Assessment of Strategic MGT Hosp Hejase Et Al

04/2001; In proceeding of: the 9th Arab-International Health & Hospitalization Congress, Beirut, Lebanon
Assessment of Strategic Management Practice in Private Non-Profit Hospitals in

Greater Beirut
Hussin J. Hejase1, Dima A. Baltagi 1, and Kassem Kassak2

1
Faculty of Business School, Beirut Campus. Lebanese American University
hhejase@aust.edu.lb
2
Faculty of Health Sciences, American University of Beirut.
Abstract
Lebanons infrastructure has been modified tremendously in the last eight years. Millions of dollars
have been budgeted to bring all productive sectors to the operational level acceptable under the
influence of the uncertainties presented by the external environment. The health sector has been
a demanding industry that has upgraded itself many folds. Lifting itself from a development-lag
caused by eighteen years of war impacting technology as well as the management system used
to cope with the chaotic situation prevailing. The health sector represented mainly by the
hospitals has gone through an extensive exercise of evaluating strategies and plans so that to
survive the hidden agenda that competition was preparing. The central issue, then, was to
review existing strategies and trying to rework the whole strategic intent that top management
had hold to in the past years.
This paper will shed light and assess the practice of strategic management in a selection of private
non-profit hospitals in Greater Beirut. The purpose is to find out how top management thought
their way out to cope with new demands and challenges of the new external environment where
competition to survival has new rules and different ingredients to capture the consumer base.
This paper will be based on one-to-one structured interviews with top management for data collection.
The interviews were directive, in-depth, structured and include both types of questions, open-
ended as well as fixed-alternative ones. The sample selected was a convenient sample after
facing difficulties with randomly selected hospital top management refusing the interview.
Keywords: Lebanon, Non-Profit Hospitals, Private Hospitals, Strategic Management
Introduction
There are two important reasons why strategic management is important to hospitals. First, the health
care industry worldwide, especially the hospitals- is passing through an era of restructuring. This
restructuring phase relies heavily on a high degree of commitment to anticipate all changes happening
in the environment, thus, on practicing strategic management. Second, the belief that the process and
practice of strategic management being an excellent for the big business corporations is no more
restricted to this type of organizations as hospitals are implementing it more and more worldwide in
order to survive in the increasingly competitive environment.
Definition of Strategic Planning and Strategic Management
Strategic management can be defined as a continuous, iterative process aimed at keeping an

organization as a whole appropriately matched to its environment (Certo & Peter, 1988, p. 5). It is a
process of making explicit the goals of the enterprise, the environment in which it operates, the
strategies, and finally the feedback loops that tell the firm whether each of these steps has been
identified correctly (Gardner & Rachlin, 1986, p. 2). Furthermore, it is a stream of decisions and
04/2001; In proceeding of: the 9th Arab-International Health & Hospitalization Congress 2
actions that leads to the development of an effective strategy or strategies to help achieve corporate
objectives (Jauch & Gluek, 1988, p. 5). Moreover, the strategic management is the way in which
strategists determine objectives and make strategic decisions with regard to:
a. Determine the organizations mission.

b. Establishing long and short-range objectives to achieve the organizations mission.
c. Determining the strategy that is to be used in achieving the organizations objectives.
d. Formulating policies to guide the organization in establishing, choosing a strategy, and
implementing the chosen strategy (Byars, 1984, p.7).
Benefits of Strategic Planning
Organizations can reap several benefits from appropriately practicing strategic management. At first,
strategic management provides better guidance to the entire organization on the crucial point of what
it is we are trying to do and achieve? (Thompson & Strickland III, 1992, p. 17). The second benefit is
seen financially as an effective strategic management system increases profitability (Certo & Peter,
1988, p. 7) since it provides managers with a rationale to evaluate competing budget request for
investing capital and new staff (Thompson & Strickland III, 1992, p. 17). In addition, we need not to
forget, that strategic management systems provide consistency of actions, and clear objectives and
direction for employees; therefore, boosting their commitment for the sake of the sacred objective of
achieving corporate synergy.
Strategic managements emphasis on assessing the organizations environment allows firms to

anticipate changing conditions, and therefore makes it less likely to be surprised by movements within
the market place, or by actions of competitors that could put the organization at a sudden
disadvantage. It also gets managers into the habit of thinking in terms of the future as they launch
strategic offensives to secure sustainable competitive advantage and then use their market edge to
achieve superior financial performance; therefore, aggressive pursuit of a creative, opportunistic
strategy can propel a firm into a leadership position, paving the way for its products/services to
become the industry standard. Moreover, the business entities that perform strategic management are
more effective, and therefore have a higher probability of success than those who do not. This is due
to the following reasons:
1. Strategic management is one way to systemize the most important of business decisions.
Business involves great risk taking, and strategic management attempts to provide data so that
reasonable and informed gambles can be made when necessary.
2. Strategic management helps educate managers to become better decision-makers. It helps
managers examine the basic problems of a company.
3. Strategic management helps improve corporate communication, the coordination of
individual projects, the allocation of resources, and short-term planning such as budgeting
(Jauch & Gluek, 1988, p.19).
Finally, while strategic management will never be a cure-all, especially for incompetent management,
it can go a long way toward improving an organizations long-term performance. However, there are
situations where the benefits are not guaranteed. There are two compelling reasons for holding off on
a strategic planning effort. At first, strategic planning may not be the best choice to make if the
organization has its roof falling. At second, strategic planning should not be implemented and is
considered a waste of time if the leaders lack the appropriate skills, resources, and commitment to go
through the whole process of strategic planning (Bryson, 1988, p. 12).
Strategic Management of Private Non-Profit Hospitals

Having to survive in a turbulent and rapidly changing environment, the hospital like any other
institution has to refer to strategic management to protect its future by planning for it.
As far as its evolution in the hospital industry, twenty years ago there was practically no literature
existing as far as this topic; nor were there any conceptual or empirical research publications in the
area of non-profit organizations as a whole. However, with the rapidly changing environment of the
1980s as market and competitive forces grew aggressively, hospitals executives began to refine and
respond to the new challenges. As the future became less predictable, it was urgent for the
organizations to increase their flexibility to adapt to the new changes, and leaders began to focus more
on providing vision and direction for the organization. In the 90s, the strategic planning in the hospital
focuses even more on general goals and the organization is more flexible so that to be able to respond
quickly to the environmental changes (Ross, 1992, pp. 92-3). Today, there is an increasing literature
applicable to the non-profit sector and specifically to the hospitals (Grant, 1988, pp. 418-23).
Hospitals as Systems
A hospital is an important organization that can be considered as part of the safety net providing
human beings with good life. It typically employs many different professions and responds to
patients needs from conception through life till death. There is scarcely a family whose members or
friends will not enter a hospital as either patients or visitors in the course of one year. Like any other
organization, the hospital is characterized by certain traits and-or features. They can be summarized
by a recognizable method of assigning tasks and responsibilities and an established network for
communication.
Most individuals think they know what a hospital is until they try to define it. Yet one could hardly
manage a hospital if it is not defined by what it is and what it does.
According to Bullas (1994), hospitals are complex organizations which have a range of roles. They
are responsible for treating acute illness and trauma, treating and supporting those with chronic
illnesses, promoting healthy lifestyles, training health professionals and playing an active role in the
cultural life of the local community (Bullas, 1994, p. 12).
During the 1960s, it became increasingly apparent that the hospital like any other man-made
organization, had external relationships. Now, with the increased concern for the patient, consumer,
client, attention is being directed outside the organization toward these external relationships. The
1990s are considered the era of the consumer; thus, management strategies should focus on the
patients needs and their health care expectations. Therefore, it is important to conceive the hospital as
an open system. That is, the hospital exists in a constantly changing relationship with its environment.
A hospital is an institution surrounded by a specific environment and has essential parts that are
interrelated and interdependent (Liebler et. al., 1992, p. 10), designed to achieve a set of goals. The
general system theory may be simplified if one views it as the phenomena of tossing a stone into a
pool of water, many wave circles emerge out of the shock (Schulz & Alton, 1983, p. 50). The hospital
is the point of impact, and the waves are but the inputs, outputs and the external influence and
constraints. Basically, a system converts inputs into outputs. In the hospital, the patient is the main
input and the doctors, nurses, equipment, supplies all together represent the total inputs. These
inputs are transformed into outputs as patients with modified needs, improved physician skills This
system is subjected to the influence and constraints of the government, community, and third party
payers.
In a changing environment, an open system either changes with its environment or perishes. Thus, to
survive, the system will have to adapt by means of the processes of learning and innovation.
What is Strategic Planning and Strategic Management to Hospitals?
Health care executives find the strategic planning process a continuous, complicated and complex
process. It requires enormous amount of time, a constant review if it is to stay up-to-date and useful.
However, it is absolutely essential for the hospital survival so that to be able to enter the twenty-first
century and be a leader (Ross, 1992, p. 92).
No matter how complicated a strategic planning process can be for hospitals, certain characteristics
apply to all strategic planning processes that are applied in hospitals as well as in business; and it is
these characteristics that can make the planning process as easy as possible if they are well
understood. These are:
1. An ongoing process: Strategic planning is a continuous process of analysis, decision making

