Healthcare leaders are concerned about developing reliable strategies for the future. Is effective strategic and financial planning even possible with so many variables up in the air?
Healthcare is in a period where uncertainty, financial pressures, performance challenges and constant change are the overarching themes. A wide range of policy issues impacting insurance coverage, provider reimbursement, and overall system economics are in flux. Healthcare leaders are concerned about developing reliable strategies for the future. Is effective strategic and financial planning even possible with so many variables up in the air? Yes, and one could argue it is even more critical to have a clear path forward during unsettled times.
Here are 10 considerations for strategic planning in times like these:
1. Stay true to your mission and vision. Your mission and vision are meant to be statements of the long-term purpose and role of your organization. The mission describes why the organization exists, and the vision establishes the destination. A changing environment requires adapting strategies, especially related to value-based care initiatives, but staying focused on the long-term destination is especially important when approaching headwinds.
2. Don’t panic. This is not a time to allow inertia to overtake your organization. It could be helpful to re-evaluate the variables that could affect your results-Medicaid coverage, commercial insurance coverage, value-based contracting incentives, reimbursement rates, credit agency guideline changes, etc.-but many of these things won’t change overnight.
3. Focus on the “knowns.” There are many things we don’t know for certain, such as specific federal and state policy changes ahead, but we do know many things are unlikely to change. These macro trends will persist to varying degrees regardless of how policy is shaped over the next several years. Among these macro trends: the imperative to reduce costs and deliver value and reliable outcomes, the aging of the population and the complexity of caring for patients with multiple chronic conditions, increasing consumer expectations for access and a better experience, a growing number of disrupters poised to provide alternatives to traditional delivery (i.e., telehealth and the continued advancement of personalized health through medical biotechnology and information technology). Considering that the macro trends are not changing, creating a strategic direction and framework for moving forward is still well within the capacity of your organization.
4. Engage all stakeholders. Most strategic planning processes include a method for obtaining input from the organization’s key stakeholders: board members, medical staff, management, community members. In times like these, make sure that you have the pulse of important outside influencers including governments (federal, state, and local), employers, payers, and other healthcare entities with which you may interact. Understanding the potential direction and actions that all related entities may take will allow you to have a more complete view of the variables for which you may need to be prepared. Furthermore, involving these parties in your planning process will enhance their ownership of the plan and their participation in its implementation.
5. Refresh your financial plan. Take an objective view of your current state, including understanding the ability to withstand lower reimbursement rates, higher interest rates, or changes in payer mix. It is also helpful to model and prepare and consider multiple scenarios regarding the likely financial impact of federal and state policy changes on your organization. Most experts agree there will continue to be opportunities for enhanced value-based contracting with commercial and government payers.
6. Conduct rigorous scenario planning. Advanced modeling around risks and uncertainties can help provide clarity when planning for a range of possible outcomes. Scenario modeling will help evaluate the impact of financial, marketplace, clinical, technological, and other variables in your planning assumptions. Not only does this type of modeling identify the range and probability of likely outcomes given specific assumptions, it also helps identify specific areas to target for risk mitigation in the planning process.
7. Avoid “herd” mentality. Your strategic planning process must reflect your organization’s situation and mission. Certain strategies adopted by competitors may be useful to be aware of, but it is important to keep sight of your organization’s unique market position, challenges and opportunities. A strategic plan that defines how that distinctiveness will be cultivated and nurtured requires setting clear priorities and considering approaches that your competitors may not have considered or be capable of implementing.
8. Stay close to your market. Monitoring local market conditions is especially important when so many variables have the potential to change. There will be new disruptors, new delivery models, new technologies, and many other local factors that you will need to be aware of and adapt to. Understanding and adapting to national trends is equally important.
9. Develop an organizational navigation system. While the strategic plan will provide clarity on the goals and priorities for the organization given the assumptions and expectations made at the time, it is also important that the planning process consider how the organization will absorb information, modify assumptions and recalculate model outputs. Leaders should be aware of the assumptions underlying the modeling they are using for planning purposes and should be able to question those assumptions when necessary. Some organizations have found that having a “rolling” strategic planning process, that allows the plan to be refreshed each year, is the best way to keep the roadmap current.
10. Communicate and activate the plan. In uncertain times, it is ever more important to ensure that the strategic plan is well understood throughout the organization. Demonstrating that leadership has considered key internal and external factors and developed a clear path forward will go far in building internal confidence and focus. The strategic plan must be fully activated: translated into management goals, including accountabilities and timeframes; integrated with the budgeting process; and is a cornerstone of board discussions.
In uncertain times, it is the most resilient, agile and aware organizations that succeed. Know your destination, know the resources and capabilities available or that must be added along the way, be alert to changes in conditions ahead, make sure the driver and its passengers are aware of the route, and be agile and ready to make course corrections as new information is absorbed.
Laura Jacobs is president, GE Healthcare Camden Group.
Tony Ursitti is manager, GE Healthcare Camden Group.