Strategic Planning and the Pace of Change

The accelerating pace of change, much of it unpredictable, means accelerating disruption to plans, for better or worse. (For “better,” think of the 18 billion dollars for healthcare information technology made suddenly available as part of the ARRA stimulus package.)

Strategic plans used to look forward five to eight years, writes Jan Greene in a thoughtful and valuable article in Hospitals & Health Networks magazine. Now, some hospitals use “rolling” plans that update the future continuously.

For the hospital board, a rolling strategic plan is less of a plan and more of a process that results in guidance about what to do at any moment in turbulent economic or political times. The key aspect of a rolling plan is a laser-like focus on mission, values, and vision. Often, these are the last things that come to mind in a time of crisis, but they should come first. They comprise the heart and soul of an organization, but they have to be taught and internalized. When they are, deciding and prioritizing what to do in a crisis becomes easier.

In one example of a rolling strategic planning process given by Greene, trustees at one hospital list strategic issues, develop assumptions from them, then rank each assumption on its importance to the hospital and its fit with the hospitals strengths. The results are plotted on a quadrant graph which reveals the action priorities, and the graph is updated at every board meeting in light of the impacts the action steps are having on the original assumptions. This seems to us essentially a form of scenario-based planning, the most used method in “futuring.” As applied here, it has the benefit of bringing both big-picture vision and operational nuts and bolts—or principle and practice, or present and future—together.

The accelerating rate of disruption means that time is of the essence when considering, for example, major capital projects. What might happen in the five years it typically takes to build a new hospital building?

Retail Clinics Update

Still, not even tugs from the heartstrings or admonitions from the soul focus strategic attention like a threat to survival, without which there is no heart nor soul. Consider the threat to hospitals and doctors posed by retail clinics—a threat we have mentioned before, including a 2008 study which found that:

“The number of retail clinics in the United States is increasing rapidly. Recent polls indicate that 15 percent of children and 19 percent of adults are very likely or likely to use a retail clinic in the future, and one report estimates that by 2011 there will be 6,000 retail clinics in the United States providing more than fifty million visits per year. Retail clinics appear to be providing care to a patient population less likely to use PCPs, and their focus is on a limited scope of reasons for which patients might prefer convenience over a relationship with a particular provider. To what extent the growth in retail clinics will lead to a shift of care from EDs or PCP offices to retail clinics or the disruption of primary care relationships is unknown.”

Two years later, it seems that hospitals and doctors may have thwarted the threat by competing on the same level—offering patients the convenience of neighborhood urgent care centers, extended office hours (including evenings and weekends), and adjusting their schedules to accommodate walk-ins and same-day scheduling. They are also competing financially by hiring more nurse practitioners to handle routine cases.

Some 70 retail clinics located in Meijer supermarkets closed over the past two years. Between August 2008 and August 2009, 85 MinuteClinics also closed. A retail clinic costs an estimated $500,000 to operate, requires heavy marketing, and takes two to three years to become profitable, according to a Center for Studying Health Care System Change report in December 2008. And insurers are reluctant to reimburse for their services because they are staffed solely by nurse practitioners.

Dangers of Accelerating Technological Advance

Close behind survival as a trumper of higher values come denial, greed, indolence, carelessness, technological arrogance, and lagging legislation. A recent AP report reminds us that some mix of these is a recipe for disaster, as when BP ignored warning signs of a dangerous well through overconfidence in a blow-out preventer that in the event just did not work; and as when NASA ignored warning signs of brittle O rings and insecure foam insulation, each of which led to space shuttle disasters.

When warnings of disaster are heeded, as in the Y2K computer bug, the ignorant and foolish may scoff and wonder what all the fuss was about; but disaster is averted. But the world is changing very fast, so we need new ways—perhaps, a rolling plan?—to predict and avert disaster.

