Strategic Planning in Healthcare Organizations

a, b
Francisco de Paula Rodríguez Perera , Manel Peiró
a
Medtronic Ibérica, Madrid, Spain
b
Departamento de Dirección de Personas y Organización, ESADE Business School, Barcelona, Spain

Keywords
Strategic planning. Healthcare organization. Strategic areas and objectives.

Abstract

Strategic planning is a completely valid and useful tool for guiding all types of
organizations, including healthcare organizations. The organizational level at which the
strategic planning process is relevant depends on the unit's size, its complexity and
the differentiation of the service provided. A cardiology department, a hemodynamic
unit or an electrophysiology unit can be an appropriate level, as long as their plans
align with other plans at higher levels. The leader of each unit is the person
responsible for promoting the planning process, a core and essential part of his or her
role. The process of strategic planning is programmable, systematic, rational, and
holistic and integrates the short, medium and long term, allowing the healthcare
organization to focus on relevant and lasting transformations for the future.

Article
Aspects to consider before starting the strategic planning process
A thorough understanding of some of the conceptual aspects of strategic planning (SP) is essential before it can be
effectively implemented. Unless such understanding is achieved–which is not always the case–the process may be
approached in a superficial manner, which is a common cause for the failure of SP.

Definition of Strategic Planning

There are many academic definitions, as well as others which, although not academic, have been applied
successfully by those employing them.1 This demonstrates that what matters is the importance of the concept and
idea behind the definition, rather than the definition itself.

Strategic planning is the systematic and organized process whereby an organization creates a document indicating
the way it plans to progress from its current situation to the desired future situation. It is the set of decision-making
criteria and the decisions taken and implemented by an organization to definitively and permanently guide its
activities and structure.

We would like to highlight 2 important aspects:

 • First, it is assumed that the unit of production is not the individual but the organization. There is still a
long way to go before it is fully recognized that a health professional working alone, even with sufficient
material resources available, cannot solve all the challenges that arise in the current healthcare setting.

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  • Second, SP has a clear transformational purpose: a) it identifies the current characteristics specific to the
organization and the setting in which it operates; b) it generates a vision of how the organization wishes
to be in the future; and c) it also defines the roadmap and actions required to change the organization's
current situation to the desired future situation.

The following could serve as an academic definition of SP: “A proactive, structured process implemented by
organizations consisting of the dynamic use of specific selected external opportunities that engage and develop
internal competencies with the aim of fulfilling the organization's mission and creating value for its stakeholders”. 2

An alternative definition could be “A set of processes carried out to identify the future desired by the organization
and to develop guidelines for making the decisions leading to such a future. When an organization behaves
reliably and consistently over time, it can be said to have a strategy. The strategy is a means that the organization
chooses in order to move from its current situation to a desired situation in the future”. 3

The term “strategic” has 2 components that should be highlighted. The first refers to the decisive importance 4 that
should be placed on anything considered to have a strategic role. This role is frequently conferred on trivial
matters, which should be avoided to prevent misuse of the term. Secondly, the term “strategic” should only be
associated with the medium- and long-term future (3 years or more) in contrast to the term “operational”, which
applies to a time horizon of 1 year or less. “Strategic” denotes a highly substantial issue that cannot be associated
with the short term.

Why Should Healthcare Organizations Use Strategic Planning? Does it Matter?

There are 5 indicators that, in combination, would suggest the need for SP. 5

 • Increasingly informed, demanding and nonloyal clients (with the capacity to choose). If we assume that
patients are the only clients of a health organization (HO), it seems obvious that in the future the HO will
be treating patients who are increasingly better informed, aware of their rights, demanding, and with a
growing capacity to choose their healthcare provider, a decision that has consequences for financing the
HO.
 • Increasingly professional and skilled competitors. The system of resident physicians, access to updated
knowledge, and continuous training have led to the following: a) it is increasingly easy to find highly
qualified trained professionals outside the major centers of large cities; and b) the high level of
specialization and excellence among these professionals is increasingly widespread.
 • Limited resources for production. This factor needs little explanation, and even less in times of severe
economic crisis. A possible response to this situation is the increased obligation to allocate resources on a
rational basis, allowing only the best and most efficient HOs to remain.
 • Focus is shifted from the product or service to the client. The focus is no longer solely on the quality of
the product or service, but also on how this is transferred to the client and their experience. HOs no
longer simply focus on carrying out the processes to the best of their ability, but on achieving patient
satisfaction and obtaining the best results possible. What matters is not only what, but how.
 • Size and complexity of the HO. Increases in the size of the population, their needs, and the diagnostic and
treatment options offered has led to physical growth in the size of HOs and increased organizational
complexity. A clinical service may already be too large a productive unit, and decomposing it into highly
complex subunits may have to be considered. Another source of complexity arises from the need to act in
collaboration with primary care in relation to a range of diseases, especially chronic ones.

