HMGT 495 CASESTYDY 2

63

C H A P T E R 4

Major Planning Process Considerations

It is good to have an end to journey toward; but it is the journey that matters, in the end.

—Ursula K. LeGuin

The most important things a leader can bring to a changing organization are passion, conviction, and confidence in

others. Too often executives announce a plan, launch a task force, and then simply hope that people find the answers—

instead of offering a dream, stretching their horizons, and encouraging people to do the same. That is why we say,

“Leaders go first . . .”

—Rosabeth Moss Kanter

Structuring and carrying out an effective strategic planning process is often more important to a healthcare organization, and to the success of strategic planning, than the plan itself. The increasing complexity of the healthcare environment and growing vulnerability of provider organizations to myriad external threats have made it far more challenging to effectively carry out strategic planning and develop strategy.

At the same time, the increasing size, diversity, and complexity of healthcare organizations make for unwieldy entities to communicate in and to manage. While it is possible to overdo the strategic plan- ning process and derail or overwhelm the organization’s capacities,

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C o p y r i g h t 2 0 1 8 . H e a l t h A d m i n i s t r a t i o n P r e s s .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

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Healthcare Strategic Planning64

in general more process is better than less. As a rule, organizations should strive to maximize participation in the planning process within the limits of their capabilities to handle it and achieve the desired results.

The key to an effective planning process is developing shared understanding—and ultimately consensus—about four important elements of the strategic plan:

• Current, and especially future, environment • Critical issues the organization faces • Mission and vision to guide the organization to the future • Major plan outputs, including priority strategies and

alternatives considered

An effective process builds acceptance, facilitates approval, and expe- dites the transition from planning to action.

The planning process needs to link effectively the many con- stituencies involved in healthcare organizations. If it does, it can facilitate better communication among staff and improved coher- ence in future operations. While the organization should certainly seek tangible outputs from strategic planning, the planning process presents important opportunities for improving communication across the organization and for forging new and stronger bonds among stakeholder individuals and groups to help ensure the orga- nization’s future viability.

This chapter addresses some of the critical elements of the plan- ning process. While many of these elements have been mentioned in passing in previous chapters, the importance of a strong planning process calls for more extended discussion.

FACILITATION

Facilitation is an extremely critical element of a successful strategic planning process. Someone needs to be primarily responsible for

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Chapter 4: Major Planning Process Considerations 65

guiding the process throughout, ensuring that the important planning tasks are conducted and completed, assisting leadership and other key groups involved in the process in reaching decisions and achieving consensus, and then directing the transition from planning to success- ful implementation. While many individuals involved in the strategic planning process will have specific responsibility for facilitating one or two aspects of the diverse group work, one person typically takes the lead throughout, with overriding responsibilities for the entire process.

What alternatives exist for effective facilitation of the strategic planning process? Many healthcare organizations have a planning staff or organizational development department (or occasionally other internal resources) that can facilitate the planning process. Some organizations retain consultants to fill this role. When evaluat- ing possible consultants, organizations should look for individuals who are highly experienced, have healthcare field and comparable organization experience, and possess a range of facilitation skills described further in the following sections.

In some instances, the CEO may consider serving as the process facilitator. Most CEOs find this job extremely challenging, if for no other reason than it makes productive group discussion and consen- sus development difficult. Most CEOs inhibit free discussion as a result of their power and authority and tend to dominate meetings when put in charge. Avoid this alternative if at all possible.