and revision.
2. Future oriented: It deals with planning the future; thus, it should not plan and consider the
day-to-day activities.
3. Structured: The process is formalized and systematic so that to focus and end up with
productive outcomes.
4. Part of hospital philosophy: Strategic planning has to be treated as an integral part of the
hospital to succeed.
5. Participate: The process is more important than the plan itself. Only by including physicians
and others in the process that a sense of commitment can be generated leading to the success
of the process (Pratt, 1991, p. 17).
Strategic planning creates a vision of the hospitals future, and uses this vision to set a strategic
direction that defines values and directs actions. Strategic direction is materialized by setting goals
and objectives that create competitive advantage. The time span for strategic direction is from five to
ten years depending on the resources of the hospital. Only after having set the strategic direction that
one moves to the next step which is the strategic management.
Strategic direction is translated into actions by encouraging managerial commitment and enthusiasm
and developing capabilities and resources that are flexible and responsive to environmental changes.
Strategic direction, then, provides a sense of continuity and flexibility achieving therefore consistency.
It guides rather than dictates behavior so that the hospital leaders use their judgement while
responding to environmental changes (Wolper & Pena, 1987, pp. 168-70, 174-75).
Information and Tools Needed
Strategic planning requires large amounts of information derived from and relating to areas of
knowledge outside the corporation. Most of the more relevant data needed to relate to the future are
difficult to get with accuracy, and are tailored to each problem (Steiner, 1969, p. 38).
Tools for information generation abound. They range from simple non-quantitative techniques such as
observation, experience, creativity, and intuition to the most sophisticated and complex use of
information technology. Their usefulness is directly proportional to their relevance. A major
consideration to be taken into account is that this information should not only be tailored to problems
and situations but also to the capabilities of the participants to understand and use it.
Hospitals generate a tremendous amount of data that is mostly descriptive. Three major sources are
identified: the business office, the medical record department, and various other departments and units
on the operational level. Data generated is sent to the computer center for treatment and generation of
adequate reports.
There are five information categories needed for strategic planning in a hospital. These are shown in
Figure 1:
Figure 1. Hospital Information
AREAS SERVED
OTHER
MEDICAL HEALTH
STAFF CARE UNITS
PATIENTS
Other types of information can always develop depending on the maturity of the hospital and the
strategies adopted for future scenarios.
Information Technology
A major valuable tool that enables the strategic management process is information technology. The
development of: timely, accurate, systematic, consistent and useful information systems is a must in
order to support scanning and recording of the external environment dynamic forces. Such systems
are also helpful for comparative analysis of organizational performance; interdependently internally as
well as benchmarking external organizations. Information, then, is recorded constantly related to
monitoring the environment, assessing competitors capabilities and movements, performing market
research, and conducting self-assessment exercises. Moreover, the use of planning software packages
is of good help for alternatives evaluation and risk weighing.
Information technology, in general, and planning software, in particular, help the Chief Executive
Officers (CEOs) or their equivalents to concentrate on their major concerns as cost control, physician
relations, quality improvement and the growing managed care environment (Hard, 1992, p. 42). In
addition, the computerized hospital management system is there to provide a dependable database, a
consistent coordination tool that is capable of providing coherency to the planning activities to
achieve rapid accessibility, thorough analysis, and effective display for the sake of achievable
organizational synergy.
Other Supporting Tools: Scenario Building and Matrix Analysis
Scenario Building:
Turbulent environments abound today and may increase the threatening nature of the external general
and task forces. Hospitals as well as any other institution need to generate adequate alternative
strategies in order to absorb or act on the identified threats. One tool that has proven its effectiveness
is scenario building. According to Thompson (1997, p. 244), the value of scenario planning is in
increase awareness by exploring possibilities and asking and attempting to answer what if
questions It can also help decision making by providing managers with insight so that they can
react better when things happen or change.
Three central themes underpin effective scenario planning (Thompson 1997, p. 245).
1. It is important to clarify just what a business can and cannot change.
2. What seems trivial or a pipe-dream today could be crucial in the future.
3. Multiple scenarios need to be explored and held as real possibilities.
Scenarios can be obtained or developed in a variety of ways. Either through the use of existing
scenarios as those of the Institute of the Future in Menlo Park, California, or through the use of
consulting organizations, or through in house development of scenarios, using ones own staff,
insights, and facilities. It is advisable for novice planners to use the help of outsiders when the
scenarios are prepared for the first time (Zenter et. al., 1991, p. 220).
In summary, the use of scenarios offers the opportunity to explore in a disciplined and manageable
manner potential future trends and events. The hospital can thus, understand the risks and
opportunities it faces today so that to be taken into consideration when planning the future (Zentner
et. al., 1991, p. 221).
Matrix Analysis:
Matrix analysis is an individual or group activity that involves identifying the various market needs,
technologies, or product benefits and then using them to head the columns and rows in a two- or
three-dimensional matrix (Bovee et. al., 1993, p. 356).
A matrix analysis is a creative tool helpful in the planning process so as to identify and concentrate
the hospital efforts to search for innovative products and processes. Usually, the matrix will offer,
along the intersections that form each cell, one or more ideas for applying new concepts to existing or
other new markets.
A matrix analysis is also an important tool to measure a hospitals performance. It answers many
objectives such as assisting the Board in assessing the current situation by doing SWOT analysis,
establishing the baselines upon which performance is evaluated, and identifying priorities for
achieving the hospitals mission (Solovy et. al., 1991, pp. 8-9, 21).
The Planning Mindset
No organization can simply jump into strategic planning without first determining how it should get
the process functional. However, even if a framework is setup, it is imperative to have certain
attitudinal readiness by the planners. Usually the desire to wait until time is available is often an
excuse for avoiding strategic planning. To create a favorable climate, a hospital has to assess its
willingness and readiness for strategic planning. This task is done by the CEO, or by a team formed
from the CEO, the executive directors and a consultant. The CEO evaluates the readiness of the
governing Board to carry out the planning process at meetings through discussions and by
brainstorming questions like:
i. Has the hospital leadership determined what the hospital aspires towards its
customers?
ii. What services to offer and resources needed to provide them?
iii. Has the hospital studied the impact of the changing external forces on the hospitals
ability to meet the future needs?
iv. What technologies are to be adopted and for what reasons?
v. Is there a need to expand and in which directions?
Depending on the answers, the hospital leaders will know if they are familiar with this strategic
process and how ready are they to carry out the work and how much preparation is needed towards
these endeavors.
Planning Leadership
Hospitals need sophisticated planning efforts in order to match the planning of successful
organizations in industry. To do so, there is a need for a formal planning authority or committee.
Large hospitals usually have planning departments as well as directors of planning. Consequently
there should be planning staff and a planning budget as well. However, when the hospital is small in
size (< 100 beds), the CEO claims primary responsibility for virtually most administrative functions.
This may also occur in midsize hospitals (100<# of beds<299) (Anderson, 1990, p. 50).
Having an executive in charge of the continuous planning process, it becomes an urgent necessity to
communicate the strategic plan along all dimensions. Communicating the plan to all individuals
involved in the operation of the hospital creates strategic intent. Strategic intent is an innate cognitive
resolution to participate in the process of making things happen. An organization wide spirit is very
crucial for the success of the strategic process. It is an interpretation of the strategic vision along all
organizational levels.
Redefining strategic plans involves taking risks. If hospital leaders are not ready to take risks, then
they are not ready to go through the whole process. It is common knowledge that the changes
generated by the dynamism of the environment whether in terms of technology, demographics,
economy or government regulations embody great risks. Boards of non-profit hospitals should
attempt to both improve current operations and investigate opportunities and threats that by dealing
with them will add value to the organization. One also notices that the propensity to avoid risk is but
consistent with the traditions of the hospital Boards. The preservation of the institutional capital, the
Boards primary duty, requires an emphasis on low or no-risk investments. However, there is a need to
risk in order to preserve the institution; the Board has then to act as an entrepreneur not just as a
Trustee. In summary, there is a need to take risks in order to redefine the hospital strategic plan,
develop a propensity to risk when the need is clear, and perpetuate the institution (Draba, 1991, p. 12).
Finally, the chosen type, the sequencing and the time lines of the planning process have to be
determined. Sequencing involves making decisions about which parts of the planning process to
undertake and when. By establishing how to evaluate the planning process once implemented, the
hospital is ready to go through the journey of the strategic planning process (Ross, 1992, pp. 94-5).
Innovation, Culture, and Excellence
Excellent organizations are creative and innovative in the way they do things. Organizations adopt
creative ways from other organizations to solve problems beside their endeavor to develop and
produce truly new products and services. Unfortunately, innovativeness is not an easy skill to instill
within organizations. It is really based on what structures organizations use in order to establish rules
and regulations necessary to back up creativity in doing things rather than consistency only.
Established structures impact creativity for the simple fact that they determine how communication,
cooperation, and inter-group relations add value to the management of change and the ways
operations are conducted. The more static the organization is will result is a culture that places greater
value on conformity than innovation.
Health care is typically described as an innovative industry. Hardly any sector of the economy can
match the technological progress made in areas such as genetics, surgery, pharmaceuticals, and
materials engineering. Less visible but no less important are process or managerial innovations taking
place that have encouraged new ways of doing things and improved patient services (Duncan et. al.,
1995, p. 469).
When innovations occur, two things seem to be present an organizational culture that encourages
everyone to think and share ideas, plus a champion of change, a person who is determined to
overcome all odds, all bureaucratic barriers, and all nay-sayers to shepherd the new idea into reality
(Bovee et. al., 1993, p. 470).
Strategic planning can never be considered a mechanistic type of work if a hospital hopes to prepare
itself for a promising future. In order to move forward challenging the dynamic forces of the external
environment, leaders must be willing to apply some stretch to their plans and seek to be creative.
Creativity is a whole of three indispensable parts that are genuine to planning: the ability to change
ones approach to a problem, the ability to develop new and relevant ideas, and the ability to translate
these ideas into actions desired (Peters, 1979, p. 38).
Creativity, intuition, and innovation are but essential tools to organize and plan activities to better
enable the hospitals to accomplish their common mission: to serve the health needs of their
communities effectively and efficiently. A climate to foster creativity has to be provided so that to
maintain the vitality that push the leaders to take new risks necessary for the promotion of future
growth and development.
Moreover, creativity is a disciplined effort that requires expertise and experience too. Creativity is a
learned skill. Regular use of creativity techniques results in improved general personal creativity and
improved use of techniques when required by identified external drivers which may include: Strategy
determination, project initiation, new product or service devising, or problem solving. It therefore
makes a lot of sense to have regular creativity sessions driven by the need to enhance creativity rather
than a specific problem (Clegg, 1999, p. 24).
Who does the Planning?
Organizations have many component parts. Governance is manifested by a group of individuals who
have the authority and the strategic intent to make things happen. In this paper, several relevant
constituencies are discussed. These are governing boards, appointed committees, and the CEO.
Governing Boards
Is the governing body of the hospital. Boards of governance in all types of organizations are
responsible for making policies or establishing direction under which the organization will operate. In
health care, there are different types of governing boards. Philanthropic governing boards are service
oriented and concerned primarily with spanning the boundary between the health care organization
and the community. These boards are larger and more diverse to gain the broadest community
exposure and representation as possible. The inclusion of different types of stakeholders is important
and requires that board members be selected from among business leaders, physicians, local
politicians, consumer of health care services, and so on (Duncan et. al., 1995, p. 476).
Corporate governing boards are more involved in strategic planning as well as policy making. This
type of board is smaller and composed of individuals who possess expertise that will aid the
organization in accomplishing its goals (Duncan et. al., 1995, p. 476). Membership diversity is
important, but less so than the actual skills possessed by the members.
The governing board is headed by a chairman. He holds ultimate responsibility for the hospitals
operations, including the quality care standards of the hospital (Wolper & Pena, 1987, pp. 51-6). The
board typically functions through committees that are established for key functions such as finance,
strategic planning, fund raising and quality assurance. In addition, the board is responsible for
appointing and evaluating the CEO, and for assessing good relations with medical staff as well as the
community.
When health care organizations are profit oriented, their boards take on more corporate
characteristics. They tend to be smaller, to compensate members for service, to select members for
specific expertise, to involve the CEO as a voting member and make him/her formally accountable to
the board, and to require the participation of board members in strategic decision making. The
motivation for the members may be to provide a valuable service plus the benefit of the salaries.
(Duncan et. al., 1995, p. 477)
In not-for-profit health care organizations, governing boards tend to display characteristics more in
line with the philanthropic model. They are generally large (in fact too large to be effective aids in
decision making), do not compensate the members, select members primarily as stakeholder
representatives, and do not hold the CEO formally accountable for performance. The motivation here
is service and recognition (Duncan et. al., 1995, p. 478).
In summary, the board is the health care organizations conscience. It determines the values by which
an organization operates, and then communicates these values to key groups. In addition, the board
sets and ensures the hospitals future mission by focusing on such issues as quality assurance,
strategic planning, financial viability, and management policy (Smith, 1991, p. 16).
The Appointed Committee
Its major duty is to prepare the plan in accordance with the hospitals overall mission, policies and
corporate requirements set by the board. The board also advises the committee of what is expected of
it in terms of its duties, the basic philosophy underlying its activities, any prescribed timetable to
report back to the board, and the framework of its authority to make any special arrangements
necessary to carry out the required tasks. This committee includes not only members from the
governing board but also includes medical staff and the CEO, as well as some community members
who are not committed to the process but who are able to influence the future directions of the
hospital (Peters, 1979, pp. 45-52).
This committee coordinates the planning efforts of the hospital, as it recommends any planning
matters and supervises the preparation of the strategic plan. Subcommittees are formed if the necessity
arises to widen the expertise base and obtaining broader inputs. Once the plans are considered
satisfactory, the governing board acts on them.
The CEO
Strategic management has traditionally focused on top management, particularly the CEO. This
individual is considered the person most responsible for scanning and influencing the environment,
developing adaptive strategies, and managing key constituencies (Zuckerman, 1989, pp. 25-38 &
Harper, 1992, pp. 7-25). Moreover, the CEO is responsible for all information and supports the board
for implementation of its decisions, and for important relationships with the medical staff (Griffith,
1992, p. 190).
The CEO coordinates the hospitals resources in order to fulfill the institutions medical care mission
in the most efficient and effective way. Next to this, he or she tries to manage the hospitals funds,
personnel, material and equipment in a business-like manner. He or she is responsible for all the other
functions such as the medical staff functions, nursing services, technical activities, and the general
services activities (Wolper & Pena, 1987, p. 276).
As for the CEOs role in leading the strategic planning process, it is described by three important
functions (Ross, 1992, p. 99):
i. Assemble the planning team.

