Strategic Planning Video Series: Understand the Starting Point
- April 20, 2021
In the aftermath of 2020, healthcare providers need to take a step back and take stock of what is happening within their organizations. There are four areas where the pandemic hit healthcare organizations the hardest: financial, psychosocial, physical, and transactional.
Financial | The American Hospital Association estimates that COVID-19 will have a $202.6 billion impact in terms of lost revenue for American hospitals and health systems from deferred or eliminated volume. In April 2020, 14.8% of the American labor force was unemployed, the highest it has ever been since data collection started in 1948, with a much higher self-pay payer mix.
Psychosocial | Healthcare workers are considered high-risk for adverse psychological effects from the pandemic.
Physical | There have been 29.3 million cases and 530,000 deaths from COVID-19.
Transactional | According to a Ponder & Co report, there were only 79 announced hospital M&A deals in 2020, down 25% from the 10-year trailing average and the lowest since 2009. There was less growth from mergers and acquisitions as people paused or abandoned those plans to face the pandemic.
The effects of the pandemic reiterate that strategic planning is key to a healthy organization and should occur regularly.
Coker’s Approach to Strategic Planning in Five Steps
- Understand the Starting Point
- Focus on the Endpoint
- Outline Your Course
- Set Mile Markers Along the Road
- Ensure You Have the Right Resources
Step 1: Understand the Starting Point
What lessons can we learn from Howard Shultz, the CEO of Starbucks, in 2008?
- Establish Baseline – Where Are We?
- Gather Qualitative and Quantitative Data
- What Does the Data Say?
- Get Feedback from Stakeholders
Let’s use this framework and take a look at the considerations for the healthcare industry.
All organizations had strategic plans, but COVID changed everything in 2020, and it remained entirely outside of our control. 2021 is vastly different from 2020, focusing on the environment, government changes, struggling communities, changes in migratory patterns, and healthcare shifts to telehealth.
The macro-environment includes industry-wide dynamics and location-specific dynamics (i.e., regional or service area considerations) such as:
- Regulatory: Changes to federal or state regulations that affect the businesses or functions of the organization
- Financial: Macro-financial implications, such as the status of the state or regional governments, local industries and community health, or changes to major payer reimbursement rates
- Population: Changing (and aging) population and any other factors affecting population size and structure (i.e., migration into or out of service area)
- Healthcare Utilization: Shifts in the way patients utilize healthcare services, including decreases to inpatient procedures and increases in consumerism
- Global Pandemics/Health of Population: New from a macro standpoint this year, yet critical
Next, the organization should evaluate how they stand within their specific market and how they interact with other organizations within their service area.
- Competitive Position: How the organization stacks up against its competition (both within its primary service area and secondary service area) and areas where competition is gaining patient volumes.
- Patient Patterns: Where its patients are originating from and how this may impact growth strategies. This should include analyzing where patients from its primary service area are out-migrating and how geography plays into these decisions.
- Partnerships: Depending on the organization type, alignment or affiliation with other community organizations will be crucial to understanding the market dynamics. This could refer to clinical partners as well as community or business partners.
Finally, organizations should evaluate their current internal structure and how they are built to address current patient needs and future patient needs. Additionally, as population health management continues to gain ground, organizations should ensure they are positioned internally to manage the care of their entire service area.
- Financial: How well the organization is performing financially and whether it can support specific strategic initiatives. Further, if the organization is under significant financial pressure, strategies may differ from those performing well (i.e., what level of risk the hospital can take).
- Cultural: Developing and maintaining a widespread, collaborative culture is crucial to successfully implementing strategic initiatives. This needs to come from the top-down to ensure all employees will be willing to support the organization’s mission.
- Provider Portfolio: Considering employed and aligned providers within the organization and specialties covered will also be a critical analysis and evaluating productivity and utilization across the entity.
- Clinical Portfolio: A major area of evaluation for organizations should be their clinical portfolio. This includes a review of what, how, and where services are provided. As consumerism in healthcare continues to rise, the where will be crucial, and initiatives like telehealth will continue to gain prominence.
What Actions Should You Take?
- Review Current Issues
- Review areas that the hospital administration and clinical leaders are struggling with on an ongoing basis and prospective issues facing the organization.
- What is going right?
- What is going wrong?
- Develop a SWOT Analysis
- Consider the organization’s current internal and external positioning and evaluate potential strategies to protect the hospital in the future.
- Use as a Foundation for Strategies
- Where we are going has everything to do with where we are coming from
- Listen to a podcast about approaching a private equity deal strategically
- Learn more about our strategic planning professional services
- Submit your questions or request to speak with Aimee or Taylor