Healthcare Strategic Planning
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American College of Healthcare Executives
Management Series Editorial Board
Alan O. Freeman, fache, Chair
Big Springs Medical Association, Ellington, MO
Carolyn C. Carpenter, che
Duke University Hospital, Durham, NC
Ralph H. Clark, Jr., fache
Eastern Health System, Inc., Birmingham, AL
Terence T. Cunningham, III, fache
Ben Taub General Hospital, Houston, TX
Sandra A. DiPasquale, dr.p.h., fache
Community Health Center of Buffalo, Inc., Buffalo, NY
James L. Goodloe, fache
Tennessee Hospital Association, Nashville, TN
Debra L. Griffin
Humphreys County Memorial Hospital, Belzoni, MS
Nick Macchione, che
San Diego Health & Human Services Agency, San Diego, CA
Gerald J. Maier, fache
OU Medical Center, Oklahoma City, OK
Mikki K. Stier, fache
Broadlawns Medical Center, Des Moines, IA
Warren K. West, che
Copley Health Systems, Inc., Morrisville, VT
Alan M. Zuckerman, fache
Health Strategies & Solutions, Inc., Philadelphia, PA
H E A LT H C A R E
S T R AT E G I C
PLANNING
Second Edition
Alan M. Zuckerman
Health Administration Press
Chicago, Illinois
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do not represent the official positions of the American College of Healthcare Executives
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Copyright © 2005 by the Foundation of the American College of Healthcare Executives.
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09 08 07 06 05 5 4 3 2 1
Library of Congress Cataloging-in-Publication Data
Zuckerman, Alan M.
Healthcare strategic planning / Alan M. Zuckerman.—2nd ed.
p. cm.
Includes bibliographical references.
ISBN 1-56793-237-1
1. Health services administration. 2. Strategic planning. I. Title.
RA971.Z793 2005
362.1'068—dc22
2004060621
The paper used in this publication meets the minimum requirements of American National
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ANSI Z39.48-1984. ∞
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Health Administration Press
A division of the Foundation of the
American College of Healthcare Executives
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Chicago, IL 60606-4425
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Contents
Acknowledgments vii
Preface ix
1. Is Strategic Planning Still Relevant? 1
2. Organizing for Successful Strategic Planning:
12 Critical Steps 15
3. Activity I: Analyzing the Environment 27
4. Activity II: Identifying Organizational Direction 45
5. Activity III: Formulating Strategy 61
6. Activity IV: Transitioning to Implementation 79
7. Major Planning Process Considerations 97
8. Realizing the Benefits from Strategic Planning 111
9. Making Planning Stick: From Implementation to
Managing Strategically 127
10. The Annual Strategic Plan Update 143
11. Encouraging Strategic Thinking 153
12. Future Challenges for Strategic Planning and Planners 167
About the Author 179
v
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Acknowledgments
I hope you enjoy the second edition of Healthcare Strategic Planning
as much as I enjoyed writing it. I appreciate all of the suggestions and
ideas given to me over the past six years by my clients, students in my
ACHE courses, and colleagues. As a result of their input, this new edi-
tion is a much better guide to healthcare strategic planning.
There are three groups I would particularly like to acknowledge for
their contributions to this second edition. First of all are my clients
from the past six years, and especially those organizations that gener-
ously allowed me to share aspects of their strategic plans and processes
with the field. They include the following:
• Chester River Health System, Chestertown, Maryland
• Covenant Healthcare System, Inc., Milwaukee, Wisconsin
• Health First, Inc., Melbourne, Florida
• High Point Regional Health System, High Point, North Carolina
• Stillwater Medical Center, Stillwater, Oklahoma
• Cortland Memorial Hospital, Cortland, New York
• AtlantiCare, Egg Harbor Township, New Jersey
• Exempla Healthcare, Denver, Colorado
• Barnes-Jewish Hospital, St. Louis, Missouri
• Pinnacle Health System, Harrisburg, Pennsylvania
Second are my colleagues at our consulting firm, Health Strategies
& Solutions, Inc. Particular kudos go to Susan Arnold, director of
marketing and editor supreme, for fixing my errors and filling in the
vii
viii a c k n ow l e d g m e n t s
blanks (of which there were many) in the first draft, and Christine
Passaglia, typist extraordinaire, who rarely fussed about my handwrit-
ten manuscript, even though my handwriting deteriorated with each
new chapter and I reneged (again!) on my promise to type my first
draft on the computer.
