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Instructions: 

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  2. Read and complete the SWOT Assignment

What is a SWOT
A SWOT is basically a strategic analysis of some scenario in which a decision is needed. The

acronym SWOT stands for Strengths, Weaknesses, Opportunities and Threats. What we

want to do is develop a listing of all the factors in a situation that fit in the Strengths category,

the Weaknesses category, the Opportunities category and finally the Threats category.

Read the following excerpt and place all of the factors you can find in the proper category.

Example: Executive Summary

This business plan has been developed to present NovOculi, Inc. to prospective investors and to

assist in raising equity capital needed to begin production and to continue research and

development of its patented products.

The Company
NovOculi, Inc. is a start-up company that has designed and plans to develop and market

ophthalmological surgical tools and techniques. During the past two years, NovOculi’s principals

have had extensive experience with refractive correction techniques (both laser and non-laser

based). Building on this experience, the principals have developed and begun testing a unique

method of incisionless refractive correction dubbed NICS (Non-Invasive Corneal Sculpting).

Current refractive techniques, including LASIK, PRK, and Intacs, all require destruction of at

least a portion of the protective epithelial layer overlying the cornea of the eye and are

accompanied by complications resulting from this loss of protection. The principals have

developed a method involving iontophoresis, an ionic dye and a wavelength-specific laser to

accomplish effective refraction without the troublesome destruction of epithelium.

Using NICS, NovOculi plans to take advantage of the opportunities for market development and

penetration in the field of laser refraction in which demand is nearly doubling each year.

Based on the detailed financial projections prepared by the company’s management, it is

estimated that equity investment is required to begin the company’s operations successfully.

Funds will be used to produce, test and market NICS, as well as provide initial working capital

for the first two years.

Market Potential

A massive potential market base exists for the laser refractive surgery industry. It is estimated

that approximately 54% of the U.S. population (~162 million) has refractive errors,

approximately 90% of which are eligible for correction using current techniques or those on the

near horizon (Federal Air Surgeon’s Medical Bulletin). In contrast, only 900,000 Americans have

had LASIK (the most popular laser correction technique) as of two years ago. This represents

only 0.6% of the total current market, leaving the other 99.4% untapped. (“Bye-Bye Glasses,”

EyeCare Business Online). Furthermore, the demand for laser refractive surgery is

approximately doubling annually (“Bye-Bye Glasses,” EyeCare Business Online,).

The company has contacted nine of the leading ophthalmological medical institutions in the U.S.

Seven of the nine have expressed interest in participating in collaborative research and, given

encouraging research results, performing NICS commercially once it is available. Institutions

expressing interest include: John Hopkins, Harvard, Stanford, Oregon Health Sciences, Duke

University, and the University of California at San Francisco.

NovOculi’s principals have also conducted a preliminary market survey at a local grocery market

in the Durham, NC area. Fifty consumers with refractive errors were randomly selected outside

of a local grocery market and asked the questions in the survey. A copy of the survey and a

summary of its findings may be found in the Market Survey topic.

Technology
The principals have developed and patented a revolutionary technique, NICS, and two novel

devices which are used to accomplish incisionless refractive correction. The patented technique

involves driving an ionic dye from its patented polymeric vehicle into the cornea of the patient

using the patented iontophoretic device (a device that creates a charge which then repels or

attracts other charges). Once the ionic dye has been effectively driven into the cornea and away

from sensitive structures, a laser tuned to the wavelength of the dye is then used to target the

dyed cornea and alter its shape, much as is done with current laser refraction protocols. After the

procedure is completed, the iontophoretic device is reapplied, this time with opposite polarity,

and the dye is drawn from the cornea due to the attraction of opposite charges. Through the use

of the patented device and technique, the ophthalmologist performing the procedure will be able

to avoid the most troublesome and complication-ridden aspect of current laser refraction surgery:

the corneal incision. Over 90% of all complications of current laser refraction surgery are related

to difficulties associated with the incision and the subsequent healing process, virtually all of

which could be avoided with NovOculi’s technology.

Strategy
The key element in NovOculi’s strategy is to market its technology to both those performing the

procedure as well as to those on which the procedure will be performed. Once research data and

publicity have been generated, the sales force will step in to encourage the initial investment in

the laser and equipment required for the procedure, creating a “demand push.” After this

investment has been made, a “demand pull” will be generated for the components required for

institutions to perform the procedure through marketing directly to patients.

The sales team will begin with six seasoned sales personnel and swell to forty-four members by

Year 5. The sales team will work closely with laser manufacturers in order to promote the

technology to patients and surgeons.

