HMGT 495 CASESTYDY 2

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105

C H A P T E R 6

Phase 1: Analyzing the Environment

In God we trust. All others bring data.

—Edward Deming

You can never plan the future by the past.

—Edmund Burke

LOOKING FORWARD VERSUS LOOKING BACKWARD

Strategic planning typically begins with an analysis of the current situation and recent history of the organization, referred to as the situation analysis or environmental assessment (see exhibit 6.1).

The environmental assessment should

• identify past successes and failures: what has worked, what has not, and why;

• give trustees and others less knowledgeable about the organization a solid grounding for constructive involvement;

• help determine what factors are subject to the organization’s control and influence; and

• identify how external forces might affect the organization in the future.

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Healthcare Strategic Planning106

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Chapter 6: Phase 1: Analyzing the Environment 107

Although the environmental assessment may be viewed as mere busywork for the planning staff before real strategic planning begins, it has valid and important purposes that should be enumerated and highlighted at the start of the assessment. Among them, as the first activity in the planning process, the environmental assessment largely sets the tone for the strategic plan and indicates how the rest of the planning process is likely to unfold by examining the following questions:

• Will the process be comprehensive in scope? • Which key organizational stakeholders will be involved in

a constructive way? • Will it be highly structured or loosely organized? • Will it be driven by facts, strive to overcome bias, and

focus on critical issues? • Have the outputs of the strategic planning process been

clearly articulated, and will this process drive toward their achievement?

• Is a planning schedule being followed, and will that planning lead to action?

As discussed in chapter 3, many planning efforts get off to a poor start because the planning process and activities lack sufficient advance conceptualization, organization, or explanation to the whole organization. The environmental assessment, if poorly planned and executed, can derail subsequent strategic planning activities. The environmental assessment is characterized by three separate processes: information gathering, distillation of key findings, and translation into conclusions.

Perhaps the most common concern when undertaking an envi- ronmental assessment is that the staff may become enmeshed in data gathering and analysis, bogging down the entire planning pro- cess early—a problem known as analysis paralysis. Guidelines and resources for effectively carrying out data gathering—a complicated and controversial task—are provided in exhibits 6.2, 6.3, and 6.4.

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Healthcare Strategic Planning108

While it is important to compile a database that clearly reflects the organization’s historical performance and market, strategic plan- ning is not primarily an exercise in plotting historical patterns and then extrapolating. As the Burke quote at the beginning of this chapter implies, historical performance is not a reliable indicator of the future. Reviewing recent history and analyzing successes and failures is a comforting activity. But organizations gain little from overanalysis of the past, and whatever momentum and excitement it may be able to create at the initiation of strategic planning will likely be lost if historical performance, particularly negative trends or areas of underperformance, becomes the major focus of the stra- tegic planning process.

Being deliberate and focused in both the type and volume of data that are being sought will not only expedite the environmental assessment but also ensure excessive time and resources are not spent overanalyzing information simply because it is available. A few tips for organizing the data collection process follow:

Internal External

• Characteristics and utiliza- tion of major programs and services

• Key indicators: facilities, equipment, and staff

• Financial performance and position

• Major demographic and economic indicators

• Major technology, reim- bursement, and regulatory factors

• Position of major programs and services

• Profile and analysis of key competitors

• Future market size and char- acteristics

Exhibit 6.2: Minimum Data Requirements for the Environmental Assessment

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Chapter 6: Phase 1: Analyzing the Environment 109

• Agency for Healthcare Research and Quality

www.ahrq.gov

• American Hospital Association www.aha.org

• American Medical Association www.ama-assn.org

• Center for Consumer Information and Insurance Oversight

www.cms.gov/CCIIO

• Centers for Disease Control and Prevention

www.cdc.gov

• Centers for Medicare & Medicaid Services

www.medicare.gov/ hospitalcompare www.medicare.gov/ nursinghomecompare

• The Dartmouth Atlas of Health Care www.dartmouthatlas.org

• Health Resources and Services Administration

www.hrsa.gov

• Kaiser Family Foundation www.kff.org

• National Cancer Institute www.cancer.gov

• National Center for Health Statistics www.cdc.gov/nchs

• State-specific hospital discharge databases

(Varies by state)

Exhibit 6.3: Online Healthcare Data Resources

Hard Data Soft Data

• State licensure and other state filings

• 990 and 10-K reports and other federal filings

• Hospital associations • Public vendors

• Annual reports • Websites • Public relations releases or

brochures • Press releases • Presentations by executives • Former employees

Exhibit 6.4: Creative Data Gathering for the Environmental Assessment: Competitor Intelligence

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Healthcare Strategic Planning110

• Create a checklist prior to data collection identifying the specific categories of information that will be most helpful for the organization and situation.