The third group is, of course, my family, for allowing me to spend
so much time on this and other “volunteer” activities. Thanks Rita,
Seth, and Joanna for letting me do my thing, again.
Alan M. Zuckerman
Philadelphia, Pennsylvania
December 2004
Preface
Since the publication of the first edition of Healthcare Strategic
Planning: Approaches for the 21st Century in 1998, I have been pleased
and a bit overwhelmed by the response of healthcare professionals to
this book. Many have told me how helpful it has been to them and
their organizations. Quite a few have remarked on how simple, straight-
forward, and practical the book is. A number have made suggestions
for improvement based on their own experiences.
I’ve been gathering ideas for improving the book for six years. When
Health Administration Press approached me about updating it, I was
quite prepared. Now that the manuscript is done, I am amazed at how
much has been added and changed since the first edition. This second
edition of Healthcare Strategic Planning is truly new and improved. I
hope it will be as useful and helpful to the field as the first edition was.
What has been retained in the second edition is the basic structure
of the recommended strategic planning approach. Chapters 3 through
6, which review each component of the strategic planning process, and
chapters 2 and 7, which address preplanning preparation and planning
process issues, will at first glance appear remarkably similar to the same
chapters that appeared in the first edition. But each of these chapters,
as well as Chapter 1, present significant and important new material.
• Chapter 1—Is Strategic Planning Still Relevant? The second part
of this chapter is completely new. Key additions include a
description of what is effective strategy, an enumeration and dis-
cussion of the problems that limit the effectiveness of strategic
planning so that approaches can be developed at the outset of
ix
x p r e fa c e
planning to anticipate and avoid the problems, and an outline of
how strategic planning has changed in healthcare organizations,
especially in the past five years.
• Chapter 2—Organizing for Successful Strategic Planning: 12 Critical
Steps. The main changes in this chapter are the additions of sec-
tions on the leadership role of the CEO in strategic planning and
the importance of a designated strategic planning facilitator.
• Chapter 3—Activity I: Analyzing the Environment. A number of
exhibits have been added related to the data needs for the envi-
ronmental assessment. The future-oriented parts of the environ-
mental assessment, assumptions about the future, and
identification of planning issues have been completely updated,
including new illustrations and examples.
• Chapter 4—Activity II: Identifying Organizational Direction. All of
the examples of mission, vision, strategy, and values statements
have been updated and improved, and much of the guidance
material about how to develop these statements has been
reshaped and sharpened.
• Chapter 5—Activity III: Formulating Strategy. Perhaps the most
confusing part of strategic planning is how to define the critical
strategic issues and what to do about them. These issues are
addressed directly in the new Chapter 5 and are accompanied by
new examples of potential outputs of this activity.
• Chapter 6—Activity IV: Transitioning to Implementation. The tran-
sition from planning to implementation has proven to be a diffi-
cult task for many organizations. New, more specific guidance on
this topic is provided in this chapter, including an updated
implementation plan format, transition management guidelines,
and a detailed description of how to communicate and roll out
the plan’s findings and recommendations to stakeholders.
• Chapter 7—Major Planning Process Considerations. The last of the
chapters updated from the first edition presents extensive new
material on the facilitator’s role and facilitation processes in
strategic planning and the important topic of making effective
use of planning teams in the process.
The second edition replaces the case studies that appeared in chap-
ters 8 to 11 of the first edition with specific topical discussions of areas
that were discussed briefly in the first edition. Chapter 12, which addresses
future challenges, is substantially revised.
p r e fa c e xi
• Chapter 8—Realizing the Benefits from Strategic Planning. This
chapter argues that strategic planning needs to produce tangible,
important benefits to remain relevant and suggests that most
healthcare organizations should attempt to realize benefits in four
broad categories: products/markets, finances, operations, and
community health.
• Chapter 9—Making Planning Stick: From Implementation to
Managing Strategically. This chapter makes the case for changing
strategic planning from a periodic event to an ongoing manage-
ment process to achieve full realization of the benefits of strategic
planning. The emerging concept of strategic management is
described and discussed as the new model for achieving this
change in perspective. Detailed guidelines are presented on
implementation management as a crucial component of strategic
management.
• Chapter 10—The Annual Strategic Plan Update. Today, many
healthcare organizations conduct an annual planning update.
This topic, only briefly discussed in the first edition, is accorded
full treatment in the second edition, including both the content
and process for the annual update. Three short case studies, rep-
resenting three alternative update paths, are also provided.
