectively to healthcare reform (Valentine and Masters 2012). REVENUES AND EXPENSES Per unit revenues (c.g., average net revenue per procedure or per patient day) were expected to increase at a rate slower than cost trends over the next 12 to 24 months. Medicare payments would increase by less than 2 percent, and most states were expected to hold the line on Medicaid payments (or even reduce reimbursement rates). Commercial payers would likely limit rate increases to 4 to 6 percent. Some payers, including Medicare, were expected to tie certain rate increases to documented quality improvements. Value-based purchasing bundled payments, readmission rate reductions, ACOs, and other risk-based arrangements would present opportunities for greater financial reward for low-cost, high-quality providers. Reducing costs would remain a top priority in the coming fiscal years. Simultaneously, it was expected that patient throughput and occupancy levels would need to increise in boch acute care/hospital based and outpatient settings to maximize economies of scale (i.e., reduction of per unit cost resulting from high volume) and use of resources (Valentine and Masters 2012). ACCESS TO CAPITAL Access to capital (funds) would continue to be a key catalys for mergers, sales, affiliations. and other alliances among hospitals. Capital was expected to be more difficule to obrain in the immediate future due to the weak cconomy, lower patient volumes, and deteriorating payer mix. Most independent hospital boards would continue to ask whether they could remain independent and, if so, whether they should (Valentine and Masters 2012). INFORMATION TECHNOLOGY Useful dara that could inform clinical and financial decisions in real time would become key to increasing revenues and managing expenses more effectively. Information technology systems and strategies would need to be sufficiently robust to capture large volumes of data that could be readily integrated into decision making (clinical and financial) and marketing efforts (Valentine and Masters 2012). Consolidations, Closures, AlLIANCES, and Mergers The healthcare reform agenda was expected to continue, with 5 percent of acute care hospitals closing by 2020 . Further consolidation and alignment of hospitals and medical groups was expected as these entities joined together to improve access to capital, form ACOs, and achieve cost reductions through economies of scale (Valentine and Masters 2012). CLINICAL INtEGRATION and Care Delivery Redesign Processes associated with clinical integration and care delivery redesign were within the "golden triangle" of cost containment, quality improvement, and financial performance. Future success factors for clinical integration and care delivery redesign included attention to all points of the care continuum: coordination of primary care, acute care, and postacute care (Valentine and Masters 2012). WORKFORCE ISSUES Pressure to reduce operating costs from 10 to 20 percent over the next three to five years was expected to continue. The enormity of this reduction would mandate further reducing nonclinical staffing, outsourcing functions to less costly vendors, and reducing wages or 1. According to Rachel's environmental assessment, what were CMC's most important strengths, weaknesses, opportunities, and threats? 2. Identify and describe CMC's most important strategic issues. 3. In what ways should CMC's strategic issues have driven the development of a strategic marketing plan? 4. What are the foremost issues Rachel and Lindsey should have considered as they positioned CMC and promoted its services to area physicians, patients, payers, and the general public? 5. After completing the environmental assessment-including the SWOT analysis and summary of strategic issues - Lindsey and Rachel needed to develop business and marketing plans to advance the organization's strategic initiatives. In your judgment, what are the elements or characteristics of a valid marketing plan? INTRODUCTION Twenty-three-year-old Rachel MeKee complered her undergraduate degree in healthaics administration with an emphasis in planning and marketing. To her delight, she sos offered the position of assistant director of strategic planning and marketing califomia. Rachel wity Medical Centers (CMC), a large healtheare and eager to make an early impact. She was pleased that her new boss and mentor, Lindscy Chadwick-a seasoned healthcare veteran-seemed confident in Rachel's ability to process complex information and assume increasingly important responsibilitic, Lindsey understood the intricacies of CMC and the local healthcare market. Het. supervisor and members of the board had put her in charge of updating the organication's strategic marketing plan in response to important, ongoing changes in the local and regional markets. Lindsey assigned Rachel the important task of performing an environ. mental assessment and using the results to complete a strengths, weaknesses, opportunf. ties, and threats (SWOT) analysis and draft a summary of the organization's core strategic initiatives. From these important documents, Lindsey and Rachel would update CMC1 strategic marketing plan. From the outset, Lindsey advised Rachel to gather and assess relevant market information from various sources, including noted health industry publications; organization, statewide, and other publidy available databases; and