Groundbreaking goals and strategies can be developed by reviewing the long-term vision and mission of an organization. Strategic planning efforts should answer, “Where is our hospital now?”, “Where should we be going?”, and “How are we going to get there?” An environmental assessment will address “Where is our hospital now?” Organizational direction and strategy will address “Where should we be going?”, and implementation planning addresses “How are we going to get there?”
Strategic planning initiatives are designed to improve financial performance, market positioning and mission success. A decentralized, but integrated, process should challenge healthcare leaders to broaden their system-wide horizons and justify long-term implications of significant capital expenditures with long-term strategic positioning improvements. In the process, healthcare leaders will review financial, operational, clinical and marketing realities to identify the most valuable allocations of resources for success. Such forecasting models as volume projection, facility configuration, care delivery, functional capacity, physician resources, financial capacity, and others must be analyzed.
It begins with forming a process of regularly scheduled meetings with executive, physician, administrative, service-line director and functional leadership. Structured systems for compiling and reporting internal and external data will be necessary. Using nonlinear methods such as sophisticated modeling; scenario studies; financial analytics; operational, primary and secondary research; and knowledge management systems will keep the strategic planning efforts focused and knowledge-based. Information is imperative. As Sir Arthur Conan Doyle had Sherlock Holmes state in his book The Adventures of Sherlock Holmes, “It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts.”
Strategic planning should also be a flexible, continuous, “rolling” process that is dynamic in nature. The ability to adapt to a changing environment will allow for quick adjustments of external factors vital for developing a culture of continuous improvement within an organization. As naturalist Charles Darwin said, “Survival under conditions of intense competition and accelerating change depends on the ability to adapt and take advantage of the [changing] environment better than others.”
Also critical is to assure the strategic plan accommodates a range of possible futures. Something which appears to be the best approach today may become less appealing as the world changes. The ability to make course corrections without having to overhaul the strategic plan needs to be preserved.
This may sound easier said than done. The Society for Healthcare Strategy and Market Development (SHSMD) of the American Hospital Association and Health Strategies & Solutions conducted a study in 2006 to gauge the sophistication of strategic planning in hospitals around the country. They found that although strategic planning seems to be well-adopted and used regularly in most hospitals, most leadership teams do not advance past vision and critical issues analysis as part of their process.
Suggested steps in the strategic planning process include:
- Long-term Vision
- Critical Issues Analysis
- Strategies Development
- Competitive Differentiation
- Trackable Benefits
- Spotlight on an Excellent Strategic Planning Process
- Launch Preparations
- System-wide Participation Strategy
- Creating a Culture of Strategic Management and Action
- Implementation and Feedback Stages
LONG-TERM VISION
Navigating through unclear health reform and unstable economic realities, hospital leadership works in an ever-changing, dynamic environment. The latest burning issue at hand draws focus from long-term vision. Pressure to produce quick results leads to short-term tactics—versus the ambitious long-term strategies that lead to the Cleveland Clinics of the world.
This is not to recommend turning a blind eye to immediate critical issues, but rather to begin each decision with the long-term vision of “who you want to be when you grow up” to align the planning efforts. Plus, properly setting priorities will help achieve the long-term vision and help prevent getting mired in the fires.
I urge you to keep the focus of this phase on the long-term vision of your organization. I would also recommend reading The Art of the Long View: Planning for the Future in an Uncertain World by Peter Schwartz, and keep in mind you are planning for a range of possible futures, not a single solution. Begin with an understanding of “Where is our hospital now?”, and “Where should we be going?”, and “How are we going to get there?” An environmental assessment will address “Where is our hospital now?”
INTERNAL ENVIRONMENTAL ASSESSMENT
The long-term-vision stage begins with an environmental assessment, which examines mission, philosophy and culture. Through this, the planning leadership should gain an objective assessment of past successes and failures. Understanding why former plans and implementation processes have worked and not worked will be invaluable when going into the coming stages of the planning process.
After reviewing past strategic processes, take a look at specific areas of success and failure within the organization. The numbers don’t lie, and they will unveil key opportunities to lead discussions. Areas of focus may include:
- Market share overall and by service line
- Out-migration statistics
- Profit & Loss statements
- Managed-care reimbursements
- Charity care, bad debt, Medicare, Medicaid mix
- Transfer agreements
- Referral statistics and physician liaison(s) logs for leakage issues
- Physician, employee and patient satisfaction scores
A recent study conducted by Forbes Insights and FD in conjunction with the Association for Strategic Planning and the Council of Public Relations Firms analyzed which initiatives would be considered strategic in your organization. The results are as follows.
- New market entry 71%
- Acquisitions or divestures 63%
- Business model transformation (e.g., pricing) 58%
- Repositioning or rebranding 57%
- New product launch 48%
- Reorganization 47%
- Sourcing/outsourcing 30%
- Channel transformation 29%
- Recapitalization 24%
- Technology platform replacement 23%
- Reengineering 23%
- Changes to the compensation model 23%
- C-level leadership training 17%
Source: Forbes Insights and FD
Keep in mind—this stage is entirely about your organization—not what your competitors are doing. This is your hospital’s visionary work, not a short-term reaction to an attempt to keep up or benchmark with local competition.
EXTERNAL ASSESSMENT
Now, it is helpful to conduct an external assessment to understand national and regional trends that are largely out of your organization’s control, but will have an effect on your strategic planning outcomes. The evaluation should include policy, technology and medical advancements. Consumerism, reimbursement and payers, work force, academic, economic and other trend assessments should be absorbed. Trend analysis should forecast the next three to five years. National best-practice review and benchmarking should also be conducted in this stage. The primary deliverable at the conclusion of this phase is the realignment of your vision and mission.
CRITICAL ISSUES ANALYSIS
Once the long-term vision is clarified, organizational critical issues should be attached. Organizational direction and strategy will address “Where should we be going?” A SWOT analysis (strengths, weaknesses, opportunities and threats) should be conducted at this stage. Once the critical issues are revealed in this process, utilizing Six-Sigma tools such as a KJ Analysis and affinity diagrams may help categorize the critical issues. These tools deliver a sense of objectivity to the work. Other tools, such as a QFD, can help prioritize them.
Once the critical issues have been determined and prioritized, they should be attached with a clear understanding of what defines “success.” Defining the goals is the key deliverable of this stage. This phase is entirely about “What needs to be done?”—and not “How will it be accomplished?” That is next.
Strategic planning goals may be developed around such areas as:
- A comprehensive fundraising program
- Implementing quality improvements
- Employee satisfaction initiatives
- Patient experience initiatives
- Human resources development programs
- Facilities improvement initiatives
- Medical staff development initiatives
- Program development
- Ambulatory care development
- Post-acute care programs
- Identity/branding initiatives
STRATEGIES DEVELOPMENT
Implementation planning answers the question “How are we going to get there?” Having a better understanding of the regional environmental shifts and competitive factors will help identify barriers to success. Competitive information has not been introduced before now because it creates too much temptation for hospital leaders to become distracted from the long-term vision of what “should be” by the pressure to react to immediate competition.
SECONDARY RESEARCH
Secondary research will take a close look at healthcare trends, shifting dynamics and best practices. I recommend site visits for this, which will provide a clear understanding of where your competition and affiliates stand in the marketplace.
- Competitive analysis
- Clinical quality
- Service offering
- Competitive media spend
- Share of voice
- Competitive advertising
- Competitive services offering set, awards, key differentiations
- Competitive positioning strategy and messaging
- Market trends
- Marketing audit
PRIMARY RESEARCH
Primary research gathered through the data analysis, executive interviews and secondary research will undoubtedly lead to important questions—and will likely expose differences of opinion. Ultimately, your hospital will need to create a strategic plan based on servicing all of its stakeholders. To determine the most effective approach for your business, you need to go right to the source by conducting quantitative surveys to your consumers, physicians (referring and non-referring) and employees; then conduct a GAP analysis on differences between your target audiences. You may want to follow up with the qualitative focus groups of each audience to glean further understanding as to why certain responses were chosen and how your hospital may reinforce or change those opinions or behaviors.
- Consumer research
- Physician research
- Employee research
- GAP analysis
- Cross-tab analysis
Once the data analysis is complete, executive interviews will reveal subtle issues not uncovered in the data, including political issues, cultural dynamics, physician alliances, as well as answers to questions developed in the data analysis phase.
STRATEGIC SERVICE LINE AND CROSS-FUNCTIONAL TEAMS
After the strategic planning team is fully aware of overall competitive, political, clinical, financial and operational issues creating barriers to achieving goals around the critical issues, the next step is to form specific service-line teams to divide and conquer the strategic planning process. Each team should have executive and administrative representation, as well as service-line-specific representation with physician, nurse, director/manager and community leadership.
Each team should work together to analyze data, provide opinion leadership, set direction and be champions of building organizational buy-in and support. This is where the tactical work around “How are we going to get there?” is really conducted.
If your health system has support service departments with individuals dedicated to specific service-lines, such as a marketing department with individual strategic planners and marketers dedicated to women’s health and other service-lines, then those individuals would serve on the service-line teams. Penn Medicine, for example, is a highly integrated, cross-functional marketing department with teams dedicated to specific service-lines. They have established an ongoing planning structure with deep integration with service-line teams on an ongoing basis.
If your hospital has smaller support service departments that service the entire health system, then it would be best to form a cross-functional team of finance, marketing, information technology, human resources and other support services to work with each service-line team. This team’s job is to answer important questions and conduct scenario studies for service-line teams to make important decisions on strategy and tactics. This stage dips into the realities of what it takes for an organization to execute—essentially: “What is it going to take to get the job done?” If the service line determines executional barriers are too high, they may need to reconsider the overall strategy. As Stephen M. Case, a director of Time Warner and the former CEO of America Online stated, “A vision without the ability to execute is probably a hallucination.”
Throughout this process, the entire strategic planning team will convene on a regular basis to provide status reports of service-line and cross-functional teamwork. This is to keep the entire team informed of work process and status, as well as to provide support and feedback on direction. Again, some Six-Sigma tools can be useful to the work of these teams. Using the definition of success from the Critical Issues Analysis, one can use the QFD or The House of Quality tools to help assess the degree to which service line recommendations are expected to contribute to this success.
By the conclusion of this phase, which could take several months, each service-line team should have identified how to achieve the overall vision by meeting or exceeding defined goals within their individual service lines or functions. Strategies, tactics, timelines and budgets should have been developed. Marketing and communications, clinical, technological, human resources and other needs to achieve success should be clearly defined.
COMPETITIVE DIFFERENTIATION
At this point, all initiatives should support the long-term vision. This phase is called the competitive differentiation stage, because at this point, the initiatives get prioritized by what creates the most significant competitive advantages.
Competitive differentiation is not just important for market positioning—it is important for business success. Conveying to your internal and external stakeholders how your organization is different from the competition leads to preference and loyalty—in physicians, employees and consumers. Why should physicians, nurses and other potential employees choose your hospital over your competitors? Why should patients? Why should affiliate hospitals develop transfer agreements for your hospital’s higher-level clinical services? Why should the government prioritize your institution when providing certificates of need, dividing charity care reimbursements, and so on?
Differentiation is necessary on all levels of business development. Having a keen awareness of the competition, developed through the research noted above, will keep the service-line teams focused on building differentiation of services in their efforts.
At the competitive differentiation stage, all of the service-line teams and the cross-functional teams will reconvene with the overall strategic planning team. This is when big-picture vision meets reality. All service-line strategies, goals, tactics and budgets are discussed in macro-terms of how the organization can accomplish the work. Due to the realities of financial requirements for the totality of work, another set of prioritization may need to occur. Given the complexities of most healthcare systems, using a tool like the Pugh-Concept Selection can help keep assessments structured and tied to the critical success factors and facilitate identification of hybrid or combination approaches across service lines. Timelines may need to be realigned with a one-, two- and three-year timeline.
