BUSI 691 Liberty University W 5 Wishards Strategic Planning Paper-assign.pdf

You will write a 1300-1500 word paper in current APA format addressing the case questions presented

in the assignment. Your answer must be supplemented with research from the course textbook,

scholarly peer-reviewed sources, plus the Bible.

I will attache the chapters from the book you will need to use

DEVELOPMENT AND EXECUTION OF A STRATEGIC PLAN

CHAPTER

You don’t need a strategy. You need strategies.

“What is your strategy?” is the wrong question. The right question is,

“What are your strategies?” No organization can get by with one strategy. You need a handful.

Thomas Aquinas advised, “Beware the man of one book.” The same advice applies to strategies. That

handful of “driving strategies” should be synergistic. They should strengthen and feed on one

another. Each is a linchpin. Remove one driving strategy, and the others suffer; that one strategy is

often reduced to impotence.

A handful of strategies persistently and consistently pursued in support of a compelling vision uni es,

integrates and coordinates the daily work of the organization. According to Rumelt: “The idea that

coordination, by itself, can be a source of advantage is a very deep principle. It is often

underappreciated because people tend to think of coordination in terms of continuing mutual adjustments

among agents. Strategic coordination, or coherence, is not ad hoc mutual adjustment. It is

coherence imposed on a system by policy and design. More speci cally, design is the engineering of t

among parts, specifying how actions and resources will be combined.’”

—Dan Beckham, “10 Surprising Keys to Strategic Thinking for Health Care CEOs,” 2016b

L Ob

After reading this chapter, you will

 understand the basic principles of strategic plan development;

 be able to describe the process involved in creating a strategic plan;

 have learned how environmental and gap analyses help leaders set

strategic priorities;

 perceive the importance of stakeholder alignment and the role of

communication in achieving stakeholder buy-in and support;

243

244 Strategic Healthcare Management

Strategic plan

A formal, written document

that guides an organization’s actions and informs stakeholders about the organization’s direction and future activities.

 be aware of various sources of data;

 comprehend the basics of effective goal setting;

 know how to use project charters; and

 recognize strategic planning structures, including personnel

responsibilities and governing body roles.

For most organizations, the principal representation of their strategic direction is their

written strategic plan. The plan articulates the organiza- tion’s mission, vision, values, goals, and

objectives and the motives behind its decisions and actions. Most organizations use an annual

planning process to formulate written strategies and budgets documents that allocate

resources for the upcoming 12 to 18 months, establish nancial and operating metrics, and

align management’s efforts on key strategic priorities. However, as discussed in the quote at the

opening of this chapter, strategies, not a strategy, should be developed into written plans

that should be used as a guideline, not as a blueprint that has to be followed. Strategic plans

ultimately should provide value to their organization by

 de ning, developing, and sustaining a clear strategic advantage;

 producing meaningful differences from competitors;

 appropriately allocating and aligning resources;

 creating understanding and commitment; and

 driving accountability and implementation (Beckham 2016b).

Although there are many ways to construct a strategic plan, to be useful and effective it must

answer the following questions:

 Where is the organization now?

 What needs to be done to achieve the organization’s mission and vision

more completely?

 What avenues might the organization take to accomplish the mission

and vision?

 What speci c actions should be taken?

 How do we translate the strategic plan into action?

 How do we know if we have achieved our objectives?

This chapter builds on the environmental analyses discussed in previous chapters and examines

these questions to provide concrete suggestions on how to create a strategic plan that helps an

organization achieve its mission. As shown in exhibit 10.1, the environmental analyses

inform the organization of

Chapter 10: Development and Execution of a Strategic Plan 245

EXHIBIT 10.1

The Strategic Plan Development Cycle

Environmental Analyses

External Analysis

Gap Analysis

Creation of Specific Action Plans

Development of Marketing Plans

its existing status and the progress it has made toward ful lling its mission and vision. The gap between an

organization’s current and desired states inspires objectives and action plans. Once the plans are

implemented and outcomes are evaluated, the cycle begins anew.

Understanding an Organization’s Current Status

It is critical that examination of the current status of an organization be based on observed and

recorded data. Leaders must rely on periodic evaluations of their environment, not just on their

“gut feelings.” An organized approach to examining the organizational environment involves routine

collection of both quantitative and qualitative information to determine whether the organization’s

Internal Analysis

Evaluation of Mission, Vision, and Values

(desired state)

Understanding Existing Status (current state)

Development

of Strategic Options

Evaluation of Implementation

Creation of Strategic Goals and Objectives

Implementation of Plans

246 Strategic Healthcare Management

strategic plans are working to achieve its mission. As discussed in chapters 7 and 8, environments change,

so organizations must reanalyze their circumstances and situation and update their plans

accordingly. If they fail to do so, their plans may become misaligned with their mission and vision.

By periodically assessing their organization’s environment and com- municating the results to all

staff, leaders update not only their perspectives but also those of all employees. Periodic updates

are important to aligning perceptions in organizations. When staff at different levels in an

organization have different perceptions of their external or internal environment, progress derails

and efforts are wasted. Research has shown that strategic efforts often (Walston and Chou 2006,

879) “‘go off track’ as a result of misaligned goals, created in part by inaccurate communication,

poor feedback, confused goals, and uncertain strategic directions. Speci cally, perceptions of the change

efforts may differ along organizational hierarchy and create con icting perceptions of goals,

outcomes, and strategic directions, leading to misappropriations of resources, inconsistent efforts,

premature abandonment, and poor results.”

Key Stakeholder Involvement

Proper involvement of stakeholder groups in the planning process helps them reach a consensus on

the environmental challenges and motivation for change and develop a sense of common ownership and

vision. If they are not involved, con icting positions may arise among stakeholder groups. Stakeholder

align- ment must be measured periodically through surveys, focus groups, workshops, and interviews. The

degree of alignment between stakeholders and leaders can greatly affect an organization’s ability to

develop and implement strategies. The critical aspect is engaging key stakeholders. A consultant

from interna- tionally famous strategy rm McKinsey & Company provides an example of “one large

health care company [that] asks the leaders of each business unit to imagine how a set of speci c

economic, social, and business trends will affect their businesses, as well as ways to capture the

opportunities—or counter the threats—that these trends pose. Only after such an analysis and

discussion do the leaders settle into the more typical planning exercises of nancial forecast- ing and

identifying strategic initiatives” (Dye and Sibony 2007).

Engagement efforts or neglect can cause stakeholders and executives to become aligned or

misaligned in various ways. Exhibit 10.2 demonstrates the different opinions stakeholders and

executives can have regarding the need to make a major change, along with probable outcomes. If a

proper environmental analysis has been conducted and communicated appropriately, a consensus

of either negative–negative (indicating a need for change) or positive–positive (indicating

agreement that existing practices and programs

Chapter 10: Development and Execution of a Strategic Plan 247

Negative

Positive

Stakeholder Perception

EXHIBIT 10.2

Effects of Stakeholders’ and Executives’ Perceptions on Alignment

Joint Negative Perception of Situation

Both executives and stakeholders seek change. Consensus is

reached.

Misaligned Perceptions of Situation

Executives seek change, while stakeholders seek to institutionalize

status quo. Conflict results.

Misaligned Perceptions of Situation

Executives seek to institutionalize status quo, while stakeholders

seek change. Conflict results.

Joint Positive Perception of Situation

Both executives and stakeholders seek to institutionalize status

quo. Consensus is reached.

Source: Adapted from Walston and Chou (2011).

should be institutionalized) will be reached. If the executive team does not involve stakeholders in

strategic planning or communicates poorly with them, the perceptions of the two groups can

quickly become misaligned. In these situations, one group has a negative perception, indicating a desire

for change, while the other has a positive perception, indicating resistance to change. Therefore,

stakeholder involvement, communication, and transparency of organizational issues are critical

components of strategic planning. Involving and interacting with employees and other stakeholders

promote both emotional and cognitive alignment.

Often the process of discovery and communication during planning is as important (or perhaps more

important) than the creation of the ultimate writ- ten plan. Prominent football coach Bill Belichick agreed

with former president Dwight D. Eisenhower, who, as supreme commander during World War II, said,

“In preparing for battle I have always found plans are useless, but planning is indispensable” (Mihoces

2015). The planning process brings stakeholders together; reinforces the organization’s mission, vision,

and strategic direction; and unites the work effort.

Leaders earn buy-in by involving critical stakeholders early in the stra- tegic planning process.

Especially in large organizations, involvement of all employees is impossible. As discussed in

chapter 6, in uential representatives from key stakeholder groups are chosen to participate on boards,

committees, task forces, and subcommittees concerning the strategic planning process.

Executive Perception

Positive Negative

248 Strategic Healthcare Management

Organizations should appoint key stakeholders who act as spokespersons for the groups in which they

participate and serve as ambassadors or liaisons between their groups and the organization.

The initial steps of strategic planning therefore are to identify, commu- nicate with, and involve key

stakeholders. These steps are facilitated by early development of a communication plan. Key milestones

in the planning process and the mechanisms to be used to communicate with key stakeholders are speci- ed

in this plan. Key milestones might include presentation of a summary of the environmental analyses,

including signi cant challenges facing the organization; a revised mission or vision; the overall strategic

goals; and other components of the strategic plan and planning process. Venues through which

information and progress can be shared include departmental or companywide meetings, intranet

postings, newsletters, bulletin boards, e-mail, Twitter, and Facebook, among others. An established public

relations department can implement the communication plan, or a subcommittee of the strategic

planning committee may be tasked with managing the communication effort.

Consensus is reached more often in organizations that focus on learning and innovation than in companies

that emphasize adherence to rules, budgets, and avoidance of failure. A culture of learning and

innovation increases stake- holders’ openness to change. On the other hand, organizations that

exercise control, focus on rules and policies, and tie budget outcomes to rewards are less likely to

engender intraorganizational consensus (Walston and Chou 2011).

Environmental Analysis

Chapters 7 and 8 describe the components of the internal and external envi- ronment and types of

analyses that may be used to clarify an organization’s market status. If too many data are analyzed,

however, “analysis paralysis” may result. Therefore, only critical factors should be analyzed. As

indicated in chapter 8, key internal data include factors that help measure achievement of the

organization’s mission and progress toward the vision and re ect important stakeholder needs. These data

may be drawn from documentation of volume activity, nancial statements, employee opinion

surveys, and research. Past successes and failures should likewise be examined. Leaders should identify

key factors contributing to both successes and failures and use these to inform the planning process.

Areas reviewed should be restricted to a manageable number.

Key external data also include factors that could signi cantly affect the organization’s direction and

ability to ful ll its mission and vision. Data on competitors, industry data, community and customer

perceptions, market share, and information on customer origin (e.g., from hospital patient origin

studies) are some examples. SWOT analysis may be used but should never be an exclusive source of

information.

Chapter 10: Development and Execution of a Strategic Plan 249

The Affordable Care Act included an interesting provision that requires all tax-exempt hospitals (i.e., those

with the 501(c)(3) designation) to assess the health needs of the community and design a plan to

meet those needs at least once every three years. The assessment must consider input from individu- als

representing the “broad interests of the community served by the hospital facility” and must be

made publicly available (Internal Revenue Service [IRS] 2010). Information required in the

implementation plan appears very similar to that commonly included in a strategic plan, including

(IRS 2011)

 a description of the community served;

 community demographics;

 other community healthcare facilities and services;

 the health needs of the community;

 the health needs of uninsured, low-income, and minority groups;

 prioritized community health needs; and

 an implementation strategy.

Strategic planning must be a data-driven process in which decisions are based on current,

reliable information. If planning is not data driven, it devolves into decision making based

on opinion and conjecture. While there is never only one right decision, relevant and accurate

data improve the quality of decision making.

Sources of Data

Finding accurate, timely data can be extremely dif cult. Public data commonly take one or more

years to be published and often are incomplete or contain errors. Private data tend to be

more accurate and timely but are often costly to buy.