interviews with executives, physician groups, insurance companies, regulators, and others. Like an investigative reporter, Rachel was directed to probe and dig for important and useful information that would ultimately provide a framework and justification for the organization's marketing plan. From her coursework in college, Rachel remembered that a marketing plan must include timely and accurate information about a marke's hcalthcare providers-notably hospitals and local physicians. She knew that a summary of key market demographics, including patient, employer, and insurance company profiles, was essential. A broad yet detailed understanding of the public at large and the political dynamics among the provider community also was vital. Finally, she needed to gain an overview of key industry trends. After four months of diligent study, networking, and thoughtful analysis, Rachel presented her environmental assessment to Lindsey. Her assessment included the following highlights. FRESNO MARKET BACKGROUND With a total population of 1.6 million people, the greater Fresno area had seen strong growth over the past decade - up 22 percent compared to 14 percent statewide. It was one of the poorest communities in California; the incomes of nearly half of the Fresno area population were below 200 percent of the federal poverty level. Educational attainment was also well below the state average; only 22 percent of adults held a college degree. Approximately 50 percent of the market population were Latino, 37.5 percent were white (non Latino), and 20 percent were foreign born. The health status of local/regional resident was generally not good; approximately 20 percent self-repotted fair or poos health watus. and more daan 27 pereent were living with arthma, diabetes, or both. The unemployment rate in the area was high and continuing to rise 15.5 percent of the population was out of wotk (up 5 percent over the previous year and 5 percent higher than the statewide aver. age). Although agriculture was a vital part of the local and regional economies, the largeat enployers in the market were publie-sector organizations, including Fremo County, the Giry of Fresno, and the Fresno school district. Two major healtheare systems_CMC and Suint Agnes Medical Center-were among the area's largest private employers (California HealthCare Foundation 2009). HOSPITAL/HEALTH SYSTEM PROVIDERS Mast of the hospitals in the region were not-for-profit or government/district hospitals. The freno community had an acute care bed capacity of 173 per 100,000 (slightly less than the sarewide average of 182 ) and an occupancy rate of 68 percent (grater than the statewide average of 59 percent). The major hospitals ran near capaciry at certain rimes of the year. The major hospital systems in Fresno County were CMC ( 800 beds across three hospitals), Saint Agnes Medical Center (more than 400 beds), and Kaiser Permanente Fresno Medical Center (165 beds). These hospital systems represented roughly 50,30 , and 10 percent of the hospital market, respectively. CMC and Saint Agnes served a large grographic area and enjoyed a referral base from several outlying counties. Historically, the retationship between CMC and Saint Agnes had been characterized by little collaboration and intense, long-standing competition bordering on animosity. While Saint Agnes was beared in the more affluent part of north Fresno and was often described as the "cash cow" of is 40 -hospital parent corporation, CMC' 500 -bed flagship facility was located in the heart of Fresno and, with its nine outpatient clinics, served as Fresno Councy's primary sfery net provider.' Financial losses at CMC's flagship facility were largely offset by highly profitable operations at its two sister hospitals located in more affluent communities to the norch and northeast. In recent years, CMC had reversed its negative financial performance and had become modestly profitable. Reports from the Office of Statewide Health Planning and Development indicated an increasingly unfavorable payer mix across all Fresno area hospicals - an indication of the communiry's high levels of poverty, lack of insurance, and Medi-Cal (similar to Medicaid) coverage. The Saint Agnes payer base was approximately 25 percent Medi-Cal. CMC-with its more than 30 -year contract with Fresno County to provide indigent care-reported that nearly 40 percent of its patients were covered by Medi-Cal. Major iaitiatives at CMC included the recent opening of 160 new beds at its flagship hospital, induding 56 neonatal intensive care beds. After opening a new patient tower, Saint Agnes added 36 neurosurgery and critical care beds. In some cases, new hospital construction wa aresponse to both capacity issues and compliance with state seismic standards. Both CMC and Saint Agnes also added new programs to stem the exodus of parients to out-of providers of services not previously offered within the community. Survey respondenrs' characterizations of the quality of care at Fresno area hosphal, ranged from poor to good. Many opted to leave the area when they got "really sick"; sudy showed that patients soughtrnearly $500 milion in medical care services outside onse greater Fresno area annually for a varicty of rasons, anotably long waility of care provided by area hospitals, In reectit years, area hospiats aligned thernselves with academic teaching programs