Strategy and Strategic Planning in Healthcare: Are They Dead or Alive

Jul 10, 2022 | Articles

Andrew S. James RN, MS, MHA, FACHE

Yevgeny Ostrovskiy MBA, MS-HCA

An Excerpt

A business strategy is a set of guiding principles that, when communicated and adopted within the organization, generate a desired pattern of decision-making. A strategy, therefore, relates to how people throughout the organization are to make decisions and allocate resources, to accomplish key objectives. A good strategy provides a clear roadmap, consisting of guiding principles or rules that define the actions people within the business should (or should not) take, and the things they should (or should not) prioritize, to achieve the desired goals.

‘Strategy’ is a word with which many healthcare leaders will be familiar; few, however, might perhaps truly understand it, and many may struggle when it comes to detailed planning, or execution when required to lead their organizations. Healthcare is one of the most complex non-linear systems, because of its many moving parts, which consist of people, processes, sub-processes, macro-cultures, micro-cultures, and regulations, as well as internal and external administrative and political pressures. In addition, there is no way to adequately prepare in advance for certain events, which may suddenly evolve, such as management of workforce shortages, or the disruption of supply chains related to a unique event, such as a pandemic.

For industries in general, even today, the focus remains on operational efficiency, with the goal of lowering costs and generating higher productivity. This, however, can lead to a lack of innovation, homogeneity, and stagnation. Market positioning and competitive advantage are missing, and there exists no clear understanding of customer segmentation.2 This applies, too, to healthcare systems, primarily to acute care hospitals and their associated ambulatory care services, and this is because most healthcare systems offer multiple services to every patient. Between Medicare, Medicaid, and the various forms of commercial insurance, reimbursement rates have little variability: everyone is paid roughly the same, based on geographical location. Performance benchmarks for quality and patient experience are the same because the majority of them are set by CMS. Healthcare systems thus strive for the same goals, resorting to operational effectiveness by attempting to ‘do more with less. This puts a considerable number of people under considerable stress, with no clear winners emerging.

Although the healthcare industry is volatile and complex, this does not mean that strategy is inapplicable, or should not be considered for fear of it being too difficult to formulate and execute.

This article briefly touches on some key types of strategy that the authors of this article believe all healthcare leaders should become familiar with. It is crucial that leaders understand the components of strategic planning, and what tools and frameworks are available for meaningful analyses.

Here is the link to the full article