All these circumstances clearly affect HOs, immersing them in an environment of constant and sudden change
both in their external and internal circumstances, and those of their clients. In these circumstances, SP is a fully
applicable tool that is both useful and relevant to the HO. If SP is not conducted, then in a few years HOs could
become irrelevant or even cease to exist.

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Advantages, Drawbacks and Errors
Advantages

SP is a rational process that aims to bring the future closer and allows us to both study and conduct simulations of
the future. The process can reveal previously hidden opportunities or threats, 6 providing the option to act on them
early. Strategic planning establishes a clear and explicit framework with criteria for making day-to-day decisions
and identifying fragmentary and unaligned choices or personal value judgments, all of which facilitates and
simplifies managerial decision-making. The development of SP encourages the participation and commitment of
the entire HO in achieving the planned results, thus becoming an important element in institutional cohesion.
Finally, an organization that has good SP and applies it consistently offers a serious and credible external image
(corporate reputation).

Drawbacks

Strategic planning is definitely not a bed of roses. It is expensive, especially in the amount of time invested by
members at different levels of the organization, and may seem very tedious or a waste of time. Strategic planning
may uncover differences or conflicts that were more or less hidden and which the members had learned to live
with, thus making the situation during the process seem worse than before. Given that SP not an exact science, a
genuine fear is that even with good SP an organization may still fail. However, in changing or turbulent
environments, the risk of failure is obviously greater when no plan exists. 5

The Most Common Errors

Two common errors are not involving the right people and not addressing the really relevant issues due to their
being too burdensome or complex. Another error is the failure to link SP to organizing the resources (financial or
otherwise) needed to carry it out. Any strategic plan should be able to answer the question of how much it costs.
Perhaps the most common error is to put all the effort into the planning stage, but fail to put the plan into practice.
A variation of this is when its implementation is interrupted by the arrival of a new management team or head who
wants to restart the entire process.

Who Should Promote Strategic Planning in Healthcare Organizations?

At the highest director in the organization, the chief executive officer (CEO) has the duty to promote the SP
process and provides the organization with a plan for the future. 7 Such planning is the most important core
function of any CEO and is their raison d’être. Making plans for the future is probably the one function of CEOs
that cannot be delegated and may represent their biggest “gamble” as heads of organizations. The CEOs can and
should rely on their teams to create the plan and can also receive assistance from third parties (consultants).
However, neither the team nor consultants can replace their initiative when analyzing the current situation,
creating a shared vision of the desired future and identifying the best way to close the gap between reality and
desire. Strategic plans cannot be purchased. However, methodological support can be purchased to develop the
strategic plan. The executive board that does not plan (or buys a plan) is failing in its most fundamental task.

Organizational Level at Which Strategic Planning Is Appropriate

This issue does not have a single universally acceptable answer. In non-healthcare organizations, corporate SP is
characterized by being generated at the strategic apex of the organization and sets out the main strategic areas (SA)
that affect the entire organization without exception. Deriving from this, there may be a strategic plan for each
business area in which the corporation is active. In addition, each internal department may have a functional
strategic plan tailored to its needs. For example, a pharmaceutical company may have a global corporate strategy.
Depending on this strategy, the department of heart medicines may have another strategy that differs from that of
the department of drugs acting on the brain, which in turn could be different from the diabetes department, even
though the strategic plans for these 3 departments will be completely consistent with the corporate strategic plan.
Within the department of drugs acting on the heart, there may be a need to develop a strategic plan for Spain that
could differ from that for Pakistan. Thus, within a sufficiently large organization, distinct strategic plans may

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 coexist at different levels. The only requirement is that each of the strategic plans is consistent and aligned with
any other or others at higher levels.