ii. Establish the ground rules and timetable.
iii. Oversee the process itself.
The relationship between the CEO and the governing board is described by a governance partnership.
For the two functions of strategic setting and strategic implementation are interdependent (Wolper &
Pena, 1987, p. 155). This board-CEO partnership extends along many dimensions. The board sets the
hospitals direction through policies and goals. The CEO provides information and advise about
which directions to take. Moreover, the CEO translates the direction set into implementation policies.
The board, with input from management evaluates whether the direction was appropriate, whether
management pursued it effectively, and whether a new course is required.
The Physicians Role
The hospital medical staff (physicians) form the heart of the hospitals mission of rendering medical
care. All the members of the medical staff are accountable to the board for their performance. They
are expected to exercise ethical and moral judgement in performing their clinical practices in the
institution (Wolper and Pena, 1987, p. 279).
In contemporary management, planning is considered to be a participative function. It underlies

interdependency among the medical staff, the CEO and the board. It is of primary importance to
involve the medical staff for they bring the knowledge of what constitutes good medical care. Namely,
they bring to the process technical expertise on development in the art and science of medicine, and
how these can be adapted to the needs of the hospital strategic planning. (Peters, 1979, p. 51)
It is through their training and socialization that they are considered to be a source of critical strategy
information since they control resources needed for the execution of strategic plans. Therefore,
individual physicians (as members of the board), or medical staff representatives (with or without
voting power) contribute to the internal analysis of the hospital since they carry the knowledge of the
hospitals weaknesses and strengths. They also contribute to the external assessment by their inputs on
competition, the state of local economy, and the patients own inputs of the hospitals services.
Finally, by giving them the opportunity to have a direct pipeline into the strategic planning, and
opening for them the doors of participation in strategic issues, will empower the hospital to work out
issues before they become inflammatory (Anderson, 1992, pp. 22-4).
Solicitation of Expert Opinion?
CEOs play a major role in determining the need for expert opinion. In developing the strategic
planning process, a lack of qualified staff members coupled with a doubt of mastering the process
using the hospitals staff, make CEOs decide to hire consultants in strategic planning, even though
they prefer to have tasks performed in-house (Pratt, 1991, p. 17).
Expert opinion is often used to identify, monitor, forecast, and assess environmental trends. Experts
play a key role in shaping and extending the thinking of the new managers during the strategic
planning process. Consultants are not asked to prepare the whole plan, but rather to carry-out the tasks
for which the hospital has neither the time nor the in-house expertise (Duncan et. Al., 1995, p. 103).
The Strategic Planning Process
One of the fundamental requirements for business success today is the managers skills and
preparation in their own endeavors. Management books emphasize today on a combination of a
number of different skills, among which we mention: technical, conceptual, analytic and diagnostic,
communication, decision making, time management and interpersonal skills (Griffin, 1999, pp. 18-
21). However, when it comes to strategic planning it is imperative to follow a systematic approach
when looking at the process of strategy. Figure 2 shows the intended guidelines to follow when
assessing Lebanese private non-for-profit hospitals approach to strategic planning.
Figure 2. The Strategic Management Process
Situational Analysis
Establish:
Vision, SWOT Strategy Strategic
Mission, Analysis Formulation Implementation Control
Goals
Feedback: Corrective Action
The strategic planning model shown above is simple and can be easily followed by the hospital
leaders to implement their plans. It consists of five steps that are briefly stated next.
The Organization
Organizations are under continuous pressure exerted by the forces of the external environment.
However, internal processes exist to help the organization understand, interpret, and cope with its
external environment. These processes are situational analysis, strategy formulation, strategic
implementation, and strategic control. These processes aid the organization in understanding
competitive behavior and the impact of a strategy. The organization can then decide to commit
resources to a new strategy, predict risk and return, and encourage a willingness to act in light of the
strategy. The aim after all, is to conduct a reconciliation exercise designed to best position the
organization within the external environment and to implement a strategy that will help assure success
(Duncan, 1995, p.53)
Steps One & Two: Situational Analysis: SWOT Analysis & Establishing the Vision, Mission, and
Goals
Analyzing and understanding the situation is accomplished through two steps. These are:
(1) SWOT Analysis which consists of another two steps:

I. External environment analysis.
It covers the general and task forces. Is a process in which managers of the health care
organizations scan external information that is continuously affecting the organization.
Accumulated information covers the general forces such as: government, the
socioeconomic factors, technology, and societal forces. It also deals with hospital task
forces such as: competition, consumers, suppliers, insurance, banks, non-government
organizations, etc. The forces, being general or task, will exert changes that will present
opportunities or threats to the organization. Health care managers, then, have the
responsibility to understand the potential impact of these and respond competitively with a
relevant strategy.
II. Internal environment analysis.