C. Davis Fogg (2010) suggests that the best facilitators have three types of skills (see exhibit 4.1):

• Process: putting the planning process together and making it work

• Content: giving specific solutions to business and strategic problems

• Intervention: breaking personal, organization, and business decision blockages

He adds that all three types of skills may not be, and often are not, possessed by any single individual. The more of the three skills

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Healthcare Strategic Planning66

What the Facilitator Does I. PROCESS • Structure

– Structures the process – Defines key analyses – Produces the manual – Handles documentation

• Training – Trains in planning and pro- cess

• Facilitation – Facilitates major meetings – Teaches others to facilitate – Gives private advice on process

– Schedules meetings • Resourcing

– Identifies training – Identifies outside facilitators – Identifies content specialists

II. CONTENT • Solutions to specific strategic

issues

III. INTERVENTION • Diagnostic interviewing

– Initial – In process

• Private counsel, particularly CEO

• Team interventions • Keeps process on time

What the Facilitator Does Not Do • Develop the plan • Write the plan • Make decisions • Become a power point • Play politics • Execute the plan

When the Boss Facilitates; Is Part of the Team • Be a member of the group • Speak last • Use good facilitator skills • Be neutral • Let the team come to consen-

sus • Do not dominate or be

authoritarian • You always have the deciding

vote—use it sparingly

Exhibit 4.1: The Facilitator’s Job Description

Source: Fogg (2010). Used with permission.

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Chapter 4: Major Planning Process Considerations 67

that are offered by one person or group, the more effective and effi- cient the strategic planning process will be. In nearly every strategic planning effort, the organization needs all three types of skills, and it must be prepared to provide them at appropriate points in the process. Fogg believes that the lead facilitator must have certain basic process skills, especially a keen understanding of all parts of the planning and implementation process, and must know how to weave them together successfully. She must also have knowledge of organizational behavior and the change process and strong leader- ship capabilities.

TEAMWORK

Much of the strategic planning process occurs through the efforts of informally or formally constituted, diverse groups. In the typi- cal strategic planning process, important team work is performed by the strategic planning committee, board of trustees, senior management staff, and a variety of standing or ad hoc groups. How can the effectiveness of these many and varied groups be maximized?

Fogg (2010, 257) suggests that effective teams are “characterized by:

• Considerable discussion • Open communication • Debate, even conflict, on key issues • Decision by consensus whenever possible • Monitoring, measuring, and correcting of their own team

behaviors”

Effective teams must also have a clear charge or objective to accomplish, good leadership by a chair who facilitates and directs

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Healthcare Strategic Planning68

but does not dominate, and accountability of the team and indi- vidual members for results. Among other qualities, individual team members must be good listeners, constructive participants, and willing to put aside their own self-interest for the sake of the group. All in all, a very tall order, but one that is essential to the smooth and successful flow of activities in the strategic planning process.

The interaction of the facilitator and team is a critical element of an effective strategic planning process. Fogg (2010) provides an extremely useful checklist (see exhibit 4.2) of facilitation tips to keep the teams on track and moving ahead.

Process • Facilitate team mission; roles, job description, and processes

used • Process checks during and at end of meetings—what is good and

bad versus norms • Redirect process when off track • Point out dysfunctional team behavior

Meeting • Off agenda/subject—get team back on track • Summarize/crystallize key points; transitions • Offer stand-up facilitation when team is bogged down • Crystallize/facilitate/resolve conflicts • Missing the point—suggest it

Content • Wrong decision—point out correct options/process to define

correct decision • Suggest expert outsiders • Give specific content solutions

Individual • Point out dysfunctional individual behavior or interactions • Offer individual/pair counseling

Exhibit 4.2: Team Interventions

Source: Fogg (2010).

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Chapter 4: Major Planning Process Considerations 69

PLANNING RETREATS

Almost every strategic planning process has at least one planning retreat. The retreat usually brings together board members, phy- sicians, and other clinicians and members of management in an extended planning session. Some retreats are intended for board members exclusively, while others are for members of different leader- ship groups. Depending on the organization’s style and preferences, as well as the particular focus of the retreat, the retreat may be held off-site and may even be carried out in a remote location combined with social and recreational activities. The following section presents a review of the purposes of the different types of retreats that may be held.