The following sites are good sources of healthcare data:

 www.healthdata.gov: This governmental site contains access to many different data sets,

including those from the Centers for Medicare & Medicaid Services (CMS), Centers for

Disease Control and Prevention (CDC), Food and Drug Administration, and National

Institutes of Health.

 www.data.gov/health/: The federal government has organized information from multiple

departments dedicated to improving the health and lives of all Americans. These resources

include data sets, tools, and applications related to health and healthcare.

 www.cdc.gov/nchs/ahcd/: The National Ambulatory Medical Care Survey is a national

survey designed to meet the need for objective, reliable information about the provision

and use of ambulatory

250 Strategic Healthcare Management

Gap analysis

A method of identifying the distance between the organization’s current position and its desired position with regard to

its mission, vision, and values.

medical care services in the United States. Findings are based on a sample of visits to nonfederally

employed, of ce-based physicians who are primarily engaged in direct patient care. The National

Hospital Ambulatory Medical Care Survey is designed to collect data on the utilization and

provision of ambulatory care services in hospital emergency and outpatient departments.

 www.nahdo.org: The National Association of Health Data Organizations (NAHDO) is a

nonpro t educational association dedicated to improving healthcare data collection and use.

NAHDO’s members include state and private organizations that maintain healthcare

databases as well as stakeholders of these databases in the public and private sectors.

 www.ahrq.gov: The Agency for Healthcare Research and Quality maintains a large sample of

data on hospitalized patients, including the Healthcare Cost and Utilization Project, a

national inpatient sample of about a thousand hospitals.

 www.cms.gov: CMS maintains Medicaid and Medicare inpatient and outpatient claims data.

 www.mgma.org: The Medical Group Management Association collects data on physician

productivity in group practices by visits and costs.

 www.imshealth.com: IMS Health maintains data on pharmaceutical

agents, diseases, and medical conditions.

 www.cancer.gov/statistics: The National Cancer Institute provides

cancer statistics by type, geographic area, and demographic subgroups.

 http://ahd.com: The American Hospital Directory provides data and

statistics on more than 6,000 hospitals nationwide.

 www.ahadata.com: The American Hospital Association collects detailed

annual hospital statistics.

 www.dartmouthatlas.org: The Dartmouth Atlas of Health Care

provides data on variation of care across the United States.

Gap Analysis

An organization’s environmental analysis includes examining its mission, vision, and values (if they

have been established) to ensure that they are still appro- priate. As discussed in chapter 6,

the values, mission, and vision express an organization’s ideal position and strategic intent. A

gap analysis identi es the distance between the organization’s current position and where it wants

to be. The following questions can help leaders measure this distance:

• Which stakeholder groups’ needs are not being met? • What key actions must be taken to

attain the vision?

Chapter 10: Development and Execution of a Strategic Plan 251

 Which past goals were not achieved? How did this nonachievement affect the mission?

 How is the organization living its values? What can be done to emphasize and more fully

incorporate the values into daily work life?

 What core weaknesses may be preventing the organization from living its mission?

 What external threats have to be addressed to be able to continue providing mission-based

products and services?

 What is the organization’s nancial health, and how does it affect the organization’s strategic

position?

Some of the methods discussed in chapters 7 and 8, such as PEST (political, economic, social,

technological) and SWOT (strengths, weaknesses, opportunities, threats) analysis, also can help

leaders identify challenges and issues that are impeding mission achievement.

The number of challenges should be narrowed to four or ve that are most prominent and most

likely to impede the organization from accomplish- ing its mission and vision. Some key

challenges posed by today’s healthcare environment include

 availability of technical personnel;

 new technology;

 new or potential regulations;

 nancial capabilities;

 market and competitive changes;

 customer satisfaction, preferences, and demands;

 capacity issues (excess or constraints);

 cost pressures;

 relationships and af liations with partners;

 employee engagement and retention; and

 access to capital.

The following questions can be used to determine which issues are most critical:

 Could this force seriously affect the organization’s ability to achieve its mission?

 How signi cantly could the force affect the organization? What impact may the force have on

key stakeholders?

 What effect could the force have on the organization’s reputation?

252 Strategic Healthcare Management

Planning structure

The person(s)

or unit with responsibility for strategic planning.

 Could the force signi cantly change the organization’s customer base?

 Could the force have a substantial impact on the organization’s

nances?

The challenges culled from this analysis form the foundation on which orga- nizations build

strategic plans.

Preparing for Planning

Organizations need to prepare for their planning processes. A governing body can examine its

preparedness for strategic planning by asking the following questions:

 Is there a written policy for the process and activities of strategic planning?

 – Does it spell out who is responsible for which activities and how the different

groups interact and coordinate with the governing body?

 – Are speci c time frames established for each strategic planning component?

 Does the organization have a plan for communicating the development of the annual

strategic plan and its results?

 Does the governing board use the strategic plan appropriately to set realistic, challenging

goals?

 Do strategic or tactical issues dominate board discussions? If strategic issues are not

addressed the majority of the time, what can be done to increase the board’s focus on them?

 Is there a proper planning structure whose members appropriately represent the key

stakeholders? If not, is there a means of obtaining periodic input from other stakeholders

(e.g., task groups, focus groups, sur veys)?

Planning Structures

Organizations use various planning structures to organize and facilitate their process. The

composition of these structures depends on the size, culture, and ownership of an

organization, but they typically combine organizational positions, standing committees, and

task forces.

Most companies designate a person or a department as their strategic planning coordinator.

This person or unit is responsible for gathering and ana- lyzing data and organizing and conducting

committee and task force meetings.

Chapter 10: Development and Execution of a Strategic Plan 253

Large organizations, such as Kaiser Permanente in California, may employ a specialist, such as the

strategic planning analyst described in exhibit 10.3, for this purpose. Almost 45 percent of

healthcare systems reported having a chief strategy of cer (Health Research & Educational Trust

2014).

Small organizations might expand the duties of the strategic planning director to include business

development and public relations. Job descriptions for the vice presidents of business development and

strategic planning some- times blend strategic planning and these related functions. In small

organiza- tions, combining these functions streamlines strategic actions. The integration of public relations

and business development is essential to communicating strategic direction appropriately (as

discussed earlier) and to translating the written plan into implementation (see chapter 15).

Most strategic planning in healthcare is overseen by a healthcare organi- zation’s governing board. In this age

of increasing emphasis on board account- ability, governing bodies have a greater responsibility to

engage in strategic

Essential Functions

Leads, makes signi cant contributions, and/or provides technical leadership to high visibility projects to

identify and resolve issues of strategic impor- tance to the organization.

 Interfaces regularly with senior management to produce timely and valu- able results.

 Sets the strategic direction of projects.

 Determines goals and priorities with management team sponsors.

 Establishes team membership and negotiates time commitments and

resources.

 Develops proposals for clients outlining proposed project structure,

approach and work plan.

 Provides staff leadership to project teams, as well as manages work of

outside consultants when needed.

 Designs research plans for data gathering and analysis.

 Participates signi cantly in interpreting analysis and developing action

plans accordingly.

 Produces or oversees development of written materials for senior execu-

tives and other key clients.

 Plans and facilitates meetings.

 Makes formal presentations to various senior level audiences.

 Assists, as needed, in planning and coordinating with other ongoing

teams and projects to maximize effectiveness.

 Participates in the development and management of the department,

including coaching, recruiting, conducting performance reviews for con- sultants/analysts, and other

departmental activities.

EXHIBIT 10.3

Essential Functions of a Strategic Planning Analyst

at Kaiser Permanente

Source: Excerpt from Kaiser Permanente (2017).

254 Strategic Healthcare Management

planning. Although the level of board member involvement varies, the full board should view the

strategic planning process and nal plan as critical to the organization’s direction and as

groundwork for executive decisions and actions. Therefore, the governing board formulates the plan but

does not usurp management’s responsibility to implement and execute it.

As mentioned earlier, the board can approach strategic planning in many ways. An important issue for

boards to decide is whether the full board will act as the strategic planning body or whether the

responsibility will be desig- nated to subcommittees and task forces. Although most hospital boards

have standing strategic planning committees, some have questioned this established practice (Bader et al.

2007):

It may be time to revisit the assumption that a standing strategic planning committee (SPC) is the best method for

engaging the board in strategy. There can be a “dark side” to relying on a committee to do the board’s strategy work. All

too often, it is only the members of the SPC who fully understand the strategic challenges and opportunities facing the

organization over the next ve to ten years. The rest of the board members may not have been included in the educational

sessions on national healthcare trends, in-depth conversations about current and potential competitors in the market,

and discussions of alternative strategies for the organization’s future.

Some boards choose to form task forces or advisory groups to repre- sent geographic or special

constituencies. These groups may report to the full board or to their strategic planning committee.

Focused task groups enable a microlevel evaluation of stakeholder needs that have been aggregated

by the strategic planning committee. Whatever the approach, the board should develop a written

policy that articulates its expected outcomes; the timeline of the strategic planning process; and the

functions of the subcommittees, task forces, and full board.

Most organizations update strategic plans annually; therefore, the com- mittees and task groups generally

are organized on an annual basis. If task groups are formed, their primary function is to gather

stakeholders’ perspectives and explore critical issues during the environmental analyses. They may

meet as needed or as often as weekly during the environmental analysis period. As shown in exhibit

10.4, task groups meet throughout the early stage of strategic planning—a period of approximately four

months—and report their ndings to the strategic planning committee, which in turn reports to the

board.

Following the environmental analysis period, the strategic planning committee and board

formulate strategy and develop goals over the next three to ve months. During this time, members

of both bodies may be more engaged if they participate in educational sessions on external and

internal environmental issues. Education is a vital means of challenging assumptions and

promoting understanding. For example, board and strategic planning

Chapter 10: Development and Execution of a Strategic Plan 255

Approximate Months

0 4 6 7 12

EXHIBIT 10.4

Timeline of Review Bodies’ Involvement in Annual Strategic Planning Process

Task Group

Strategic

Planning Committee

Board

Task Group

Board

committee members and other key stakeholders can attend retreats organized for educational

purposes.

Format of a Strategic Plan

Although strategic plans come in many types and formats and no standard plan exists, the following

components are essential to all plans:

 Executive summary: A three- to ve-page executive summary of the full plan precedes the

plan document.

 Strategic intent: This section expresses the organization’s mission, vision, and values and

elaborates on these statements.

 Environmental analyses: This section includes subsections on the internal and external

analyses. These subsections commonly present the following information:

 – Major market trends and their implications

 – Consumer pro les and demographics

 – Major service line data and analyses by service and payer

 – Competitor analyses

256 Strategic Healthcare Management

Strategic priorities

The most important areas addressed by a strategic plan.

 – Major stakeholder data and analyses

 – Potential technological changes

 – Key quality indicators

 – Critical legal and regulatory issues

 – SWOT analysis

 – Critical factors or driving forces

 Strategic priorities and programs: This section acknowledges and discusses

key areas of focus. Environmental analyses, forecasts, and projections are

presented as rationales for prioritizing or selecting these areas.

 Strategic goals and objectives: This section delineates the desired

outcomes of strategic activities, identi es who is responsible for each activity, presents key

performance indicators, and lays out project timetables. Charters for key projects also may

be included.

 Appendixes: The appendixes include data referenced in the strategic plan, such as

forecasted service volumes, performance targets, expected market shares, and nancial

projections.

Setting Strategic Priorities

Strategic priorities are an outgrowth of the environmental analyses. Organi- zations view

the gap between where they are and where they want to be and generate options they could

pursue to narrow the gap. From these options, a small number of strategic priorities are

selected, generally no more than seven. A greater number heightens the complexity of the strategic

process and makes it exponentially dif cult to manage.

For example, St. Francis Medical Center in the Centura Health network, located in Colorado

Springs, Colorado, is a 195-bed acute care hospital (St. Francis and Centura Health 2016). As

part of its community assessment and planning process, it identi ed four strategic priorities:

 Wellness—Healthy babies and children

 Community engagement—Strengthen hospital and clinical behavioral

health network

 Behavioral health—Healthy adolescents

 Access to care—Underserved and at-risk population

The next step in the planning process is to create speci c strategies and tactics for achieving

the key priorities. Centura Health’s strategic plan again

Chapter 10: Development and Execution of a Strategic Plan 257 serves as an excellent example, elaborating on

the priorities with goals. Two

are shown in the following section (St. Francis and Centura Health 2016):

Access to Care:

Goals:

Maximize access to care for underserved and at-risk populations in El Paso County communities through enrollment

efforts and more appropriate use of acute care resources . . .

