NUFFIELD HEALTH

Macro & Micro Environment- Nuffield Health



Macro & Micro Environment- Nuffield Health

Introduction

This paper analyses the environmental aspects for a registered charity organization in UK. Specifically, this paper identifies the key aspects of macro and micro environments of Nuffield Health which is a UK registered charity organization. The paper also explores the SWOT, GAP and the competitor analysis regarding the topic.

Discussion

Nuffield Health (Nuffield or 'the company') is a charity and a non-profit independent healthcare provider in the UK. It is primarily engaged in the operation of private hospitals and nursing homes (Christopher, 2009). It also provides mobile surgical facilities and health and fitness centres. The company primarily operates in the UK, where it is headquartered in Surrey, the UK and employs around 9,991 people.

Macro and Micro Environment

Hospital profit margins decreased in the five years to 2011, despite increases in the prices charged for hospital care. This decline is partly because of an increase in the cost of inputs and a fall in occupancy, an increase in uncompensated care, and losses generated by caring for Medicaid patients. Medicaid reimbursement does not fully cover the cost of care, and Medicaid enrolment is increasing due to higher unemployment rates(Lauterborn, 2010).

During the past five years, the number of nonprofits and government-run hospitals has moderately decreased from about 10.4% in 2007 to 11.5% in 2011. This aspect has helped buoy profit during the economic recession. Nonetheless, in 2008, operating profit margin fell to 2.6% of revenue, down from 6.9% in the previous year. In 2011, profit margin remained suppressed, at about 2.4% of revenue due to low reimbursement from federal programs and mounting wage costs.

Wages as a percentage of revenue are about 38.4% in 2011, slightly up from 2007. This percentage varies by hospital type. During the economic recession, many hospitals reduced staff in administrative functions; however, hospitals have struggled to employ more physicians and nurses. Labour shortages and greater use of relatively expensive agency staff and other contracted labour have driven up wage expenses.

Trends that can make it difficult to reduce doubtful debts as a percentage of revenue include payer mix shifts to managed care (with greater patient co-payments and deductibles), and an increase in the volume of services provided to uninsured and under-insured patients. Any increase in unemployment can also contribute to growth in doubtful account provisions (McCarthy, 2008).

Other major expenses include supplies (e.g. medical equipment and devices and pharmaceutical supplies), which account for an estimated 17.0% of industry revenue. They also include asset depreciation and amortization (mainly buildings and medical equipment), accounting for an estimated 5.0% of revenue. Other expenses include repair and maintenance, consulting, malpractice and information systems.

Hospitals are also augmenting offerings in specialty areas in direct response to mounting competition, most notably in cardiac catheterization and angioplasty services, according to data from the American Hospital Association (AHA).

SWOT analysis

Strengths

Hospitals in profitable large urban areas driving growth in inpatient revenues.

Nuffield Health, through its facilities located in the high growth urban areas in the UK, has recorded consistent ...