Ophthalmologist training for the NICS procedure will be available at six sites throughout the

U.S.: San Francisco, Boston, Atlanta, Philadelphia, Kansas City, and Durham, NC. Each site will

have in-depth training sessions led by a prominent ophthalmic surgeon.

Those performing the procedure will be able to charge a premium for providing patients with

access to this superior technology. NovOculi will extract approximately half of the nearly $1,000

premium through licensing fees associated with its patented procedure and sales of the individual

components.

Regulatory Issues

As with its predecessor, LASIK, the company’s product will not need to wait for FDA approval

prior to widespread use. LASIK had been performed on almost 900,000 patients without

approval by the FDA as of two years ago (Current Trends in Refractive Eye Surgery, 128th

Annual Meeting of APHA).

This was made possible due to the fact that the “FDA does not approve procedures, only the

equipment used in them” (“Eye centers set their sights on LASIK surgery growth,” Houston

Business Journal, July 16) and the components of the procedure have already been approved by

the FDA for medical use. NovOculi will not need to obtain approval to market their

patented technique and devices due to the fact that the FDA has approved similar devices for

medical use in the following arenas: 1) The 440 nm laser has been approved for dermatologic

uses. 2) Iontophoretic devices has been approved for drug delivery on the epidermis. 3)

Polymeric contact lenses have been approved and are commonly used as an external aid for

refractive correction, and 4) The targeting dye, tartrazine, is the most ubiquitous food coloring

additive on the market to date.

Major Milestones
The following are key milestones for the startup period:

 Completion of strategic business plan nine months before starting date.

 Research grants applied for by seven months before starting date.

 All patents, domestic and foreign, applied for by six months before starting date.

 Start-up capital raised by starting date.

 All other first-year milestones are currently on schedule in accordance to the business

plan.

Competitive Advantage

NovOculi is uniquely positioned to take advantage of this market opportunity due to its

protected, proprietary positions. Three patents have been filed in the U.S.: one for protecting the

reversible iontophoretic device, the second protecting the technique involved in NICS, and the

third protecting the unique vehicle for the ionic dye.

The principals, to date, have spent ample time on development and research of the current

products which will satisfy the market demand for a safer, less complicated laser refraction

correction technique.

Financial Summary
Based on detailed financial projections, if the company receives its funding, it will operate

profitably by Year 4 with a hefty net profit. The following chart summarizes the projected

financial information.

Assignment:
Now you try it!! Develop your own SWOT for the following:

HCA was founded in 1968, in Nashville, Tennessee by Dr. Thomas F. Frist, Sr., Jack C. Massey

and Dr. Thomas F. Frist, Jr.. Frist Sr. is the father of former U.S. Senate majority leader Bill

Frist. Milton Johnson is the CEO of HCA.

The first hospital that HCA owned was Park View Hospital, near downtown Nashville.[3] The

small group of founders worked out of a small house not far from Park View for the first few

years of operation.[4]

In 1969, HCA conducted its first Initial Public Offering (IPO) on the New York Stock Exchange

(NYSE).[3] As HCA grew, the small house that served as office space for the company no longer

provided enough space. In 1972, the company built a new office to house corporate operations

behind Centennial Park in Nashville.[5]

Parkview Hospital circa 1968

Growth & merger

During the 1970s and 1980s the corporation went through a tremendous growth period acquiring

hundreds of hospitals across the United States which numbered 255 owned and 208 which HCA

managed.

In 1988, the hospital operator was acquired for $5.3 billion in a management buyout led by

Chairman Thomas F. Frist, Jr.[6] and completed a successful initial public offering in the 1990s.

In 1993 HCA merged with Louisville-based Columbia Hospital Corporation to form

Columbia/HCA. In April 1998, Birmingham, Alabama-based HealthSouth Corporation

announced it was acquiring the majority of HCA’s surgical division.

Fraud & investigation

In 1997, the company was part of a fraud investigation initiated by a number of governmental

departments in the United States. Later that year, Rick Scott resigned as Chairman. He later

became the 45th and current Governor of Florida. The case was settled in 2002 at a reported cost

of $2 billion to HCA. This made it the largest fraud settlement in US history.