Wellness—Healthy Babies and Children:

Goals :

Access and evaluate FY 2015 Healthy Babies and Children goal for integration into CHNA future programs

• Increase opportunities within El Paso Community to directly in uence factors tied to babies and children growing up

healthy from pregnancy to adolescence

Another example comes from King Faisal Specialist Hospital, a large, international medical center in

Riyadh, Saudi Arabia, that made improving its staff selection, recruitment, and retention one of its

key priorities. It chose to call its strategies “projects,” but their structure is similar to that of St. Francis’s

strategies. Strategic priority 1 elaborates on the center’s need to improve the quality and abilities of

its staf ng:

Strategic Priority 1 (SP1): Staff Selection, Recruitment and Retention

To enable the Hospital to compete in the international and regional market in order to select, recruit and retain high

quality staff

Problem: The loss of good performers and the dif culty and delays in nding replace- ments impact ef ciency and retention

of expertise. Turnover should be reduced. In some areas, staff members work many overtime hours under stressful

conditions. Currency uctuations, limited increase in compensation packages, including the loss of bene ts in certain areas,

have resulted in a reduced competitiveness of the Hospital in the International and Regional markets.

The candidate projects and initiatives to address SP1 are shown below.

Project 1A: Compensation System

Project 1B: Career Development

Project 1C: Performance Management and Review Process Project 1D: Staff Support and Satisfaction

Project 1E: Selection and Recruitment Process

Project 1F: Identi cation of Critical, Dif cult-to-Fill Positions Project 1G: Succession Planning Program

Project 1H: Education, Training and Scholarship Programs

258 Strategic Healthcare Management

Objectives

Objectives are narrow “stepping stones” that quanti ably support and elaborate on goals.

Goals

Broad results that an organization seeks to achieve.

Goals and Objectives

Goal formulation is perhaps the most dif cult aspect of planning. To be effec- tive, organizations

must translate each strategy further into speci c goals and objectives. Objectives are subsets of de

ned goals and measurable steps that quanti ably support the achievement of goals (Belicove 2013).

Goals are general intentions; objectives are precise and de ned. Goals are broad; objec- tives are

narrow.

Strategic goals and objectives drive the achievement of the organization’s mission and vision. Although

directed toward the future, goals and objectives must also t realistically with short-term budgets

and prioritize actions to be achieved in the next scal year. Goals, as part of a strategic plan, must not

just exist on paper. Rather, they must be integrated with nancial control systems and marketing

efforts to guide daily decision making.

To be effective, goals and objectives need to be more than just a state- ment of what should be

accomplished. They should also state who will be responsible for them, what actions and events

they comprise, when those actions and events should be completed, and the performance metrics

that will be used to determine whether they have been achieved.

A popular way to conceptualize goal creation is the SMART method. To be achievable, goals and

objectives must have the following characteristics:

 Speci c: They must clearly identify what is to be done, who will do it, whom it will be done

for, where it will be done, when it will be done, and any related requirements or constraints.

 Measurable: Metrics should be set to know when the goal is accomplished. Key performance

indicators should be established for each key goal component. Quanti able indicators are

preferable.

 Attainable: Goals should stretch the organization’s capabilities but still be achievable.

 Relevant: Goals should be pertinent and applicable to the organization’s mission. Goals

should correlate with the strategic priorities and the time frames associated with them.

 Time bound: Target dates should be set for each goal and objective. Target dates should fall

in the correct business cycle (e.g., planning and budget cycle). Results should be used to

inform the next cycle of strategic planning and goal formation.

When setting objectives, one can use the following questions as a guide:

 What is the outcome I want?

 Why is it important to achieve?

 Who needs to be involved?

Chapter 10: Development and Execution of a Strategic Plan 259

 When does it need to be completed?

 How are we going to achieve it?

 How and when am I going to measure the outcome?

For example, St. Francis developed the following tactics for its access- focused and

insurance enrollment–focused goals:

FY16 Tactics—

• Tactics/Initiatives:

 – Neighborhood Nurse Centers increase HC access by 5% through collaboratively connecting patients

with Centura and community enrollment advocates and enrollment specialists

 – Increase ability to track “Friendly Face visits” through EMR tracking

 – Develop collaborative approach to Educate PSF units and staff 3–4 times/ year to determine best

practices for uninsured and underinsured common

clients

 – Add Personal Health records to data collection at NNC sites and PSF units

 – Meet with team that assesses dif cult cases and determine how a

bridged practice can be incorporated with the NNC practices to address readmission issues for dif cult

patients (St. Francis and Centura Health 2016)

A goal is not realistic if one does not have the resources—skills, fund- ing,

equipment, and staff—needed to accomplish it. Managers assigned to a particular

goal need to ask if they have enough resources to accomplish the supporting

objectives and the ability to rearrange priorities to free up time to address those

that are most important. The goals and objectives set by US Navy Medicine are

reproduced in exhibit 10.5. Note that the objectives are more speci c and de nitive

than the goals.

To make objectives actionable, organizations must write detailed action plans. Each

objective should be subdivided into component actions and respon- sibility and authority

for each action driven down the organization to the appropriate level. Action plans

translate higher-level aims into speci c, narrowly crafted tasks. In large organizations,

the development of action plans quickly becomes complex and time consuming. To

make this job more manageable, organizations use tools to facilitate it, one of which

is the project charter.

The use of a project charter, a tool commonly employed for construc- tion

management and implementation of information technology, is becoming more frequent in

healthcare. Project charters clarify the key components of action plans, including

scope, outcomes, participants, resources, time frames, and responsible parties, and

ensure that the action plans and the desired out- comes of those action plans

coincide with strategic priorities and goals.

Project charter

A tool commonly used in project management that clari es a project’s key components, including scope, desired outcomes,

participants, resources, time frames, and responsible parties, and ensures that

the project’s de nition and desired outcomes coincide with the organization’s strategic priorities and goals.

260 Strategic Healthcare Management

EXHIBIT 10.5

Navy Medicine Goals and Objectives, Fiscal Year 2015

Readiness

We provide agile, adaptable, and scalable capa- bilities prepared to engage globally across the range of military operations within

maritime and other domains in support of the national defense strategy.

Value

We will provide exceptional value to those we serve by ensuring the safest and highest quality care through best health care practices,

full and ef cient utilization of our services, and lower care costs.

Jointness

We lead Navy Medicine to jointness and improved interoperability by pursuing the most effective ways of mission accomplishment.

R1 Deliver ready capabilities to the operational commander

De nition: To maximize alignment between requirements, capabilities, and capacities, we will transition our health service support into

interoperable adaptive force packages by align- ing Navy Medicine’s manning, training, and equipping to maintain a medically ready

force.

R2 Deliver relevant capability and capacity for Theater Security Engagement operations De nition: Navy Medicine will lead the Services

in de ning clinical currency and determining the requirements to maintain currency across the medical force.

V1 Decrease enrollee network cost/Increase recapture of Purchased Care

De nition: Navy Medicine will decrease network spending, maximize clinical experience of our staff, and optimize resource utilization. We

will manage referrals in order to provide our enroll- ees the best care at the best value.

V2 Realize full benefit from Medical Home Ports and Neighborhoods

De nition: Navy Medicine will strive to achieve full bene t from our MHP and neighborhoods for Fleet, USMC, and MTFs. We will improve

the health for our patients, and when they do need care, we will provide the best care possible in a patient-centered care environment.

J1 Leverage joint initiatives to optimize perfor- mance of Navy Medicine’s mission

De nition: We will increase our participation in joint work groups, committees, and nominative positions (MHS, DHA, JS) where essential

policy decisions will be determined, and through mem- bership/leadership, we will improve our ability to lead in tri-service initiatives.

J2 Improve Navy Medicine interoperability

De nition: We will improve our ability to respond in a Joint environment by leading in those areas where Navy Medicine has signi cant

exper-

tise and unique capabilities to support our war ghters.

Strategic Goals

Strategic Objectives

Source: Reprinted from US Navy Bureau of Medicine and Surgery (2015).

Exhibit 10.6 outlines a project charter; the full template used by the CDC is provided in the

appendix. Aside from increasing the likelihood of a project’s success, project charters identify

interdependencies among concurrent projects and place them in proper sequence.

Chapter 10: Development and Execution of a Strategic Plan 261

1. Introduction

1.1 Purpose of Project Charter

2. Project and Product Overview

3. Justi cation

1. 3.1 Business Need

2. 3.2 Public Health and Business Impact

3. 3.3 Strategic Alignment

4. Scope

1. 4.1 Objectives

2. 4.2 High-Level Requirements

3. 4.3 Major Deliverables

4. 4.4 Boundaries

5. Duration

5.1 Timeline

5.2 Executive Milestones

6. Budget Estimate 6.1 Funding Source

6.2 Estimate

7. High-Level Alternatives Analysis

8. Assumptions, Constraints and Risks 8.1 Assumptions

8.2 Constraints 8.3 Risks

9. Project Organization

1. 9.1 Roles and Responsibilities

2. 9.2 Stakeholders (Internal and External)

10. Project Charter approval

APPENDIX A: REFERENCES APPENDIX B: KEY TERMS APPENDIX C: GOALS

Source: Reprinted from CDC (2006).

Marketing Plans

An important document supporting the strategic plan is the marketing plan. A successful marketing

plan builds on the strategic plan and is directed and informed by it. Marketers use the mission and vision

along with the market and environ- mental analyses to determine the right marketing strategies.

Marketing’s chief role is to generate and retain “preferred customers in de ned strategic areas and

loca- tions” and to in uence and gain buy-in to strategic priorities (Nauert 2005). The

EXHIBIT 10.6

Table of Contents for a Project Charter Template

Marketing plan

A written document that details an organization’s marketing strategies.

262 Strategic Healthcare Management

Marketing

The activities involved in promoting products

and services, including creating, communicating, and delivering offerings that customers value.

American Marketing Association (2016) de nes marketing as “the activity, set of institutions, and processes

for creating, communicating, delivering, and exchang- ing offerings that have value for customers, clients,

partners, and society at large.”

In many industries, marketing’s key role traditionally has been to initiate transactions or sell more

products or services. As suggested by the American Mar- keting Association’s de nition, marketing’s role has

changed. Today, it focuses on building long-term relationships with customers, instilling trust,

improving the organization’s reputation, creating value, and ensuring satisfaction (Kotler, Shalow- itz, and

Stevens 2008). As shown in exhibit 10.7, pharmaceutical companies have switched to heavy marketing of

prescription drugs through direct-to-consumer advertising, which may not be sustainable in the current

healthcare environment.

Marketing in healthcare is complicated by the importance of quality and the dominance of not-for-pro t

organizations with community service missions. Instead of promoting price, sales, and discounts as in

most sectors, healthcare professionals must in uence their customers primarily through quality, access,

and service advantages.

Marketing builds on strategic planning and incorporates the mission and vision, market analyses,

stakeholders, differentiation, and customer value, among other factors. A common approach to

marketing plan development consists of three major activities:

1. Segmentation: dividing consumers and stakeholders into de ned market segments

2. Targeting: determining which key segments to target

3. Positioning: designing features and images that will occupy a distinctive

place in the market’s perception

Although pharmaceutical companies traditionally have marketed their drugs by sending salespersons directly

to physician of ces (a practice known as detailing) and advertising in professional journals, they aggressively

pro- moted prescription drugs through direct-to-consumer advertising via broad- cast and print media from

the late 1990s and into the twenty- rst century. Expenditures on direct-to-consumer advertising rose from

$150 million in 1993 to $5.2 billion in 2015, with spending on ve drugs accounting for one-fourth of these

advertising costs. Prescription drugs accounted for almost 17 percent of total US healthcare spending in 2015,

up from 7 percent in the 1990s.

Drug advertising remains controversial. Drug companies see it as essential. As Bob Ehrilich, chief executive of

the consulting rm DTC Perspec- tives, noted, “There’s no doubt that [direct-to-consumer advertising] is now

seen as almost a must-do for a drug that wants to be big,” However, about half of drug cost increases may

result from the cost of direct advertising, which has prompted calls for regulation. Only the United States and

New Zealand permit such advertising.

EXHIBIT 10.7

Marketing in the Pharmaceutical Industry

Sources: Dave and Saffer (2012), Robbins (2016).

Chapter 10: Development and Execution of a Strategic Plan 263

Segmentation

Segmentation of the market involves identifying key stakeholders, as discussed in chapter 6. De ning key

market segments enables marketers to focus their efforts on consumers most likely to want or need

a product or service. Some market segments may be excluded, while others are marketed too

heavily. Market segments tend to group stakeholders who have a similar set of needs or wants.

