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Strategic Planning: The GPS for Medical Practices and Other Healthcare Organizations
Have you ever tried to navigate an unknown or slightly known territory without a map or GPS? Well, I have and it was a big mistake! Following an hour of non-value-add (NVA) time in driving around, the wasted gas and getting to my destination late, I made two commitments to myself: 1) my next car would definitely have an in-built navigation system and 2) I will never part with my phone again!
A medical practice without a strategic plan is like someone heading out without one’s GPS. Strategic planning is the best travel tool to get you to your destination using the most efficient path with the added benefit of avoiding a route with an accident, and the choice to control toll expense.
For many medical practices, strategic planning is not a systematic or consistent business activity though it should be. Many strategic decisions are made out of sudden external pressures, internal pain- and breaking points (often financial), and random interest in the latest industry fad or trend. While some of these initiatives may work, no organization should subject the sustainability and viability of its existence to the odds of success akin to that of a spinning wheel game. Brainstorming ideas, no matter how wild, is a good exercise. However, the selection and development of those ideas should be informed by the many factors that affect the organization before resources (i.e. money, time and people) are directed towards their advancement.
Understanding strategic planning is important in order to appreciate its necessity and application. Strategy is the art of devising or employing plans toward a goal or objective. “Strategic planning is an organizational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results, and assess and adjust the organization’s direction in response to a changing environment. It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organization is, who it serves, what it does, and why it does it, with a focus on the future.”
There are two major categories of strategic planning:
- Red ocean strategic planning is a protectionist methodology of planning in which an organization is competing in bloody red shark-infested waters of a defined market with defined competitors by incremental improvements or augmentation to the existing business. Horizontal integration of organizations is an example of this.
- Blue ocean strategic planning involves breaking out of the bloody red ocean of competition into relatively uncontested and calmer waters to do something new often in reaction to emerging possibilities in the market.
No strategic plan is viable without the following fundamentals:
- Alignment with the mission, vision, and values of the organization
- Directed towards a clear and defined set of objectives
- The basic purpose serves to sustain and grow the organization
- The plan should reflect buy-in from all key stakeholders
- The plan should have an executive level of sponsorship or ownership, and be incorporated into the operational level of accountability.
Management of the strategic plan is necessary to ensure accountability. To do so effectively, the plan should:
- Reflect an order of priority – keeping in mind the resource intensity and payoff value of each component.
- Reference an execution (operational) plan which includes the KPI- key performance indicators; specific, measurable, attainable, realistic and timely (SMART) goals; robust action items, and a timeline-driven task list.
- Highlight the critical risk and success factors.
In addition to getting an expert to help facilitate strategic planning sessions efficiently, there are many tools that are available to aid successful planning.
- Data analysis – gathering and organization of information about quality measures, volume, market share, service/product line, payer, competition, capacity, local, regional, state and national trends within and outside the healthcare industry etc.
- SWOT analysis – an examination of the organization’s Strengths, Weaknesses, Opportunities for growth and Threats from the external environment.
- PESTEL analysis – an external scan of the Political, Economic, Social, Technological, Environmental and Legal/regulatory environments.
- Force Field analysis – identification of the driving or hindering forces (underpinnings) attributed to the SWOT analysis-derived information.
- Financial analysis – assessment of the organization’s financial health and need based on information contained in the organization’s balance sheet, budget, proformas, as well as cost-benefit analysis, make or buy analysis and the evaluation of access to funds or the capital market.
- Software – many software programs such as ClearPoint Strategy, i-nexus, Envisio, Cascade Strategy etc. are useful facilitative applications that help with both the planning and accountability part of the process.
It is also important to not be misguided by misconceptions about the strategic planning process. It can be done at any time in the life cycle of the practice or organization or business, and it can be conducted at any time in the year. It should reflect a multi-year timeline typically about 3-5 years and be subject to constant review and reevaluation. It should serve as a nimble living document that’s adaptable to the changes from the internal and external factors that informed the plan in the first place.
I bet that you could start your strategic planning exercise as soon as possible simply by conducting a visualization exercise and conduct what is known as a gap analysis. Hold a roundtable with your staff and ask each to envision the practice or organization that they want to see in the foreseeable future (visualization). Then the team should be challenged to list the gaps or reasons preventing the attainment of that vision (gap analysis). Use the information to segue into the other aforementioned tools and continue the strategic planning process.
Oyinkansola Ogunrinde is the Founder and Chief Practice Transformation Officer of FUNMI Healthcare Consulting, LLC, a consultancy specializing in the management of physician practice and ambulatory services (www.funmihc.com).