• Limit the historical data to three to five years of trend information.

• Use existing or regularly updated data sets, particularly those that are commonly employed in the organization, as they are more likely to be accurate and are easier to obtain than customized reports.

• Select appropriate benchmarks for comparison. • Inventory information as it is collected and be sure to

clearly label files (e.g., type of information, years included) so information can be easily located and accessed later in the strategic planning process.

While quantitative analytics can tell much about how an organi- zation has performed in recent years, data in isolation lack context and perspective on why the organization chose a particular path or what environmental factors affected performance. Stakeholder inter- views provide valuable insights that will support or supplement data findings. These interviews also shed light on topics that cannot be extracted from analytics, such as culture or an organization’s readi- ness for change (exhibit 6.5). Board members, senior management, and physician leaders are typically the subjects of these interviews. Interviews should not be limited to internal stakeholders. External constituents, including regional competitors’ senior management, major payer representatives, community leaders, and relevant politi- cal representatives, can offer perspectives as to how the organization is perceived in the market.

If more extensive feedback is desired or required, online surveys or focus groups can be useful tools to engage a broader group of stakeholders. Although the substantive value of input gathering may diminish significantly as greater amounts of information are collected, the political value of soliciting and carefully listening to organiza- tional leaders’ and stakeholders’ opinions should not be ignored.

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Chapter 6: Phase 1: Analyzing the Environment 111

APPROACH TO THE ORGANIZATIONAL ASSESSMENT

The organizational assessment combines data analysis with qualita- tive information to formulate an accurate profile of the historical performance of the organization. Along with the market assess- ment, discussed in the next section, it establishes the organization’s strengths, weaknesses, opportunities, and threats (SWOT) and identifies competitive advantages and disadvantages that serve as a springboard for subsequent strategic planning activities.

Telling the story of a complex organization is challenging. Infor- mation needs to be organized in a way that allows conclusions to be extracted and easily understood by various constituencies. It is help- ful to group information into summary categories. These categories and the data that are evaluated will be different for every organiza- tion. Exhibit 6.6 shows possible categories that can be explored, and related key questions that should be answered in the organizational assessment.

Larger, complex organizations may need to evaluate entities or lines of business separately, while smaller organizations may be able to consider the enterprise as a whole. For example, a large health system might profile its acute care business, medical group,

Internal Interview Topics External Interview Topics

• Perceived strengths and weaknesses

• Recent or planned initiatives • Strategic priorities • Desired future state or

vision

• Community perception or reputation of the organiza- tion

• Local or regional market trends

• Needed services in the com- munity

Exhibit 6.5: Internal and External Interview Topics

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Healthcare Strategic Planning112

Scale and scope of services

• What is the organization’s coverage of the care continuum?

• What is the organization’s size (revenue and vol- ume) relative to competitors?

• What are the breadth and depth of services? • What are the number, nature, and distribution of

customer access points? • How is utilization trending by service or entity?

Financials • What is the current financial position? • What has been the recent financial performance

and what are the drivers of that performance? • What is the organization’s payer mix? • What types of reimbursement contracts are cur-

rently in place and what are being proposed? • Have any major capital needs been identified?

Providers • What is the profile of the medical staff and other providers (e.g., number, age mix)?

• What is the base of employed or tightly aligned providers?

• What is the degree of provider engagement?

Value • How does the organization perform on clinical quality, patient safety, and patient satisfaction measures?

• What is the cost of care or service delivery? • How are services priced?

Integration • Do elements of the organization effectively coor- dinate care or service delivery?

• Are organizational goals and incentives aligned across departments or entities?

• Is there significant “leakage” or internal referrals to external entities?

Operations • How efficient is the organization? • Are there any significant facility or staffing needs? • How is the organization positioned in informa-

tion technology?

(continued)

Exhibit 6.6: Possible Information Summary Categories

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Chapter 6: Phase 1: Analyzing the Environment 113

post-acute care business, health plan, and so on individually across relevant categories.