• Chapter 11—Encouraging Strategic Thinking. Strategic planning
has been criticized for being too static—evolutionary rather than
revolutionary even in times of great external change. Processes to
encourage more farsightedness, creativity, and responsiveness to
the nature and rate of change in the healthcare field are described
in this chapter.
• Chapter 12—Future Challenges for Strategic Planning and
Planners. Two entirely new sections are added to this chapter:
material that represents the latest thinking on how to move
strategic planning from its present state in healthcare to a more
continuous, iterative model (building especially on chapters 9 to
11) and how the role of planners needs to change in response to a
new model of strategic planning.
Ad hoc planning, educated guesses, and intuition have allowed some
organizations to survive, although many have succumbed to the most
recent wave of hospital and system consolidation and closure. These
approaches alone will not serve healthcare organizations well as they
contend with an increasingly competitive and financially unstable oper-
xii p r e fa c e
ating environment. I fervently believe that planning that is truly strategic
—envisioning a desired future that may challenge conventions and
then crafting creative and ground-breaking strategies that will take
organizations there—will distinguish those providers at risk for clo-
sure from those who will thrive. I hope this book will be a call to action
for healthcare executives and will help to inspire and motivate them
to use strategic planning to lead their organizations into a new cen-
tury of serving the healthcare needs of their communities.
Chapter 1
Is Strategic Planning Still Relevant?
“If you don’t know where you’re going, any path will
take you there.”
—Sioux proverb
“Every moment spent planning saves three or four in
execution.”
—C. Greenwalt (quoted in Fogg 1994)
Strategic planning remains an important and frequently used
management tool, both inside and outside healthcare. Despite its preva-
lence and prominence, evidence of its effectiveness is mixed. Ginter,
Swayne, and Duncan (2002) note that, “After almost three decades of
research, the effects of strategic planning on an organization’s per-
formance are still unclear. Some studies have found significant bene-
fits from planning, although others have found no relationship, or
even small negative effects.”
Although academicians and pundits are divided on the bottom-line
performance of healthcare strategic planning, executives and managers
on the front lines of healthcare delivery argue that strategic planning is
still relevant and a central management and governance discipline, espe-
cially in the rapidly changing operating environment. According to
Thomas C. Dolan, Ph.D., FACHE, CAE, president and CEO of the
American College of Healthcare Executives, “Ten to 20 years ago, a trend
in one part of the country might take years to get to your area. Today,
that can happen in a matter of months, and you need to be prepared”
(Trustee 2004). Bellenfant and Nelson (2002) note that, “Too often
strategic planning fundamentals . . . are neglected during times of
1
2 h e a lt h c a r e s t r at e g i c p l a n n i n g
high pressure and crisis. Yet the stronger an organization is at develop-
ing and implementing a strategic plan, the better it can anticipate the
environment’s changing demands and opportunities.”
My unscientific observations of the field indicate that strategic plan-
ning is practiced with regularity by a majority of healthcare organiza-
tions. Some organizations carry out strategic planning on an ongoing
basis, much as they perform financial planning. Others completely
update their strategic plans every three to five years and carry out a
variety of related activities between major updates. Still others may
develop a strategic plan periodically, perhaps precipitated by the arrival
of a new CEO or a change in board leadership. While the scope and
extent of strategic planning vary widely in the field, most healthcare
leaders view it as a necessary and important practice.
STRATEGIC PLANNING IS . . .
The concept of strategy has roots in both political and military his-
tory, from Sun Tzu to Euripides (Duncan, Ginter, and Swayne 1995).
The Greek verb stratego means “to plan the destruction of one’s ene-
mies” (Bracker 1980). Many terms associated with strategic planning,
such as objective, mission, strength, and weakness, were developed by
or used in the military (Duncan, Ginter, and Swayne 1995).
A number of definitions have evolved to pinpoint the essence of
strategic planning. According to Ginter, Swayne, and Duncan (2002),
“Strategic planning is the set of organizational processes for identify-
ing the desired future of the organization and developing decision
guidelines.” Those authors also note that, “When an organization
exhibits a consistent behavior it has a strategy,” and “A strategy is the
means an organization chooses to move from where it is today to a
desired state some time in the future.”
Beckham (2000) describes a true strategy as “a plan for getting from
a point in the present to some point in the future in the face of uncer-
tainty and resistance.” Campbell (1993) adds the concept of measure-
ment to his definition: “Strategic planning refers to a process for
defining organizational objectives, implementing strategies to achieve
those objectives, and measuring the effectiveness of those strategies.”