These segments can then be further divided into narrowly de ned niches and local markets, which has

become increasingly important in healthcare organizations. Health systems such as TriHealth, based in

Cincinnati, Ohio, and Novant Health, located in Winston-Salem, North Carolina, have embraced market

segmentation to improve patient engagement and further their popula- tion health management

programs (Butcher 2016). Although consumers of healthcare products and services receive primary

marketing consideration, other stakeholders (e.g., lawmakers; regulators; referring physicians; hospitals,

nursing homes, and home health agencies; insurance companies) may be considered critical market

segments.

Consumer market segmentation can be broken down into four major categories: geographic,

demographic, psychographic, and behavioral. Geo- graphic segmentation divides customers by

political and physical land units. International healthcare organizations may segregate markets by nations.

Hos- pitals and physician clinics may be more concerned with counties, cities, and local

neighborhoods. As discussed in chapter 2, patient origin studies help segment geographic markets

into primary and secondary markets.

Demographic segmentation divides customers into markets on the basis of such factors as age, gender,

disease or diagnosis, payer type, and income. Consumer wants, preferences, and rates of product

and service use can vary dramatically by these factors. Elderly individuals tend to need products

and services different from those needed by young individuals; for example, elderly men have a higher

incidence of heart disease, prostate cancer, and erectile dys- function, while women between the ages of 18

and 40 have dramatically higher needs for obstetric care. People with diabetes require specialized services.

Suc- cessfully attracting favorable categories of payers (e.g., Medicare, Blue Cross) and discouraging

others (e.g., Medicaid, self-pay) may signi cantly affect an organization’s pro tability. Families earning

high incomes may desire optional services, such as upgraded rooms, cosmetic surgery, and gourmet

meals.

Psychographic segmentation categorizes consumers by lifestyle, person- ality, or values. Often these

categories are combined with demographic variables to produce distinct market groups. Strategic

Business Insights, a marketing and strategy consulting rm, combines psychographic and

demographic data into eight categories: innovators, thinkers, believers, achievers, strivers, expe-

riencers, makers, and survivors (for more information, see Strategic Business Insights 2017).

Combinations enable an organization to target its market more precisely in terms of predictable

consumer behavior.

Segmentation

The division

of a market

into subsets of consumers with similar needs and wants; enables marketers to focus their marketing efforts on consumers

most likely to buy a product or use a service.

Geographic segmentation Major category of consumer market segmentation that divides customers by political and

physical land units.

Demographic segmentation Major category of consumer market segmentation that divides customers into markets on the

basis of such factors as age, gender, disease or diagnosis, payer type, and income.

Psychographic segmentation Major category of consumer market segmentation that categorizes consumers

by lifestyle, personality, or values.

264 Strategic Healthcare Management

Behavioral segmentation Major category of consumer market segmentation that divides consumers by their perception

and use of a product or service, including their familiarity with it, attitude toward it, and response to it.

Behavioral segmentation divides consumers by their perception and use of a product or service,

including their familiarity with it, attitude toward it, and response to it. Marketers may further

segregate consumers by occa- sion of use, bene ts gained, user status, usage rates, stage of readiness

to buy a product, and loyalty (Kotler, Shalowitz, and Stevens 2008). For example, according to the US

Department of Labor (2013), women make approximately 80 percent of healthcare decisions for their

families (e.g., when to access care and whom to go to for care).

Targeting

Following market segmentation, an organization must determine the market divisions on which it

should focus its efforts. Some market segments are much more important to an organization than others.

As illustrated in exhibit 8.9, stakeholders who have high interest and in uence are considered

important. Interest can be expressed by the stakeholder’s use or potential use of the orga- nization’s

products and services or the stakeholder’s af nity for the organiza- tion. For example, a religious

group might have an af nity for a faith-based organization and have a strong interest in supporting

it and using its services. The large Catholic populations in parts of the United States may feel

strongly about and have a high interest in their local Catholic hospitals. Stakeholders’ in uence may

be related to the size of their segment or sociodemographic characteristics. For instance, high-

income segments may support more pro t- able services, and females spend 22 percent ($8,315 per

capita) more than males ($6,788) (CMS 2017b).

Healthcare organizations should be certain that the market segments they select match their mission and

vision. If the mission highlights the importance of charity care, segments of the poor should be present

in the target markets. Likewise, if the mission focuses on pro ts for shareholders, the target segments

should include high-income groups.

Five key attributes can be used to determine which market segments to target (Kotler, Shalowitz,

and Stevens 2008):

1. Measurability of the segment by size, purchasing power, or other characteristics

2. Substantiality of the market segment that makes it worth pursuing

3. Accessibility of the segment (i.e., it can be effectively reached)

4. Differentiability of the segment

5. Ability to formulate programs that will attract and serve the chosen

segments

In healthcare, the primary targeted segments include physicians, payers, and patients (consumers),

though the trend “is for healthcare marketers to increas- ingly target consumers and payers” (Lockard

2017).

Chapter 10: Development and Execution of a Strategic Plan 265

Positioning

As discussed in chapter 3, positioning means differentiating one’s products and services from others in the

market. Products and services can be distinguished by their attributes, bene t to customers, or value.

Historically, marketers sug- gested that the four Ps established a product’s or service’s position:

1. Product: the physical features of a product or the intangible aspects of a ser vice

Positioning

Designing and promoting an organization’s products and services so that they occupy a distinctive place in the market.

Four Ps

Four attributes that have traditionally been used to establish an organization’s market position: (1) product,

(2) price, (3) promotion, and (4) place.

2. Price: the amount paid for the product

3. Promotion: the methods of communication used to inform customers

and potential customers

4. Place: the point of access for the consumer

Excellently positioned products’ and services’ unique characteristics, utility, and value are clearly

de ned.

To these four Ps, consulting groups have added other attributes, proposing ve, six, or seven Ps.

Organizations can position products and services by many different features and characteristics,

including physical form, access, quality, speed, reliability, and performance, among others. These attributes

must be signi cant to consumers, and their difference must be perceived. If an organization highlights

attributes that are not perceived as important or as distinct from the attributes of competitors’

products or services, it may well have wasted its positioning efforts. For example, in the past, many

hospitals launched “We Care” campaigns, seek- ing—mostly unsuccessfully—to distinguish

themselves by their compassion and kindness. Billboards and television advertisements proclaimed that a

hospital cared for its patients, which often prompted that hospital’s competitors to produce similar

advertisements suggesting that they cared even more. Another example of ineffective positioning was a faith-

based hospital’s attempt to promote its caregivers as “saints in action” via a series of television, print,

and billboard advertisements. The dancing saints did little to convince consumers that the hospital

provided anything signi cantly different from its competitors’ offerings.

The most critical aspect of positioning is customers’ perception of a product or service. As stated a long

time ago by the originators of this concept, “Positioning is not what you do to a product. Positioning is

what you do to the mind of the prospect. That is, you position the product in the mind of the

prospect” (Ries and Trout 2001, 2).

Successful marketers compare and contrast their products and services with those of their

competitors to establish their distinct positions.

Healthcare facilities may not advertise as overtly but still seek to posi- tion themselves uniquely in

the mind of the public. For instance, Cancer Treatment Centers of America (CTCA) has sought to

differentiate its services from its competitors by being the company that treats “complex and advanced

cancer” through an integrated treatment plan and a personalized approach to

266 Strategic Healthcare Management

care (see www.cancercenter.com). CTCA aggressively acquires state-of-the art equipment and designs its

hospitals on the basis of patients’ feedback. CTCA selectively targets the market for whom it will

provide care, and with its team of communication specialists, determines “the economic viability of

prospec- tive client(s).” Its marketing outspends that of all other major cancer centers forming a

consistent brand “positioning itself as a destination cancer center on par with the leading major national

cancer institutions” (Sabin 2017).

Creation of a Marketing Plan

As mentioned earlier, marketing plans build on strategic plans. Although there are many different formats

for marketing plans, the following items are key components:

 Mission and vision: What are the purpose and future of the organization? The answer to this

question is rst and foremost in any organizational plan.

 Market research and analyses: This part of the plan includes information gathered from the

organization’s environmental scan. Competitors’ positions and strategies, the organization’s

key products and services, and market segments are identi ed. A marketing plan may re ne

the strategic plan’s data to provide more detailed direction and plans for the rm’s range of

products and services.

 Target market: The target market(s) are identi ed.

 Positioning strategies: This section recognizes the attributes and

characteristics to be used to position the organization’s products and

ser vices.

 Marketing strategies: The marketing and promotion strategies are

established. Examples include direct marketing, advertising, training,

public service information, direct sales, trade shows, and websites.

 Marketing goals: As discussed previously in this chapter, goals should be

quanti able. This part of the plan assigns responsibility for each goal to an individual or

department and sets time frames in which the goals are to be achieved.

 Budget: A reasonable budget is established to accomplish the marketing goals.

Some argue that the traditional practice of targeting products and services to market segments is no

longer relevant to healthcare marketing; with advances in information technology and changing

consumer demands, healthcare has become more consumer driven, which require new

approaches “with usable, transparent, and actionable information” (Krivich 2016). The

patient has become a central focus. Modern technology offers many new ways to market

Chapter 10: Development and Execution of a Strategic Plan 267

to existing and potential patients through patient portals, online videos, social networks, and blogs. As

healthcare moves toward accountable care organiza- tions and medical home models, organizations

may need to use websites and social media more aggressively to connect with consumers (Ford et

al. 2012). Data show how dependent the population has become on the Internet; more than 70

percent of adults in the United States reported using the Internet as a source of information on

which to base healthcare decisions (Weaver 2013).

Patient portals are one example of an interactive electronic connection whose use is becoming more

common across the world. Through these secure sites, people can view personalized health information and

test results, request appointments, query physicians, manage medications, and pay bills. Three

growing patient portals in the United States are “MyMercy,” sponsored by the Mercy healthcare system;

“My Health,” provided by Intermountain Health Care; and “My Health Manager” from Kaiser

Permanente. In 2015, 70 per- cent of Kaiser Permanente adult members had registered to use its

portal, and e-mails through it represented 33 percent of its primary care physician–patient interactions

(Garrido, Raymond, and Wheatley 2016).

Overall, marketing plans will continue to be critically important. Like strategic plans, marketing

plans should be periodically reviewed and updated as market conditions change. The quality and

effectiveness of an organization’s marketing plan directly affect its ability to sustain its strategic

direction and accomplish its mission and vision.

Chapter Summary

Strategic plans guide organizations from their existing state to their ideal state (vision). Environmental

analyses inform an organization about its existing position and reveal the gap between its existing

and ideal positions. Accu- rate information and effective communication are critical to formulating

and maintaining strategic direction. Organizations that fail to appropriately engage their key stakeholders

and align perceptions may nd that their strategic efforts derail, resulting in con ict and wasted effort.

Strategic priorities are key initiatives that drive achievement of the mission and vision. From these

priorities, goals and objectives are formed. Goals and objectives need to be speci c, measurable,

attainable, relevant to the strategic direction, and tied to time frames.

To facilitate the development of goals and objectives, many organizations institute project charters. These

documents elaborate on the scope, outcomes, resource needs, participants, and processes involved.

They are especially use- ful when an organization has many complex, interactive projects to

manage.

While strategic planning can be organized in various ways, most organiza- tions assign responsibility for

coordinating the strategic planning process to an

268 Strategic Healthcare Management

individual or a department. The duties of this person (unit) can be expanded in smaller organizations to

include public relations, communications, and business development. Organizations with boards may

designate strategy oversight to a strategic planning subcommittee and use task forces and advisory

groups to obtain information from key stakeholders and constituencies.

The strategic planning process generally occurs annually. Organizations commonly set speci c time frames

for the main components of planning, including the environmental analyses, strategy formulation,

goal formation, and implementation. Effective boards spend a signi cant amount of their time discussing

strategic issues.

Marketing plans are derived from strategic plans. The mission, vision, environmental analyses, and

strategic goals inform the content of marketing plans. Marketing plans segment the market, target

desired customer groups, and position the organization’s products and services as distinct from

com- petitors’ products and services. Marketing plans should be monitored and updated

periodically.

Chapter Questions

1. How does an organization combine its mission and vision with its environmental analyses

to develop a strategic plan?

2. Why is alignment of employees’ perceptions critical for proper strategic action to take

place? Why do you think executives’ perceptions might differ from those of other staff?

3. How can an organization better align its employees’ perceptions?

4. Why is it not preferable to have more than seven strategic priorities?

Would it be better to have fewer?

5. What critical factors do leaders need to consider when setting goals and

objectives?

6. What are the advantages of using project charters? What might be some

disadvantages?

7. Why might a person or unit in charge of strategic planning also be

assigned responsibility for public relations, communications, and

business development?