This phase is considered complete only when the exact vision, prioritized strategies, tactics, timelines and budgets have been approved. At the conclusion of this phase, there should be no unanswered strategies, such as: “What is our suburban strategy?”, “Is our goal to be acquired by the academic quaternary hospital?”, “Are we developing a clinical cancer network with community hospitals?”, or “Should we invest in dual-trained neurosurgeons and ‘byplane’ technology to launch a new cerebrovascular center?” If you don’t have the answers to these types of questions at this point, and you merely have an understanding that hospital leadership needs to make a decision about these issues, then you don’t have a strategy—just more questions.
TRACKABLE BENEFITS
After the final decisions have been made, and strategies, goals and critical success factors (CSF) have been established, a clearly articulated message about the strategic plan’s benefits to all stakeholders, and how those benefits will be tracked and reported, must be concluded before moving forward. This work should be conducting in conjunction with the marketing department. Establishing a metric for benefits and success tracking will lead to the implementation messaging strategy used in the next few stages.
At this time, the individual service-line teams with the support of the cross-functional support team will be responsible for finalizing the organizational and service-line-specific CSFs to achieve the strategic goals and the timing of the CSF initiatives. Based on the long-term vision and the initiatives of the critical issues, questions may arise, such as:
- What exactly are critical achievements to gain the benefits of the initiative
- What service lines, departments or functions are responsible for achieving each CSF?
- How is the achievement of each CSF tracked and reported?
All of this operational planning is conducted in the trackable benefits stage.
Penn Medicine, for example, has an integrated master spreadsheet which outlines every service-line initiative, each CSF, the team responsible for achieving each CSF, which person on the team is responsible for what action, how success is tracked, who is responsible for oversight and reporting and when each task is due. This detailed information is rolled up into a system-wide dashboard for executive leadership. Throughout the process, Penn Medicine also conducts periodic checks of CSFs and other strategic and tactical planning against the overall vision and goals.
The launch preparations, system-wide participation strategy, creation of a culture of strategic management and action, and implementation and feedback stages are all addressed in part two of this Strategic Planning Process feature, entitled Plan, Align, Deploy, Execute—Bring Your Strategy To Life.
SPOTLIGHT ON AN EXCELLENT STRATEGIC PLANNING PROCESS
AtlantiCare uses a similar strategic planning process, but on a three-year continuous rolling process. They kick off the first quarter of each year by reviewing the prior year’s strategic planning initiatives, CSF results and where they stand in terms of forward thinking. They overlap their continual three-year strategic planning with the one-year executional process. AtlantiCare uses information gathered from the most current internal and external environmental assessments to tweak their current one-year strategic planning executions as well as planning two and three years out.
AtlantiCare’s strategic planning and execution is deeply grounded in clear communications strategies, building brand ambassadors and “ownership” of the strategic plan within every employee on every level of the health system. Their process is dynamic, information-based and entirely rooted in their long-term vision with little competitive distractions.
Their strategic decisiveness has fostered the passionate commitment of physicians and employees, as well as generating significant patient loyalty. AtlantiCare has approximately 60 percent of market share in most service areas and is continuing to grow.
CONCLUSION
Every hospital and health system is different, so a strategic planning process and its outcomes will vary widely based on the organization’s culture and dynamics. Gaining perspective from outside council such as a consultant will avoid biases leading to prioritization based on politics versus opportunity. This person(s) will also oversee process quality control, and information gathering, analysis and presentation, which all takes significant time.
It will be vital for organizations to use a systematic approach with data analysis and knowledge management practices to avoiding setting a course that is not backed by factual evidentiary support. Keep in mind the value is not just in the end-product or plan, but the journey to get there. The development of a compelling message in the next step can be very difficult without a deep understanding of the issues and decisions which led to the plan. Creating an environment of innovation and creativity for the strategic planning team and supporting a “bottom-up” feedback of information from frontline employees is also important. Lastly, shifting from a static to a dynamic strategic planning approach will allow for new ideas to be introduced midstream, based on changing competitive, financial and political dynamics.
To ask questions or inquire about consultant services for effective and efficient strategic planning, please contact Gabrielle DeTora at gabrielle@detoraconsulting.com.
As seen in:
http://www.healthleadersmedia.com/content/LED-247183/Escalate-Growth-Through-Strategic-Planning
http://www.healthleadersmedia.com/content/LED-247892/Escalate-Growth-through-Strategic-Planning-Part-2