• Healthcare Strategic Planning in Today's Dynamic Environment

    Q+A Aug 10, 2015

    Experts at three large health systems share how they make the strategic-planning process timely, relevant, and responsive.

    John M. Colmers, vice president, health care transformation and strategic planning, Johns Hopkins Medicine

    John M. Colmers is vice president, health care transformation and strategic planning, Johns Hopkins Medicine, Baltimore.

    Although much is uncertain about the future of health care, some things seem like sure bets, such as accountable care, population health management, integrated clinical networks, and a shift in focus from inpatient to outpatient services. But what exactly do such influences mean for the individual organization To keep afloat in such turbulent waters, healthcare organizations need a strong rudder, a good compass, and up-to-the-minute maps-in other words, a sound strategic plan.

    How do you manage to be both agile and far-reaching in your strategic planning?

    Sanpei: As a large system, Intermountain Healthcare is nimble in terms of day-to-day operations and being able to move quickly on smaller needs, such as flexible staffing levels or minor training issues. But on the macro end, we have to be proactive. We can't know exactly what lies ahead, but we do need to understand what the future possibilities are so we can come up with strategies that will be successful in myriad different iterations of the future.

    Dean Sanpei, vice president, strategic planning, Intermountain Healthcare

    Dean Sanpei is vice president, strategic planning, Intermountain Healthcare, Salt Lake City, Utah.

    For example, five years ago, amid talk about the Affordable Care Act and accountable care, we didn't know what reform efforts would look like in the end-parameters, reimbursement levels, etc. But we could see the industry was moving toward value-based payment models and population health.

    So we started to shift toward value-based strategies and initiatives that would allow us to jump on opportunities when they arose. For example, when the state of Utah moved to restructure Medicaid, we were well-positioned to be one of the providers chosen for those Medicaid ACOs. Likewise, we began incorporating more of the prepayment kinds of models, such as capitated payments for population health management, into our financial planning to accommodate fixed premiums.

    Van Gorder: At Scripps Health, I meet with my corporate executive team weekly, our hospital CEOs also meet weekly, and our senior team has a full-day retreat scheduled every couple of months. So we're constantly reviewing our strategy and tactics. We're always prepared to act.

    Chris Van Gorder, president/CEO, Scripps Health, San Diego

    Chris Van Gorder is president/CEO, Scripps Health, San Diego.

    Expansion is one of our strategies, so we've built a mergers and acquisitions team that can move swiftly if, say, we need to respond to an unexpected RFP [request for proposal]. We've also called special meetings of the full board or the strategic planning committee, so we can make a corporate decision when an acquisition opportunity comes up suddenly.

    Having a strategic plan gives us a context against which to examine possibilities in the ambulatory care environment, which is where we plan to grow. For instance, we just closed on an acquisition of eight imaging centers that we were able to fast-track at the tail end, because the board-which needed to approve all sorts of changes in the agreement-understood the plan and the leadership understood the approval process.

    How do you ensure adequate input and buy-in?

    Colmers: We've taken a robust bottom-up and thoughtful top-down approach. Johns Hopkins Medicine is a very large and complicated organization with many different components and a historically decentralized structure. We have adopted six strategic priorities: people, biomedical discovery, patient- and family-centered care, education, integration, and performance. We have accountable leaders for each strategic priority who are responsible for updating the planning process, representing both the school of medicine and the health system. These leaders get input from their peers and others throughout the organization.

    Based on the strategic plan, we developed cascading performance measures in all six priority areas that are used as part of our incentive plan for the top 300+ senior executives. Say, for instance, you are a leader at one of our community division hospitals. Part of your incentive is driven by your performance there, part of it by the performance of the community hospital division, and part of it, ultimately, by the performance of Johns Hopkins Medicine overall.

    Van Gorder: At Scripps Health, we engage all of our constituents in open dialogue in a variety of forums. Examples include a workshop for the 300 plus graduates of our monthly Leadership Academy for front-line managers, a Physician Leadership Cabinet for all of our hospital chiefs and vice-chiefs, and our Employee 100 Group (front-line employees). Once a month, we also talk to our board about not only what we're doing, but what we should be doing. In addition, we go to each of our clinical care lines and get feedback from their specific viewpoints.

    All of that input goes to our strategic-planning team and the senior executive team, which holds an annual retreat to look at our past and current performance and what we need to do for the future.

    In tandem with the planning is a process of continuous alignment and education, in which our leadership ensures that the organization is continually adjusting to the marketplace. I actually spend most of my time teaching in the organization-and learning about what's going on in the medical specialties, digital medicine, pharmacology, and technology areas that we'll need to invest in.

    How do you make the strategic plan a living document that's relevant, rather than one that sits on the shelf

    Sanpei: At Intermountain Healthcare, we have a five-year plan. However, we update it annually, so it's really a continuous cycle of improvement: In July, we start looking at major capital; in August, we start the operating budget; in October, we start setting goals for the next year; in November, we finalize the capital and operating budgets and the goals; and then in March, we do a review. In April, we start the whole process all over again.

