Market indicators cue strategic plan changes

February 1, 2011

The obvious course of action for managed care organizations might be to take a wait-and-see attitude

But holding off on whether and how to change the company's strategy to conform to the new market realities might be a costly mistake.

Proactive, but focused, monitoring of the key variables likely to determine the future of PPACA and its resultant market impact can serve as an insurance policy against the implications of surprise and uncertainty.

Plans need a structured analysis of plausible surprise scenarios with a simple and effective approach to information monitoring. Both elements form the basis of a business early-warning system that can allow company executives to think proactively about the strategic implications of these and other trends.

IDENTIFY FUTURE INDICATORS

Managed care companies' strategic planning processes should include a structured scenario-planning component, such as, what might the market environment look like in 2014 if the political and regulatory environment was such that significant aspects of PPACA were reformed or repealed; if the pressure to reduce healthcare costs accelerated; and if consumer engagement with new channels for receiving healthcare services was slow to develop.

With several plausible scenarios developed, the scenarios then play two roles. First, they create a planning context, enabling executives to game different strategic approaches in different conditions and choose among a set of resilient strategic options.

Second, for the purposes of building the early-warning system, companies can also use the scenarios to identify indicators: future industry developments, events and circumstances that would have to occur for the conditions depicted in any one scenario to actually happen. These indicators become the basis of focused, external information monitoring.

Kenneth Sawka is the managing partner at Outward Insights, a Boston-area consulting firm.