Represents the capabilities of the organization. Internal environment factors include overall
structure as well departmentalization specifics, management and supporting information
technology. Strengths and weaknesses are revealed. A comprehensive understanding of
these impacts the strategy formulation process, since it performs a kind of reality check.
(2) The development of the organizations vision, mission, and goals.

The vision, mission, and goals of an organization have a direct impact on the strategy ultimately
adopted. The vision is a view of the future taking today decisions that will affect tomorrows
issues. It is a blueprint of a desired state, a mental image, a picture of a preferred condition that
organizations work to achieve in the future (Johnston, 1994, p. 24). To define a vision for a
hospital is rather a challenge especially if its leaders are unable to see beyond todays mission to
a vision for tomorrow. According to Rathwell (1987, pp. 156-63), the strategic vision is
commonly regarded to be the corporate philosophy or statement of basic principles that govern
the direction in which an organization seeks to develop. The purpose of a corporate philosophy is
three fold as Exhibit 1 Shows.
Exhibit 1. Purpose of Corporate Philosophies (Rathwell, 1987)

1
To communicate to both employees and customers the central purpose which
underpins, guides, and motivates the organization.
To provide a framework which governs the relationship between the

organization, those working in it, and the wider environment within which it
operates.
To state in broad terms the objectives to which the firm aspires with regard to
future development and performance.
The development of one commonly shared vision necessitates the collaboration of the Trustees
who should all agree on a set of values, views, and ethics. These accepted standards form the
basis for the establishment of a genuinely shared value statement. Hospitals pro-activity
necessitates the articulation and revision of the vision statement on an annual basis in
consideration of the environment and identified trends. The mission, on the other hand,
represents the consensus and articulation of the organizations understanding of the external
opportunities and threats and the internal strengths and weaknesses. It is a general statement of
what distinguishes the organization from all others of its type and answers questions Who are
we? and What do we do? (Duncan et. al., 1995, p. 55).
Mission statements commonly address four different types of information in describing the
organizations most fundamental intentions. By describing perceived obligations to different
stockholders, delimiting the scope of the business, identifying the most important forms and
sources of competitive advantage(s), and stating assumptions about the future (Miller, 1998, p.
44). Moreover, Exhibit 2 shows a list of eight comprehensive questions a mission statement
responds to.
Exhibit 2. Eight Questions Leading to a Comprehensive Mission Statement
1. What is our reason for being? What is our basic purpose?

2. What are our obligations to various stakeholder groups?
What is the relative emphasis placed on meeting the needs of different
stakeholders?
3. What is unique or distinctive about our organization?
4. What is likely to be different about our business 3 to 5 years in the future?
5. Who are, or who should be, our principal customers, clients, or key market
segments?
6. What are our principal goods and services, present and future?
7. What are or what should be our principal economic concern?
8. What are the basic beliefs, values, aspirations, and philosophical priorities of
the firm?
The scope of this paper is the private non-profit hospitals. In this sector, the hospitals do not base their
strategy on money. These organizations start with the performance of their mission because they lack
the management of the bottom line. Starting with the mission and its requirements, the hospital
focuses on action and allows defining the specific strategies needed to attain the acute goals. It creates
a disciplined organization (Drucker, 1989, p.89).
The real purpose of the non-for-profit hospital, i.e. its mission, is not to make business, but to provide
health care. To blur this mission will cause loss of moral, social, and political power. This renewed
focus on community is because hospitals do not live in markets but in communities. This community
focus in the mission requires the leaders to be more creative and flexible in defining their strategic
planning.
A vision becomes more tangible in the form of a mission statement. A mission helps managers, after
answering the questions stated above, set priorities, guides strategic decision making, and gauge
performance. It provides a fundamental tool to help define a business. Defining the business in that
way forms a competitive step in the strategic management process. This leads us to follow a
continuum. For the mission statement to become more concrete, a hierarchy of goals is defined.
Goals describe in fairly general terms what the organization hopes to accomplish. The strategic goals
identified by most organizations share several features (Miller, 1998 p. 46):
1. They address both financial and non-financial issues.

2. They facilitate reasoned tradeoffs.
3. They can be reached, with a stretch.
4. They cut across functional areas.
The terms hierarchy of goals was mentioned above reflecting the fact that there are goals spread along
different time dimensions. It was also stated that strategic goals translate the mission statement more
tangibly, and therefore, it is natural to expect having shorter dimensions of time to state at any
situation much more tangible terms, best expressed by operational goals that are also called
objectives.
Objectives represent the operational definitions of goals, or explanation of abstract concepts that are
concrete enough to suggest specific actions. Objectives, then, detail in more precise terms what
needs to be accomplished in order to reach the goals. The most helpful objectives share the following
characteristics (Miller, 1998, p. 48)
1. They can be measured.
2. They incorporate a time dimension.
3. They reduce conflict.
Hospitals have many objectives most of which are hard to quantify. The most important include high-
quality patient care, cost containment, research, recruitment and retention of professional staff,
professional training, cost efficiency, growth in size, good community relationships, and community
prestige (Jauch & Glueck, 1988, p. 34).
The interaction and results of these steps form the basis for the development of strategy. These inter-
related steps drive the strategy.
Step Three: Strategy Formulation
Situational analysis involves a great deal of gathering, classifying, and understanding information.
Strategy formulation is making decisions concerning that information. The results from such decisions
are strategies for the organization. The first set of decisions concerns the vision, mission and
organizational goals. These decisions provide the general direction for the organization and are,
therefore, called directional strategies. Directional strategies provide the basic philosophy of the
organization.
Next more specific strategic decisions are made. These include determination of:
Adaptive strategies: which are more specific than directional strategies and indicate the method of
carrying out the directional strategies.
Market entry strategies: which indicate whether the adaptive strategy will be accomplished by buying
into the market or internal development.
Positioning strategies: which delineate how the organizations products and services will be
positioned vis-a-vis other organizations products and services in a given market.
When these have been made the general strategy for the organization will have been developed.
Exhibit 3. Adaptive, Market Entry, and Positioning Strategies
Adaptive Strategies:
Expansion
Diversification, vertical integration, market development, product
development, or penetration.
Contraction
Divestiture, liquidation, harvesting, or retrenchment.
Market Entry Strategies:

Buying into the market
Acquisitions, licensing, or venture capital investments.
Cooperating
Mergers, alliances, or joint ventures.
Positioning Strategies
Cost leadership, Product differentiation, and Focus.
Decisions concerning these strategies are sequential. That is, directional strategies are developed first,
then adaptive strategies are formulated. Next market entry strategies are selected. Finally, positioning
strategies are formulated. (Duncan, 1995, pp. 56-57)
Step Four: Strategy Implementation
Although strategy formulation is essential for an organizations long-term success, no less is strategy
implementation. Implementation is part of day-to-day management, involving resource allocation and
scheduling. Assignment of responsibility for each aspect of the plan is important. Involvement of
those implementing the plans in the development of the same, should result in few problems and
minimal resistance to change. The implementation process involves an integrated set of choices and
activities that are used to allocate resources, organize, assign key managers, and set policies.
Implementing strategies is accompanied by change. Resistance to change, then, a natural aversion to

change should be dealt with in order to minimize the chances of failure of the implementation process.
Resistance evolves because of different reasons. Four key barriers could impact the strategy
implementation: the human problem of attention and commitment, the process problem, the structural
problem, and the institutional problem of exercising leadership.
To solve these issues, the strategy implementation should follow a certain process that consists of the
managerial functions of planning, organizing, and leading. That is when decisions are made,
implementation takes place in a cascade fashion, through the basic structural hierarchy of the
organization. This will ensure that all the staff on each level, and in each function, understand the
direction and the timetable. Since implementation is required at lower levels, it is required a
coordination at all levels to achieve success. Therefore, functional strategies and supporting programs
and budgets must be developed for the key functions in the organization, such as the marketing,
information systems, finance, and human resources functions. Implementation plans formulated at the
lower levels are reviewed by the leaders to: assure that they are consistent with the hospitals overall
strategy as well as allocated resources, and to resolve any overlaps or conflicts between levels and
functions.
Functional strategies must be integrated to move the organization toward realizing its mission. In
addition to the functional strategies, organizations often develop organization-wide strategies. These
operational strategies include initiatives such as changing the organizations culture, reorganization,
upgrade of facilities and equipment, and social and ethical strategies (Duncan, 1995, p. 57).
Step Five: Strategic Control
The final stage of strategic management is strategic control. According to Bovee et al. (1993, p. 610),
is a regulatory process that ensures successful implementation of long-term strategic plans,
specifically emphasizing the impact of broad environmental effects and internal strategic directions.
Strategic control has special timing; I fit is done too soon or too late, results will not reflect the real
changes happening in the environment, and thus, strategic control will be ineffective. If it is too rigid,
it will not be able to cope with the dynamic environment. Therefore, strategic control is a delicate
balancing act that has a proper process of juggling between methods, and timing of feedback,
evaluation and corrective actions. To do so, a control process should be established, some critical
areas have to be monitored, and some methods for measuring results identified.
Strategic control, then, has the following process activities:

(1) the establishment of standards (objectives), the CEO and his staff decide on the standards (or
critical success factors), and thus, the system is tailored to their hospital specific needs. They
can relate to the industry such as excellent medical staff, competitors, patients view of the
hospital, range of services provided as well as to the internal capabilities such as execution
of the strategy or improving the image of the hospital. (Schulz & Alton, 1990, p. 118).
(2) the measurement of performance, to make sure that the strategic plan is being well
implemented, a close and continuous monitoring of the process should exist to determine how
well the action plan is progressing towards its objectives. Performance measures should be
established for every critical success factor for each goal, and quantified as much as possible
and judgement must always be applied when interpreting them.
(3) the evaluation of organizational performance against the standards, judgement and objectivity
are much of need when performance is compared to the established standards. It is doubt the
most difficult task of this process since the comparison will often uncover symptoms of
deeper problems. The leaders must understand the causes both the failing to meet standards
and of exceeding them as well.
(4) the taking of corrective action if necessary. There is always the need to check conformance of
the performed actions and desired results to the stated vision. Sometimes, even the best
prepared plan has to be revised if future developments occur, or if information base suffered
changes. Revision, then, is as much an important part of the process as was the development
of the plan at first. Taking action falls under one of the following forms of action (Bovee et.
al., 1993, pp. 605-9):
i. Take corrective action: move performance back in line with established

standards.
ii. Recognize performance: positive performance should be reinforced and
applauded.
iii. Change standards and measures: if standards are not constantly met or are
exceeded, this means that there is something wrong with the previous
undertaken steps. Standards and /or the associated performance measures
should consider change. The latter may be unrealistic or do not conform the
hospitals capabilities; they may be set incorrectly, or the conditions affecting
them may have changed.
The strategic control process will, in turn, affect the operational strategies, the organizations general
strategy, and situational analysis processes. Managers monitor these processes, they interact
accordingly with the information collected all through the above processes and maintained by the
information system, learning what is effective and take corrective actions as necessary (Duncan et. al.,
1995, p. 58).
Need of this Study
Hospitals can be categorized by three types of ownership: the government, the private for-profit, and
the private non-profit organizations. This study is to deal with the third type. Private non-profit
hospitals are established by private, non-governmental groups, for the sake of common good rather
than for individual gain. They are legally dedicated to the collective good. Thus, the beneficiaries are
but the communities they serve. The ownership is therefore rarely critical to its overall management.
The importance of the study of strategic management in this type of hospitals is critical for both the
Lebanese Community, and for the survival of these institutions in the next twenty-first century. In
addition to the fact, that this research will enrich the pool of knowledge concerning this topic and
which is not well documented in the existing Lebanese literature.
Currently, there is a lack of knowledge of the ways these organizations operate on the long-run basis
to anticipate the environmental changes. Thus, it is very important to consider the strategic
management concept in order to improve the overall quality of management in these organizations.
This paper will study, assess, and shed light on the strategic management practice in the private non-
for-profit hospital sector in the city of Beirut.
Methodology
This research adopted a descriptive quantitative analysis approach. The sample of managers for this
study consists of assistant directors and directors of hospitals as well as consultants to hospitals
administrators.
Data collection was performed using a structured interview instrument. Structured interviews rely on
a standardized simple questionnaire that is administered in a face-to-face setting. This approach will
guarantee consistency of responses among interviewees. Differences in the respondents answers can
be attributed to genuine variations that will show the discrepancies between the different perceptions
of the directors, and not to divergence due to the order of asking the questions.
The interviews were conducted within a 5-week period to ensure that all the interviewees were
exposed to the same external events, limiting challenges to the historical validity of the data.
Respondents were encouraged to respond objectively in order to reflect genuinely the relevant
assessment of the practice of strategic management.
The interview was directive, in-depth, structured and including both types of questions, open ended
and fixed-alternative ones. Respondents were to fill at the beginning of each interview a brief-profile
about his/her demographic data. Consent of the participants was obtained provided the complete
confidentiality about each hospitals own answers.
The chosen sample of private non-profit hospitals, with number of beds more than one hundred,
consisted of seven hospitals. The intention was to target ten hospitals but three of them abstained from
the interviews. To substitute for those, another three were selected with a little less than one hundred
beds capacity. In addition to this sample, a Ministry of health officer was interviewed.
The average interview time was around two hours. Some of the interviews were done in one sitting
and others were divided into two.
Research Findings and Analysis
This section will exhibit the practice of strategic management in the Lebanese private non-for-profit
hospitals as findings will show. The analysis will cover ten parts as per the division of the
questionnaire.
Hospital Characteristics
Tables 1 and 2, show information about the date of establishment of the visited hospitals, and the
functional nature of the hospitals as well.
Table 1. Dates of hospitals establishment
Hospitals (Percentage) Date of Establishment

30 % Prior to 1900
40 % From 1901 to 1960
30 % From 1961 to Present
Table 2. Hospital function classification
Type of Hospital Percentage

Teaching 40 %
Philanthropic 40 %
Teaching & Philanthropic 20 %
Most of the hospitals were growing before the Lebanese war, and were not established as a response
to war needs. This reflects that a continuum in the growth of these hospitals reflects a proper
management, especially knowing that the hospitals are among the biggest in Lebanon. It is apparent
that the teaching trend is increasing among philanthropic hospitals which reflects a growth trend.
Administrators Demographics
As far as the interviewees level of education, 90 % hold a Master degree or above. Then most of the
directors are highly educated within the field of their work. It is also interesting to find 20 % to be
medical doctors. However, 50 % hold specifically an administration degree that is necessary for
hospitals management. Table 3 shows more of the details.
Table 3. Directors education
Level of Education Percentage

Master in Business Administration 20 %
Master in Hospital Administration 30 %

Medical Doctors 20 %
Master in Industrial Engineering Health Systems 10 %
Licensed Nurse having done Hospital Administration training 10%
Ph.D. in Law 10 %
With respect to the number of years of work in the hospital, a benchmark to consider was to ask how
many work years they have in the institution by 1996. An important finding was that 20 % had around
9 years of service, 20 % 6 years of service and a 60 % majority were recent appointees. Looking at
these today, will reflect that a new generation is taking care of these hospitals. Therefore, new blood
managers coupled with adequate education will bring changes needed in a less rigid manner than what
used to be.
The Practice of Strategic Management
Directors were asked to state reasons for why they practice strategic management. They responded as
follows:
For evolution.
Strategic thinking allows the allocation of resources in the right direction.
It is the way towards the proper survival and long-term management.
More cost effective operations.
In order to predict the long-term (5 years) effect of a project on the overall
operations of the institution: quality, cost, and patient satisfaction.
The after war situation in Lebanon makes the implementation of strategic
management exigent.
To develop our hospitals activities.
To plan the future.
It seems that the idea of long-range planning is clear and most of the respondents based their
responses on long-run view. However, long-range planning is but a previous stage in the development
of the management towards strategic management. Therefore, it can be concluded that the idea of
strategic thinking and not really strategic management exists and which is still somehow vague for
many directors.
Strategic Management Process
30 % of the respondents have a formal process, while another 50 % have an informal one, and 20 %
have a combined approach relevant to the complexities of the situation. As mentioned earlier, strategic
thinking exists, but no real strategic management as literally defined takes place in most hospitals.
This reality implies that the directors are not fully committed to the process of strategic management.
Knowing that most hospitals, after the war, went through a steamy race of technology upgrading with
no formal planning towards the future. Nevertheless, the situation is starting to change now, and a new
strategic thinking leading to strategic management is underway.
The 50 % being informal leads us to conclude that 50 % of the hospital directors interviewed are
characterized as analyzers, and not as prospectors in their leadership. Probably, this could be traced
back to the crisis management styles practiced through the war. However, the other 50 % reflect a
change towards a prospector leadership, which constitutes a positive step towards strategic
management applications.
How much strategic planning have been applied?