On March 19, 1997, investigators from the FBI, the Internal Revenue Service and the

Department of Health and Human Services served search warrants at Columbia/HCA facilities in

El Paso and on dozens of doctors with suspected ties to the company.[7] Following the raids, the

Columbia/HCA board of directors forced Rick Scott to resign as chairman and CEO.[8] He was

paid a settlement of $9.88 million and left with 10 million shares of stock worth over $350

million, mostly from his initial investment.[9][10] In 1999, Columbia/HCA changed its name back

to HCA, Inc. HCA also admitted fraudulently billing Medicare and other health programs by

inflating the seriousness of diagnoses and to giving doctors partnerships in company hospitals as

a kickback for the doctors referring patients to HCA. They filed false cost reports, fraudulently

billing Medicare for home health care workers, and paid kickbacks in the sale of home health

agencies and to doctors to refer patients. In addition, they gave doctors “loans” never intended to

be repaid, free rent, free office furniture, and free drugs from hospital pharmacies.[11][12]

After Scott stepped down, Frist Jr. returned as chairman and CEO. He called on longtime friend

and colleague Jack O. Bovender, Jr. to help him turn the company around. Frist and Bovender,

who became CEO in 2001, pulled off what Fortune magazine called a remarkable corporate

rescue.[13] In settlements reached in 2000 and 2002, Columbia/HCA pleaded guilty to 14 felonies.

They admitted systematically overcharging the government by claiming marketing costs as

reimbursable, striking illegal deals with home care agencies, and filing false data about use of

hospital space.

Corporate office in 1972

In late 2002, HCA agreed to pay the U.S. government $631 million, plus interest, and pay $17.5

million to state Medicaid agencies, in addition to $250 million paid up to that point to resolve

outstanding Medicare expense claims.[14] In all, civil lawsuits cost HCA more than $2 billion to

settle, by far the largest fraud settlement in US history.[15] The name subsequently reverted to

“Hospital Corporation of America.” HCA abandoned the use of its name in its home market and

instead promotes its Nashville hospitals under the TriStar brand.

On July 1, 2005, Senator Frist sold all of his HCA shares two weeks before disappointing

earnings sent the stock on a 9-point plunge. Frist claimed that he sold his shares to avoid the

appearance of a conflict of interest if he ran for president. Other executives sold their stock at the

same time. Shareholders sued HCA, alleging that the company made false claims about its

profits to drive up the price, which then fell when the company reported disappointing financial

results. Eleven of HCA’s senior officers were sued for accounting fraud and insider trading. [16]

HCA settled the lawsuit in August 2007, agreeing to pay $20 million to the shareholders.[17]

Recent history

In 2006, Kohlberg Kravis Roberts and Bain Capital, together with Merrill Lynch and the Frist

family (which had founded the company) completed a $31.6 billion acquisition of the hospital

company, making the company privately held again 17 years after it had first been taken private

in a management buyout. At the time of its announcement, the HCA buyout was the first of

several to set new records for the largest, eclipsing the 1989 buyout of RJR Nabisco. It would

later be surpassed by the buyouts of Equity Office Properties and TXU.[18]

On Friday May 7, 2010, HCA announced that the corporation would once again go public with

an expected $4.6-billion IPO.

As of 2012, HCA operated 162 hospitals and 113 freestanding surgery centers located in 20 U.S.

states and London.[2] The London sites include The Harley Street Clinic, The Lister Hospital,

London Bridge Hospital, The Portland Hospital for Women and Children, The Princess Grace

Hospital and The Wellington Hospital. In July 2007, HCA sold its hospitals in Switzerland.[19]

The Princess Grace Hospital specializes in breast cancer and surgery, aided by Professor Kefah

Mokbel and Dr. Nick Perry who, in 2005, founded The London Breast Institute.

HCA Holdings Inc. (HCA:US), the biggest for-profit U.S. hospital chain by patient volume,

raised its 2014 earnings forecast and said it would announce second-quarter earnings that are

higher than analyst estimates.

HCA expects 2014 earnings excluding certain items of $4 to $4.25 per share, compared with a

previous forecast of $3.45 to $3.75 per share, the Nashville, Tennessee-based company said in a

statement today. Second-quarter profit excluding some items will be $1.07 per share, compared

with 92 cents average estimate of 21 analysts surveyed by Bloomberg.

The results “exceeded our internal expectations, both in terms of our core operations and

healthcare reform,” said Milton Johnson, HCA’s chief executive officer, in a statement. HCA is

scheduled to release its full second-quarter results on July 29.

HCA expects second-quarter net income of $904 million, 12 percent above a year earlier,

according to its statement.

HCA shares (HCA:US) rose 10 percent to $60.99 at 4 p.m. New York time, the most since 2012.

HCA Corporation SWOT analysis:

Strengths:

Weaknesses:

Opportunities:

Threats: