The world of strategic planning in healthcare has become more complex, with concepts such as “scenario planning,” “game theory” and “nonlinear analysis” being discussed in hospital C-suites across the country.
But experts say that while a few select healthcare organizations are attempting to apply advanced principles to their operations, most would be sufficiently served by a basic blueprint that addresses their biggest challenges, organizes priorities, formulates an action plan and implements rational methodologies. Only when they have mastered the fundamentals should executives consider higher degrees of planning sophistication, consultants working in the field suggest.
Healthcare organizations have collectively become more astute on the topic of strategic planning, acknowledges Alan M. Zuckerman, founding partner and director of Philadelphia-based Health Strategies & Solutions. Yet the healthcare industry’s unique business dynamics continue to force its leaders to improvise their own systems instead of adopting proven structures that have worked well in other industries, he said.
“The complexity of the healthcare environment makes the responses much less cookie-cutter and much more tailored,” Zuckerman said. “When we look outside healthcare, we see all sorts of sophisticated ideas that leaders may want to incorporate. But outside of healthcare, strategic planning works in a different way – from the bottom up rather than the top down.”
Because of differences in the nature of the industry, healthcare cannot emulate successful mega-corporations such as General Electric and Shell Oil, Zuckerman said. What’s more, those giant corporations have the advantage of economic longevity, which has given them the wherewhithal to develop sophisticated strategic plans.
“Shell and GE approach strategic planning very differently,” he said. “The corporate office sets policies and overall goals and lets their subsidiaries develop their own business plans based on that. In healthcare, everything is driven down from the top.”
Even though healthcare organizations aren’t able to duplicate master plans being practiced by Fortune 500 companies, however, they are making distinct progress in their own way at their own rate, Zuckerman observes.
“The outside world has become more sophisticated, and healthcare mirrors that,” he said. “Hospitals are showing a greater aptitude for strategic planning. As tools and techniques get better and the environment gets more complex, organizations are moving in the same direction along with it.”
While revenues, expenditures, patient safety, security and various other administrative challenges are high on healthcare providers’ list of concerns, consultant Jan Jennings warns that they should be more worried about an ominous two-headed issue: The baby boomers’ massive influx into the healthcare patient base and its subsequent pressure on an already understaffed healthcare workforce.
“It is the ‘pig in the python,’ ” said Jennings, president and CEO of Pittsburgh-based American Healthcare Solutions. “The boomers will start to enter the Medicare program in four years. In 14 years, 78 million of 300 million people in the U.S. will be regularly using the healthcare system. And the population coming up behind them is not exactly enamored with the healthcare profession, so that is extremely concerning.”
To date, executive reactions to the situation have gone two ways, Jennings said – “apathy because they’ll be gone or deer in the headlights.” Until the healthcare industry begins to seriously address the looming crisis of patient bulge vs. versus labor drought, other issues won’t matter, he said.
The physician sector is also evolving in its strategic planning capabilities as practices search for ways to navigate the increasingly choppy financial waters, say consultants at BKD Health Care Group in Fort Wayne, Ind.
“Physicians realize they need to think strategically in order to figure out how to proceed with issues like succession and compensation plans,” senior manager Mark Blessing said. “Succession, in particular, is a big one, because, as older physicians leave the group, it creates a huge void.”
Devising a strategic plan is especially valuable in helping practices identify key challenges and organize their priorities, added partner Tom Cottrell.
“They need to identify, prioritize and execute,” he said. “We can help them get their issues out on the table and flush out what really matters, but we can’t make their decisions for them.”
Blessing says physicians typically see the strategic planning process as disruptive and laborious, but adds that this attitude is understandable.
“It’s hard for them to hang up their provider hats and put on their employer hats,” he said. “They put in full days as doctors, and then they have to do their part-time jobs at night. It is hard for them to muster the energy to do it.”
Even so, when they are able to focus on the task at hand, they usually excel at it and appreciate its importance, Blessing said.