8. When and why might a governance board want to organize a strategic

planning subcommittee?

9. What methods can a board or strategic planning committee use to

increase communication to stakeholders and better understand their

needs and perceptions?

10. Why is it important to have written guidelines for the strategic planning

process?

Chapter 10: Development and Execution of a Strategic Plan 269

11. What are the differences between strategic plans and marketing plans?

12. How should a company determine which customer segments to focus

on?

13. How can a marketing plan help an organization achieve its mission and

vision?

14. What critical points should a marketing plan address?

Chapter Cases

Case Studies

Read and discuss “Bozeman Health’s Competitive Dilemma” in the case stud- ies section at the end of the

book. Answer the questions at the end of the case.

Honnutti Home Healthcare

Honnutti Home Healthcare (HHH) has decided to expand into a new region. It has been successful

in its primary market area and is excited to move into a new area. Its primary services include

nursing and physical therapy, whose excellent reputation is based on the high caliber of its personnel.

HHH has high patient satisfaction scores and secure referral sources. Only one home health agency

operates in the new region, and it appears to have a marginal reputation.

To be successful in the new area, HHH must almost recreate itself. New employees, new referral

relationships, and a new physical site have to be established. The lead nurse, Sharon, has been

tasked with prepar- ing a plan for market entry. She has been told that she can transfer three

employees to the new market area. About ten others will need to be hired to begin operations.

Sharon’s plan must set strategic priorities, goals, and objectives for the rst year.

Questions

1. Who are the key stakeholders Sharon needs to coordinate with?

2. What further internal and external data should Sharon try to obtain?

3. What kind of strategic priorities could Sharon set?

4. What goals and objectives might be appropriate?

Setting Meaningful, Measureable Objectives

Ted, the director of strategic initiatives, has been tasked with moving the strategic initiatives

established by the board’s strategic planning commit- tee to goals and objectives. To accomplish

this task, he has been meeting with each divisional chief. He had provided each division with the

appli-

cable strategic initiatives and asked each to provide its planned goals and

(continued)

270 Strategic Healthcare Management

objectives. Most responses have gone well, but a few are requiring more effort to nalize appropriate

goals and objectives. His interactions with the head of the Department of Medicine have especially been

problematic. Dr. Chou, a prominent physician and the chief of medicine, personally responded with the

following “goals and objectives” for his department:

 Strategic Initiative: Improve Patient Satisfaction

 – Medicine Goal: Improve medicine patient satisfaction.

 – Objectives

1. Make patients more satis ed with nursing care.

2. Make patients more satis ed with food.

 Strategic Initiative: Improve Clinical Quality

 – Medicine Goal: Improve medicine clinical quality.

 – Objectives

1. Have high-quality physicians with clinical privileges.

2. Increase patient safety among clinical care activities.

Ted has to decide how to respond to Dr. Chou’s memo.

Questions

1. What is good and bad about the proposed goals and objectives?

2. What form of communication might be best to handle this upcoming

interaction?

3. Write an example of better goals and objectives for this area. What

did you include?

Chapter Assignments

1. Search the Internet for a healthcare organization’s strategic plan. Examine and write a two-

page analysis of it. Does it contain all of the components discussed in this chapter? Did the

organization involve its key stakeholders in the plan’s development? What are the strengths

and weaknesses of the plan?

2. Talk to a person responsible for project management. Determine how his role coordinates

with strategic planning.

3. Find a marketing plan for a healthcare organization, and look for the key components

discussed in this chapter. On what speci c features and attributes does the plan focus? Does

it identify a target market segment? If so, what is the segment?

BUSINESS PLANS AND STRATEGIC MANAGEMENT

CHAPTER

A strategic plan is primarily used for implementing and managing the strate- gic direction of an existing

organization. A business plan is used to initially start a business, obtain funding, or direct operations.

The two plans cover different timeframes as well. According to one resource, a strategic plan

generally covers a period between three years to more than ve years, whereas a business plan is

normally no more than one year. Hence, a stra- tegic plan is a long-term roadmap, and a business plan is

utilized to execute the strategic plan on an annual basis.

—Rachel V. Rose, “The Business Plan: A Must for Medical Practices,” 2015

L Ob

After reading this chapter, you will

 recognize the differences and similarities between a business plan and a strategic plan,

 comprehend the components and sequence of a business plan,

 understand the purposes and uses of a business plan, and

 know how to create a business plan.

Organizations use different written methods to organize their strategic thinking. As

discussed in the previous chapter, a strategic plan is a means of implementing strategy and

managing strategic direction. Another commonly used written plan that is similar to a

strategic plan is the business plan. The creation of business plans also supports strategic

thinking and improves operational implementation of strategy. Business plans are critical for all

segments in healthcare.

Business plan

A written document that de nes, analyzes, and promotes a speci c proposal, a line of business, or an innovative concept.

271

272 Strategic Healthcare Management

Differences Between Strategic Plans and Business Plans

An organization’s strategic plan generally is the foundation of its business plan. Strategic plans provide focus

and direction and specify actions an organization needs to take to achieve its mission and vision,

whereas business plans de ne, analyze, and examine a speci c proposal, line of business, or innovative

concept. Organizations create strategic plans for overall guidance, while business plans are more

tactical and often have a narrow purpose—for example, to obtain project funding from corporate

governance or an external source of capital (e.g., bank, private entity). For example, Centura

Health’s strategic priority, access and insurance enrollment (see chapter 10), may translate into

various proposals, including mergers, acquisitions, or the creation of new businesses to achieve

greater access to care. Business plans analyze the appropriateness, total capital requirements, and

feasibility of such projects.

Business plans also differ from strategic plans in terms of the time frame involved. Strategic plans

generally cover three to ve years but may extend over as many as ten or even twenty years.

Business plans generally cover one to three years. Strategic plans aggregate organizational needs,

while business plans identify speci c resources for a de ned entity.

The size of an organization may in uence its use of business plans. Small businesses may initially use their

business plan as a strategic plan, whereas large companies develop overarching strategic plans and

generate business plans as part of their business development process.

Depending on their type and purpose, organizations may use business plans for internal or external

audiences. Small entrepreneurial enterprises, such as start-up biomedical companies, may direct their

business plans to external nancial stakeholders. These plans might make detailed cash ow and pro t

projections to inform potential investors. Not-for-pro t organizations similarly use these documents to

procure funding from nongovernmental and govern- mental agencies and donors (e.g., World Bank,

International Monetary Fund). For-pro t organizations may use business plans for this purpose as well.

For example, in 2008 Ford Motor Company submitted a business plan to Congress to request a $9 billion

bridge loan for a proposed restructuring project.

Large rms, such as Clinigen Group, a global specialty pharmaceutical products and services group, may

use their business plans for internal purposes. Peter George, chief executive of Clinigen Group, stated,

“Creating a consoli- dated organizational structure is a core part of Clinigen’s ambitious ve-year

business plan to deliver fourfold sales and sixfold pro t growth. Two years in, we are well on target”

(Business Wire 2012a). Business plans with an internal focus also may be created to evaluate

feasibility or for monitoring purposes. For example, organizations might use them to assess the

viability of proposed information technology systems, new products, or mergers or be the basis for

the development of monitoring systems, such as balanced scorecards.

Chapter 11: Business Plans and Strategic Management 273

Like strategic plans, business plans should be considered a work in progress; the creation of the plan is

not the desired outcome but a means to an end. The plan should motivate some purpose: obtaining

funding, proceeding with a project, establishing better monitoring systems, or some other end. As

conditions change, organizations should alter the assumptions and contents of business plans.

Components of a Business Plan

The format and content of business plans are not set in stone; many variations exist. Their content

and structure depend on the purpose of the plan and its intended audience. Different organizations

highlight different aspects. For example, a not-for-pro t organization may emphasize the promotion

of its mission, while a for-pro t company requesting a bank loan may focus on its ability to repay its

loans and generate adequate cash ow.

The US Small Business Administration provides an excellent guide to crafting a business plan for

small, pro t-driven organizations (select the Busi- ness Guide menu, and under Plan Your Business,

choose “Write your business plan” at www.sba.gov). It suggests including the following components:

 Executive summary

 Market analysis

 Company description

 Organization and management

 Marketing and sales management

 Description of service or product line

 Funding request

 Financials

 Appendix

Each of these sections is described in the following discussion.

Executive Summary

The executive summary is the rst (and possibly the only) section read by stake- holders and

generally is considered the most important section of a business plan. It generally is kept to

one page and contains

 the organization’s mission and vision;

 a brief description of the organization;

 growth prospects and projections;

 an explanation of the organization’s products and services;

274 Strategic Healthcare Management

• existing and needed nancing and funding, as appropriate; and

Market analysis

A study that examines competitors and relevant markets, including the market position

in which an organization will be placed, relative to other industry competitors.

• a summary of the organization’s future.

Although the authors typically write the executive summary last, after all other sections are completed, it is

placed rst. Readers form their rst impressions of an organization from the content in this section.

The organization delivers a short presentation or “elevator pitch” to interest potential funders,

custom- ers, or strategic partners quickly. It highlights the organization’s strengths and strongly promotes

the plan’s purpose.

Market Analysis

The market analysis is a focused environmental analysis that examines the healthcare

organization’s sector, competitors, and relevant markets. It de nes the organization’s current or future

market position relative to its competitors. The market analysis typically contains the following

information:

• A description of the industry and its prospects, including size, projected growth rates, and other

signi cant trends and characteristics.

• Customer characteristics, including major clusters of customers or potential customers and unmet

customer needs. Customers may be broken down by demographics (e.g., age, sex) and location. If

the organization is well established, the primary and secondary markets of the organization’s

existing (if applicable) and projected market share are de ned.

• Size of the existing market, including annual purchases, and how its size might change when the

organization enters the market.

• A competitive analysis that identi es competitors by product line or service and market segment;

their corresponding market shares, strengths and weaknesses, and other factors that might affect

the organization’s success; and the importance of the organization’s target market to competitors. If

competitors could expand into the organization’s proposed product or service area, the window of

opportunity (i.e., time before competitors expand) and the timing needed to succeed are explained.

• Market barriers and impediments to achieving the organization’s mission, which might include

regulations, technology, and economies of scale, among other factors (as discussed in chapter 7).

Company Description

This section is especially important for new businesses. It describes

• the focus and nature of the business and the marketplace needs the company is seeking to satisfy;

Chapter 11: Business Plans and Strategic Management 275

 the consumers the company will serve; and

 the competitive advantages the company will have, which might

comprise location, personnel expertise, ef ciencies, or any other feature that distinguishes

the company from competitors and provides greater value to customers.

Organization and Management

The organization and management of the entity, as well as its leadership, ownership, and

governance, are discussed in this section. The relationships among personnel, their

management expertise, and the experience that quali- es them to lead the proposed

company or project are critical details. The description of the governance structure includes

the type of board (internal or external), members of the board, and the scope of their

authority (advi- sory or governing). A business plan should provide the following speci cs if

possible:

 An organizational chart that shows the relationships among units, products, and other

internal structures

 Ownership information, including legal structure, owners’ names, and equity relationships

 Pro les of the members of the management team, including their names, positions, primary

responsibilities, education, unique skills and experience, previous employment, community

involvement, and number of years with the organization

 Governance structure, including governance type and board members’ names, positions,

expertise, extent of involvement in the organization, backgrounds, and contributions to the

organization’s success

Marketing and Sales Management

The marketing and sales management section addresses the organization’s proposed

approach to marketing the new product or service, including its strat- egy for changing existing

customer referral and buying patterns and generating new business. It describes the type of

marketing to be used (e.g., salespersons, direct mail, media advertising, promotions), as well as

potential distribution channels and their related advantages (e.g., Internet, distributors,

retailers).

Description of Service or Product Line

The service or product line section speci es the service or product to be offered and

clearly delineates the bene ts and value customers will derive from it. The life cycle of the

product or service (as discussed in chapter 2) is explored, and any existing or forthcoming

patents are noted. If applicable, it describes relevant research and development activities.

Organization and management

The structure, management team, ownership, and governance of an organization.

Marketing and sales management An organization’s approach to promoting and selling its products or services—the type

of marketing to be used (e.g., salespersons, direct mail, media advertising), as well as potential distribution channels and

their related advantages (e.g., Internet, distributors, retailers).

Service or product line

The particular kind or type of services or products offered by an organization.