Kickoff Retreat

Some organizations use a retreat at the beginning of strategic plan- ning to jump-start the process and create enthusiasm and momen- tum. The agenda for this type of retreat may include some or all of the following:

• Rationale for strategic planning (purpose, expected benefits)

• Strategic planning orientation (see chapter 3) • Review of previous planning efforts, successes, and failures • Review of the organization’s recent performance • Discussion of the organization’s strengths, weaknesses,

opportunities, and threats • Review of current major strategic initiatives • Identification on a preliminary basis of major planning

issues

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Healthcare Strategic Planning70

Often, one or more outside keynote speakers are used to discuss critical issues or environmental challenges. If external speakers pres- ent, they should be oriented to the organization’s situation and their content previewed with the facilitator to ensure it is on topic and avoids statements that distract rather than enlighten. This type of retreat is a good vehicle for underscoring the importance of strategic planning and creating heightened interest in the planning process from the outset.

Midprocess Retreat

At any number of points in the middle of the strategic planning process, retreats can be held to do the following:

• Focus on a particular issue of concern • Have extended discussion that is not possible in a regular

planning committee session • Obtain broad-based input, including input from the

members of the planning committee and other important leaders not represented on the committee

• Brainstorm about approaches to issues facing the organization

External speakers may be used in midprocess retreats in a manner similar to kickoff retreats. The purposes of the midprocess retreat are information sharing, clarification, and direction. Sometimes this retreat is referred to as the “question” retreat—the attendees make sure the organization is focusing on the right strategic questions. These retreats are rarely used for decision making or communicating “answers” to strategic planning issues.

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Chapter 4: Major Planning Process Considerations 71

Concluding Retreat

At or near the end of the strategic planning process, a retreat may be held to

• obtain additional, broad-based input before finalizing the recommendations;

• communicate the answers (i.e., the plan’s key recommendations);

• serve as a bridge to implementation, including strategizing about implementation opportunities and barriers; and

• build a broader consensus on the plan and its recommendations than that offered by the planning committee alone.

Often, this type of retreat is developed to expose all members of the board to a plan before it is brought to this group for formal consideration of its adoption. This type of retreat may also be used to signal to the organization that planning is (temporarily) over and implementation is about to begin.

Retreats may also be held in off years, when the organization is not undertaking a full strategic planning effort, to accomplish any of the purposes cited earlier and to keep the planning process going even as the organization’s efforts are primarily devoted to implementation. Increasingly, healthcare organizations are using one or two planning retreats per year to review and revise the strategic plan, make important corrections to the direction and strategies, and obtain broad-based consensus on key initiatives to keep the organization moving forward. (See chapter 10 for more discussion of the annual strategic plan update and the potential role of retreats.) These retreats are an excellent vehicle for maintaining momentum and organizational commitment in the face of constant day-to-day

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Healthcare Strategic Planning72

pressures that consume management and have the potential to take the organization off course.

RESEARCH APPROACHES

Much of the success of the strategic planning process is dependent on information gathering and the involvement of key constituen- cies, which comes through various research efforts. The importance of constructive involvement of key constituencies in the strategic planning process cannot be overstated; implementation is dependent on a broad base of support for the plan’s recommendations and actions. This support is only likely to occur if stakeholders believe they have a true opportunity to shape the results. A brief review of the range of research approaches used in strategic planning follows.

Interviews

Interviewing is typically part of every strategic planning process. Individual or group interviews usually occur early in the strategic planning process to gather information and demonstrate sensitivity to the perspectives of internal parties, and they are also intended to accomplish one or both of these purposes with external parties. Sometimes, interviews may be carried out during the middle of the process to gather additional information on issues of concern or involve select parties in review of alternative approaches for address- ing particular issues.