Vaccines Back In Business

In medicine, at least, most of the change is for the general good, even if it hurts a few. Vaccines for malaria, TB, Alzheimer’s, AIDS, pandemic flu, genital herpes, urinary tract infections, grass allergies, dengue fever, MRSA, C. difficile, traveler’s diarrhea and even cocaine and nicotine addiction—all under development in a resurgent onslaught by the pharmaceutical industry after years in the doldrums—may benefit billions, while hurting those whose livelihood depends on the continuing presence of those diseases.

The breakthrough vaccines of the last decade (pneumococcal disease, rotavirus, meningitis, and cervical cancer, among others) are just a precursor to what Pfizer head of vaccine research Emilio Emini says “is going to be characterized as a golden era [in vaccines].” Be sure to factor this into your rolling plan.

Forecasting Clinician Workforce

One thing hospitals typically do not strategically plan for is to ensure “the right number of the right clinicians in the right places,” according to consulting firm McKinsey, even though nearly 60 percent of healthcare costs goes to clinical labor. We think they meant to add: “At the right time.”

This affects patient care, clinician morale, and service delivery; and ultimately, the mission of the institution. (To prevent that, here is where that laser-like focus on higher values might come in handy.) One difficulty is that medical and allied education and training often last longer than the tenure of planners, and in the meantime medicine may have changed so much that the education and training is outdated.

Jobless Recovery

Workforce planning is a problem not just for medicine.

Why do the stocks of General Electric, IBM, Texas Instruments, and other large companies get hammered, as they have been recently, even though the companies beat profit forecasts? Because sales are sluggish. Why? Because unemployment is high and the jobless don’t consume, much.

“When jobs will come and where they’ll come from are two of the biggest questions hanging over the recovery,” writes the AP’s Dave Carpenter. The stimulus program doesn’t seem to be providing an answer, yet.

The EU hopes to create more than 165,000 jobs through a 12 percent increase on funding for scientific research and innovation, for a total of 6.4bn euros in 2011.“Research and innovation are the only smart and lasting route out of crisis and towards sustainable and socially equitable growth,” said the EU’s Commissioner for Research and Innovation.

Is technological innovation really a solution to the jobs situation and the broader economy? It is a truism that businesses become more profitable when they can replace people with automation. But by and large, people without work become non-consumers, so companies sell less, and down goes the spiral toward economic disaster. With respect to the current “jobless recovery,” one pundit said recently (we neglected to record the source details) that companies won’t hire again until labor costs equal third-world labor costs. (But even China is beginning to shed jobs, so where does that end up?)

Solo Practice Declining

Given the growing trend to medical tourism, perhaps even physicians’ incomes won’t stabilize until they too reach third-world levels. In the meantime, the decline in income is driving midcareer physicians in solo practice, as well as graduating med students, to take salaried jobs at hospitals. The number of solo- and two-doctor practices fell from 40 percent of physicians in 1997 to 30 percent in 2008, according to the Center for Studying Health System Change, and health reform and Medicare cuts will probably accelerate the trend. The decline of cardiac surgeons in private practice is said to be even greater: down from 80 percent in 2007 to 30 percent today.

However, notes Christina Rogers in the Detroit News, the trend will not only improve the coordination of patient care between doctors and hospitals but will also mean “the steady demise” of physician autonomy (and therefore, we would add, a steady rise in the practice of evidence-based medicine, and therefore better care.)

Clinician Shortage: Africa

On the bright side, the developing world is much shorter on doctors than it is on factory workers, so there may be opportunities there. A report claiming that by 2015 thirty-one Sub-Saharan African countries will be short by almost 800,000 doctors, nurses, and midwives implies that there may be no shortage of work for providers in the West who are willing to relocate, or to work via telemedicine.

How Local is Healthcare?

The future of healthcare is certainly set for a period of turbulence that extends well beyond that caused by health reform. Here’s a fascinating—and telling—perspective on the future of healthcare in an article by Rich Thomaselli in Advertising Age magazine. To the extent advertisers wield power to shape the future—and the extent is sometime horrifying—then watch out, and prepare for global competition:

“We used to think of hospitals in terms of geography — what’s closest and how fast can I get there? Now that’s not an issue,” said Ned Russell, managing director of Saatchi & Saatchi Wellness. “The health-care business is developing its own destination segment.”