276 Strategic Healthcare Management

Funding Request

If the purpose of the plan is to request funding, the organization discusses its current funding needs

and its intended use of the funding. The funder should be made aware of the time at which the

capital will be needed; the projected duration it will be needed for; and whether the funds will be

used for capital expenditures, operations, working capital, debt retirement, acquisitions, or other

purposes. Furthermore, a plan should include the potential for future capital needs as well as any

strategic nancial plans that may signi cantly affect the organization, such as buyouts, acquisition by

another organization, and debt repayment plans.

Financials

Established organizations should provide historical nancial data from the last three to ve years. All

businesses should provide three- to ve-year nancial projections. This section presents income

statements, balance sheets, cash ow statements, capital expenditure budgets, and ratio and trend

analyses of both historical and prospective data. Projected expenditures on the proposed project should

match the amount of funding requested.

Appendix

The appendix exhibits con dential data. Enclosures may include

 entrepreneurs’ personal and business credit history (if applicable);

 key managers’ resumes;

 photos of products;

 letters of reference;

 details of market studies;

 magazine or book references;

 details of licenses, permits, or patents;

 leases, building permits, contracts, and other legal documents; and

 a list of consultants, attorneys, and accountants involved in the business.

Writing an effective business plan requires a skilled presentation. The ability to

communicate your business plan professionally is critical to imple- mentation. To achieve

this, journalist Patrick Hull (2013) has suggested that a business plan should do the

following:

1. Not contain “ uff”: Be as concise as possible; delete any nonessential language. Fluff only

wastes space. No one wants to read a lengthy business plan.

Chapter 11: Business Plans and Strategic Management 277

2. Be realistic: Honestly present both challenges and opportunities. Make credible

assumptions.

3. Be conservative: Choose conservative projects and demonstrate how your approach and

projections are very reasonable.

4. Contain good visuals: If possible, use meaningful visuals in your business plan. Graphs,

charts, and images can improve your presentation. Visuals break up the text, better inform

the reader, and improve ow.

5. Be creative: Include creative elements to help your plan stand out, be unique, and seize

someone’s attention. Make the presentation look original—do not use a template.

Chapter Summary

Business plans are tools that support and organize strategic thinking. They differ from strategic

plans in that they typically focus on a speci c proposal, a line of business, or an innovative concept.

Organizations may create multiple business plans to carry out a strategic plan’s goals and

objectives. Business plans can be used to ascertain the feasibility of a proposal, obtain funding, or

establish monitoring metrics to manage projects better.

The components of a business plan vary according to the issues it addresses and the context. Generally,

business plans contain an executive sum- mary; a market analysis; a description of the organization,

including its man- agement and governance; marketing and sales strategies; an explanation of the

proposed service or product line; funding requests; company nancials; and other related

documentation. Business plans encourage disciplined thought and provide a mechanism for

carrying out strategic decisions.

Make the presentation of your business plan professional. Create a plan that is concise, realistic, and

meaningful. Use good visuals that help tell your story and better inform the reader. Ensure that

your business plan is creative and stands out.

Chapter Questions

1. How are strategic plans and business plans similar?

2. How are strategic plans and business plans different?

3. In what instances could a business plan be used?

4. How does a business plan encourage disciplined strategic thinking? 5. What factors determine

the components included in a business plan?

278 Strategic Healthcare Management

Chapter Cases

Case Studies

Read and discuss “Bozeman Health’s Competitive Dilemma” in the case studies section at the end of

the book. Answer the questions at the end of the case.

A Business Plan for New Mobile Ultrasound?

A company is seeking nancing for a new mobile ultrasound unit it has developed. The new unit’s

ultrasound scans are of almost the same quality as those produced in hospitals, and the unit weighs less

than 40 pounds. While hospital-based units cost $40,000 to $150,000, the new unit would sell for

less than $10,000. The new ultrasound unit would be an ideal means of improving prenatal care in parts

of the developing world.

In groups of three or four, design a business plan for the new ultra- sound unit. Include all of the

elements explained in this chapter. Present your business plan to the class.

Chapter Assignment

Search the Internet for healthcare business plans. Find two plans and write a two-page paper

analyzing them. Do they contain all of the components described in this chapter? If the purpose of

the plans is to obtain funding, would you be impressed enough to fund the projects they propose?

What are the strengths and weaknesses of the plans?

IMPLEMENTING STRATEGIES

Choice of organizational structure can signi cantly affect an organization’s abil- ity to implement its strategies.

Strategies commonly catalyze change, which—if not managed appropriately—can seriously impede an

organization in pursuit of its goals. Chapter 12 provides an overview of organizational structure

and its relationship to strategy and explains how the most appropriate structure for an organization

depends on its external and internal environments. Chapter 13 explores strategic organizational

change and provides tools for managing the challenges that change presents. Chapter 14 discusses

the components of strategic management and introduces methods for improving executives’

strategic leadership skills.

LEARNING OBJECTIVES

•Understand the basic principles of strategic plan development.

•Be able to describe the process involved in creating a strategic plan.

•Have learned how environmental and gap analyses help leaders set

strategic priorities.

•Perceive the importance of stakeholder alignment and the role of

communication in achieving stakeholder buy-in and support.

•Be aware of various sources of data.

•Comprehend the basics of effective goal setting.

•Know how to use project charters.

•Recognize strategic planning structures, including personnel

responsibilities and governing body roles.

KEY ISSUES OF PLANS

•Where are we now?

•What needs to be done to better achieve the

organizational mission and vision?

•What are the options available to accomplish the

mission and vision?

•What specific actions should be selected?

•How is the strategic plan translated into actions that can

be implemented?

•How do we know if we have achieved our strategies?

THE STRATEGIC PLAN

DEVELOPMENT CYCLE

Refer to Exhibit 10.1, page 231 of the text.

EXAMINATION OF THE CURRENT

STATUS OF AN ORGANIZATION

•Must be based on observed and recorded data

•Must use a periodic and organized approach

•Must update assumptions and perspectives

KEY

STAKEHOLDER

INVOLVEMENT

•Periodic testing of

alignment and

needs

Joint Negative Perception

of Situation

Both executives and

stakeholders seek change.

Consensus is reached.

Misaligned Perceptions of

Situation

Executives seek to

institutionalize status quo, while

stakeholders seek change.

Conflict results.

Joint Positive Perception

of Situation

Both executives and

stakeholders seek to

institutionalize status quo.

Consensus is reached.

Misaligned Perceptions of

Situation

Executives seek change, while

stakeholders seek to

institutionalize status quo.

Conflict results.

Stakeholder Perception

Executive Perception

Negative Positive

Positive Negative

Adapted from Walston and Chou (2011)

Effects of Stakeholders’ and Executives’ Perception on Alignment

COMMUNICATION

•A critical initial step in strategic planning

•Often the process of discovery and

communication during planning is as important

(or perhaps more important) than the creation

of the ultimate written plan.

ENVIRONMENTAL ANALYSIS

• If too many data are analyzed, “analysis paralysis” may

result. Therefore, only key, critical factors should be

analyzed.

•Key factors contributing to both successes and failures

should be identified and inform the planning process.

•Key external data also include factors that could significantly

impact the organization’s direction and ability to fulfill its

mission and vision, including data on competitors, industry

data, community and customer perceptions, market share,

and information on customer origin.

SOURCES OF HEALTHCARE DATA

•nahdo.org: The National Association of Health Data Organizations (NAHDO) is a nonprofit educational association

dedicated to improving healthcare data collection and use. NAHDO’s members include state and private

organizations that maintain healthcare databases as well as stakeholders of these databases in the public and private

sectors.

•ahrq.gov: The Agency for Healthcare Research and Quality maintains a large sample of data on hospitalized patients,

including the Healthcare Cost and Utilization Project (HCUP), a national inpatient sample of about 1,000 hospitals.

•cms.hhs.gov: The Centers for Medicare & Medicaid Services maintains Medicaid and Medicare inpatient and

outpatient claims data.

•mgma.org: The Medical Group Management Association collects data on physician productivity in group practices by

visits and costs.

•imshealth.com: IMS Health maintains data on pharmaceutical agents and diseases/medical conditions.

•cancer.gov/statistics: The National Cancer Institute provides cancer statistics by type, geographic area, and

demographic subgroups.

•bcbs.com/blueresources/tec: The BlueCross and BlueShield Association performs technology assessments to gather

scientific evidence of the effectiveness of different treatments and tests.

•ahd.com: The American Hospital Directory provides data and statistics on more than 6,000 hospitals nationwide.

•ahadata.com: The American Hospital Association collects detailed annual hospital statistics.

•dartmouthatlas.org: The Dartmouth Atlas of Health Care provides data on variation of care across the United States.

GAP ANALYSIS

• Identifies the distance between the organization’s current position and

where it wants to be

•The following questions can help leaders measure this distance:

—Which stakeholder groups’ needs are not being met?

—What key actions must be taken to attain the vision?

—Which past goals were not achieved? How did this nonachievement affect the mission?

—How is the organization living its values? What can be done to emphasize and more fully

incorporate the values into daily work life?

—What core weaknesses may be preventing the organization from living its mission?

—What external threats have to be addressed to be able to continue providing mission-based

products and services?

—What is the organization’s financial health, and how does it affect the organization’s strategic

position?

IDENTIFYING CHALLENGES

•The number of challenges should be narrowed to four or five that are most prominent and

most likely to impede the organization from accomplishing its mission and vision.

• Some key challenges posed by today’s healthcare environment include

—availability of technical personnel;

—new technology;

—new or potential regulations;

—financial capabilities;

—market and competitive changes;

—customer satisfaction, preferences, and demands;

—capacity issues (excess or constraints);

—cost pressures;

—relationships and affiliations with partners;

—employee engagement and retention; and

—access to capital.

DETERMINING THE ISSUES

THAT ARE MOST CRITICAL

• Could this force seriously impact the organization’s ability to

achieve its mission?

•How significantly could the force impact the organization?

What impact may the force have on key stakeholders?

• What impact could the force have on the organization’s

reputation?

• Could the force significantly change the organization’s

customer base?

•Could the force have a substantial impact on the

organization’s finances?

EVALUATING PREPAREDNESS FOR

STRATEGIC PLANNING

•Is there a written policy for the process and activities of strategic planning?

––Does it spell out who is responsible for which activities and how the different

groups interact and coordinate with the governing body?

––Are specific time frames established for each strategic planning component?

•Does the organization have a plan for communicating the development of the annual

strategic plan and its consequent results?

•Does the governing board use the strategic plan appropriately to set realistic,

challenging goals?

•Do strategic or tactical issues dominate board discussions? If strategic issues are not

addressed the majority of the time, what can be done to increase the board’s focus

on them?

•Is there a proper planning structure whose members appropriately represent the key

stakeholders? If not, is there a means of obtaining periodic input from other

stakeholders (e.g., task groups, focus groups, surveys)?

PLANNING STRUCTURE

•Person or unit responsible for gathering and

analyzing data and organizing and conducting

committee and task force meetings

• Often overseen by (healthcare) organizations’

governing board

•Task forces/advisory groups may represent

geographic and/or special constituencies

Approximate Months

0 to 4 to 6 to 7 to 12

Environmental Strategy Goal Implementation

Analysis Formulation Formation and Monitoring

Activity

Task Group Task Group

Task Group

Strategic Planning

Committee

Board

Strategic Planning

Committee

Board

Strategic Planning

Committee

Board Board

TIMELINE OF REVIEW BODIES’

INVOLVEMENT IN ANNUAL STRATEGIC

PLANNING PROCESS

COMPONENTS OF A

STRATEGIC PLAN

•Executive summary

•Strategic intent

•Environmental analyses

•Strategic priorities and programs

•Strategic goals and objectives

•Appendixes

SETTING STRATEGIC PRIORITIES

•Organizations view the gap between where they are and where

they want to be and generate options they could pursue to

narrow the gap.

•From these options, a small number of strategic priorities is

selected—generally, no more than seven.

•See the Centura Health example on pages 242–45.

Strategic Options Strategic Priorities Goals and

Objectives

FORMULATING

GOALS AND OBJECTIVES

•Goals: General, intangible, broad, abstract,

strategic, and long-range

•Objectives: Specific, measurable, narrow,

concrete, tactical, and short-range

S.M.A.R.T. METHOD

To be achievable, goals and objectives must have the following characteristics:

•Specific: They must clearly identify what is to be done, who will do it, whom it will be

done for, where it will be done, when it will be done, and any related requirements or

constrains.