Surveys

Surveys are the second most frequently employed technique, and are often used for information gathering early in the strategic planning

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Chapter 4: Major Planning Process Considerations 73

process. Many organizations participate in ongoing survey efforts that provide valuable input for strategic planning—patient satisfaction, quality and outcomes tracking, and consumer perception are among the most common. Surveys may be carried out internally to gather broad input in a less expensive way than possible through other research approaches. Internal surveys may also allow each member of an affected group to be involved in the strategic planning process and to accomplish this participation in an equitable and consistent manner. External surveys have similar purposes. The advantages and disadvantages of different survey approaches—electronic, mail, or telephone—as information-gathering techniques are best left to experts in this subject area (e.g., Designing and Conducting Survey Research: A Comprehensive Guide by Louis M. Rea and Richard A. Parker). With the availability and prevalence of electronic com- munication today and the rise of various standard online survey tools, much focused surveying occurs at a relatively low cost via the Internet or organizational intranets.

Focus Groups

The focus group technique is the least frequently used of the three approaches, but it is growing more commonplace in strategic plan- ning processes. Focus groups may be convened at any point in the process to gather information on a particular issue. Such groups are becoming more widely used in the strategy formulation stage of the planning process and provide excellent forums for multidis- ciplinary development of strategy on a given issue. The advantages and disadvantages of focus groups versus other research approaches is a larger subject than can be addressed here (e.g., Focus Groups: A Practical Guide for Applied Research by Richard A. Krueger and Mary Anne Casey).

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Healthcare Strategic Planning74

Reactor Panels

The reactor panel is a modified version of the focus group. Depending on the substance of the material to which a reaction is being sought, reactor panel members may be key constituents of a particular group (e.g., cardiovascular providers) or more diverse in representation (e.g., the medical executive committee). When conducting a reactor panel during the strategic planning process, the facilitator is usually seeking a found response to a particular recommendation, set of rec- ommendations, or potential alterations under consideration. Reactor panels are appropriate vehicles for these narrowly defined purposes.

Most strategic planning processes employ more than one of these approaches. With the growing recognition of the importance of a strong process in strategic planning, organizations will likely pursue more extensive use of individual and group research approaches in future strategic planning efforts.

KEY STAKEHOLDER INVOLVEMENT

The strategic planning process is more likely to succeed if all key stakeholders understand their roles. The following sections briefly describe each major group’s role.

Board Members

The strategic planning committee is usually an ad hoc or standing committee of the board and therefore includes significant represen- tation from the board of directors. Board members are important participants in retreats, and they are involved in internal research. The board should be concerned with the policy implications of strategic planning and is generally and appropriately focused on the organizational direction portion of the strategic planning output.

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Chapter 4: Major Planning Process Considerations 75

Physicians

In hospitals, health systems, and, obviously, medical groups, physi- cians should be well represented on the strategic planning committee. They are often solicited for input, and, moreover, they often provide the most extensive contributions of all internal (and sometimes external) constituencies.

Physicians concern themselves with the clinical implications of strategic planning; in teaching hospitals and academic medical centers, they are also interested in teaching and research interrelation- ships with clinical services and specific recommendations affecting the academic role of their organizations. Physicians may be most broadly affected by the outputs of the strategic planning process; however, excepting some of the second- or later-generation inte- grated delivery systems, they do not have direct approval authority or clear implementation responsibility.

Few topics are as hotly debated today as how to involve medical staff members in hospital and health system strategic planning. The escalation of competition between physicians and hospitals over provision of outpatient services and, increasingly, entire high- margin clinical service lines, has created enormous complexity and confusion in this area. In addition, some physician groups are bearing risk for the total cost of patient care, sometimes leading them to view the hospital, with its typically higher-cost services, as the enemy. However, with more physicians employed by hos- pitals and health systems, this dynamic has begun changing in recent years. These alignments and competitive postures yield an ever-evolving mix of tension and cooperation between a hospital and its medical staff that must be considered in its uniqueness in each market.

While no single approach exists that fits every situation, construc- tive and careful physician involvement in the planning process is vital to effective planning. Organizations need to make appropriate

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Healthcare Strategic Planning76

accommodations for competitive considerations in many instances. Little or no involvement of physicians in strategic planning is not an option.