The same criterion should be applied in the HO. Thus, the Ministry of Health or Health Department should have a
strategic plan and, within the Health Department, the regional health service should also have a strategic plan that
is aligned with the former body. In turn, there could logically be a strategic plan for specialized care and, within
this, a specific hospital could have a strategic plan. The only qualification for the implementation of strategic plans
is that they should be well aligned with one other and not be in conflict or divergent. The justification for their
existence is that that they pertain to a structure which, even though subordinate, is sufficiently large, complex and
different from the rest of the organization.8 From this point of view, an integrated management unit, a clinical
institute or a clinical service, depending on its complexity, may well need its own strategic plan which will differ
from the current higher-level strategic plan. The only methodological requirement is that it is aligned with the
higher-level strategic plan and is not in conflict or divergent. In recent years, and within the hospital-based
cardiology, SP has been conducted for subunits such as hemodynamics, electrophysiology, clinical cardiology,
noninvasive diagnosis, etc. Strategic planning is relevant when the subunit is sufficiently large, complex and
specific, is clearly different from the rest of the service, and the plan is consistent with the higher-level strategic
plan.

Organizing the Strategic Planning Process

There should be a steering group within the HO to lead the development and implementation of a strategic plan 6;
this group should represent all interests and include people with leadership skills. Ideally, this group should be led
by its chief representative, who will act as the driving force and display strong commitment to the project and
should include someone who is familiar with SP methodology. The group must have real executive power to avoid
being perceived as a mere planning entity.

When the HO is sufficiently large, it is very useful to provide a specific physical space (the SP Office), which is
the epicenter of the planning process. Sometimes an “external facilitator” for SP is contracted; this is the person in
charge of organizing, motivating, and networking all actions, giving them shape and connecting them in time and
space. When required by the circumstances, this is a role often assigned to a consultant.

To address the different aspects of analysis and generate ideas, working groups have to be created that report to the
steering group. These should be cross sectional and well coordinated to avoid duplicating work and to fully focus
on the assigned tasks. The number of these groups will increase, the greater the size of the HO for which they are
attempting to plan.

One aspect that may adversely affect the planning process is associated with the relative lack of strategic thinking
among the health workers in the HO service.9 Healthcare professionals manage short-term situations very
effectively and make quick decisions based on current diagnosis and treatment models and algorithms, which
serve as a guide in taking clinical decisions. The long-term features very little in their daily work, which requires
practical and immediate answers to specific problems that are usually tangible and quantifiable. Their work is
usually efficient within the known, due to its repetitive nature. In contrast, physicians manage uncertainty and
vagueness with difficulty and do not go looking for problems as these tend to arrive on their doorsteps and are
usually routine. Physicians have a working philosophy of “hands-on” and “first line of action.” Strategic planning
may present them with a challenge because they have to face problems that are not well defined, have no known
precedents, evolve unpredictably, are barely quantifiable, and yet require a response. Physicians have problems
dealing with ambiguity and problems that cannot be systematized.

To minimize any undesirable effects, the difference between the professional skills specific to physicians in the
HO services and those required when they are placed in the position of participating in or leading a strategic plan
should be taken into account.

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The process of strategic planning

The SP process is divided into successive phases, although it is recognized that progress may involve the need to
return to some earlier stage in order to fine-tune it. The literature provides different names for distinct phases. This
article takes a classical approach, which continues to be valid, identifying 5 stages in the process.

Defining the Mission, Vision and Values

Mission

This is a written statement that defines the final aim of the HO, that is, its reason for being.10Classically, this
statement defines the overall purpose of the organization, the target clients, the services offered, its distinguishing
features, the geographical area in which the HO operates, and sometimes the way it operates (quality, ethics,
efficiency, etc.).

The mission statement should be short, clear and concise and its content should be shared throughout the entire
HO. It should avoid any ambiguities and clichés that may hinder differentiating and identifying the organization.

The mission statement should be disseminated throughout the HO such that all the workers effectively know it by
heart. In this sense, after its successful development and dissemination, it can become a rallying point for cohesion
within the HO. In addition, clients can be informed of the mission statement as a formal declaration of
commitment to a task and its recipients.