    Colmers: We're nearing the midway point of our first five-year plan, and we have developed an annual refresher cycle. The broad structure of the plan doesn't change and neither do the goals, but we do develop strategies, tactics, and performance measures for the upcoming year, which are then adopted by our board.

    For example, one of our priorities is integration: to become the model for an academically based, integrated healthcare delivery and financing system. This necessarily involves clinical integration, clinical footprint, and our insurance strategies. So each year, we've identified strategies and tactics to further that goal. Right now we are in the midst of evaluating the Medicare Advantage market, which fits within the context of the plan, and developing tactics-networks, markets, etc.-to capitalize on that trend.

    Van Gorder: We have what we consider a three-year rolling strategic plan, which we update tactically every year to keep up with the fast pace of change. It's designed to allow us to be opportunistic-if we had to make a change in a month, we could do that very easily. There are metrics based on the plan going all the way down to the unit level that are also updated annually. We have one board of trustees and one board strategic-planning committee that meets on a monthly basis and provides oversight for the entire system's integrated approach to planning and implementation. We also have a team of individuals who work on an ongoing basis with our business units and corporate offices on market changes, emerging payment and care models, demand forecasting and community need, and growth opportunities.

    Strategic-Planning Process
    The five-year strategic plan at Intermountain Healthcare, Salt Lake City.

    How centralized is your strategic-planning process?

    Sanpei: Each of our entities (health plan, medical group, hospitals) has division or regional strategic planners, and we coordinate monthly across the different divisions and regions. We give leaders of our regions and divisions some flexibility in applying system standards so they can respond to competitive issues, but they have to go through a predefined process to justify a deviation.

    For example, we set volume triggers for assets to ensure optimal efficiency is reached before we buy or build something new, including new facilities. In obstetrics, our threshold is approximately 1,200 to 1,500 deliveries annually before we would develop new space. However, if we have a competitor wanting to build close to one of our locations and split the market, we may lose the opportunity entirely if we don't move sooner.

    Colmers: Now that we have adopted a strategic plan at the enterprise level, we're beginning to deploy strategic plans at individual entities that have a similar structure to the overall plan. Before this, they had their own operational plans in line with the system's very robust 10-year financial plan.

    How do you avoid analysis paralysis?

    Sanpei: We've got more than 200 analysts-in finance, clinical programming, and planning-and we keep them busy because we can't afford to fail on a macro basis, but we can't always wait to act and fall behind either. The advantage of being as big as we are at Intermountain Healthcare is that we can pilot things pretty easily. We're doing that right now with our EHR conversion. We started in two of our smallest hospitals in one region and, once we work out all the bugs, we'll move on to a larger facility in a larger region and so on until we've covered the whole oganization.

    Colmers: It's a challenge to not get bogged down but still be able to have actionable data for both operational and strategic purposes. At Johns Hopkins Medicine, we're blessed with very good financial data on our own health system and, because of our location in Maryland, good information about overall hospital services in the market. And we're constantly developing new models for organizing that information in ways that make sense for a particular project or market area.

    For example, we've just completed a planning exercise for one of our hospitals, Howard County General, which is the only hospital in that county, where we've been seeking to understand more about the primary and secondary markets for services and identifying which services are the best candidates for shifting from inpatient to outpatient, as well as examining impact of competitor arrangements, expected shifts in demographics and payer arrangements, and the influence of physician practices in the area.

    Van Gorder: It would be easy to get bogged down if we were basing our planning solely on data. But our process at Scripps Health is probably driven just as much, if not more, by individual expertise and knowledge. We really do trust our instincts as a senior management team that's been working together and making our targets for 15 years. Sometimes data is used by individuals as a way to say "I don't want to do it," and we don't allow that.

    What is the biggest challenge related to strategic planning?

    Sanpei: You have to know your current environment to understand your future environment. But even more important, you have to know your organization because culture eats strategy for lunch.

    We've had situations in the past, less so now, where one region wants to build a freestanding ED, for instance, because that drives more revenue on a short-term basis. But these kinds of initiatives have not been successful at Intermountain Healthcare because they have been counter to our culture and the direction we've set for ourselves.

    Colmers: Getting people to think strategically-to look up from their day-to-day activities and toward the horizon-is always a challenge. Also, in a decentralized organization like ours was until recently, it was difficult to get everyone to agree to common principles and priorities.

    Van Gorder: Focus. There are so many things we can do as an organization. Sometimes you can execute on small ideas at the local level, but you don't want to be like fireflies all over the place. As we like to say, 'If you don't know where you're going, any path will get you there.' We're always going back and reminding our physicians and leaders that we have to focus on the main tenets of the strategic plan to guide us.

    What advice would you offer other organizations for enhancing the effectiveness of their strategic planning?

    Colmers: The single most important thing is to have a CEO who is fundamentally committed to strategic planning and actively involved in promoting it. It's also critically important to have that understanding and commitment from governance. It is management's responsibility to propose and to execute, but it is the board's responsibility to adopt the plan and hold senior executives accountable for carrying it out.

    Van Gorder: I've worked for companies that consider the strategic plan to be absolutely rigid, and they failed every time. The plan has to be built so you can speed it up or slow it down, take a left turn, take a right turn-the point is, you have to get to the goal, rather than worrying about every step along the way.

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