In other words, how much of the strategic plans were applied? Table 4 shows that 20 % have applied
above 80 % of what is planned for, 40 % have applied between 70-80 %, and the rest between 50-70
%. However, at some point we may sense certain bias to what is responded looking at the general
environment of the hospitals performance in Beirut.
The bias sensed above results from the fact that no hospital has a special planning department with a
director of planning, most of the directors, 60 %, take responsibility for virtually most administrative
functions, whereas, the other 40 % are being helped out by an administrative council.
Budget Allocation
Most of the hospitals (70 %) do not allocate a budget for strategic management. 30 % allocate a
budget but not as a separate budget item. They do take it into consideration when planning for their
annual budget. Moreover, 67 % allocate a budget ranging from $25,000 to $50,000 for strategic
management, while the rest allocate a budget less than $10,000.
Strategic Planning Meetings
30 % of the hospitals directors meet once per year and 10 % meet semi-annually, while 60 % meet
monthly. 40% of these hospitals back up their meetings mostly by an on-going meeting process. These
meetings take place whenever necessary depending on the complexity of the events.
Which functions are driven by the strategic planning process?
Responses reflected that the marketing department comes first with 80 %, then medical staff
development and program planning with 70 %, working capital 60 %, and hospital operations with 50
%. Finally, personnel management, outpatient, and management information systems were agreed
upon by 30 %.
One cannot but note that strategic management is involved in almost all the functions in the hospital,
but each of these directors reflected situational criteria in selection of priorities, something that is very
realistic.
Attitude toward Risk
Strategic management is carried out to study the risk and threats that the turbulent environment
discloses so that to minimize their impact on the hospital. 80 % of the directors agree on the need to
take risk in the strategic planning process, whereas 20 % disagree on this fact. Since the beginning,
the majority has shown the strategic intent so it is strange to observe the majority is risk takers.
Moreover, while planning, 70 % of the directors use scenarios to prepare the strategic planning, while
30 % do not. Among the ones who use scenarios, 72 % develop them in house, while 28 % refer to the
help of expert opinion (consultants).
Use of Information Technology
An important tool for strategic management is the use of information technology. Table 4 shows the
areas of concern where information technology (IT) is being applied as stated by the respondents. As
noticed, cost control has the highest rate (100 %) which means that this dimension is computerized in
all the selected hospitals despite the fact that there is no full integration of computers. Consequently,
this reveals the high priority put on efficiency in cost control. The second most important priority is
the application of IT to achieve quality improvement of services offered to patients.
Table 4. Use of Information Technology

Use of Information Technology Percentage

Cost Control 100 %
Physicians relations 20 %
Quality improvement 70 %
Between departments and services 20 %
Feasibility Study 20 %
Operations of the hospital 20 %
When directors were asked to rate the status of IT in their hospitals 50 % said they were satisfied on
the average (60 % classified their IT as fair-good).
Qualities Required by Top Management
As revealed in the literature review, qualities like creativity, intuition, innovation and experience are
to be practiced with excellence. Responses from directors reflected that experience is the most
indispensable quality perceived and needed for strategic management success followed by creativity
and innovation, and then intuition. However, when asked what is the much needed qualities, they
selected creativity and innovation, then intuition and finally experience.
Who Does the Strategic Planning?
The overall responses revealed that the parties conducting the strategic planning process are board of
trustees (40 %), administrative council (20 %), and religious congregation (40 %). When more details
were asked by the last two groups constituting 60 %, 50 % of those said that a committee is created
for this purpose and the remaining 10 % involve the executive committee in setting the plans.
However, all of the respondents agreed that the final decision is issued by any of the three parties
identified above. Tables 5, 6, and 7 show the involvement of the directors, physicians and consultants
in the strategic management processes.
Table 5. Activities Held by the Director of the Hospital

(Percentages, %)
Oversees and coordinates the achievement of goals 10
Assures a constant review of the plan 90
Oversees the process itself 50
Establish the ground rules and time table 50
Assemble the planning team 60
Establish criteria and standards to be used 70
Determine the major steps necessary to move the hospital from its
present course to the desired one 90
Select the basic ways in which these activities will be created 50
Identify the particular services that the hospital should and will be
used to measure performance 70
Table 6. Physicians Involvement in Governance
Through the Medical Directors Office 30 %

Medical Committee that expresses their Opinion 20
%
Individual physicians can be members of the board, elected like any
other board member 30 %
Medical staff representatives attend and participate in board
meetings with or without voting power 20
%
Table 7. Type of Guidance Provided by Consultants
Conducting special studies 90%

Assisting in preparing the plan 57%
Evaluating the hospitals current & proposed activities 43%
Surveying community needs 15%
Preparing the whole plan -
Tables 5, 6, and 7 show that directors determine the major steps necessary to develop the hospitals
from current states to desired states, they also assure constant previews of the plans. On the other
hand, interviewees reflected awareness of the importance of the mutual cooperation among
physicians, CEOs and the governing board. Consequently, physicians are allowed to involve in the
strategic planning process. Finally, expert opinion is sought in conducting special studies, in
evaluation the hospitals current and proposed activities and in the preparation of the plans. Directors
use expert opinion mostly to make up for the lack of knowledge and experience as well as for the lack
of skills.
As noted above several domains of the strategic planning process are sought through consultants.
Knowing that directors have shown the strategic intent, there seems to be a gap in the application side.
Assessment of the Strategic Management Processes
A. Situational Analysis: (SWOT and Vision, Mission, and Goals)
This section will be based on the responses and personal beliefs of the interviewed directors. This is
because, there is a common base of agreement among the majority into how to look to the future of
their hospitals and under what situational external forces.
The Vision
A reference in the Board of Excellence in the Middle East.

A community hospital that serves as a teaching center in medicine and paramedical disciplines and
that provides high standards.
To be able to provide the medicine of next millennium.
To be a reference in medicine, providing excellent health care.
To be the choice of patients, physicians, and employees and to be a totally customer oriented
organization.
The Mission
To provide high quality of medical services to the community regardless of their financial abilities.
To provide teaching services and a high level of medicine with no discrimination of race, wealth, and
religion.
To help all patients who were refused by everyone even by their family.
To provide the highest quality of health care at the lowest possible cost, and to provide the setting for
an adequate teaching environment.
We are a hospital with Open Doors and No Walls.
The continuum of the spirit reflected in the vision flows downward and is expressed by more tangible
terms. However, communicating the mission to all stakeholders is a must, and must be done openly.
The respondents reflected this fact as shown in Table 8.
Table 8. Communicating the Mission.
Word of mouth 10 %
Direct services 10 %
Through the medical staff (doctors) 80 %
Through patients 80 %
Through the media 30 %
The Goals
The structured interview had a section of possible goals from which the interviewees had to select
whenever goals were applicable to their institutions. Responses are shown in Table 9.
Table 9. Hospitals Strategic Goals
Becoming a Universal Hospital 10 %

Growth in most needed community services 20 %
Financial resources 40 %
Marketing-creating patient access 20 %
Innovation-avoidance of obsolescence 60 %
Social responsibility 60 %
Recruitment & retention of professional staff 50 %
Community prestige 30 %
Growth in size 40 %
Cost efficiency 40 %
Professional training 80 %
Research 40 %
Quality patient care 90 %
Fulfilling community needs 90 %
Meeting government regulations 60 %
Providing Excellent health care 100
%
Most of the respondents (80%) believe in the necessity to balance between their hospitals goals and
the community needs. Also, 60 % revise the hospitals goals on a yearly basis. 20 % do the revision
semi-annually, and the other 20 % review when there is a need for it.
SWOT Analysis
Respondents, in their majority (70 %) conduct SWOT analysis in their hospitals, whereas 30 % rarely
do. Moreover, 20 % use a marketing audit as a tool in comparison to 70 % who rely on medical
committees, or on a task force committee formed of physicians and employees, or on the occupancy
rates and utilization of services, or on insurance companies. The remaining 10 % refer to external
expertise.
Community Assessment
Private non-profit hospitals are primarily community hospitals whose aim is to provide quality health
care for all patients. Community needs are assessed by 80 % of the respondents. 50 % out of those
perform the assessment on a continuous basis, 25 % perform it semi-annually, and the remaining 25 %
only when needed.
Methods of Community Assessment
Table 10 shows that the most common methods used are to gather information through traditional
database and health status indicators like morbidity and mortality (88 %), hospital discharge data (75
%), informal gatherings of local leaders (63 %), and finally through simple ongoing conversation (63
%).
Table 10. Methods of Community Assessment

(Percentages)
Activity parameters of the hospital 13
Simple ongoing conversation 63
Informal gatherings of local leaders 63
Structured questionnaires (Household interviews, market 25
research)
Focus group 13
Hospital discharge data 75
Traditional database and health status indicators like
morbidity and mortality 88
Table 11. Methods of Hospitals Self-assessment

(Percentages)
Occupancy rate 10
Government assessment 10
Measuring the market share 30
Studying the Gap: Accomplishments versus planned 80
Benchmarking other hospitals 80
Through perception testing of the key constituency groups 40
Table 11 reflects the interviewees responses suggesting the different ways of conducting self-
assessment. The most apparent methods are benchmarking other hospitals and studying the hospitals
performance gaps.
External and Internal Environments Analysis
Exhibit 4. SWOT Analysis Results of the Non-for-Profit Hospitals
Strengths
Professional staff like: nurses and doctors.

Specialties offered in different hospitals (each hospital has its own specialization).
Good administrative infrastructure and planning.
Academic affiliation with hospitals in France.
Quality control.
Sophisticated equipment.
Unity and commitment that the staff has towards the hospital.
Good image of the hospital.
Weaknesses
Having a large number of sophisticated equipment that goes obsolete: its depreciation is very high, not
to forget that its maintenance cost too much.
Marketing: not being able to attract more patients.
Having no integrated computerization.
Employees having high barriers of Resistance to change.
Lack of communication skills among unskilled employees.
Financially: Cash flow deficiencies, and not enough money for equipment renovations.
Number and quality of nurses is low.
Opportunities
Return of Lebanese professionals with new specialties.

New facilities and techniques offered by the development of technology.
Increasing needs of the community.
New government regulations.
Advances in health care systems.
Contract with World Bank to enhance national health system.
Targeting Arab communities improves the medical and academic dimensions.
Stability of the Lebanese situation on a national level improves the health care system.
Threats
Absence of a national health strategy.