Vision

The vision statement is a written statement that presents the future image of the HO after the transformation
process. The content of the vision statement should reveal what the HO specifically aspires to be in the future. It
should also serve as an inspiration and pose an attractive and motivating challenge to be shared by the members of
the HO. They should feel that this vision is achievable and that it is exciting to work with something that, currently
just a vision, will be transformed into a reality.

Like the mission statement, the vision statement should be as short and well defined as possible so that the
members of the HO can clearly visualize what the organization aspires to be in the future.

A well-formulated and widely shared vision statement exerts a powerful pull on all of the HO's members, who will
thus be able to clearly see where the projects are heading.

Values

Values are the set of principles, rules and cultural aspects governing the HO and determining their institutional
behavior. They constitute the organization's ethical code that gives it its “soul” and “character”. These values
predict a specific response by the HO when a situation arises that must be immediately resolved.

The values must be shared and widely disseminated.

The real values of an organization are those that actually govern its behavior and decision-making processes,
whether they are formally stated or not.

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Strategy Formulation

The second phase of SP has 5 stages.

First Stage: Analyzing the External Environment

This analysis provides information on everything external to the organization that can influence it, but which the
organization cannot change. The analysis of the environment focuses on 4 components:

 • Clients: it is essential that the HO identify its clients and what they can expect. They should be segregated
using the criteria appropriate to each case (demographic, socioeconomic, etc.). It may be of interest to
include in the client category other bodies relevant to the HO setting, such as the center's management or
the clinical services that refer patients or receive them.
 • Competitors: they must be clearly identified and analyzed to identify the features that distinguish them
from the HO and what makes them better or worse than the HO. Competitors are a major source of
learning for the HO.
 • Providers: the HO should characterize and differentiate their suppliers, which are the source of necessary
resources (goods and services) and which can have a significant influence on the quality and cost of the
services provided. Recently, some providers have attempted to occupy a significant position in the
production network in genuine collaboration with their clients to establish long-term partnerships that
benefit both parties.
 • Owners: this term refers to the person, company or government body (public or private) that has
ownership equity of the HO. The HO must clearly identify and understand their objectives and timing,
and also understand the circumstances surrounding the activity to deal with expectations.

These four dimensions are those that form what is classically called the “business sector” and provide a good
picture of the environment in which it operates. In addition to this static description, Porter 11 proposes a more
dynamic complementary analysis, which considers 5 environmental aspects: a) rivalry between competitors in the
sector; b) entry barriers to the sector, their importance and characteristics; c) the threat of alternative products or
services; d)supplier bargaining power; and e) client bargaining power.

Second Stage: Analyzing the Internal Environment

This analysis provides information on everything relevant that has occurred and occurs within the HO. It is
accepted that the HO has the complete ability to act, transform and change its internal environment. This analysis
focuses on 4 different aspects:

 • Resources: an analysis is made of the HO's available resources, including people, financial budgets,
structural resources (plant, facilities and equipment) and their degree of obsolescence, and organizational
resources. Organizational resources may not be analyzed in sufficient depth, which would be a waste of
the organization's enormous potential for improvement.
 • The legal situation: an analysis is conducted of the current regulations affecting performance, particularly
those limiting or guiding it. If the question arises of whether to include this aspect in the environmental
analysis (certain regulations cannot be changed from within the organization), the answer is that there is
no methodological obstacle to doing so, although the impression must be avoided that nothing can be
done about them, which is often not true.
 • Other power groups within the HO: trade unions, professional associations, internal decision-making
bodies, clinical commissions, informal power groups, etc, may play a role in the life of an HO and, if so,
it is important to analyze their degree of influence and impact on operations.
 • Analysis of clinical care, training and research activity: without doubt, this is the part of the HO's internal
analysis with the greatest scope. It is important that the analysis is conducted over a long enough period
to detect trends that may motivate taking strategic decisions. This analysis has to be addressed from the
perspective of the quantity, quality and cost of production; comparing the HO's data to standard data and
data from competitors is of maximum utility. The analysis of activity should not simply produce an

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 avalanche of data but must be synthesized to highlight what is relevant and bring out any need to take
strategic decisions.

The validation of the current list of services, defined as the set of different services offered to the clients, is an
aspect that is often glossed over in analysis of activity. The list is usually determined by demand and habit, rather
than by periodic critical review. Setting out of the list of services is probably the biggest exercise in resource
allocation carried out in a HO, and should not be left out of the critical analysis during the SP process.