to suppore cliniyears, area hospials aligned chemselves with acading of care, enhance their reputations, and recruit more physicians to the market. Notable associations included CMC s formal affi) ation with the University of California, San Francisco, and Saint Agnes's affiliation with Stanford University for cardiology and neurosciences. Although Saint Agnes was widely regarded as the premier hospital in the matker, highly publicized recent outbreaks of methicillin-resistant staphylococcus aureus (MRSA) infections and Legionnaires' disease had raised questions about its patient carc and quality. PHYSICIAN AND ALLIED HEALTH COMMUNITY The greater Fresno area suffered from a notable shortage of primary care and specialist physicians, with 45 primary care physicians per 100,000 residents versus 59 statewide and 118 physicians overall per 100,000 residents versus 174 statewide. An aging physician workforce led market observers to expect shortages to worsen. Nurses and other allied health personnel were also in short supply, causing the federal government to classify most of the market as a health professional shortage area. Primary and specialty physician shortages invariably resulted in long appointment wait times - a key reason many insured patients sought medical care outside the local market. Wait times for dermatologic appointments, for example, were reportedly 9 to 12 months. Other specialists in short supply induded neurosurgeons, general surgeons, cardiologists, gastroenterologists, oncologists, otolaryngologists, ophthalmologists, and psychiatrists. Recruiting new physicians to the Fresno area was challenging because of various factors, including poor payer mix, poor reimbursement, ongoing hospital call coverage obligations, and quality-of-life considerations. Although many physicians already established in the market were overworked, they were apprehensive about losing market share and thus had little interest in recruiting. Many respondents reported that the physician shortage would have been even more acute if it were not for the many foreign-born physicians practicing in the Fresno area, notably natives of India and Pakistan. Many of these physicians were attracted by the area's sizable ethnic communities and focused their practices on patients from their own ethnic background. For various reasons, Fresno had few large physician practices. Most physicians opted to practice solo or in small groups of fewer than five physicians, and single-specialty 12ther than multispecialty groups were the dominant practice type. Although many com. muniry physicians maintained admitting and practice privileges at multiple hospitals, they generally concentrated their practice at one hospital. For years, emergency call coverage bad been a source of friction between area hospitals and physicians due to the expensive sipends hospials in many markets in California to provide call coverage. Unlike in many markets in California and clsewhere, formal integration between poysicians and hospitals was limited. Relationships generally were marked by strain and distrust. In recent years, CMC 's relationships with its primary physician groups had improved, whereas Saint Agnes's hospital-physician relationships had deteriorated. Hos. pitals efforts to attract and align area physicians were focused on joint ventures, many of which atilcd. Area physicians' lack of loyalty to area hospitals was evidenced by the extensive movement of various services-including imaging, orthopedics, plastic surgery, and endoscopy-out of hospitals and into physician offices or physician-owned facilities. Many repors suggested that physicians' ongoing dissatisfaction with area hospitals was the basis of this activity. PAYER/INSURANCE COMMUNITY In contrast to other California markets, the greater Fresno area only modestly embraced managed care. Even at their peak in the mid-1990s, health maintenance organizations (HMOs) and their variants never achieved dominance in the Fresno area, and their pres. ence shrank from roughly 30 percent in 2000 to 25 percent today. According to one sport, the absence of a strong HMO/ managed care presence meant that health system features common to other communities - formation of large multispecialty physician groups, dose hospital-physician alignment, provider familiarity with performance measurement and reporting, and aggressive care and utilization management - were not pervasive in the Fesno market. Only 46 percent of area residents (compared to 59 percent statewide) had private madical insurance, and 16 percent were uninsured. Medi-Cal enrollment was high in the Fresno area, at approximately 30 percent. Fresno's safety net was generally considered weak, fragmented, and inadequate for the needs of the population. Indeed, healthcare w2s considered a low priority for many of the area's county governments. Blue Shield of California and Anthem Blue Cross were the leading health insurers in the greater Fresno market. As in other regional markets, these health plans were under high pressure to moderare premiums. Many believed that doing so would be extremely challenging in the face of escalating hospital costs. Because some hospitals - notably Saint Agnes and CMC's Clowis Community Medical Center-were considered "must haves" by employer purchasets, these hospitals had strong negotiating leverage with area health plans. The Future of