The Organizational Assessment’s End Product

The product of the organizational assessment should be a sum- mary of the results that contains a limited number of charts and tables that are both clear and concise in their key conclusions. (See exhibits 6.7 and 6.8 for examples.) These conclusions should not simply describe trend information but rather explore implications for the organization’s position moving forward. These implications can range from an urgent or immediate need for attention to a source of competitive advantage in any given category. Supporting documentation is required and should be prepared and available as backup. No exact measure for how much supporting documentation is necessary exists, as every organizational assessment is unique. A guiding rule is that if a potential table, graph, or analysis does not support or answer a key question identified in the organizational assessment, it is likely extraneous.

Competitive position or market capture

• What is the organization’s market share by ser- vice and geography?

• Who is the market leader by service and geography? • Is there significant outmigration from the ser-

vice area for any service or consumer group?

Future orientation

• What is the organization’s reliance on inpatient and fee-for-service revenue?

• Can the organization manage change? • What is the organization’s structure, and does

that structure support future growth?

(continued from previous page)

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Healthcare Strategic Planning114

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Chapter 6: Phase 1: Analyzing the Environment 115

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Healthcare Strategic Planning116

APPROACH TO THE MARKET ASSESSMENT

The market assessment, like the organizational assessment, should be an accurate profile of the organization’s historical performance as it relates to the marketplace. The external assessment profiles the historical performance and evolution of the marketplace and initiates the process of looking forward by explicitly considering market trends and forecasts. The external assessment has four main components.

Review Population Characteristics This task identifies the broadest trends and variables that have had and will have an impact on organizational performance. While key community demographic, economic, and health status indicators for the past three to five years should be profiled and forecasts provided for the next five to ten years, if available, it is important to note that minor shifts in these measures are of minimal or no consequence to the strategic planning process. Organizations should take care not to overreach and instead should aim to complete a review with a scope that is general and high level rather than detailed. In addition to identifying broad trends, this analysis is occasionally useful in identifying geographical areas or population segments with strong potential for future cultivation.

Review the State of Healthcare Delivery in the Local and Regional Market This step is perhaps the most important in the market assessment and should be afforded requisite attention and resources. The purpose of reviewing applicable healthcare technology, delivery, reimburse- ment, regulatory, consolidation, teaching, and research trends is to identify any major environmental influences that have affected recent organizational performance and, more important, may affect future performance and strategies. (Examples of such reviews for two areas in the United States are shown in exhibits 6.9 and 6.10.)

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Chapter 6: Phase 1: Analyzing the Environment 117

In addition to identifying an anticipated trend’s impact on organi- zational performance, key statistics or research should be included as support for the conclusions.

Individual, small group, and large group markets dominated Insurer A

Much higher than average proportion of covered lives in individual market (vs. large or small group)

Regional/state market characterized by medium to large regional and multistate systems

82% of hospitals in the state a�liated/owned by a system, as compared to 62% in the US

Majority of physicians in the region employed by integrated delivery systems or a�liated with ACOs or

large, independent, multispecialty groups; several independent primary care groups

NC has a higher physician employment rate than the US average (by 16 percentage points)

Fragmented Payer Consolidation

Consolidated

Independent Physician–Hospital Alignment

Aligned

Fragmented Hospital Consolidation

Consolidated

Key Region State

Exhibit 6.9: Select Market Characteristics in Central North Carolina, 2015

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Healthcare Strategic Planning118

Analyze Competitors Analyzing competitors is another critical task—and often the most difficult one. Competitor data in healthcare can be incomplete and out-of-date, although good information can be collected with some hard work and resourcefulness.

State: Low IN HMO penetration rate vs. US (17% vs. 24%); mediocre IN and KY performance on Medicare value-based payments,

30-day readmissions

Region: High relative fee-for-service prices signal likely future rate cuts; Insurer A implementation of wrap payments in IN will solidify footholds and accelerate shift; moderate accountable care organization penetration

Local competition level: ↑ quality, ↑ service, ↓ price Regional competition level: ↑ quality, ↓ service, ↑ price State competition level: ↔ quality, ↑ service, ↓ price

No local or regional market provider owns full continuum; locally, System A has formal partnerships spanning much of

continuum; regionally, System B owns most of care continuum

Slow Shift to Value Payments

Imminent

Minimal System-led Continuum Coverage

Full

Minimal Value Competition

Intense

Key Local Region State

Exhibit 6.10: Select Market Characteristics in Southern Indiana, 2015

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Chapter 6: Phase 1: Analyzing the Environment 119

Competitors may operate on a variety of levels. Some organiza- tions may compete in most or all service categories, whereas others may do so in one or a few select niches. An increasingly common mistake in competitor assessments, particularly for hospitals and health systems, is an exclusive focus on traditional competitors. In many markets across the United States, new market entrants are competing with acute care providers, particularly in the retail space.

