Anthem is a company that provides insurance to people across the US. Similarly to other healthcare establishments, the Affordable Care Act (ACA) has affected its performance and revenue due to significant policy changes. The challenges that impact the healthcare industry present a need for a thorough examination of them to create a strategy for enhancement of operations. This paper aims to analyze environmental factors that impact the business, directional statements of Anthem, gaps in desired and actual outcomes, and leadership practices.
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Firstly, PEST analysis helps identify specific components that influence Anthem’s work. Table 1 presents the results of the research and provides an understanding of the primary factors that will help determine the performance gap. The political factors primarily involve the Affordable Care Act because it is the most recent legislation that has affected the healthcare industry. According to Japsen (2018), Anthem decided to stop working in particular niches under the law and focus specifically on Medicare because of specific difficulties the company experiences with payments. Therefore, the factor affects Anthem negatively and presents challenges to leadership.
Table 1. PEST analysis table (created by the author).
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The directional strategy of Anthem implies a need to improve the health of the community simplifying the process of care delivery. The vision statement is as follows: “to be the most innovative, valuable and inclusive partner” (“Mission, vision, and values,” n.d.). The values prioritize community and leadership, together with integrity, agility, and diversity. The strategic direction of the company is to create value and grow by using new opportunities, which is reflected in its culture (“Business strategy,” n.d.).
Table 2 presents an organizational scorecard that reflects the mentioned plans and provides performance measures. Based on this information, it can be concluded that the strategy fits the external environment because it applies challenges from the PEST analysis that Anthem uses for growth.
Table 2. Anthem scorecard (created by the author).
|Objectives||Performance Indicators||Targets (Financial and Quality)|
|Financial|| || || |
|Customer Satisfaction|| || || |
|Internal Process|| || || |
|Learning and Growth|| || || |
Table 3. Anthem desired and actual outcomes analysis (created by the author).
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|Actual Outcome||Desired Outcome|
|Financial|| || |
|Customer|| || |
|Internal Process|| || |
|Learning and Growth|| || |
Anthem’s primary directional strategy is to serve the community and use opportunities provided by the external environment of the healthcare industry. The gap analysis revealed that several components are missing in the current strategic plan, most importantly the inability of the company to profit from the ACA program. Therefore, it is necessary to ensure that by 2020 Anthem will create and execute a plan, which would engage the company into the legislation and obtain revenue from clients. Table 3 reflects the primary performance measures derived from the balanced scorecard and presents a gap analysis.
Another gap that was revealed but not included in the table is the need for cybersecurity. In 2015, the company was subjected to an attack and suffered from a data breach resulting in a fine of $15,000,000 from the US Department of Health and Human Services (Landi, 2018). However, while the requirement is dictated by the external environment analysis and previous history, it does not relate to the directional statements; thus, it was omitted from the gap analysis and the scorecard.
It is evident that Anthem’s leaders should develop a strategy that would help close these gaps and achieve target outcomes. According to Hall and McCue (2016), the primary issue that insurers faced is the inability to price their services for ACA programs adequately. The authors state that only a quarter of companies was unable to profit after the implementation of the law; thus, the experience of competitors can be used to adjust Anthem’s approaches to the ACA.
Additionally, McWilliams, Chernew, Landon, and Schwartz (2015) state that many companies were able to reduce losses by joining the Pioneer accountable care organizations (ACO), while McCue and Hall (2015) offer to reduce administrative expenses. ACO allows healthcare providers to redistribute financials if income is below the benchmark, and lowering administrative spending would create better margins. The benefit of this method is the ability to reduce risks, while limitations involve the need to invest in ACO.
The recommendations regarding patient-centered care and chronic conditions care are focused on developing an educational program for the staff members. Both will allow Anthem to respond to the changes in client preferences and adhere to new branches of care provision. According to Bowen et al. (2015), continuous education impacts the ability to make health-related decisions and improves the quality of services. Therefore, it is crucial for Anthem to invest in these developing programs for its staff members. The benefit of the approach is the ability to improve professionalism, while the limitation involves a need to create new programs that would focus on chronic condition care.
Hoogg, Lysholm, Garvare, Weinehall, and Nystrom (2016) state that “monitoring, processing, and feedback and communication” are essential for managing large healthcare establishments (p. 133). Therefore, a scorecard and an appropriate process for controlling adherence to it should be implemented by Anthem. Anthem would benefit from this because executives will be able to measure performance and identify improvement requirements. The limitation involves a need to develop realistic targets that would not overburden the personnel.
Anthem’s leader has a critical role in shaping and implementing the recommended changes because most require the engagement of all company’s divisions and staff members. Essential competencies of success that determine the outcome of the program are flexibility that allows adjusting plans according to the requirements of the external environment. Friedman (2018) states that “an important truism in healthcare today is that change is the only constant” (para. 1). Thus, transformational practices and approaches should guide the leader in this work. This would allow managing change while adhering to the current culture and directional statements, which emphasize the need to serve the community and use new opportunities.
Overall, Anthem’s PEST analysis revealed several critical components that the company’s leadership has to consider when creating a strategic plan. Most challenges arise from the ACA and its implications because the establishment was unable to profit from the ACA program in 2018. The scorecard and gap analysis tables present an outline of actions that should be taken to improve Anthem’s performance in regard to the financial and quality targets.
American Hospital Association. (2018). 2018 environmental scan. Web.
Bowen, J. L., Hirsh, D., Aagaard, E., Kaminetzky, C., Smith, M., Hardman, J., & Chheda, S. G. (2015). Advancing educational continuity in primary care residencies: An opportunity for patient-centered medical homes. Journal of the American Geriatrics Society Expert Panel on Person‐Centered Care, 64(1), 15-18. Web.
Business strategy. (n.d.). Web.
Friedman, L. (2018). Transformational healthcare leadership competencies. Web.
Hall, M. A., & McCue, M. J. (2016). How has the Affordable Care Act affected health insurers’ financial performance? Issue Brief (Commonwealth Fund), 18, 1-14.
Hoogg, E., Lysholm, J., Garvare, R., Weinehall, L., & Nystrom, M. E. (2016). Quality improvement in large healthcare organizations: Searching for system-wide and coherent monitoring and follow-up strategies. Journal of Health Organization Management, 30(1), 133-153.
Japsen, B. (2018). Shift from Obamacare to Medicare advantage boosts Anthem profits. Forbes. Web.
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Landi, H. (2018). Anthem agrees to record payment—$16M—for largest U.S. health data breach. Healthcare Informatics. Web.
McCue, M. J., & Hall, M. (2015). Health insurers’ financial performance and quality improvement expenditures in the Affordable Care Act’s second year. Medical Care Research and Review, 72(1), 113–122. Web.
McWilliams, J. M., Chernew, M. E., Landon, B. E., & Schwartz, A. L. (2015). Performance differences in year 1 of pioneer accountable care organizations. New England Journal of medicine, 372, 1927-1936.
Mission, vision and values. (n.d.). Web.
Smith, N. (2018). Health-care costs are still eating the U.S. economy. Bloomberg. Web.