•Measurable: Metrics should be set to know when the goal is accomplished. Key

performance indicators should be established for each key goal component.

Quantifiable indicators are preferable.

•Attainable: Goals should stretch the organization’s capabilities but still be

achievable.

•Relevant: Goals should be pertinent and applicable to the organization’s mission.

Goals should correlate with the strategic priorities and the time frames associated

with them.

•Time-bound: Target dates should be set for each goal and objective. Target dates

should fall within the correct business cycle (e.g., planning and budget cycle).

Results should be used to inform the next cycle of strategic planning and goal

formation.

QUESTIONS FOR SETTING GOALS

•What is the outcome I want?

•Why is it important to achieve it?

•Who needs to be involved?

•When does it need to be completed?

•How are we going to achieve it?

•How and when am I going to measure the

outcome?

PROJECT CHARTERS

•Clarify the key components of action plans,

including scope, outcomes, participants,

resources, time frames, and responsible parties

•Ensure that the action plans and the desired

outcomes of those action plans coincide with

strategic priorities and goals

OUTLINE OF A PROJECT CHARTER

Refer to Exhibit 10.7, page 249 of the text.

MARKETING PLANS

•An important document supporting and informed by the strategic plan

•Complicated in healthcare by the importance of quality and the dominance

of not-for-profit organizations with community service missions

•A common approach to marketing plan development consists of three major

activities:

1. Segmentation: Dividing consumers and stakeholders into defined market

segments

2. Targeting: Determining which key segments to target

3. Positioning: Designing features and images that will occupy a distinctive

place in the market’s perception

SEGMENTATION

•Involves identifying key stakeholders

•Tends to group stakeholders who have a similar

set of needs or wants. These segments can

then be further divided into niches and local

markets (Kotler, Shalowitz, and Stevens 2008)

•Can be broken into four major categories:

Geographic, demographic, psychographic, and

behavioral

TARGETING

Five key attributes can be used to determine which market segments to

target (Kotler, Shalowitz, and Stevens 2008):

1. Measurability of the segment by size, purchasing power, or other

characteristics

2. Substantiality of the market segment that makes it worth pursuing

3. Accessibility of the segment (i.e., it can be effectively reached)

4. Differentiability of the segment

5. Ability to formulate programs that will attract and serve the chosen

segments

POSITIONING

• Differentiating one’s products and services from others in the

market

• Four Ps established a product’s or service’s position:

1. Product: The physical features of a product or the intangible aspects of a

service

2. Price: The amount paid for the product

3. Promotion: The methods of communication used to inform customers

and potential customers

4. Place: The point of access for the consumer

•Clearly defines the unique characteristics, utility, and value of

products and services

Remember…

The most critical aspect of positioning is

customers’ perception of a product or service. As

stated a long time ago by the originators of this

concept, “[P]ositioning is not what you do to a

product. Positioning is what you do to the mind

of the prospect. That is, you position the product

in the mind of the prospect” (Ries and Trout

1982).

COMPONENTS OF A MARKETING PLAN

•Mission and vision: What is the purpose and future of the organization? The answer to

this question always is first and foremost in any organizational plan.

•Market research and analyses: This part of the plan includes information gathered from

the organization’s environmental scan. Competitors’ positions and strategies, the

organization’s key products and services, and market segments are identified. A

marketing plan may refine the strategic plan’s data to provide more detailed direction and

plans for the firm’s range of products and services.

•Target market: The target market(s) are identified.

•Positioning strategies: The attributes and characteristics to be used to position the

organization’s products and services are recognized.

•Marketing strategies: The marketing and promotion strategies are established. Examples

include direct marketing, advertising, training, public service information, direct sales,

trade shows, and websites.

•Marketing goals: As discussed previously in this chapter, goals should be quantifiable.

This part of the plan assigns responsibility for each goal to an individual or department

and sets time frames within which the goals are to be achieved.

•Budget: A reasonable budget is established to accomplish the marketing goals.

CHAPTER QUESTIONS

1. How does an organization combine its mission and vision with its environmental analyses to develop a strategic

plan?

2. Why is alignment of employees’ perceptions critical for proper strategic action to take place? Why do you think

executives’ perceptions might differ from those of other staff?

3. How can an organization better align its employees’ perceptions?

4. Why is it not preferable to have more than seven strategic priorities? Would it be better to have fewer?

5. What critical factors do leaders need to consider when setting goals and objectives?

6. What are the advantages of using project charters? What might be some disadvantages?

7. Why might a person or unit in charge of strategic planning also be assigned responsibility for public relations,

communications, and business development?

8. When and why might a governance board want to organize a strategic planning subcommittee?

9. What methods can a board or strategic planning committee use to increase communication to stakeholders and

better understand their needs and perceptions?

10. Why is it important to have written guidelines for the strategic planning process?

11. What are the differences between strategic plans and marketing plans?

12. How should a company determine which customer segments to focus on?

13. How can a marketing plan help an organization achieve its mission and vision?

14. What critical points should a marketing plan address?

CHAPTER 11:

BUSINESS PLANS AND

STRATEGIC MANAGEMENT

LEARNING OBJECTIVES

•Recognize the differences and similarities

between a business plan and a strategic plan.

•Comprehend the components and sequence of

a business plan.

•Understand the purposes and uses of a

business plan.

•Know how to create a business plan.

BUSINESS PLAN

•Shares similarities with a strategic

plan

•Supports strategic thinking and

improves operational

implementation of strategy

•May be used for internal or

external audiences

DIFFERENCES BETWEEN

STRATEGIC PLANS AND BUSINESS

PLANS

S P B Pl

Provide focus and direction and specify actions an

organization needs to take to achieve its mission

and vision

Define, analyze, and examine a specific proposal,

line of business, or innovative concept

Created for overall guidance

Created for tactical and narrower purpose

Generally cover 3 to 5 years but may extend

over as many as 10 or even 20 years

Generally cover 1 to 3 years

Aggregate organizational needs

Identify specific resources for a defined entity

COMPONENTS OF A BUSINESS

PLAN

•The format and content of business plans

are not set in stone; many variations

exist. Their content and structure depend

on the purpose of the plan and its

intended audience.

•Suggested components of a business

plan:

—Executive summary

—Market analysis

—Company description

—Organization and management

—Marketing and sales management

—Description of service or product line

—Funding request

—Financials

—Appendix

EXECUTIVE SUMMARY

•First (and may be the only) section read by

stakeholders and generally is considered the most

important section of a business plan

•Typically written last but is placed first

• Delivers a short presentation or “elevator pitch” to

quickly interest potential funders, customers, or

strategic partners

• Highlights the organization’s strengths and strongly

promotes the plan’s purpose

CONTENTS OF AN EXECUTIVE

SUMMARY

• Organization’s mission and vision

•Brief description of the organization

•Growth prospects and projections

• Explanation of the organization’s products and

services

•Existing and needed financing and funding, as

appropriate

• Summary of the organization’s future

MARKET ANALYSIS

•Focused environmental analysis that examines the

healthcare organization’s industry, competitors, and

relevant markets

• Defines the organization’s current or future market

position relative to its competitors

•Typically contains the following:

—Description of the industry and its prospects

—Customer characteristics

—Size of the existing market

—Competitive analysis

—Market barriers and impediments

COMPANY DESCRIPTION

Describes the following:

•Focus and nature of the business and the marketplace

needs the company is seeking to satisfy

•Consumers the company will serve

•Competitive advantages the company will have, which

might comprise location, personnel expertise,

efficiencies, or any other feature that distinguishes the

company from competitors and provides greater value

to customers

ORGANIZATION AND

MANAGEMENT

Provides the following:

•Organizational chart that shows the relationships among units, products, and

other internal structures

• Ownership information, including legal structure, owners’ names, and equity

relationships

•Profiles of the members of the management team, including their names,

positions, primary responsibilities, education, unique skills and experience,

previous employment, community involvement, and number of years with the

organization

• Governance structure, including governance type and board members’

names, positions, expertise, extent of involvement in the organization,

backgrounds, and contributions to the organization’s success

MARKETING AND SALES

MANAGEMENT

• Addresses the organization’s proposed

approach to marketing the new product or

service

•Describes the following:

—Type of marketing to be used (e.g., salespersons,

direct mail, media advertising, promotions)

—Distribution channels to be used

—Related advantages (e.g., Internet, distributors,

retailers)

DESCRIPTION OF SERVICE

OR PRODUCT LINE

•Specifies the service or product to be offered and

clearly delineates the benefits and value

customers will derive from it

• Explores product’s/service’s point in the product

life cycle (discussed in Chapter 2)

•Notes any existing or forthcoming patents

•Describes relevant research and development

activities, if applicable

FUNDING REQUEST

• Defines the organization’s current funding needs and

intended use of the funding

•Details the time the capital will be needed; the projected

duration it will be needed for; and whether the funds will

be used for capital expenditures, operations, working

capital, debt retirement, acquisitions, or other purposes

•Addresses the potential for future capital needs as well

as any strategic financial plans that may significantly

impact the organization (e.g., buyouts, acquisition by

another organization, debt repayment plans)

FINANCIALS

•Should include historical financial data from the

last three to five years as well as three- to five-year

financial projections

•Presents income statements, balance sheets, cash

flow statements, capital expenditure budgets, and

ratio and trend analyses of both historical and

prospective data

•Projected expenditures on the proposed project

should match the amount of funding requested

APPENDIX

Includes the following:

• Entrepreneurs’ personal and business credit history (if applicable)

• Key managers’ resumes

•Photos of products

•Letters of reference

•Details of market studies

•Magazine or book references

•Details of licenses, permits, or patents

•Leases, building permits, contracts, and other legal documents

•List of consultants, attorneys, and accountants involved in the

business.

CHAPTER QUESTIONS

1. How are strategic plans and business plans

similar?

2. How are strategic plans and business plans

different?

3. In what instances could a business plan be used?

4. How does a business plan encourage disciplined

strategic thinking?

5. What factors determine the components included

in a business plan?

BUSI 691

INDIVIDUAL ASSURANCE OF LEARNING EXERCISE GRADING RUBRIC

Criteria

Levels of Achievement

Content 70%

Advanced

Proficient

Developing

Not present

Points

Earned

Identification

of Strategic

Competitive

Situation

17 to 18 points

Superior identification of

strategic competitive

situation. Includes at least

3 environmental factors in

the analysis. Includes

substantive Biblical

integration.

15 to 16 points

Identification of strategic

competitive situation.

Includes 2 environmental

factors in the analysis.

Includes moderate Biblical

integration.

1 to 14 points

Marginal identification of

strategic competitive

situation. Includes only 1

environmental factor in

the analysis. Includes

minimal Biblical

integration.

0 points

Substandard

identification of

strategic competitive

situation. Does not

include Biblical

integration.

Assessment of

Strategy

Strategic

Leverage

17 to 18 points

Included a superior

assessment of the strategic

leverage the organization

had over area hospitals.

Includes substantive

Biblical integration.

15 to 16 points

Included an assessment of

the strategic leverage the

organization had over area

hospitals. Includes moderate

Biblical integration.

1 to 14 points

Marginally included an

assessment of the strategic

leverage the organization

had over area hospitals.

Includes minimal Biblical

integration.

0 points

Did not include

assessment of the

strategic leverage the

organization had over

area hospitals. Does

not include Biblical

integration.

Strategic

Steps

17 to 18 points

Clearly provides at least 3

strategic planning

recommendation(s) of next

steps for strategic action

grounded in current

literature or best practices.

Includes substantive

Biblical integration.

15 to 16 points

Provides 2 strategic planning

recommendation(s) of next

steps for strategic action

grounded in current literature

or best practices. Includes

moderate Biblical

integration.

1 to 14 points

Marginally provides a

recommendation of next

steps for strategic action

grounded in current

literature or best practices.

Includes minimal Biblical

integration.

0 points

Does not provide

recommendation(s) of

next steps for strategic

action grounded in

current literature or

best practices. Does

not include Biblical

integration.

Supported by

Current

Literature

and Industry

Best Practices

15 to 16 points

All 5 supporting

references, excluding the

textbook, are scholarly

and/or have been peer

reviewed within the last 5

years.

13 to 14 points

Most of the supporting

references, excluding the

textbook, are scholarly

and/or have been peer

reviewed within the last 5

years, or fewer than three

references are included.

1 to 12 points

Some of the supporting

references, excluding the

textbook, are scholarly

and/or have been peer

reviewed within the last 5

years, or fewer than three

references are included.