Doing a rich medicine in a poor country.
New government regulations.
Opening of new universities and private for profit hospitals in Beirut.
Not being able to invest proactively in new equipment.
The ever increasing trend of costs.
Delay in payments from the government and from third-party payers.
Inflation of the Lebanese economy.
Establishment of the new General Government Hospital.
Peace with Israel will boost regional competition.
Exhibit 4 shows the overall assessment results including the opportunities, strengths, threats, and
weaknesses as reflected by the interviewees.
The information presented in Exhibit 4, shows that the sampled hospitals enjoy certain common
strengths, a fact that makes competition mostly in providing the best quality health care by hiring
recently qualified and professional staff. However, a weapon with positive as well as negative
outcomes is the nursing staff. Hospitals having their own nursing schools may enjoy the higher
positive end. As for the impact of the sophisticated equipment, initially it is a strength that diminishes
with time depending on the maintenance and use of the equipment. Those hospitals that bought the
equipment just to enter the race for technology with no plans, are the ones that will suffer most from
obsolescence.
External factors that have the highest impact are government regulations, new technologies, and the
economic situation of the surrounding clients, the patients. The demographic characteristics show that
the rate of birth is steadily increasing coupled with the poverty rates today, will put the hospitals in a
weak position specially if the budgets are constrained.
Porters Five Factor Model for Studying the Business Attractiveness
This model for industry and competitive analysis is an orderly process that attempts to capture the
structural factors that define the long-term profitability prospects of an industry, and to identify and
characterize the behavior of the most significant competitors. (Hax and Majlouf, 1996, p.67) The
necessity for such an analysis became necessary after members of the selected sample showed
contradictory answers. Three hospitals claimed no competition in their field whereas the other seven
reflected a combination of different forces affecting their competitiveness. Figure 1 shows the five
forces model with the percentage rates representing the overall opinion of the respondents about the
impacts of the barriers describing the model.
Figure 2. Five forces Model
NEW ENTRANTS
20 %
SUPPLIERS RIVALRY BUYERS

40 % INTENSITY 20 %
40 %
SUBSTITUTES
20 %
Figure 2 shows that the highest barriers among the hospitals are the competition and the power of
suppliers (40 % each). All other barriers seem to be perceived the same by the respondents. Therefore,
future competition will be influenced on how the different hospitals will try to change the barriers
towards their own benefit. At first glance, and based on previous data, the primary influence that the
hospitals are trying to control is to reduce further the customer and the ease of entry of new hospitals.
Drivers for Technology Assessment
The literature is full of case examples showing the impact of technology on how services are
delivered to the community. However, it is imperative to assess what are the factors perceived by the
respondents to impact the hospitals decision to adopt information technology. Table 12 shows that the
most influential factors are the patient care quality (100 %) and the hospital- as well as physicians
needs (each accounting for 88 %).
Table 12. Factors Influencing the Practice of Technology Assessment
Mission of the hospital 75 %

Patient care quality 100 %
Wants of the hospital 25 %

Needs of the hospital 88 %
Physicians 88 %
Third party payers 38 %
Customers 38 %
Strategy Formulation
According to Kaufman (1994, p. 15), a hospital should consider eight guidelines when formulating the
strategy. These guidelines, followed in Table 13, were taken as the basis for the respondents answers
to assess their attitude and the way they practice strategy formulation.
Table 13. Respondents Attitude towards Kaufmans Eight Guidelines (Responses in %)

DA Unc A
The hospital should change before it is too late and respond to change when it
first appears 0 10 90
The hospital should face reality as it is, not as it as wished to be 0 10 90
The hospital should have a competitive advantage; if it does not, it should not
compete 30 40 30
The hospital builds its services based on what the customers want to buy, not
what it wants to sell them 20 0 80
The hospital should segment its customers according to characteristics and
needs, in order to enhance competitive position 50 30 20
The hospital should adopt an aggressive strategy if it wants to be a leader 50 10 40
The hospital should recruit expertise to insure the success of a specific strategy 10 10 80
The hospital should determine the critical strategies that must be implemented
prior to establishing its charter, bylaws, and composition 30 10 60
Note: DA = Disagree, Unc. = Uncertain, A = Agree.
There are only 30 % agreement on the fact that the hospital should have a competitive advantage in
order to be able to compete; if not, it should not compete, which reflects that most Lebanese
hospitals aim is to compete no matter what is the price. The reason is that they do not base their
competition efforts on their core competencies. Moreover, the statement dealing with customer
segmentation was approved only by 20 %. Such a fact reflects that hospitals do not really conduct
community assessment or at least a comprehensive one. They seem to consider all their patients as
one big bulk, a fact that is not realistic. The segmentation of the patients, if done according to certain
characteristics and needs, helps hospitals recognize niche markets that enable them to become leaders.
In addition, such behavior tells us that there is no accumulation of knowledge from past experiences, a
fact proved when only 30 % of the respondents agreed as they were asked if they consider past
strategies and past performance upon formulation of new strategies.
Corporate Strategy Adopted
Exhibit 5 reflects the respondents answers on which corporate (general) as well as business (specific)
strategies are adopted.
Exhibit 5. Adaptive, Market Entry, and Positioning Strategies.
Adaptive Strategies:
Expansion 50 %
Diversification 20 %
Market development & product development (hospital specific) 20 %
Contraction 10 %
Harvesting 10 %
Positioning Strategies 40 %
Cost leadership 20 %
Product differentiation 40 %
Differentiation & Cost leadership 20 %
Cost leadership & Focus. 20 %
Responses reflect that only 90 % of the hospitals, in the sample, have a general strategy based on
expansion and 10 % seeks stability strategy. Most of the responses on the positioning strategy were
based on being differentiated with their services, and offering competitive quality health care at
reasonable prices.
Finally, when asked if they use contingency plans, 70 % agreed, 20 % did not, and the remaining 10
% gave no reply.
Strategy Implementation
The first barrier towards implementing strategies is resistance to change. 50 % of the directors said
that they face much resistance to change, 30 % did not face much, and only 20 % commented that
they did not face any. Such an attitude of resistance observed with the majority, will impact the well-
being of the strategy in achieving the targeted performance. However, the directors added that they are
doing lots of work to reduce such a resistance. One strategy followed is the internal involvement of
staff in the exposition of the different strategic planning processes. In addition, they stressed on
enriching the inter-institutional communication patterns between top and bottom layers of the
hospitals. All of these factors are reflected by how the respondents categorized them as for their
importance for strategy implementation. Table 14 shows that indeed the development of a strong
information system will contribute greatly in the development of internal information needed by all
parties.
Table 14. Importance of Factors Impacting Strategy Implementation
Teaching Students 10 %
Investment in Equipment 10 %
Expand outpatient services 30 %
Organize primary care physicians 10 %
Need to build Information systems 70 %
In addition to communication, the respondents put special emphasis on factors such as: allocation of
resources, organizational structure, organizational culture, and leadership.
At first, implementation is part of the day-to-day management, involving resource allocation and
scheduling. The selected sample relies mostly on the human resources: medical and administrative, as
primary resources to be allocated the most effectively. Finance is simultaneously another important
resource that upon which the future of the hospital is decided. If no money, neither progress nor
improvement can take place in the hospital at all levels. The other resource include supplies,
equipment, and space. These resources are allocated through the use of the budgeting process very
specific for every hospital according to the pre-set hospital priorities.
Secondly, responsibility is assigned for each aspect of the plan and the implementation is directed
through the structure or hierarchy of the hospital. In fact, organizational structure plays three
important roles: envisioning, energizing, and enabling to change. All the respondents believe that
delegation of authority and assignment of responsibilities, escorted with the establishment of

relationships among people and various units are the basis upon which they stress to implement their
strategy. It is important to note that here trust and open communications are emphasized.
Thirdly, the hospital culture is essential to maneuver change. The value system practiced within the
hospital will create the suitable atmosphere for best implementation of the strategy. Therefore, the
more flexible the culture the less the opposition to new changes. Respondents to this study exhibited
an even distribution in their cultures as follows:
Hospital has very rigid culture 20 %

