Two Important Reasons Why Strategic Formulation Is Important To Hospitals

Strategic Formulation
1. Introduction

There are two important reasons why strategic formulation 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 formulation 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.

1.1. Healthcare industry in Sri Lanka
Sri
The capacity concentration was moderate, with the top five hospitals accounting for ~45%. Public-sector hospitals are engaged in both curative and preventive care, while the private sector is focused mainly on the former – in light of the commercial viability of providing such care. A study published by the Institute for Health Policy in 2015 concluded that the quality of treatment and management of inpatient care was actually better in the public sector despite being available at a lower cost. According to the same survey, the quality of assessment and investigation was more comparable across the two providers (R. P. Rannan-Eliya et al., 2015). Sri Lanka’s total healthcare expenditure as a percentage of total GDP is one of the lowest in the world at 3.24% (as of end-2013), of which only 44% was spent by the government despite a free universal health care system. Patients who are treated at state hospitals are still required to obtain certain drugs and medical tests at their own expense, which has resulted in private healthcare spend remaining above government spend. Of the private spend, 83% constituted out-of-pocket spend as medical insurance penetration is still at a very nascent stage in Sri Lanka. Yet healthcare per capita in Sri Lanka is significantly higher than in most other Asian and middle-income countries. This is reflected in high hospital bed
The Act controls the registration, regulation, monitoring and inspection of private medical institutions. The Sri Lankan hospital sector as a whole – and private hospitals in particular – is strongly positioned to benefit from favorable macro and demographic trends in the country. The administration which came into power in early 2015 has made it a priority to improve the healthcare system, and has allocated 3% of GDP for healthcare in its 2015 budget compared with 1.4% in 2014. We believe this will provide an incentive for the private sector to boost investment in order to keep pace with the public sector(Senarathna, Mannapperuma, & Fernandopulle, 2011). Sri Lanka has one of the highest and fastest-aging populations in the world. The number of people over 65 years, at 8.7% of the population (2004: 6.9%), is expected to almost double by 2030, requiring significant expansion across the board in the healthcare sector. A special focus is on geriatrics, which most hospitals are not equipped to handle. The private sector would have a large role to play in plugging the demand/supply gap, as government’s capex on healthcare has amounted to only a 4% CAGR over the past seven years (Suraweera, Hanwella, Sivayokan, & De Silva,