Senior Management

Senior management is almost always represented on the strategic planning committee, but it is generally fewer in number and lesser in “voice” than board members or physicians. Management, how- ever, plays an important and central role as the coordinator of the strategic planning process—structuring, staffing, keeping it moving along, and overseeing implementation. Senior management’s roles and responsibilities in the process generally increase as the planning reaches its later stages.

Other Clinicians

Depending on the nature of the organization, other clinicians (e.g., nurses, physical therapists, psychologists) may play a major or minor role in the strategic planning process. In healthcare organizations not dominated by hospitals or physicians, other clinicians may have significant involvement, including participation on the strategic plan- ning committee of the board. In hospital- or physician-dominated healthcare organizations, other clinicians play a minimal role in the strategic planning process, but they usually get involved when implementation begins or is near.

Other Management

In most cases, other management members only get involved in the strategic planning process prior to implementation if a significant

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Chapter 4: Major Planning Process Considerations 77

issue or area of concern arises over which they have direct respon- sibility or expertise.

Although some strategic planning experts advocate a bottom-up strategic planning process that calls for broad-based and extensive participation from all levels of the organization, few healthcare organizations practice such an approach (more about this situation follows later in the chapter). A summary of the typical involvement of key stakeholder groups in major elements of the planning process appears as exhibit 4.3. While every planning process is carried out somewhat differently, exhibit 4.3 summarizes the information in the previous sections and can be used as an initial framework for structuring involvement at the outset of strategic planning. It may be reconsidered as the process moves along.

ADVANCING TO THE NEXT LEVEL: BOTTOM-UP VERSUS TOP-DOWN STRATEGIC PLANNING

Strategic planning in healthcare is still very much a top-down pro- cess. Dominated by senior management (see exhibit 4.4), and to some degree, the board, planning in most organizations engenders little participation, awareness, and ultimately support from the majority of employees, and even less from customers. Strategic plan- ning in large healthcare organizations is still very hierarchical, with business units and other subsidiary entities reacting and responding to edicts and directives from on high.

Practices in leading organizations outside of healthcare are almost exactly the opposite. While corporate leadership provides high-level direction and guidance, planning is increasingly focused in the busi- ness units or other subsidiary parts of the company and driven up, rather than down, through the organization.

A bottom-up approach has many benefits: It allows broader- based, more substantial, and more meaningful participation in the planning process; generally encourages creativity and innovation;

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Healthcare Strategic Planning78

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Chapter 4: Major Planning Process Considerations 79

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Healthcare Strategic Planning80

has the “real action” of planning taking place closer to the cus- tomer; facilitates organizational support for what results from the planning process; and leads to greater implementation success. In addition to senior management providing vision and direction and championing the process, such organizations must have a culture of trust and accountability, outstanding formal and infor- mal communication networks, and sound strategic skills across the organization.

A decentralized planning process is much harder to manage than a centralized one, and, of course, such a process risks loss of control. However, leading companies have found that the benefits of a decentralized process far outweigh the negatives and that it delivers much more overall value. Some organizations are beginning to move in this direction, but as a field, much progress is needed to approach this best practice inside of healthcare.

EVOLVING AND IMPROVING THE PROCESS

Even today, too many healthcare organizations are wedded to a process that has worked well historically and are reluctant to make significant changes. Some ask, why fix what isn’t broken? While there is value and security in the tried and true, regular advances in approaches and methods are occurring in strategic planning in healthcare (and outside of it). Therefore, aspects of a process that is five or ten years old—or even one year—may not be current enough to keep the organization in the forefront. Executives cer- tainly aren’t content with yesterday’s operations management or financial planning and management approaches, so why shouldn’t planning evolve too?

The quality and continuous improvement orientation of an orga- nization’s strategic planning process can be evaluated by examining the process at three increasingly challenging levels of inquiry:

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