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STRATEGIC PLANNING

Victor Sandino S. Molina, RN, MSN


Presenter

Objectives
Towards theLearning
end of the discussion,
the class will be
able to:
Describe strategic planning and strategic planning
process
Discuss the importance of strategic planning as a
dynamic process
Identify healthcare market powers and trends, and
understand their potential impact on health services
Conduct SWOT analysis
Identify methods to monitor and control strategy
execution
Identify the role of the manager in the strategic
planning process

What is Strategic Planning?

Strategic
Plan
Plan for the future and tap market opportunities.
Identifying a desired future state for an

organization and a means to achieve it.


Plans that will drive the organization from its
present condition to that desired future state.

STRATEGIC PLANNING PROCESS


SWOT
Analysis
MARKET
ASSESSMENT

STRATEGY
IDENTIFICATION
AND SELECTION

STRATEGY
TACTICAL PLANS

STATEMENT OF
MVV
ORGANIZATIONAL
ASSESSMENT

STRATEGY
EXECUTION

ROLLOUT AND
IMPLEMENTATION

OUTCOMES
MONITORING
AND CONTROL

Brief history
Brief

history- 1970s- strategic planning in the healthcare


industry mainly consisted of planning for new buildings and
funding expanding services in response to population growth.
Federal PPS (Prospective Payment System) 1980s, the field of
healthcare strategic planning received a transforming jolt as
organizations scrambled to compete in an increasingly
demanding environment.
Today, hospitals and other healthcare organizations have come
to embrace strategic planning as a valuable tool to evaluate
alternative paths and held them prepare for the future.
Healthcare managers at all levels need to understand the
purpose of strategic planning, its benefits and challenges, the
key factors for its success and their vital role in the process.

Purpose and Importance of Strategic


Planning
Purpose of strategic planning is to identify market forces and

how they may affect the organization and to determine an


appropriate strategic direction for the organization to take
that will counteract those forces and/or tap their potential.
It serves to focus the organization and also its resource
allocation. At any given point in time, there are multiple and
often competing initiatives and projects to be undertaken in
an organization.
By understanding the organizations operating environment
and identifying a strategy to reach a desired future state,
resources can be allocated appropriately and effectively.

THE PLANNING PROCESS


Strategic planning process consists mainly of two interrelated

activities: the development of the strategic plan and


execution of the organizations strategy.
The development of the plan is most often done with a
multiyear time horizon (2,3,5,10 years).
Strategy Execution, on the other hand, is done on a
continuous basis and is the critical factor in management of
the organizations strategic intentions, optimally providing
continual feedback for the development of any future plans.

SWOT Analysis
(Strengths,

Weaknesses, Opportunities, Threats) Analysis


provides a foundation for strategy development.
TWO IMPORTANT FUNCTIONS OF SWOT:
To gather a snapshot of how the organization is currently
interacting with the market in comparison to the internal
capabilities and intended strategic direction of the
organization.
And to identify market opportunities and threats that the
organization may want to address in future strategic
efforts.

SWOT ANALYSIS

Initial planning phase- SWOT analysis


It aims to identify the internal strengths and

weaknesses of an organization, along with external


market opportunities and threats.
Components:
1. Market assessment
2. Statement of mission, vision and values
3. Organizational assessment

Market Assessment
1.The power of the healthcare workforce
2.The power of consumers and payers
3.Innovations in technology
4.The regulatory environment
5.Competitive rivalry

1. Power of the healthcare

workforce

The workforce is composed of the front line of


caregivers in providing services.
In the SWOT analysis, an organization should
look at the availability of all subsets of
healthcare providers that are critical to its
success.

2. Power of Consumers and


Payers
is becoming a more
The power of consumers
significant market force and one that has required a
dramatic shift in the way the industry offers services.
Todays consumers are demanding more and more
from their healthcare providers on all levels (e.g
physicians, payers, hospitals), both in items of the
availability of specific service offerings and in the
delivery of those services.
Patient-centric model

Consumers can influence the

healthcare market in other ways as


well.
Understand the effect community
needs

Power of Payers

Some markets have multiple payers of various

sizes and strengths


A healthcare organization that relies on these
payers must stay abreast of their needs and
demands and how each may affect future
operations and strategies.

3. Innovations in Technology
May

represent the threat of substitute products, as new


technologies often replace standard operations and
services.
Example:
The filmless imaging system significantly reduces the need
for storage space for films and readers and the staff to
maintain those areas and allows for remote electronic
accessing of files, ultimately requiring a potentially smaller
number of physicians necessary to interpret the images

4. The Regulatory Environment


The

regulatory environment- on all levels, federal, state


and local needs to be monitored for its effects on strategy
development as well.
Congress continually enacts influential legislation, such as
1986 Emergency Medical Treatment and Active Labor Act
Health Insurance Portability and Accountability Act
(HIPAA).
Centers for Medicare and Medicaid Services (CMS) take
the lead in changes in healthcare payment formulas that
are frequently followed by payers at local levels.

