Griffith University 7323MED: Strategic Decision Making in Healthcare

This assignment addresses strategic decision-making in healthcare, focusing on two key questions from a Griffith University health service management course (7323MED). The first question explores how power influences decision-making within healthcare organizations, emphasizing the impact of various stakeholders, resource constraints, and the exercise of discretion. The second question contrasts rational decision-making with bounded rationality, providing examples of each. Rational decision-making is presented as a structured process, while bounded rationality acknowledges limitations in information, analytical capabilities, and time constraints. The assignment uses examples to illustrate the application of these concepts and supports the analysis with relevant academic sources.

Running Head: DECISION MAKING 1
Strategic Decision Making in Healthcare
Name of Student
Name of Professor
Institution Affiliation
Date

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Question 1
Healthcare organizations, just like any other organizations usually have a system of
power. Healthcare organizations are complex because of the many people and different
professions involved, and hence, there must be power in order to ensure effective operations of
healthcare. In healthcare organizations, everyone has his/her angles, preferences, interests,
values, and beliefs. There are also insufficient resources. These two conditions require that
power be exercised to ensure the smooth running of healthcare organizations (Largent, 2016).
Power has been known to influence decision making in healthcare through the following ways;
Power and Decision making in Healthcare
Decision making is usually at the cornerstone of any management. For a manager to be
able to formulate rational and correct decisions, he/she should first gather sufficient information
and select the best option considering the consequences of the choices. Authorities require
legitimate powers in order to be capable of making decisions in an effective way. The success of
any organization primarily depends on the capability of the managers to formulate effective
decisions and foresee the possible consequences of the decision. This has ensured success even
in the healthcare system since anticipating the future of a decision helps in avoiding options that
cannot be accomplished. The capability of any organization to avoid undertaking
unaccomplishable tasks helps in saving time and resources (Oloko & Ogutu, 2017).
Power is also important when conducting discretion during the decision making process.
Discretion encompasses choosing the best option from the available alternatives. Managers who
have powers tend to exercise discretion in a better way. Even the perception that a manager can
be able to conduct discretion gives the manager more power in a decision making process

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(Rushefsky & Patel, 2016). The selection of the best option is crucial since it helps in saving the
healthcare organization's resources and ensure effectiveness in the delivery of services. For
instance, when treating a patient, a doctor in healthcare is able to determine the most effective
way of addressing the patient situation. The powers given to doctors are enough for him/her to
make a decision on the best treatment option. This is essential because if they are not given the
power, they may waste more time and resources consulting with other medical personnel. This
could also result in jeopardizing the health condition of the patient (Gray, Nolan, Clayman &
Wenzel, 2019).
Powers are essential when making a decision regarding resource allocation. Given the
fact that resources are scarce in healthcare, an effective distribution is critical. Some resources
tend to be more crucial in an organization as compared to others. Resources required in
healthcare may include; personnel, medicines, first aid kits, funds, and wards. To ensure
effective operations in healthcare, powers are necessary when making a decision concerning
resource allocation. For instance, in any healthcare organization, more resources should be
allocated to medicine; this is because medicine form the basis for any healthcare organization.
Medications are very important in any healthcare for ensuring patient wellbeing (Rushefsky &
Patel, 2016).
Question 2
A good strategic decision making in healthcare needs the understanding of reality, which
is different from the perceived environment. The real context is characterized by three explicit

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tradeoffs, that is service or program variety, patient problems, and patient access. The strategic
decision making remains viable through constant reviewing, thus enabling the health
organization to adapt to environmental changes. The differences between rational decision
making and bounded rationality may include.
The difference between rational decision making and bounded rationality
Rational decision making
The rational decision making in healthcare is the desire to improve the health of humanity, thus
helping health personnel to reach an optimal outcome. The sensible decision process consists of
careful and methodical steps that are strictly followed. The steps of the rational decision-making
process include;
1. Identifying a problem
Identifying a problem seems to be easy, but the lack of identification of a problem leads to the
downfall of decision making. Sometimes identifying the main problem is difficult and requires
serious thought.
2. Establish decision criteria
The decision-maker has to consider what is relevant through involving the interest, taste, and
preference of other stakeholders in the decision-making process.
3. Weigh decision criteria
After identifying several decisions to make, it is essential to weigh in order to come up with the
correct and most appropriate priority in the decision.
4. Generate alternatives

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After identification of the issue and gathering of the required information, it is essential to list
potential options and their solution.
5. Evaluate alternative
Evaluate each alternative by considering the desirable choice and the reason why it is desirable.
The cases where alternative seems feasible equal and unrealistic, consider the challenges and
merits of each alternative.
6. Select the best alternative
After a careful evaluation of alternatives, you should indicate the decision made to avoid
confusion. The decision may arise from options earlier listed or from the alternatives (Gershman,
Horvitz & Tenenbaum, 2015).
Despite having strict steps to follow, the rationality process does not guarantee that the
decision making is free from mistakes, but it accounts for the consequences of the action.
Examples of rational decision making are descriptive and normative theories. The descriptive
theory explains how people make their decisions, while normative theory describes how people
should make their decisions (Halpern & Stern, 2018).
Bounded rationality
An example of bounded rationality in healthcare is where a doctor may adopt non-
pharmacological treatment methods like Behavioral Therapies.The concept of bounded
rationality explains that human knowledge and capacities are limited and imperfect due to the
following limitations.

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When making decisions, it is impossible to access all relevant information required, and in many
cases, information obtained is full of mistakes.
Decision-makers have inadequate analytical and computational abilities. Decision-maker make
an imperfect judgement on their information and in the evaluation process (Robb, Babiarz,
Woodyard, & Seay, 2015).
The decision-maker has limited time to make a decision, thus letting the real-life situations
provide life constrain.
Thus considering the above limitations, the theory bounded rationality must be willing to adopt
the theory of rational approach (Gigerenzer& Gaissmaier, 2015).

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References
Gershman, S. J., Horvitz, E. J., & Tenenbaum, J. B. (2015). Computational rationality: A
converging paradigm for intelligence in brains, minds, and machines. Science, 349(6245),
273-278.
Gigerenzer, G., & Gaissmaier, W. (2015). Decision making: Nonrational theories. In
International encyclopedia of the social & behavioral sciences (pp. 911-916). Elsevier.
Gray, T. F., Nolan, M. T., Clayman, M. L., & Wenzel, J. A. (2019). The decision partner in
healthcare decision-making: A concept analysis. International journal of nursing studies.
Halpern, J. J., & Stern, R. C. (Eds.). (2018). Debating rationality: Nonrational aspects of
organizational decision making. Cornell University Press.
Largent, E. A. (2016). Health care organizations and the power of procedure. The American
Journal of Bioethics, 16(1), 51-53.
Oloko, M., & Ogutu, M. (2017). Influence of power distance on employee empowerment and
MNC performance: a study of multinational corporations in Kenya.
Robb, C. A., Babiarz, P., Woodyard, A., & Seay, M. C. (2015). Bounded rationality and use of
alternative financial services. Journal of Consumer Affairs, 49(2), 407-435.
Rushefsky, M. E., & Patel, K. (2016). Politics, Power and Policy Making: Case of Health Care
Reform in the 1990s: Case of Health Care Reform in the 1990s. Routledge.

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