Third Stage: The SWOT matrix

Once the exterior and interior analyses have been completed and integrated, the strategic plan steering group will
now have a wealth of ideas about possible strategic actions that could be addressed in the strategic plan. At this
point, the issues identified in the analysis are classified into four categories to better understand what to do and in
what order. This is the SWOT analysis, an acronym formed from strengths (S), weaknesses (W), opportunities (O)
and threats (T), which classifies the results of the analysis.

The external analysis identifies both the opportunities offered by the environment that the HO should take
advantage of and use to design its action plans, in addition to threats to the HO from which it should protect itself
and minimize their potential impact. The internal analysis identifies weaknesses, which are issues that the HO
should try to limit or correct, and strengths, which should be the subject of strategic actions to consolidate and
develop them, and from which the maximum performance should be obtained. Depending on the importance that
each organization gives to each of the results, in addition to classifying them using SWOT criteria, they can be
weighted in terms of importance or relative intensity (high, medium and low; +, ++ or +++, etc.), which allows the
planning team to establish a ranking, with the most important factors ranked in the first position, oriented to
strategic priorities.

Fourth Stage: Strategic Alternatives

Throughout the process developed so far, the planning team has been able to generate numerous alternative
strategic actions. All these proposals are now formally entered in a document, without judgment regarding their
feasibility or relevance, and where no idea is rejected without due consideration.

Armed with this set of proposals, the strategic plan steering group begins a process which classifies and groups
them into more or less defined areas of action. These areas of action are also simultaneously identified and named
depending on the type of proposals they contain.

Based on the various discussions that have identified them, the strategic action selection process is fine-tuned;
some proposals are discarded whereas some are linked to other proposals, thus better defining the fields of action
each time. At this stage, the wide range of options for action that were originally suggested are narrowed down to
some extent, leaving aside those that clearly do not meet the minimum conditions of feasibility or do not have the
desired scope.

The strategic plan steering group concludes this stage with a set of no more than 20 areas of action, which
constitute the strategic options from which the subset that will definitely form the final strategy formulation is
chosen.

Fifth Stage: Strategic Areas and Objectives

The strategic plan leader and steering group now choose the few areas on which to focus the strategic action of the
HO during the coming years. These are what are classically called SA, which must bring together the following
features:

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  Number: there should only be a few (<10) SA, preferably about 5 or 6, to ensure that the HO effectively
invests its effort, concentrating on a few strategic areas and sacrificing the rest for future planning. The
desire to do everything blurs the desired strategic direction and reduces the pressure that can be brought
to bear on each point.
 Duration: the SA must remain active for the duration of the strategic plan. Thus, the areas for action chosen
have to be those that will be open to intervention over this entire period. An SA has no expiration date in
a strategic plan, except under very exceptional circumstances, as discussed below.
 Name: in line with the above 2 points, the name of the SA should be generic, such that it refers to one area
of action alone and is not oriented toward a particular action. For example, it would be better to talk about
“Quality” rather than “Plan for Improving Quality”, as the former term can include the latter, as well as
other actions.

Once the SAs have been identified and denominated, the classically named strategic objectives (SO) are assigned
to them, which are wide-ranging actions performed within a specific SA. The number of SO assigned to each SA
should not exceed 5, and like them, should be conceived in such a way that they are valid for the entire lifetime of
the strategic plan. The drafting of the SO should make relatively explicit the actual direction to be followed within
the SA. Its formulation is much more specific and recognizable in practical terms, although it still retains its
strategic character. Imagine that we are in the SA “Quality”; an SO could, for example, be “Accredit the HO and
retain its accreditation”.

The SA and SO together in an organization constitute what is called its strategy formulation, which should only
fill 1 or 2 pages and make explicit the strategy of the HO.

At this point, it is advisable to fine-tune the strategy formulation developed, based on the perspective proposed by
Porter,12 to see if in fact a strategy exists by asking the following questions:

 Does the formulation provide a strategic proposal that will lead the HO to a genuinely unique position
compared to the previous position and to that of the competitors?
 Does it offer value in a different way?
 Have any decisions been taken that involve other actions being stopped? Will services be cut?
 When certain activities stop, does that change the way operations are performed?
 Are the strategic choices that have been made valid in the long term?