Collect competitor data from local, regional, state, and national sources, including those listed in exhibits 6.3 and 6.4. Because of this topic’s importance, and because of evidence that many healthcare organizations have historically failed to complete this task adequately, a three-part example from a strategic plan (exhibits 6.11, 6.12, 6.13) demonstrates a rigorous analysis for a fictional organization.

Market Forecasts and Implications In addition to assessing anticipated population, economic, and health status changes in the market, it may be necessary to forecast health services utilization. This step is not always required and can constitute over-analysis in some circumstances. Utilization fore- casts can be employed if there is a predetermined consensus that the strategic plan will likely focus on a specific segment of services (e.g., outpatient services, cancer services) and will necessitate more thorough analysis. The forecast will include a baseline level of market utilization for the specific services and projected growth or reduction of those services based on a variety of factors, including population and demographic changes, variations in care delivery (e.g., surgeries shifting to outpatient settings), or the effect of efforts to manage care to reduce avoidable admissions.

The External Assessment’s End Product

A summary of the market structure and dynamics should be pre- pared in parallel form to that of the internal assessment. When possible, comparison to benchmarks can help focus the summary

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Healthcare Strategic Planning120

on noteworthy key points. A brief report with several charts and tables accompanied by modest narration or highlighting of key points should suffice. Additional materials may be available for backup support if needed.

TRANSLATION INTO CONCLUSIONS

The internal and external assessments need to produce three main outputs to lay the foundation for subsequent activities: (1) a succinct, pointed, and honest statement of the organization’s competitive advantages and disadvantages in the marketplace; (2) assumptions about the future environment; and (3), with the content of the first

Strategy System A System B AMC A AMC B Niche

Provider Comm.

Hospital

Value position ✪ ●●

Market capture ✪ ● ● ✪ O OOO

✪ Horizontal integration (w/ other health systems)

✪ ● ● ✪ ● O

Vertical integration (w/ payers and physicians)

✪ O O ✪ O O

GME and research O O ✪ ✪ O O Marketing and consumer preferences ✪ O ● ✪ O ●

Symbol Description

✪ High risk to XYZ

● Moderate risk to XYZ

O Low risk to XYZ

System A and AMC B are XYZ’s most significant competitors

Exhibit 6.11: Analysis of XYZ’s Competitors’ Strategies, 2017

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Chapter 6: Phase 1: Analyzing the Environment 121

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Healthcare Strategic Planning122

two outputs in mind, identification of critical planning issues that require resolution in the strategic planning process.

Competitive Advantages and Disadvantages

No particular approach or format for determining and displaying competitive advantages and disadvantages is universally accepted. In

Organization Baseline Forecast

Aggressive Forecast (in Addition to Baseline) Declining Forecast

System A • Continues ambulatory growth

• Employs sig- nificant number of independent physicians

• Adds 1–2 com- munity hospi- tals to system

• Establishes insurance product

• Develops sig- nificant base of covered lives

• National promi- nence for clinical integration or other innova- tions

• Federal Trade Commission challenges merger

• Becomes overextended and pulls back on investments and programs

System B • Remains strong in its core services

• Modest growth attributed to physician prac- tice acquisition

• Out-of-market parent system infuses major capital resources

• Develops inte- grated service lines

• Financial ero- sion to a safety- net hospital

Community hospital

• Affiliates with local system

• Capital infusion boosts select services

• Affiliates with AMC B to establish strong academic– community network

• Does not draw affiliation interest and reduces scope of services or closes

Etc. Etc. Etc. Etc.

Exhibit 6.13: Potential Future Competitor Positioning Re: XYZ, 2017–2020

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Chapter 6: Phase 1: Analyzing the Environment 123

general, the three most reliable measures of competitive advantage or disadvantage are value position (quality relative to cost), market share, and bond rating. Upward historical trends in these variables usually indicate a strong competitive position. However, trends seen in healthcare organizations are rarely clear-cut. Simply focusing on these indicators, for example, masks major shifts in competitive posi- tion because of the lagged effect of capital or human investments.

