STRATEGIC PLANNING

The Governing Board of a hospital/health system is responsible for that hospital’s planning process. A strategic planning process must be established to position the hospital/health system in a rapidly changing environment.

Strategic planning is the process of determining what an organization wants to be in the future and how it will get there. Hospitals that develop and implement strategic plans tend to be more successful than those that don’t.

Strategic planning is different from short-term or operational planning. Operational planning usually focuses on an annual cycle and requires the development of yearly objectives and plans. This becomes part of the annual budgeting process. Operational plans lay out how the hospital will move toward its future during that year. The future is described in the hospital’s strategic plan.

Strategic planning requires that choices be made about your hospital’s future. These choices concern your vision and mission, the goals to be pursued, what services will be offered and to whom, the resources that will be needed (people, facilities, technology, money and knowledge) and how they will be acquired.

IMPORTANCE OF STRATEGIC PLANNING         Top

A hospital/health system should plan for its future to:

• Improve the hospital’s performance
• Determine the hospital’s future direction
• Provide high quality health care services
• Optimize resource allocation
• Meet accreditation and regulatory requirements
• Meet the hospital’s vision and mission statement
• Maximize its chances for success

Strategic planning has become widely practiced by Washington hospitals and health systems. Strategic planning can have a positive effect on a hospital, but it is not the answer in all situations or to all problems. Before engaging in strategic planning, the Governing Board needs to:

• Understand what strategic planning is and how to do it
• Determine if the hospital is stable. If the hospital is in a crisis - for example, in danger of closing - the crisis must be dealt with immediately
• Identify whether a need for change exists
• Be committed to the planning process and include the participation of the hospital administration, community, physicians and staff
• Decide if the hospital has the capability, resources and commitment needed for the planning process

Planning takes time and money. Both must be allotted to the process. It is important to make sure that the necessary resources, including Board and staff time, are available to plan for the future and keep operating in the present.

ROLES AND RESPONSIBILITIES         Top

The Governing Board has the principal responsibility for strategic planning. The Board guides the development of the plan consistent with the hospital’s mission, philosophy and values. The role of the Governing Board in strategic planning process includes:

• Approval of the hospital’s vision, mission statement and goals
• Suggestion and considerations of strategies
• Approval of the strategic plan and its implementation
• Monitoring and updating the plan and its implementation

The chair of the Governing Board appoints the Strategic Planning Committee.

The Strategic Planning Committee is responsible for:

• Organizing the planning process
• Scheduling and conducting meetings
• Focusing the planning process
• Ensuring that Board and community values are reflected in the plan
• Developing the strategic plan
• Periodically reviewing the hospital’s mission and vision statement
• Monitoring trends, demographics, technology and community needs
• Reviewing and approving annual strategic planning goals and objectives
• Monitoring progress toward objectives

The hospital’s chief executive officer (CEO) is involved in the planning process as a strategist, organizer, tactician and facilitator. The CEO is responsible for carrying out the strategic plan after it is approved by the Board.

Involvement of the medical staff in strategic planning is fundamental to ensuring the development and implementation of the strategic plan. This involvement can take several forms. Representatives of the medical staff should serve on the Strategic Planning Committee. The medical staff may have its own planning responsibilities and, upon completion of those responsibilities, report the results to the Strategic Planning Committee.

Hospital department heads make an extremely valuable contribution to the strategic planning process. Their internal, functional planning serves a major role in developing objectives, weighing alternatives and implementing the Board-approved plan.

The role of patients and the community in the strategic planning process merits special consideration, for these groups provide information which nourishes two vital steps in the hospital’s planning: analysis of the internal and external environments, and development of the hospital’s mission. While actual participation by these groups in the process may be limited, community and patient use of and attitudes about the hospital are reflected in all steps of the planning process.

The hospital planner is involved in staffing all aspects of the planning process. The planner performs feasibility and planning studies, develops the environmental assessment for the Strategic Planning Committee’s consideration and provides assistance in developing the plan’s format, timetables and evaluation procedures. In hospitals without a planner, these functions are the responsibility of the chief executive officer and/or administrative staff.

Consultants are helpful in the strategic planning process to:

• Prepare the Governing Board for the planning process through education or retreats
• Give an objective assessment of the hospital’s strengths and weaknesses
• Steer the Board and Strategic Planning Committee through the process
• Keep the planning process on track

A consultant cannot substitute for the Board’s unique knowledge of the hospital and its mission. The consultant is not the planner.

THE STEPS OF THE STRATEGIC PLANNING         Top

The steps of the strategic planning process usually include:

• Get organized
• Perform an environmental assessment
• Develop a vision
• Develop the mission statement
• Develop strategies
• Prepare the strategic plan
• Approve the plan
• Implement the plan
• Monitor and update the plan

Each Governing Board should design a process that is realistic and that works for its hospital. Steps can be combined and completed at the same time. They may be completed in a different order depending on the planning process. Planning should focus on the critical issues that will determine the hospital’s future success or failure. As you design your strategic planning process, answer these questions:

• What is the Governing Board’s experience with planning?
• What is the Board’s commitment to strategic planning?
• How much time and resources are needed from the Board, administration and staff?
• Does the Board or hospital have a knowledgeable person to guide the planning process?
• What technical or political issues may arise?