Hospital has a rigid culture 20 %
Hospital has somehow a neutral culture 20 %
Hospital has flexible culture 20 %
Hospital has a very flexible culture 20 %
As for the leadership practiced in the hospitals, 40 % of the directors follow the management team
leader style. The director functions as a partner with board members, medical staff, and relies more
on knowledge, attitude, skills, and information sharing habits more than on formal authority and
control to move the hospital towards desired goals. Another important fact is that 50 % follow a
combined style of leadership, with an emphasis on the coordinator and the management team leader
(30 %). This shows that most of the directors are flexible and are aware of the happenings. This
matches the fact that a team leader approach can function well in any culture.
Strategic Control
All respondents follow the same control process. The different types of the control process as
practiced are:
An evaluation of what was accomplished versus the targeted goals or specific predefined
criteria, and the reasons behind the gap.
Gathering with all the managers to see if targets are met.
Frequent reporting and establishment of deadlines; control is done during the
implementation.
Studying, analyzing, and evaluating the outcomes and taking corrective measures if
necessary.
A statistical analysis if necessary, along with a periodic evaluation of the outcomes
followed by an annual revision of the strategy.
Hospitals represented in this study use periodic reporting to conduct this control process. 60 % follow
a monthly control session, whereas 20 % conduct it annually as well as semi-annually. The rest, 10 %,
conduct an annual report as well as immediate interference when needed. As for the feedback process
followed, Table 15 demonstrates that 40 % of the respondents conduct questionnaires as well as
interviews. 30 % emphasize reporting, and 20 % frequent team meetings.
Table 15. The Feedback Approach Followed
Conversation 10 %
Reports 30 %
Frequent team meetings 20 %
Proctoring 10 %
Direct contact 10 %
Interviews 40 %
Use of questionnaires 40 %
Finally, the most important support system for the control process is to be able to gather the relevant
information that enables the hospital to analyze any existing gap, and take future corrective actions.
All respondents emphasized the importance of a well-developed management information system
(MIS department) despite the fact that only 80 % do own one.
Conclusion
The interviewees were asked to evaluate their practice of strategic management with what they have
seen in this research. Their responses show 30 % fulfilling only up to 50 % of the strategic
management process. This does not mean that these hospitals do not practice strategic management;
on the contrary, looking at their status of work, they do it by following a somehow concentrated
approach. They simply identify within the environment issues of excellence that might affect their
performance, and work on formulating strategies to manage these issues and invest in them. Surely,
that necessitates the kind of leadership identified earlier.
As for the 60 % of the sample applying more than 70 % of this process shows a positive assessment of
the practice of strategic management in private non-profit hospitals. Sure, if the responses did not
include any bias.
One final question was delivered: private non-profit hospitals aim at providing the best quality health
care at the lowest possible price. Should they follow a standard strategy that suits them?
40 % responded negatively whereas 60 % answered positively. When asked to explain, the 40 %

respondents declared that each hospital has its own culture, set of values and a proprietary SWOT
analysis; thus, they cannot follow one standard strategy. The 60 % respondents stressed strongly the
unified standard strategy that is capable of bringing these hospitals together to form a network of
specialized hospitals. This fact is due that hospitals enjoy common interests, goals, and a similar
structure.
Finally, 80 % of the respondents strongly agreed to ask for a national health planning strategy from
the government so that to regulate the non-logical competition existing among the hospitals as a result
of the stereotyped Lebanese mentality of show off.
Summary of Findings
1. Strategic intent exists in the directors moves in their strategic planning efforts.
2. There is a complete awareness of the dynamic nature of the surrounding environment.
Technology comes at the top of the list. The trade-off they are looking for is between
investment, obsolescence, quality health care, and cost-effectiveness.
3. The respondents are aware of their specific strengths. However, it depends on how much
internal awareness exists among the constituents of the hospital, and how change is
managed to cash the benefits.
4. Weaknesses are coined, but what remains is acting on them.
5. Porters five forces model reflects a major concern on competition and the suppliers
influences. However, if these directors go back and check on their specific core
competencies, they can easily adopt a niche market. In addition, the respondents should
not forget the regional competition awaiting them.
6. Hospitals are increasing in number, specially the public ones. Directors are aware of the
specific services they are offering, but what they will do to confront the cheaper services
that will be offered?
7. Strategic control is there. However, the general practice is more towards short-range
horizons. It was found that not many use contingency plans, a fact that jeopardizes the
future planning.
8. Resistance to change is there. Hospitals intending to change have to face the

organizational culture change necessary to foresee the future. This is where they will face
the real challenge.
9. Most hospitals are asking for a national health planning strategy guided by the
government.
Recommendations
Hospitals should define at first place its community, the area it is serving in order to be able to
practice strategic management. The surrounding environment is a major source of information, if
approached creatively and having a plan, will lead to competitive advantage. A hospital that is not
able to define its needs based on the needs of the community is suffering from a blurred vision.
Due to the lack of financing, it is recommended that the economic realities of health care delivery
demand efficient use of location, structure, equipment, and staffing. They should look beyond present
realities by taking advantage of the lessons learned and project towards the future.
With the establishment of the General Governmental Hospital in Beirut, the big bulk of patients (the
poor) will go there. Private non-profit hospitals will lose some of the government subsidies, and be
more under the control of third party payers. It is recommended that these hospitals create services
that are characterized by a high value-added service, capable to attract the Lebanese rich, as well as
the surrounding Arab patients. Those who look for high quality medicine but cannot afford American
nor European hospitals costs- and thus focus on the core of service providing best quality at lowest
cost.
Hospitals have a common service area, Greater Beirut. They are tied by both financial and economic
constraints, these hospitals should start thinking of cooperation and collaboration among themselves
in order to overcome the coming future threats. They have to meet the patients demands, especially if
aiming to accomplish the same mission to provide the best quality health care at the lowest possible
costs. The biggest threat, the Lebanese hospital sector will face in general, is that the Lebanese
government will not be able to provide protection to the market once the whole region becomes one
unified big market.
Facing the increasing flow of threats, as a result from global competition, needs that hospitals unite in
a sort of a multi-system network capable to provide specialized services, under the supervision of a
high council of hospital representatives and government support. Specialized hospitals will be very
efficient in their strategic plans because each hospital will increase its potentials many folds and will
be characterized by a strong combination of cost leadership and differentiation business strategies.
Eliminating duplication of services will increase the hospital potentials to focus on market
segmentation.
Moreover, building a consortium of hospitals meets the vision of the Hospital Service of the Twenty-
First Century (Bardawil, 1993, p.3). In such a system, the patient encounters focused service,
dedicated to the delivery of an effective high quality service. Two distinct elements are apparent:
1. Specialized Hospitals, in which the more complex, dependent, major cases are treated and
supported by a high level of technology and specialized skills.
2. General Hospitals, undertaking the care of the large volume of lower risk cases, which by
virtue of technological developments can largely be cared for on an ambulatory or short
stay basis.
Finally, directors should focus on upgrading their personnel in all aspects affecting the performance
directed to deliver quality health care. The training and development of staff, administrative or
technical, is a must to face the realities of the next century and to prepare people to face change which
is a never ending challenge to all institutions.
Limitations of This Study
1. This is an exploratory step into the realm of strategic management as applied in Lebanese
Hospitals, so the sample is pretty small overall. However, such a study could be a
cornerstone for further research. At this moment, no generalizations could be drawn.
2. Some major hospitals took the decision of not participating, a fact that could impact the
results presented here in.
3. The secrecy surrounding the financial practices did not allow the researchers to study
further the hospital financial performances and matching those to the overall strategic
plan.
Acknowledgement
The researchers thank the Lebanese American University for the full support on this work, which was
best manifested by the Dean of the Business School, Dr. Tarik Mikdashi. They also are
indebted to the directors who participated in this study for their full cooperation and insight.
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04/2001; In proceeding of: the 9th Arab-International Health & Hospitalization Congress, Beirut, Lebanon

Assessment of Strategic Management Practice in Private Non-Profit Hospitals in

Hussin J. Hejase1, Dima A. Baltagi 1, and Kassem Kassak2

Keywords: Lebanon, Non-Profit Hospitals, Private Hospitals, Strategic Management

Definition of Strategic Planning and Strategic Management

Strategic management can be defined as a continuous, iterative process aimed at keeping an

a. Determine the organizations mission.

Benefits of Strategic Planning

Strategic managements emphasis on assessing the organizations environment allows firms to

Strategic Management of Private Non-Profit Hospitals

What is Strategic Planning and Strategic Management to Hospitals?

1. An ongoing process: Strategic planning is a continuous process of analysis, decision making

Information and Tools Needed

Other Supporting Tools: Scenario Building and Matrix Analysis

The Planning Mindset

Innovation, Culture, and Excellence

Who does the Planning?

The Appointed Committee

i. Assemble the planning team.

The Physicians Role

In contemporary management, planning is considered to be a participative function. It underlies

Solicitation of Expert Opinion?

The Strategic Planning Process

Figure 2. The Strategic Management Process

Feedback: Corrective Action

(1) SWOT Analysis which consists of another two steps:

II. Internal environment analysis.

(2) The development of the organizations vision, mission, and goals.

Exhibit 1. Purpose of Corporate Philosophies (Rathwell, 1987)

To provide a framework which governs the relationship between the

Exhibit 2. Eight Questions Leading to a Comprehensive Mission Statement

1. What is our reason for being? What is our basic purpose?

1. They address both financial and non-financial issues.

Step Three: Strategy Formulation

Exhibit 3. Adaptive, Market Entry, and Positioning Strategies

Market Entry Strategies:

Step Four: Strategy Implementation

Implementing strategies is accompanied by change. Resistance to change, then, a natural aversion to

Step Five: Strategic Control

Strategic control, then, has the following process activities:

i. Take corrective action: move performance back in line with established

Need of this Study

Research Findings and Analysis

Table 1. Dates of hospitals establishment

Hospitals (Percentage) Date of Establishment

Table 2. Hospital function classification

Type of Hospital Percentage

Table 3. Directors education

Level of Education Percentage

Master in Hospital Administration 30 %

The Practice of Strategic Management

Strategic Management Process

How much strategic planning have been applied?

Strategic Planning Meetings

Which functions are driven by the strategic planning process?

Attitude toward Risk

Use of Information Technology

Table 4. Use of Information Technology

Use of Information Technology Percentage

Qualities Required by Top Management

Who Does the Strategic Planning?

Table 5. Activities Held by the Director of the Hospital

Table 6. Physicians Involvement in Governance