The most commonly used format for displaying competitive advantage and disadvantage is a SWOT analysis. Each category in the analysis has a specific orientation (internal, external) and purpose for examination as shown in exhibit 6.14. A sample SWOT analysis is provided in exhibit 6.15.

While the team may initially generate a lengthy SWOT analysis, the final list should be refined to a one-page summary. As the exhibits show, items may be drawn from any category of the internal and external assessments, but not every assessment category needs to be represented in the final summary.

The purpose of the SWOT analysis is to provide organizational leadership with a clear assessment of where the organizational stands in its competitive marketplace. Little benefit is derived from apply- ing overly complicated analysis to achieve the results. Leadership must use its skills, experience, and judgment to synthesize all of the external assessment findings and determine the organization’s real advantages and disadvantages.

Assumptions About the Future

Up to this point in its process, the environmental assessment has been concerned primarily with the past. The remainder of the assess- ment and the strategic planning process shifts the focus to the future.

The first forward-looking task is to develop a picture of the future environment, at least three to five years hence and perhaps further, in which the organization will operate. This forecast should consider key external factors (some local or regional, others state or national)

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Healthcare Strategic Planning124

that may have a significant impact on the organization’s future strat- egies. It should not be strictly numerical (for example, delineating market size and the precise level of reimbursement changes) but rather a qualitative and macrolevel view of significant future and external influences.

The predictions of healthcare futurists and forecasts from pub- lications and associations that track emerging trends can help

Strength

Opportunity

Internal

Successes realized or positive qualities exhibited; assets that

highlight current and foster future achievement

Internal

Key performance gaps and limitations that your organization

has the ability to mitigate

External

Competitor, payer, regulatory and other forces signi�cantly impacting your organization; not [fully] within your organization’s locus of control

Internal/External

High-impact ways to maximize strengths and address weaknesses

for competitive advantage

Weakness

Threat

Exhibit 6.14: SWOT Category Orientation

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Chapter 6: Phase 1: Analyzing the Environment 125

healthcare organizations formulate their own assumptions (see the suggested readings at the end of this chapter for examples of available resources). Gary Hamel and C. K. Prahalad (1994, 123) write that few organizations spend an adequate amount of time thinking about the future, noting that “senior managers devote less than 3% . . . of their time to building a corporate perspective on the future. In some companies, the figure is less than 1%. Our experience suggests

Strengths Weaknesses

• Facilities (hospital campuses) • Scope of services • Variety of specialized services • Medical equipment and tech-

nology • Owned health plan • Primary care base • Quality outcomes relative to

competitors

• Limited debt capacity • Siloed system components • Relationship with medical

staff • Condition of post-acute and

ambulatory facilities • Leadership in transition • Patient satisfaction

Opportunities Threats

• Rural outreach • System integration • Competitor ownership

transition • Shift to customer-focused

culture • University affiliation • Insurance product

advancement • Affiliations • Transition to value-based

environment

• Local/regional economy • Declining or flat

reimbursement • Specialist alignment to other

systems • Competitor market share

gains • Historical perspective of

the organization as non- collaborative

Exhibit 6.15: An Integrated Health System’s Strategic Profile, 2015

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Healthcare Strategic Planning126

that to develop a distinctive point of view about the future, senior managers must be willing to devote considerably more of their time” (emphasis in original).

Historically, healthcare organizations and the general business community have predicated much of their planning on one view of the future environment—usually a linear extrapolation from the past—rather than evaluating a wide range of possible futures. The upheavals in healthcare and other fields illustrate how this singular view of the future has led to major errors in organizational strategy and legitimate concern about the wisdom of planning for the future with a narrow view of possible future realities.

In the 1970s, General Motors failed to explore fully the impact of environmentalism, the importance of quality and speed in manufacturing, and the power of OPEC—the Organization of the Petroleum Exporting Countries (Schoemaker 1995). In the 1980s, IBM and Digital Equipment Corporation failed to account for the consequences of personal computers (Schoemaker 1995). In a more recent example, few healthcare leaders predicted the election of Donald Trump and the resulting implications for healthcare policy.

According to Hamel and Prahalad (1994, 126), “If senior execu- tives don’t have reasonably detailed answers to the ‘future’ questions, and if the answers they have are not significantly different from the ‘today’ answers, there is little chance that their companies will remain market leaders.”