0 points

Less than half of the

supporting references

are scholarly and/or

have been peer

reviewed within the

last 5 years, or fewer

than three references

BUSI 691

are included. Does not

include Biblical

integration.

Structure

30%

Advanced

Proficient

Developing

Not present

Points

Earned

Page Length

10 points

Explained in at least 5

pages

8 to 9 points

Explained in 3–4 pages.

1 to 7 points

Explained in 2 pages.

0 points

Explained in 1 or

fewer pages.

APA Format

10 points

No APA formatting issues

are identified.

8 to 9 points

One or two APA formatting

issues are identified.

1 to 7 points

Three to five APA

formatting issues are

identified.

0 points

Six or more APA

formatting issues are

identified.

Grammar

and/or

Spelling

10 points

No grammar and/or

spelling issues are

identified.

8 to 9 points

One or two grammar and/or

spelling issues are identified.

1 to 7 points

Between three and five

grammar and/or spelling

issues are identified.

0 points

At least six grammar

and/or spelling issues

are identified.

Total Points

Instructor’s Comments:

BUSI 691

INDIVIDUAL ASSURANCE OF LEARNING EXERCISE INSTRUCTIONS

For this assignment, read “The Struggle of a Safety Net Hospital” case in the Walston text. You

will individually respond to the case questions in a 5-6 page paper, which must be supported by

the course textbook and at least 5 scholarly, peer-reviewed sources published in the last 5 years

cited in current APA format.

As you read:

 Perceive the difficulties of aligning strategic decisions with the organization’s mission.

 Analyze the potential effects of increasing copays at a public hospital.

 Understand the varying nature of competition in the healthcare industry.

 Suggest other strategic directions (operational improvement), given the market that

Wishard might select.

You will write a 1300-1500 word paper in current APA format addressing the case questions

presented in the assignment. Your answer must be supplemented with research from the course

textbook, scholarly peer-reviewed sources, plus the Bible.

Biblical Integration: Be sure the Biblical integration is substantive and is addressed in response

to each question posed below. Specific scriptural references are required (in current APA

format).

Note: A minimum of 5 scholarly, peer-reviewed references must be used that support your

responses in the paper in addition to the textbook. This is a paper, so your answers must not be

numbered, but rather you must use titles and subheadings to guide the reader through the

narrative.

Questions:

1. What was Wishard’s competitive situation? Did Wishard have direct competitors? If so,

in what areas did it compete? Include substantive Biblical integration/support.

2. Provide an evaluation of the environmental factors impacting the management of the

organization. Include substantive Biblical integration/support.

3. What strategic leverage did Wishard have over the other area hospitals? Include

substantive Biblical integration/support.

4. From a societal perspective, what problems occur by having a stand-alone public hospital

with a primary mission of serving the indigent population? Include substantive Biblical

integration/support.

5. What strategic steps would you recommend for Wishard? Include substantive Biblical

integration/support.

6. Design at least 3 strategic planning initiatives for the organization incorporating a

financial anaylsis, human capital management, operational improvement, marketing, and

legal/regulatory compliance. Include substantive Biblical integration/support.

Running head: WISHARD’ STRATEGIC PLANNING 1

Wishard’s strategic planning

Name

Institution

WISHARD’S STRATEGIC PLANNING 2

Wishard's strategic planning

Wishard's competitive situation

Wishard health service found in Indianapolis at Indiana is a public healthcare provider

helping the poor and vulnerable in Indiana get healthcare service. I was a public hospital with the

mission and vision of advocating, caring, teaching, and serving all people living in Marion

County with a lining toward the uninsured, underinsured, and underserved population. Its

missions and visions were created to fulfill the biblically given mandate of helping the sick and

the poor in the society (English Standard Version, 2016, Proverbs 19:17). Its goodwill goals and

plans of helping the resident of Indianapolis were faced with a huge level of competition from

other healthcare providers that were offering superior services and had substantial financial

muscles that helped them to get the best medical personnel, build the best hospital buildings, and

get the latest drugs and equipment. This way, these hospitals were capable of attracting many

affluent and insured patients.

Even though Wishard had a lot of clients because the poor people made the highest

number of patients in the area and were all directed to the hospital, there was mindless

competition for the insured and paying patient who seemed to drift to the new and fully equipped

hospitals. There was also stiff competition in the area of facilities and services provided. The

hospitals were using millions to build updated facilities, which made Wishard's situation worse.

The hospital business took the direction of profligate and consumerism spending, which could be

explained by the likes of Heart Center of Indiana and Clarian spending $60 million and $150

million in new hospitals. The competition was further compounded by the market entry of profit-

making national healthcare organizations such as US Oncology, which used their financial

wellbeing to bring in highly trained staff and good business models to compete with the local

WISHARD’S STRATEGIC PLANNING 3

hospitals. With all these facilities and money, these hospitals could provide quality services for

patients, quality hospital experience, highly trained personnel, and superior drugs and equipment

far from Wishard's reach (Amelung, 2019). This way, Wishard was vulnerable to these hospitals'

competition.

Environmental factors impacting the management of the organization

One of the environmental factors affecting Wishard's management is the presence of

many vulnerable people in Indianapolis. Indiana polis, just like other cities in the US, has a huge

population that is living below the minimum wage bill. These people require healthcare, and for

a long time, Wishard has provided them with an opportunity to get healthcare even without

insurance based on its biblically guided principles of helping the needy (English Standard

Version, 2016, Galatians 6:2). The presence of these people has made Wishard continue

managing itself as a charity organization for it to help them.

The other issue in the environment is the presence of highly profit-oriented organizations around

it. Many of these hospitals, even though they offer quality services, they cannot be afforded by

many people who then opt for Wishard. This way, Wishard ends up continuing to be managed as

a charity for it to help these people.

Wishard’s strategic leverage

Even though Wishard health services seemed to go through a massive downfall due to its

business model, it still had some leverage over the other hospitals. First and foremost, the

hospital had a long time reputation of being a charitable organization offering service to the

indigent in the community. The hospital had been in the area for over 144 years, and hence many

people knew it and the services it offered. Its long existence was largely influenced by its

adherence to biblical values of helping the sick and needy (English Standard Version, 2016,

WISHARD’S STRATEGIC PLANNING 4

Philippians 2:4). With this aspect in mind, Wishard had a lot of clients every single day which

was not common in other hospitals which had to reduce costs, offer additional services like

meals and park as well as building and acquiring state of the art equipment to attract such a

number of patients (Patidar et al., 2016). Besides, being an old hospital meant that it had a lot of

investments made on it justified by the fact that it had a mental healthcare center, six community

clinics and 492 beds, which were huge resources at hand when compared to the other hospitals,

which were now building their facilities. All that these Wishard's facilities required renovation

and capacity development.

Besides, many people knew it offered less reputable services compared to the other

hospitals in the area, which meant they had little expectations whenever they visited it compared

to when visiting other newly built hospitals. Besides, Wishard was a property of Marion County

and a private healthcare provider. This aspect meant that on top of its revenue from patient bills,

it could get funds from the county to boost some of its projects such as buildings and drugs. The

fact that it was a county-owned charity hospital meant that it could also receive money from

well-wishers through fundraising. It did not have to stretch too much to make profits when

compared to other hospitals since it was a nonprofit entity. This aspect was a great advantage.

Problems associated with a stand-alone public hospital with a primary mission of serving

the indigent population

Stand-alone public hospitals like Wishard play a great role in improving community

members' health, especially people from vulnerable backgrounds. However, in the midst of doing

these acts of goodwill, these hospitals develop problems for themselves. For instance, Wishard

was having pressure surviving because it was making losses and had many of its capital projects

deferred. This aspect happens to most of these public hospitals because they usually attract

WISHARD’S STRATEGIC PLANNING 5

clients who are uninsured or underinsured, which, when coupled with the reduced reimbursement

from insurance programs, means that the hospital was making little or no income. Even if the

bible requires the services to be free, problems have arises (English Standard Version, 2016,

Mathew 10:8). Without income comes losses, which affect operations like offering quality

healthcare services, buying equipment, acquiring highly trained personnel, and venturing into

projects like refurbishing and building new units (Harrison & Association of University

Programs in Health Administration, 2016). Without these things in place, the patronage of

patients with insurance will be discouraged, meaning that high revenues will be far from coming.

Recommended strategic steps

To improve its financial status, there is no doubt that the hospital has to attract more

insured patients. Therefore, the first strategy that Wishard needs to put in place is overhauling its

physical status as well as its services. This aspect does not necessarily mean that the hospital

needs to build big facilities like mindless competitors. Still, rather it needs to renovate its

facilities at least and do an upgrade of its equipment. It also needs to hire more medical experts

to offer quality services to patients (Walston, 2018). This way, it will attract insured clients who

will pay handsomely and increase its revenue in the end.

Besides, the hospital's management needs to partner with other hospitals to help it in joint

ventures like purchases or drugs and sharing personnel. For instance, it can partner with another

private hospital nearby through which it could make bulk orders for drugs and equipment, share

specialized personnel, and even partner in treating conditions that it has no capacity to treat.

Even the bible acknowledges partnering is effective (English Standard Version, 2016,

Ecclesiastes 4:9). This way, it wouldn't have a lot of problems increasing its capacity.

WISHARD’S STRATEGIC PLANNING 6

The other good strategy is partnering with other charity organizations involved with

healthcare in the community. These organizations can fund some hospital projects and even pay

bills for the vulnerable patients visiting the hospital, hence reducing their burden of helping the

indigent people.

Strategic planning initiatives for the organization

Partnerships with other hospitals and charity organizations- partnerships are essential in

improving a hospital's capacity to serve many clients, improve their operations, and use

resources adequately (Walston, 2018). Partnering with other hospitals in their vicinity will help

them share some of the costs, such as equipment and specialists, which will help them save

money for other financial projects.

Training of personnel- the hospital does not have to hire trained personnel like other

hospitals. It can train its current personnel to be effective through seminars and continuous

professional education.

Reducing operational costs- the firm can reduce its operational costs related to running

facilities or services that can best be offered at other places. In the spirit of continuing to perform

its biblically justified mandate of helping the vulnerable, it should stop offering services offered

in other hospitals at the same price and only deal with expensive services in other hospitals

(English Standard Version, 2016, Hebrews 13:16). This way, it will reduce congestion in its

premises and costs associated with that.

WISHARD’S STRATEGIC PLANNING 7

References

Amelung, V. E. (2019). Healthcare management. New York: Springer.

Harrison, J. P., & Association of University Programs in Health Administration. (2016).

Essentials of strategic planning in healthcare (Vol. 1). Chicago, IL: Health

Administration Press.

Patidar, N., Gupta, S., Azbik, G., & Weech-Maldonado, R. (2016). Succession planning and

financial performance: Does competition matter?. Journal of Healthcare Management,

61(3), 215-227.

The English Standard Version. (2016). BibleGateWay.com. Derived on 27th July, 2020 from

https://www.biblegateway.com/passage/?search=Proverbs+19%3A17&version=ESV

Walston, S. L. (2018). Strategic healthcare management: Planning and execution. Health

Administration Press.

Wishard’s strategic planning Outline

 Wishard health service found in Indianapolis at Indiana is a public healthcare provider

helping the poor and vulnerable in Indiana get healthcare service.

 Even though Wishard had a lot of client because the poor people made the highest

number of patients in the area and were all directed to the hospital, there was mindless

competition for the insured and paying patient who seemed to drift to the new and fully

equipped hospitals.

 One of the environmental factor affecting Wishard’s management is the presence of a lot

of vulnerable people in Indianapolis.

 The other issue in the environment is the presence of expensive profit oriented

organizations around it.

 Even though Wishard health services seemed to go through a massive downfall due to its

business model it still had some leverage over the other hospitals in the area.

 Stand-alone public hospitals like Wishard play a great role in helping improve the health

of community member’s especially people from vulnerable backgrounds.

 To improve financial status there is no doubt that the hospital had to attract more inured

patients. Besides, the hospital’s management needs to partner with other hospitals to help

it in joint ventures like purchases or drugs and haring personnel.

 The other good strategy is partnering with other charity organizations involved with

healthcare in the community.

 Partnership with other hospitals and charity organizations- partnerships are essential in

improving a hospital’s capacity to serve many clients, improve it operations, and use

resources adequately (Walston, 2018).

 Training of personnel- the hospital does not have to hire trained personnel like other

hospitals.

 Reducing operational costs- the firm can reduce its operational costs related to running

facilities or services that can best be offered at other places.

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