HeALtHCARE: Key INDUstry Trends Rachel recognized that healthcare is a dynamic and ever-changing industry whose future is difficult to predict. Her assessment summarized the key trends that would likely define healthcare's immediate future. THE ECONOMY Although the economy was slowly improving, it was expected to remain fragile due to continued high unemployment in the United States and Europe. The national economy was expected to impact both demand and supply dimensions of the healthcare industry (Valentine and Masters 2012). HEALTHCARE REFORM Various elements of the Affordable Care Act were implemented on schedule, including ventures into bundled payment, accountable care organizations (ACO5), and value-based purchasing activities. State health insurance exchanges loomed around the corner; many were in active development. This trend - with its focus on benefits and network development-needed to be monitored (Valentine and Masters 2012). HOSPITAL-PHYSICIAN ALIGNMENT Physician employment was expected to remain the preferred approach to hospitalphysician alignment. Some physician/medical groups would still favor independence, and most hospitals/health systems would need to balance a dual approach to meeting the needs of both independent and employed physicians. The need to clinically integrate employed and independent physicians would remain critical if hospitals/health systems expected to respond effectively to healthcare reform (Valentine and Masters 2012). REVENUES AND EXPENSES Per unit revenues (c.g., average net revenue per procedure or per patient day) were expected to increase at a rate slower than cost trends over the next 12 to 24 months. Medicare payments would increase by less than 2 percent, and most states were expected to hold the line on Medicaid payments (or even reduce reimbursement rates). Commercial payers would likely limit rate increases to 4 to 6 percent. Some payers, including Medicare, were expected to tie certain rate increases to documented quality improvements. Value-based purchasing bundled payments, readmission rate reductions, ACOs, and other risk-based arrangements would present opportunities for greater financial reward for low-cost, high-quality providers. Reducing costs would remain a top priority in the coming fiscal years. Simultaneously, it was expected that patient throughput and occupancy levels would need to increise in boch acute care/hospital based and outpatient settings to maximize economies of scale (i.e., reduction of per unit cost resulting from high volume) and use of resources (Valentine and Masters 2012). ACCESS TO CAPITAL Access to capital (funds) would continue to be a key catalys for mergers, sales, affiliations. and other alliances among hospitals. Capital was expected to be more difficule to obrain in the immediate future due to the weak cconomy, lower patient volumes, and deteriorating payer mix. Most independent hospital boards would continue to ask whether they could remain independent and, if so, whether they should (Valentine and Masters 2012). INFORMATION TECHNOLOGY Useful dara that could inform clinical and financial decisions in real time would become key to increasing revenues and managing expenses more effectively. Information technology systems and strategies would need to be sufficiently robust to capture large volumes of data that could be readily integrated into decision making (clinical and financial) and marketing efforts (Valentine and Masters 2012). Consolidations, Closures, AlLIANCES, and Mergers The healthcare reform agenda was expected to continue, with 5 percent of acute care hospitals closing by 2020 . Further consolidation and alignment of hospitals and medical groups was expected as these entities joined together to improve access to capital, form ACOs, and achieve cost reductions through economies of scale (Valentine and Masters 2012). CLINICAL INtEGRATION and Care Delivery Redesign Processes associated with clinical integration and care delivery redesign were within the "golden triangle" of cost containment, quality improvement, and financial performance. Future success factors for clinical integration and care delivery redesign included attention to all points of the care continuum: coordination of primary care, acute care, and postacute care (Valentine and Masters 2012). WORKFORCE ISSUES Pressure to reduce operating costs from 10 to 20 percent over the next three to five years was expected to continue. The enormity of this reduction would mandate further reducing nonclinical staffing, outsourcing functions to less costly vendors, and reducing wages or 1. According to Rachel's environmental assessment, what were CMC's most important strengths, weaknesses, opportunities, and threats? 2. Identify and describe CMC's most important strategic issues. 3. In what ways should CMC's strategic issues have driven the development of a strategic marketing plan? 4. What are the foremost issues Rachel and Lindsey should have considered as they positioned CMC and promoted its services to area physicians, patients, payers, and the general public? 5. After completing the environmental assessment-including the SWOT analysis and summary of strategic issues - Lindsey and Rachel needed to develop business and marketing plans to advance the organization's strategic initiatives. In your judgment, what are the elements or characteristics of a valid marketing plan