Planning for the future in a narrow, limited environmental con- text may have been acceptable in the more static, highly regulated healthcare environment that prevailed through the early 1990s. However, this approach is no longer feasible and constitutes one of the main differences between contemporary strategic planning methods and those of even the recent past.

To ensure that a broader perspective is adopted, planning teams should define alternative futures and discuss them fully. Products of the environmental assessment may need to be revised or fine-tuned after completing this task.

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Chapter 6: Phase 1: Analyzing the Environment 127

Many excellent references offer approaches for developing alter- native future scenarios. Among these, Paul J. H. Schoemaker (1995) recommends the following steps in scenario development:

• Define the scope • Identify major stakeholders • Identify basic trends • Identify key uncertainties • Construct initial scenario themes • Check for consistency and plausibility • Develop learning scenarios • Identify research needs • Develop quantitative models • Evolve toward decision scenarios

This approach enables organizational leadership to consider and seriously analyze diverse alternative futures and distill a compos- ite scenario (or scenarios) from this broad view of the future. It is important to consider that while a scenario exercise may have varying usefulness for management or planning staff, who consider potential futures on a regular basis, it can be a helpful tool for trustees or physicians who are not focused on specific market or sector trends. Exhibit 6.16 shows a scenario exercise that was used by the Strategic Planning Steering Committee at Yavapai Regional Medical Center (Arizona).

In contrast, most healthcare organizations typically rely—explic- itly or implicitly—on the planning staff to develop a single future environmental scenario by extrapolating current trends and incor- porating current hot issues.

Regardless of the approach used, the result should be an explicit set of underlying assumptions about the future, on which the remain- ing planning analyses and outputs will be based. Exhibit 6.17 presents an example of the results of this process.

As exhibit 6.17 illustrates, the assumptions should be stated briefly to avoid unnecessarily complicating the presentation of the future

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Healthcare Strategic Planning128

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Chapter 6: Phase 1: Analyzing the Environment 129

environment in which the organization will operate. This concise, simple summary of a potential future environment is a powerful guide by which to consider, or in many cases reconsider, critical planning issues and, subsequently, organizational mission and vision.

Identification of Critical Planning Issues

The final task in the environmental assessment is to determine what critical planning issues need to be resolved during the strategic

• Provider success will be based on delivering value, as defined by high-quality services at a low cost.

• Fee-for-service reimbursement will remain but will account for a lower percentage of most healthcare providers’ revenue.

• Regional health systems will become more prevalent, with many markets consisting of only a few large systems.

• Consolidation in the provider and insurance market will give way to a focus on integration of recently partnered organizations.

• Primary care will play an increasingly central role in population health management.

• Nontraditional competitors will more frequently enter the healthcare market, with a focus on differentiating based on technology or customer service.

• Financial pressures will be exacerbated as commercial-payment increases slow to low single-digit levels and states manage budget issues.

• A significant proportion of physicians will be employed by hospitals, systems, or large multispecialty practices.

• Technological advances will continue to shift services to the outpatient setting.

Exhibit 6.17: Future Assumptions Regarding the National and Local Market, Fiscal Year 2017 to Fiscal Year 2022

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Healthcare Strategic Planning130

planning process. All of the preceding analysis feeds into this final result. The determination is subjective and usually evolves through an iterative process of some or all of the steps described in the next paragraph, depending on the size and complexity of the organization, the issues it faces, and the extent to which participative processes are used in strategic planning.

After the planning analyst or planning staff members select an initial list of issues, senior management team members review and revise the list, alone or together. The list may then go to the strate- gic planning committee members, individually or collectively, who will perform the same review. The issue list may then be accepted as a basis for moving forward or returned to the planning or senior management staff for further work. Exhibit 6.18 shows a worksheet used by a health system in Nevada to facilitate the prioritization of critical planning issues.

Typical critical planning issues that are common to strategic plans today are

• achieving sufficient scale and scope of services (via organic growth or affiliation),

• delivering and demonstrating value, • constructing an effective and integrated delivery system, • the need for significant improvement in financial

performance, • managing population health, • developing clinical programs, and • improving competitive positioning.

A variety of largely operational and quasi-strategic matters fre- quently emerge as critical issues in the environmental assessment. Leaders are often tempted to enumerate dozens of “important” issues that need to be resolved to ensure future success. But by doing so, they sacrifice strategic clarity and precision in the name of comprehensiveness and political expediency.

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Chapter 6: Phase 1: Analyzing the Environment 131

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