Strategic plans have been completed in a one-day retreat. However, it is more likely to take 40 to 120 hours of actual Strategic Planning Committee meeting time. The length of time depends on the availability of needed information, the expertise of the Strategic Planning Committee and the staff and resources allocated to the process.

Two to six hours is a good length for Strategic Planning Committee meetings. Meetings should be long enough to discuss issues and should occur at least once every two weeks until the plan is completed.

With the recent rapid changes in the health care environment, hospitals may want to develop a two- to three-year strategic plan with an annual update and review.

Everyone needs to be committed to the planning process. Don’t begin without the commitment of Board members, the CEO and the medical staff. Learn about strategic planning and how your hospital can use it. Discuss what strategic planning can accomplish, any concerns Board members have and what problems may occur. Decide if outside help is needed. Outline the planning steps your hospital will take.

It is important not to design a planning process that takes more time than can realistically be expected from staff or the Board. Form a planning team of five to ten people. The larger the team, the more structure will be needed at strategic planning team meetings. The team could include:

• Board representatives
• The CEO
• Medical staff representatives
• Staff members who have patient care responsibilities
• Community representatives
• Consultants or other resource people

The planning team members need to be able to work together, have different viewpoints, be creative and understand health care trends and the hospital.

One step in strategic planning is a thorough, objective environmental assessment. This includes a realistic assessment of the hospital’s history and present situation, its strengths, weaknesses, opportunities and threats (SWOT). The result of this analysis is a list of critical issues for the future. The hospital functions in two environments - external and internal.

Review your hospital’s history including its beginning, original mission and services, any significant events, major changes, successes or failures and values or traditions.

Review the hospital’s present environment including services, products, programs, staffing, financial position and current plans. Historical and projected utilization statistics, patient origin data and financial reports, as well as medical staff profiles and patient opinion polls, are instructive and should be gathered. This information, prepared by consultants or administrative staff, provides a sense of how the hospital has evolved.

Through its Strategic Planning Committee, the Governing Board probes and assesses the institution’s current internal position. This assessment of strengths and weaknesses may be difficult or even unpleasant. A candid evaluation performed at this stage is necessary to position the hospital for a strong future.

Every hospital functions within a larger setting, and is affected by surrounding forces. The external assessment focuses on demographic data, political trends, social change, the economic climate, community perceptions and competitive providers. Painting scenarios of how the hospital might be affected is helpful in exploring threats, opportunities and potential strategies.

Strategic planning is about being ready for the future. It is also about creating your hospital’s future. The vision statement describes the way you want the hospital to be in the future. Discussions about the hospital’s vision include:

• Clarification of the organization’s values
• Agreement on the basic beliefs that guide the hospital
• Exploring what ideas and trends could change the way the hospital is doing business
• Identifying what needs are emerging as a result of demographic, technological, economical, political and regulatory trends
• Identifying who is needed to make the vision possible

The mission statement provides the purpose or reasons for the hospital’s existence. It expresses philosophy, community service, research or educational commitments, affiliations and major functions or services offered by the hospital.

The mission statement should be a specific, succinct articulation of what the Board wishes the hospital to be. Although the mission statement defines what a hospital is, it also sets forth any limits or restrictions on a hospital’s activities. The hospital’s articles of incorporation, charter, enabling legislation, Board minutes and annual reports are valuable sources for the review and development of the mission statement. The mission statement establishes the guiding principles from which the strategic planning process flows. Your mission statement is unique to your hospital.

There are three methods which are used for developing strategies for the future. Strategies tell "how to get there." These are:

• Goal approach
• Critical issues approach
• Scenario approach

Once the Board has approved vision and mission statements, development and prioritization of goals becomes the next challenge. A goal identifies an end to which the organization aspires, what is hoped to be achieved. For purposes of clarification, this is distinguished from an objective, which is an activity necessary to reach the goal.

Each proposed goal should be examined against community need and acceptability, relation to the mission, feasibility and effectiveness in addressing a problem or concern. Obtaining a consensus on goal priorities may be difficult, for it calls into play a complex set of value judgments, biases and differences in degree of relative urgency or importance. Recognizing that resources are limited is a key consideration. The next step is to explore options for achieving organizational goals. Here, creativity is a welcome skill for discovering innovative strategies or solutions. The Strategic Planning Committee generates several possible approaches to accomplish goals. Each alternative is then subjected to an evaluation of costs, equipment and personnel resources, benefits and constraints. Consultants and the experiences of other hospitals may prove helpful in assembling the information needed to assess each option.

Upon completion of this research, the Committee focuses on selecting the most appropriate specific course(s) of action. If numerous steps or objectives are necessary to achieve each goal, develop a breakdown of those goals which would require two to five years, as well as short-term actions. In this way, goals are less overwhelming, and organizational achievement of each goal is another step toward the desired end.

The result of the environmental assessment is a list of critical issues. Take this list and focus on the four to eight issues most critical to your hospital’s future. Each issue should be stated in question form. Put the critical issues in a logical order. Each issue should be discussed, possible solutions/options identified and the best solutions selected.