Regulatory environment in the


Philippines

Health Facility and Services Regulatory Bureau


(formerly BHFS)
DOH Administrative Order No. 2012-0012

The AO conforms to the mandate of Republic Act No. 4226, the


Hospital Licensure Act, which requires a hospital to have
surgical and ancillary services for its operation to be permitted.

Re-classification of Hospital Levels


OLD
CLASSIFICATION
Level 1

Level 2
Level 3
Level 4

NEW
CLASSIFICATION
Infirmary (reclassified to
OTHER HEALTH
FACILITIES)
Level 1
Level 2
Level 3

Level 1- Surgical capability


Level 2- ICU capability
Level 3- Teaching and Training
Hospital with Departmentalized
Services

National Health Insurance Act


of 2013
(RA 7875 as amended by RA
9241 and 10606)

5. Competitive Rivalry

Tracking

competitors
moves
and
suspected intentions.
The strategic intent/activity of the
competitor can be gleaned from their
market activities.

MISSION, VISION AND


VALUES

MISSION STATEMENT
is the purpose.
It aims to identify what the organization does, who it serves and how it
does it.
VISION STATEMENT
strives to identify a specific future state of the organization, usually an
inspiring goal for many years down the road.
VALUES STATEMENT
should help define the organizations culture- what characteristics it wants
employees to convey to customers.
Any of the statements may be altered over time to adapt to the
environment. As an example, the increasing influence consumerism in
health care drove many organization to revise its vision and value
statements to become more customer service focused, which in turn
helped to change the organizations culture.

ORGANIZATIONAL ASSESSMENT
INTERNAL ASSESSMENT- examine the areas in which it has

strengths and weaknesses and how it may build or sustain a


competitive advantage in the market.
Organizational assessment has both Quantitative and
qualitative components.
The QUANTITATIVE
SECTION of internal assessment
consists mainly of the organizational volume forecast and an
assessment of financial condition.
QUALITATIVE
SECTION
focuses
on
past
strategic
performance and leaderships interpretation of the
organizations core capabilities.

ORGANIZATIONAL VOLUME FORECAST


VOLUME

FORECAST- identifying the organizations service


area- where 70-80% are drawn from- and determining the
population use rates for applicable service lines (cardio,
ortho, home care, CT scans).
Data collected over several historical time periods (previous 3
years) and can be forecasted out several time periods simply
by using a mathematical trend formula, resulting in a baseline
scenario.
Historical market share information is then applied to each
service line, therein highlighting some of an organizations
strengths and weaknesses.

By

holding its market share growth trend constant,


an organization can formulate a preliminary idea of
how well it would fare if it were to stay its current
course.
Examining the forecast from perspective of market
share, contribution margin, and/or medical staff
depth will also yield service lines of strength that
may need to be protected and service lines that
could be developed further.

Financial Condition
Key financial indicators should be analyzed to highlight
additional strengths and weaknesses of the
organization.
Indicators:

Operating margin
Net income
Gross and net revenues

Bond ratings
Fund-raising
Key financial ratios
Payer mix
Pricing and rate-setting arrangements

REVIEW OF STRATEGIC PERFORMANCE

Dynamic rather than linear process


No distinct beginning or end
Review of past strategic performance should be

included as part of future strategy development


Review if past strategies were effective or reached
their intended goals.
Discuss roadblocks that led to failure or factors that
drove success.

ORGANIZATONAL CORE CAPABILITIES


Subjective strengths and weaknesses that can be outlined through the volume

forecast and financial condition review, there are subjective strengths and
weaknesses that need to be identified for strategy development as well.
Challenge leaders (executives, physicians, managers) gather most value from
the leadership input. They are asked to think within a strategic context, as
opposed to the operational mode they are involved in on a day to day basis.
Merely asking leaders to identify an organizations weaknesses, for example,
can result in responses such as poor parking or a lack of marketing, whereas
framing the question to identify challenges to the organization in growing
service volumes may better yield answers such as an aging medical staff, lack
of capacity etc.
Important to incorporate these identified strengths and weaknesses into the
organizational assessment for further discussion.

STRATEGY IDENTIFICATION AND


SELECTION

Scenario Development based on SWOT Analysis


Strategy identification usually begins with the

baseline scenario developed for the volume forecast.


