MHA 515 Week 1 Environmental Scan of the Health Sector Example

$5.3 Trillion and Rising: An Environmental Scan for a Tucson Health System's Five-Year Plan, From National Spending to Care at Home

[Student Name]

University of Phoenix

MHA/515: Scanning the Health Sector as an Industry Expert

Week 1 Assignment

[Instructor Name]

[Date]

The health system, its planning team and priorities are composites written for a model paper; national figures and research findings come from the sources cited.

The chief executive of a composite Tucson, Arizona, nonprofit system with three hospitals opened the strategic planning retreat with a question for the director of strategic planning: what will the world around us look like in five years, and what should we do about it? This paper presents the director's environmental scan, the method behind it and the priorities it produced.

Why Scan

Environmental scanning is the systematic collection and interpretation of information about the external environment so that leaders can anticipate change rather than react to it. A health system's plan built only on its own history assumes the future will resemble the past, which the last five years have shown is unwise.

Setting the Scope

The director set three boundaries. The time horizon was five years, matching the strategic plan. The geographic focus was national trends with local effects on southern Arizona. And the scan would inform four decisions: capital investment, service line growth, workforce strategy and partnerships.

Domains and Sources

The scan used six domains: economic, coverage, demographic, technological, policy and workforce. Sources were chosen for authority and currency: federal spending accounts and projections, peer-reviewed research, federal agency data and state reports. Each finding was recorded with its source and date.

Economic: Spending Keeps Rising

National health spending reached $5.3 trillion in 2024, rising 7.2% after 7.4% growth in 2023, as use and intensity of services grew rapidly, especially for hospital care, physician and clinical services and prescription drugs; the health share of the economy rose from 17.7% to 18.0% (Hartman et al., 2026). Demand, not only price, drove growth.

Economic: The Projection

The federal government's actuaries expect health spending to climb by an average of 5.8% a year from 2024 to 2033, faster than the economy's projected 4.3%, reaching 20.3% of gross domestic product by 2033 (Keehan et al., 2025). Growth is expected to slow to about 5.6% a year in 2026 and 2027. Spending will keep outgrowing the economy, which means payers will keep pushing back on price.

Coverage: A Turning Point

The insured share of the population was 91.8% in 2024, down from a peak of 92.5% in 2023 (Hartman et al., 2026). The actuaries attribute part of the expected slowdown in 2026 and 2027 to a decline in insurance coverage following the expiration of temporarily enhanced marketplace premium tax credits (Keehan et al., 2025). For a system with a large marketplace and Medicaid population, fewer insured patients means more uncompensated care.

Demographic: An Older Region

Southern Arizona has a large and growing population of older adults, including seasonal residents in winter. Older adults use more hospital care, more chronic disease management and more post-acute services, and many prefer care close to home.

Technological: Care Moving Home

Technology is enabling care outside hospital walls. In a randomized trial of adults needing hospital admission for acute illness, those treated at home had a 38% lower adjusted cost of the acute episode, far fewer lab draws, scans and specialist consults, less of each day spent lying down and 30-day readmissions of 7% compared with 23% for usual hospital care (Levine et al., 2020).

Technological: Artificial Intelligence

Artificial intelligence tools for documentation, scheduling and imaging are spreading quickly, with vendors making large claims. Evidence is emerging but mixed, and the director flagged the area for a separate validation review.

Policy

Federal payment policy continues to push care from inpatient to outpatient settings, expand price transparency and test payment for value. Federal authority for hospital care at home has depended on short-term extensions, which makes large investment in it risky until the policy settles.

Workforce

Nursing and physician shortages, high turnover and burnout constrain every growth plan. Labor is the system's largest cost, and wage growth after the pandemic has raised it.

Local Evidence

National trends matter only as they reach Tucson. The director checked each against local data: the system's own payer mix, which showed marketplace and Medicaid patients making up a larger share of admissions than the national average; state workforce reports showing vacancy rates for registered nurses above the national level; and the system's admissions by age, which showed patients 65 and older accounting for a growing share each winter. Local data confirmed that the national trends would arrive with at least full force.

Competitors Are Scanning Too

Other organizations are reading the same signals. A national outpatient surgery company had recently bought land near the city's fastest-growing suburb, and a large physician group had begun offering home visits for older patients. Competitive moves are themselves part of the environment and often reveal which trends others believe are real.

Stakeholder Input

The director tested the draft scan with physicians, nurse leaders, board members and two community advisory groups. Physicians questioned whether hospital care at home could work in a region with long travel distances, which lowered its likelihood rating. Community members raised transportation and heat as barriers to care for older adults, which the scan had missed.

Rating the Trends

Each trend was rated on impact on the system, from one to five, and likelihood over five years, from one to five. Rising spending with payer pressure, coverage losses, workforce shortages and the aging population scored high on both. Hospital care at home scored high on impact but moderate on likelihood because of policy uncertainty. Artificial intelligence scored moderate on both pending evidence.

Signals Worth Watching

Three signals were placed on a watch list rather than in the plan: payment policy for care at home, results from larger trials of artificial intelligence tools and changes in state Medicaid eligibility. Each has an owner who will report changes quarterly.

Three Priorities for the Board

The scan produced three priorities. First, build capacity for older adults across settings, including home-based and outpatient services. Second, prepare for more uninsured patients by expanding financial counseling and enrollment help and modeling uncompensated care. Third, make workforce stability the foundation of the plan, since every growth option depends on it.

Implications for the Four Decisions

For capital, the scan favors outpatient and home-based capacity over new inpatient beds. For service lines, it points to geriatric and chronic disease services. For workforce, it supports retention and pipeline investment. For partnerships, it suggests alliances with home health and post-acute providers.

Limits of the Scan

Projections are uncertain, especially for coverage and policy. National data may not reflect southern Arizona. The ratings reflect the judgment of the planning team.

Keeping the Scan Current

The scan will be updated every year, with quarterly reports on the watch list, so the plan adjusts as the environment changes.

Conclusion

The environmental scan answered the chief executive's question with evidence rather than intuition. National spending and projections, coverage changes, demographics, technology, policy and workforce trends, rated by impact and likelihood, narrowed to three priorities. Separating trends from signals kept the plan grounded while preparing the system to act as the environment shifts.

References

Hartman, M., Martin, A. B., Lassman, D., Catlin, A., & The National Health Expenditure Accounts Team. (2026). National health care spending increased 7.2 percent in 2024 as utilization remained elevated. Health Affairs, 45(2), 110-120. https://doi.org/10.1377/hlthaff.2025.01683

Keehan, S. P., Madison, A. J., Poisal, J. A., Cuckler, G. A., Smith, S. D., Sisko, A. M., Fiore, J. A., & Rennie, K. E. (2025). National health expenditure projections, 2024-33: Despite insurance coverage declines, health to grow as share of GDP. Health Affairs, 44(7), 776-787. https://doi.org/10.1377/hlthaff.2025.00545

Levine, D. M., Ouchi, K., Blanchfield, B., Saenz, A., Burke, K., Paz, M., Diamond, K., Pu, C. T., & Schnipper, J. L. (2020). Hospital-level care at home for acutely ill adults: A randomized controlled trial. Annals of Internal Medicine, 172(2), 77-85. https://doi.org/10.7326/M19-0600