If there are negative replies, the formulation should be reviewed to check whether, instead of forming a strategic
plan, a plan has been created with a far more limited scope.

Operational Planning

The aim of operational planning is to make each SO absolutely specific, practical and recognizable. The way to do
this is by assigning operational objectives (OO) to each SO. In the draft, the OOs must be completely clear and
specific such that the reader can identify exactly what is intended. Statements such as “increase the number of X
by 20%”, “reduce the number of appointment errors below 1%” or “reduce delays on the waiting list to a
maximum of 60 days” should be used and expressions like “strengthen”, “improve” or “coordinate” should be
avoided.

The OOs bring together the following characteristics:

 They must have a fixed and recognizable duration, always less than 1 year. Intermediate goals can be
established to be carried out in different stages over time.
 They should be clearly quantified. To track their degree of completion, indicators that measure this are
frequently needed.
 They should be challenging and keep the HO in a state of alert in order to achieve them.

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  As a qualification to the foregoing, the OO should be achievable. It would be unreasonable to have OOs
that are a priori unachievable, because the HO would slacken and decrease its efforts. An excessively
demanding OO has a contradictory effect and demotivates the HO.
 Each OO must have a designated person in charge, who really has the power to alter the performance of the
unit or subunit.
 Each OO must have a cost assigned to its implementation, such that the total cost of all the OOs is equal to
the total cost of the strategic plan.
 Each OO must have the funding and other resources (staff time, equipment, etc.) necessary to achieve the
objectives.

Once all the OOs are formulated, the implementation of each has to be integrated with that of the others within a
time-line of action that includes all of them and provides an overview of the links, timing and sequence of tasks, as
well as the combined efforts that the HO has to perform at every stage.

Assessing the Results

Formulating a strategy is always a gamble whose outcome is uncertain. Although the technique and the planning
method may have been ideal, it remains an imperfect process due to various factors: a) the strategic choice may
not have been the best; b) some factors may not have been sufficiently evaluated; c) implementation errors may
have been made; d) the expected impact of the actions chosen may not have the scope initially envisaged;
and e) during the implementation of a strategic plan, the external environment or the HO may undergo changes
that invalidate or modify the initial analysis.

Thus, the way in which the steering group plans to keep track of the degree to which the objectives have been
reached is an inseparable part of the strategic plan. Tracking is done by obtaining internal information based on a
dashboard system that includes the indicators defined in the OOs. External information should also be obtained to
detect changes in the environment that may involve substantial changes to the information used to establish the
strategic priorities.

When tracking, the steering group must ensure that an overload of information is not generated and that indicators
are grouped into logical and consistent sets, which are as integrated as possible. In addition, the steering group
must design an appropriate information distribution tree for each HO management center and ensure that each OO
leader has the necessary information available.

Assessing the results of the strategic plan should be done on a collective basis by the strategic plan steering group
and each working group, at least once every quarter.

Based on these assessments, changes to one or several of the original OOs may be proposed to the strategic plan
steering group and these changes may be accepted or rejected.

Reformulating the Strategy

The last part of the strategic plan concerns its capacity to have its more strategic aims modified. If there are
warnings that OOs grouped around a particular strategic plan are having to be systematically changed, one
possible explanation is that the SO itself has been poorly chosen.

The strategic plan should have the capacity to allow this change to occur, although the need for change should be
compelling and the reason for change should be thoroughly documented. An SO should only be changed after
deviations have been regularly observed over 1 year, or when significant changes, unforeseeable during the initial
planning stage, have occurred in the environment or in the HO.

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 Several SOs may undergo systematic failures in the same SA, leading to the possibility that the SA itself is
incorrect or that it has been undermined by internal or environmental changes. Then and only then should the
strategic plan steering group change that particular SA. These changes should be made as a last resort.

Conclusions
Strategic planning is a useful tool for steering HOs, which may include a cardiology or a specialized unit (eg,
electrophysiology) in certain circumstances. The unit leader is in charge of planning, which is a systematic,
rational and integrative process that focuses the organization on the necessary, relevant and sustainable
transformations for the future.

Conflicts of interest
None declared.

Corresponding author: María de Portugal 11, 28005 Madrid, Spain. [email protected]

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