Apply planning assumptions to the scenario and not
simply accept the baseline.
Will it grow? Or it needs to discontinue specific
services
New technologies on the horizon that may affect
service volumes?

Scarcity

of providers that may counteract


predicted increasing utilization of particular
service for a period of time.
The strategic direction is the goal that the
organization desires to accomplish within the
planning time frame.
As each scenario may have different
probabilities for success and may require
different levels of resource investment, the
specific scenario (and strategic direction) that
will ultimately be chosen will often depend on
an organizations tolerance for risk.

OUTCOMES

Once strategic direction is chosen, specific

desired outcomes should be targeted and


strategies to accomplish this identified.
A successful strategic plan is focused and
executable
Too many strategies may render the plan
ineffectively simple because there is too much
to do.
Strategy is all about making choices.

A good strategy includes:

Guides decision making


Prioritize resource allocation
Keep the organization on its desired course

Successful strategies:
Are focused on the desired future state
Align internal capabilities with market opportunities and
threats
Provide or sustain a competitive advantage for the
organization
Are funded and resourced long term

STRATEGY TACTICAL PLANS

Creation

of specific tactical plans for each


strategy- necessary for translating the plan
into action.
Tactical plans answer the who, what, when,
where and how questions of strategy
implementation.

ROLLOUT AND IMPLEMENTATION


Plan is presented to the board of directors for approval and

endorsement and is then rolled out across the organization


Two steps:
Communicated at all levels of the organization- to gain the
support necessary for successful execution of the strategy
Supporting plans such as the financial and budgeting,
operating, marketing, capital, and master facilities plans
are developed or updated with their intent and strategies
developed in the strategic plan.
All of the organizations supporting plans tied to the strategic
plan is a critical factor in reinforcing its strategic direction.

OUTCOMES MONITORING AND


CONTROL

Monitoring and control of the strategic plan is

most often accomplished through the use of


an organizational dashboard, or scoreboard.
A dashboard is a visual reference used to
monitor
an
organizations
performance
against targets over time.
Simplistic design should allow for quick
assessment of areas

Dashboard

can depict strategic, operational and


financial outcome indicators, depending on the
organizations needs, but care must be taken to
highlight a manageable number of indicators, or the
dashboard will lose its functionality.
Dashboard monitored regularly.
Dashboard should serve to facilitate ongoing
management discussion regarding execution of the
strategy.
To help best ensure success of the strategic plan,
dashboard indicators are aligned with operational
plans and their associated identified goals.

STRATEGY EXECUTION

Is

crucial for organizational success and


cannot be overstated in terms of importance,
unfortunately, this is often an element of
strategic planning that any organizations
overlook.
Execution is more important than the plan.

BARRIERS
If stakeholders are not ready for the strategy, it will not be

executed by even the most tenacious of leaders.


Lack of focus of the strategy.
Strategies not appropriately funded and resourced, they
cannot be executed, or if they result in competing priorities,
the organization will likely be unsuccessful.
To overcome barriers, one must focus on execution at the
earliest stages of strategy development.
Strategy execution is also most successful with a combination
of strong leadership and organizational buy-in.

Strategies have failed because the organization has fallen to

temptation of new priorities, or they simply fail to resource


the strategy over multiple years or time periods.
Strong leadership is needed to maintain a long-term focus.
Strategy cannot be implemented solely in the top layers of an
organization.
All stakeholders must be aware of and buy in to the desired
future state and the path that leads them there in order to
ensure the momentum necessary to achieve results.
A successfully conducted strategic planning process will
generate strategy champions at all levels of the
organization.

Participants
Involves key leadership in the strategic planning process.
Each organization and culture is different
The more stakeholders that are aware of and own

the

strategy, the greater the chance of success.


Should involve representatives from the board of trustees,
upper and middle management, medical staff, general staff
and community leaders.
Once completed, it should be communicated to all
stakeholders.

STRATEGIC PLANNING AND EXECUTION.


ROLE
OF
THE HEALTHCARE
MANAGER
HC managers
need
to understand
the types of information
and
THE

intelligence gathered and analyzed for plan development, and how that
information is interpreted and acted upon.
Continually monitor their environment- both internal and external and
access and act upon the possible implications of any trends of events that
are of note.
Responsible to understand their local market on an ongoing basis and to
know their organizations strategic direction and intent.
Identify ways to support the organizations strategy in order to do the
same.
Leadership at all levels help execute and manage the organizations
strategy.
Strategic plans may also be developed for departments and other levels
within the organization and may be helpful to the manager in achieving
the departments goal as well.

Reference:
Susan Judd Casciani- chapter contributor
Introduction to Health Care Management by Sharon Bell
Buchbinder ; Nancy Shanks

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