The hospital’s strategy for the future becomes clear after all of the critical issues questions are answered. That strategy needs to be reviewed for clarity and coherence. The strategic plan is then developed.

The scenario approach requires the development of several pictures (scenarios) of what your hospital might be in one, two or more years. Scenarios should be evaluated in terms of your hospital’s vision and mission, community needs and financial feasibility. Identify the advantages and disadvantages of each scenario and select one. The chosen scenario may be a combination of more than one original scenario. Determine if the scenario is feasible, then translate it into a strategic plan.

The scenario approach is particularly useful when dealing with major changes in health care delivery, its emphasis or direction. It produces "big picture" thinking, is fairly quick and people find it interesting. The scenario and critical issues approaches can be used with the goal approach. After the strategy for your hospital’s future has been identified using the scenario or critical issues approach, specific goals can be determined using the goal approach.

Documentation of the decisions made occurs through preparation of the strategic plan. Focusing on goals, strategies and objectives, the Strategic Planning Committee assigns responsibility for achieving these objectives, specifies the timetable by which each is to be accomplished and determines what resources are required to accomplish each objective.

The plan should serve as a guide for all activity and direct the hospital toward a preferred future. A simple, brief plan with short- and long-term objectives encourages the hospital to move ahead and specifically identifies the path for doing so.

Decide on the format for your written strategic plan and outline what it will look like, based on the needs of your hospital. The plan might include:

• Summary of the strategic planning process
• History of the hospital
• Vision statement
• Mission statement
• Target population
• Community served by the hospital
• Future issues facing the hospital
• Analysis of strengths and weaknesses, including market share and competition, facilities, programs and services, medical staff, operations and finances
• Assumptions upon which the plan is based
• Goals and objectives
• Implementation strategies
• Organizational structure planned for the future
• Plans for buildings, technology or renovation
• Marketing plans
• Key relationships and how they will be maintained, improved or developed
• Organizational polices for the future
• Plans for the Governing Board - structure, role and responsibilities
• Contingency plans

Draft your strategic plan. It is easier if one to two members of the Strategic Planning Committee put together the draft of the plan.

The Strategic Planning Committee reviews the draft. The draft plan should also be reviewed by others, such as staff members, interested community leaders and people who have a stake in the hospital’s future. Then make needed revisions. It is important to develop a plan that can be understood and carried out. The Committee submits the plan for Board approval.

The Board authorizes the CEO to initiate the implementation process through policy modifications, hiring staff or purchasing equipment, appointing special task forces or allocating and budgeting funds.

The Board, the community and the medical and hospital staff should be aware of and understand the plan. The plan should be communicated to all.

Strategic plans should be monitored continually and updated annually. Given the rapidly changing health care environment, quarterly reviews of processes may be needed. Updating of the strategic plan should occur before budget development. Updating requires reviewing the hospital’s performance, the plan’s objectives, changes in opportunities, threats, strengths and weaknesses and critical issues. Revisions to the plan are then made and included in the budget.

The strategic plan needs to be adjusted when conditions change, when new information becomes available or when the health care delivery system changes.

SUMMARY         Top

Positioning the hospital for the future is the purpose of strategic planning. The strategic planning process provides a hospital/health system with the ability to determine its future and achieve it.

REFERENCES         Top

American Hospital Association, The Guide to Governance for Hospital Trustees, Chicago, IL, 1990.

Bader, Barry, Five Keys to Building an Excellent Governing Board, Rockville, MD: Bader and Associates, Inc., 1991.

Barry, Bryan, Strategic Planning Workbook for Nonprofit Organizations, St. Paul, MN: Amherst H. Wilder Foundation, 1991. (Reprinted with permission)

Hospital Trustee Association of Pennsylvania, HTA Trustee Folios, Harrisburg, PA.

Jennings, Ryan Fedra and Company, Strategic Planning Workbook, Chicago, IL: American Hospital Association, 1989.

Landry, Charles, "Strategic Planning by Rural Texas Hospitals," Texas Journal of Rural Health, Third Quarter, 1992.

Laycock, Kerry D., "Strategic Planning and Management Objectives", The Nonprofit Management Handbook: Operating Polices and Procedures, ed. Tracey Conners, New York: John Wiley and Sons, 1992.

Orlikoff, James and Mary Totten, "Strategic Planning by the Board," Trustee Workbook, July/August, 1995.

Park Jr., Dabney G., Strategic Planning and the Nonprofit Board, Washington, DC: National Center for Nonprofit Boards, November, 1992.

Pointer, Dennis D., Orlikoff, James E., Board Work: Governing Health Care Organizations, Jossey-Bass, San Francisco 1999

Quinn, James Brian, et. al., The Strategy Process, Englewood Cliffs, NJ: Prentice Hall, 1988.

Short, John, Managing Partner, Phase II Consulting, Salt Lake City, UT.

Walker, Larry President, The Walker Co., Gresham, OR.

Wheeler, Thomas and J. David Hanger, Strategic Management and Business Policy, 3rd edition, Reading, MA: Addison-Wesley Publishing Co., 1989.