Blog submission by Jeffrey Bauer, Ph.D., an independent consultant and speaker based in Chicago.
Years ago I defined strategic planning as a purposeful response to anticipated change, consistent with mission and values. My colleagues excelled at teaching mission and values, so I decided to specialize in anticipating change and preparing for it. I’ve subsequently spent nearly 40 years looking in a crystal ball, figuratively speaking, and helping providers decide how to approach the realm of possibilities under increasingly uncertain conditions.
Strategic Planning Is Back Because the Future is Different
Although I continued to focus on anticipating change and preparing for it, providers largely abandoned strategic planning after the federal government and most states began dismantling mandatory health planning laws in the 1980s. By 2000, many hospitals and health systems did not have a formal, carefully structured, written document to guide their decision-making. Return on investment (ROI) replaced long-run strategy as the main driver of resource allocation. Clinical programs, new facilities, and the latest technologies were acquired it they promised to pay for themselves, with little consideration about anticipated changes in supply and demand for health care and fundamental questions of mission and values.
Fortunately, I perceive that health care’s leaders are renewing their interest in approaching the future as a range of fundamental choices to be made—a refreshing change from the past decade. Why is strategy coming back? Because the business of healthcare delivery is being restructured by four revolutionary trends:
1) The clinical foundations of medical science are being transformed from a one-size-fits-all approach to personalized care models that tailor diagnosis and treatment to differences in genetic characteristics of diseases and in epigenetic factors that define individual capacities for health. The principal mission of health care delivery will correspondingly shift from treating acute disease to managing chronic conditions—that is, preventing latent health problems from progressing to acute illness and injury.
2) Information and communications technologies now enable the automation of many care functions that machines can do better and less expensively than human health professionals. In particular, a growing array of networked, computer-based devices are liberating clinicians and patients from the traditional confines of time and place and allowing providers to surpass the limits of the paper trail.
3) A substantial, unprecedented portion of responsibility for paying the bill is being transferred from third parties (governments and employers) to individual consumers (patients and their families). Indeed, the latest health reform law effectively makes medical insurance “affordable” by reducing the benefits of a basic health plan and increasing the co-payments and deductibles. Consumers are increasingly expected to “have skin in the game,” with dramatic implications for change in the ways health care is provided and priced.
4) Multi-stakeholder partnerships will increasingly differentiate winners and losers. The impending end of economic growth in the medical marketplace—in other words, competition as a zero-sum game where one provider’s gain is another provider’s loss—will require providers, payers, purchasers, and patients to form functional, outcomes-driven systems that allow all to share in the benefits of becoming truly efficient and effective. Vertical integration encompassing delivery, finance, and demand will be essential. Horizontal cooperation across providers will not be enough to ensure success in the future.
Success Requires Strategy
Responding successfully to these dramatic shifts in the medical marketplace will require making major trade-offs, actions taken independently of the Affordable Care Act. Providers cannot count on health reform laws or economic growth to allow them to do everything they have done in the past, and only a very small number of today’s provider organizations will be able to go it alone in the future. Health care’s leaders must approach the future strategically—evaluating options and making tough choices that produce healthier Americans for no more than 17% of the GDP. The good news is that the emerging realm of opportunities provides a solid foundation for building world-class health systems in the United States. Providers and their partners that collaboratively reallocate local resources with creative vision will accomplish real health reform.
Health futurist and medical economist Jeffrey C. Bauer, PhD is an independent speaker and consultant based in Chicago. (email@example.com; 773-477-9339) In the mid-1970s, Dr. Bauer joined the faculty of the graduate program in health administration at the University of Colorado Health Sciences Center, where he was asked to develop a curriculum for teaching strategic planning at academic health centers in response to the federal certificate of need law. With no existing teaching materials to adopt, his initial task was to develop a health-specific definition of strategic planning and then build a course around it.
Dr. Bauer is featured in the iProtean courses The New Healthcare Business Model, Introduction to Mission & Strategy and Strategic Planning.
Jeffrey Bauer, Ph.D.
What’s the number one thing that needs to be done for US healthcare to really develop the system that provides a top quality product at a price we can afford? We’re going nowhere if we try to do it on paper records. We have hit the limits of our abilities to improve efficiency and reduce cost on the paper trail, so we have to digitize the healthcare delivery system. That means establishing the infrastructure to provide data for an electronic record, from the laboratory, from the floor, from the nursing. It really has to be seen as an integrated information system. Every other industry in this country, in the last two decades, got off the paper trail and everybody else now is web enabled—all of the industries that have survived the onslaught of international competition and even competition among themselves . . .
I see dramatic changes coming, and that’s where the board sits as deciding what the organization needs to do to be responsible for that future. As a trustee I think that the responsibility is to look at the best possible use of the resources and that means change. Now, strategy to me is the purposeful response to anticipated change and nobody but the board and the chief management of the hospital has that responsibility. And in the long run the issues of terminating a program or reallocating resources, moving in new clinical directions, developing partnerships, those are really the responsibilities that come from the people who are asking the big questions, what changes can we make.
I tell board members, let the people you hired do the management. Let them deal with the tactics. Tactics is dealing with the resources you’ve got at hand. So let your chief nursing officer or your pharmacist do the best they can with the nurses that showed up for work that day or the drugs that are on the shelf. Those are tactics, finding out how to do things right with the resources you’ve got at hand.
The board on the other hand deals with strategy, looks at the realm of possibilities, asks the “what if” questions, imagines a different future. Instead of the tactical issues surrounding “doing things right,” strategy focuses on doing the right things in the future, re-envisioning the future and imagine things being different. As a trustee you are responsible for imagining how to reallocate the resources and become something new and better . . .
The strategic plan, regardless of the methods it uses, must have some quantifiable goals that will be met at a specific point in time. If it is a two-year plan or a five-year plan, it will look that far into the future and say, “two years out we will have this market share or two years out we will be well underway in establishing our patient-centered medical home or have our telemedicine plan up, and running five years from now we will have affiliated ourselves with a major payer network.” There are lots and lots of different possibilities.
I think you have to define the ways you are going to measure yourself. A strategic plan doesn’t provide just generalities, and broad statements. I see this rather often: “We’re going to provide the best possible healthcare for the community.” Rather, it should say, “two years from now or five years from now we will be known for three areas of clinical service, we will be in the top 25% of all hospitals nationally for our care in these three clinical areas.”
The second aspect of a strategic planning process that to me is critical is that it be a written document. And then number three that to me is critically important is it must be an ongoing process. Because the realm of possibilities is constantly expanding, the environments in which you work are constantly changing. So have objectives, have them written down and keep fine tuning them. The idea of a fixed plan is absolutely out the window. The only way you’re going to survive in the 21st century is to have a perpetual strategic planning process.
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iProtean Symposium & Workshop
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