He noted that “a lot of these national and world-class medical centers have developed their own specialties, and it’s become part of their brand value. They need to attract talent and get funding. How do they do that? By increasing their patient base. How do they lure patients? Their advertising. Doesn’t seem to matter these days how far away a patient is.”

Indeed, 25% of the patients at the Mayo Clinic in Rochester, Minn., come from 500 miles away or more. To get patients traveling, hospitals are upping the ante. The Cleveland Clinic more than doubled its ad spending from 2008 to 2009, according to Kantar Media, from $3.9 million to $8.5 million. Spending by Sarasota (Fla.) Memorial Health Care System is up 10%, and it’s up 15% at Detroit’s Henry Ford Health System.

Hospitals that manage to get themselves and their specialties listed in rankings such as U.S. News & World Report’s annual list of best hospitals use their ranking as a tool to market those specialties nationally and internationally. Thomaselli cites several campaigns: Mass General’s heart and vascular services (“A mother’s last words shouldn’t come before her child’s first,”) Mayo Clinic’s transplant services, Sloan-Kettering’s cancer services, Cleveland Clinic’s heart services.

Cleveland Clinic has a deal with home improvement superstore giant Lowe’s to serve as the “preferred provider” for employees’ heart care. The Mayo Clinic has a similar agreement with Walmart, for transplants. Advertising wisdom underlies this focus on specialties. “I say ‘refreshing soda,’ you think Coca-Cola. … I say ‘cancer treatment,’ you think Sloan-Kettering.”

The social media, the new word-of-mouth carriers, are increasingly used to get those messages across. From May of last year to June of this, the number of hospital Twitter accounts went from 250 to 552, and YouTube channels from 250 to 341. Mayo Clinic has a social-media manager, as indeed does our own institution, the Detroit Medical Center.

Key takeaways: (1) Hospitals need to win awards; (2) They need to advertise their awards well beyond their traditional primary service areas; and (3) They need to use social media as a key part of their campaigns.

Model Healthcare Systems

But can every hospital aspire to Mayo-dom? Last September, President Obama touted the Mayo Clinic as a model for national healthcare reform. “It’s got the best quality and the lowest cost of just about any system in the country,” he said. But is it replicable? Critics, note Washington Post staff writers Alec MacGillis and Rob Stein, point out that Mayo’s patients are wealthier, healthier, and less racially diverse than average, while its rates are higher than average, “allowing it to thrive despite the lower Medicare spending cited by its supporters.”

Since those demographic conditions apply to few other systems, the model as a whole is not transplantable, and systems that try to adopt it are likely to fail, say the critics.

US providers not only cannot emulate Mayo, it seems that in the aggregate they cannot emulate the health systems of six other industrialized countries in terms of quality, efficiency, access to care, equity, and healthy lives. A recent Commonwealth Fund study analyzed 27,000 patients and doctors’ ratings of their experiences in their national healthcare systems. They rank as follows:

1. The Netherlands
2. United Kingdom
3. Australia
4. Germany
5. New Zealand
6. Canada
7. United States

The NHS performed especially well in terms of quality of care and access to care, with “relatively short waiting times for basic medical care and non-emergency access to services after hours, [though with] longer waiting times for specialist care and elective, non-emergency surgery.”

The NHS was also top in terms of efficiency, as measured by total national spending on health as a percentage of GDP, as well as the amount spent on health administration and insurance.

In contrast, the US consistently underperformed in most areas of healthcare relative to other countries, says the study’s authors, but they expect that “The new [US health reform] legislation should begin to improve the affordability of health insurance and access to care when fully implemented in 2014.” (For a short primer on health reforms, see “American Healthcare: A Four-Napkin Explanation.” It actually takes 51 slides, but that’s nothing considering how much it really does explain, if not always accurately.)

Standard Podcast Play Now | Play in Popup | Download