Evashwick and Evashwick (1988), incorporating the concepts of
vision and mission in their definition, define strategic planning as “the
process for assessing a changing environment to create a vision of the
future, determining how the organization fits into the anticipated envi-
i s s t r at e g i c p l a n n i n g s t i l l r e l e va n t ? 3
ronment based on its institutional mission, strengths, and weaknesses;
and then setting in motion a plan of action to position the organiza-
tion accordingly.”
Strategic Planning Outside Healthcare
Strategic planning has been used in the business sector since the mid-
twentieth century. The concept of planning, programming, and budg-
eting systems was introduced in the late 1940s and early 1950s and used
only sparingly by business and government. In the 1960s and 1970s
leading firms such as General Electric practiced strategic planning, pro-
moting the merits of providing a framework beyond the 12-month cycle
and a systematic approach to managing business units (Webster, Reif,
and Bracker 1989). Strategic planning in the 1980s and 1990s was based
on corporate market planning, which emphasizes maximizing profits
through identification of a market segment and development of strate-
gies to control that segment (Spiegel and Hyman 1991).
In today’s business sector it is common to hear that things are chang-
ing too quickly to make strategic planning worthwhile. Real-time
processes are thought to be the antidote for dealing with rapid market
shifts and competitor moves. Quick reactions are valued more than well-
reasoned responses (Rheault 2003). Einblau (2003) counters this rea-
soning with the point that change is always inevitable—sometimes it
happens quickly and other times it slowly evolves, but it always happens:
Our external environment is one of market uncertainty, international
political unrest, and shifting social values; current economic imbal-
ances will continue to occur and will continue to be managed. This
is why it is important that we envision our desired future and then
plan the strategies needed to get us there; otherwise we will always
be accepting the future someone else has worked to make happen,
and in business, that “someone else” is usually a competitor.
Hamel (1996) notes that most strategic planning is not strategic. He
stresses that only a portion of an industry’s conventions are ever chal-
lenged and that the planning processes harness only a small amount
of an organization’s creative potential. Hamel suggests that most strate-
gic planning can be characterized as ritualistic, reductionist, extrap-
olative, positioning, elitist, and easy; instead, strategic planning should
exhibit the qualities of being inquisitive, expansive, prescient, inventive,
4 h e a lt h c a r e s t r at e g i c p l a n n i n g
inclusive, and demanding. Hamel (1996) also emphasizes that strategy
making is assumed to be easy, which of course it is if organizations
limit the scope of discovery, breadth of involvement, and amount of
intellectual effort expended.
Many organizations are now finding that strategy development needs
to be reintroduced and reinvigorated (Rheault 2003). And despite the
uncertainties about its value, strategic planning is being used with some
frequency. A 2003 survey by the Buttonwood Group of 225 U.S. com-
panies (the average company having more than 3,000 employees and
$850 million in sales) revealed that the annual strategic plan required
10.5 days of work for about 22 percent of that company’s employees.
The average company in the survey spent $3.1 million to produce the
plan (Taub 2003).
Healthcare Strategic Planning
Strategic planning has been used by healthcare organizations some-
what sporadically since the 1970s, oriented toward providing services
and meeting the needs of the population. As illustrated in Figure 1.1,
prior to the 1970s hospitals were predominantly independent and not-
for-profit, and healthcare planning was usually conducted on a local
or regional basis by state, county, or municipal governments. In the
fee-for-service, cost-plus reimbursement environment there was little
need for formal strategic planning.
From the 1970s through the early 1980s, regulation became more
prominent, but the fee-for-service system ensured steady revenue
sources. When strategic planning was conducted, it often focused on
facilities, with the prevailing notion that, “If you build it, they will
come.” The 1990s were characterized by the chaos generated from the
emergence of managed care and competition among providers that had
previously been collegial. Strategic planning conducted in the 1990s
featured a heavy emphasis on maximizing reimbursement.
Chaos is still evident in twenty-first-century healthcare organiza-
tions as they continue to contend with competition and reimburse-
ment issues and the added challenge of an increasingly dynamic
environment. Technology advances; new competitors, such as physi-
cian entrepreneurs and for-profit niche providers; demands for demon-
strated quality and increased attention to patient safety and convenience;
and the current nursing crisis and looming physician shortage have
converged to create an environment in which hospitals and systems
i s s t r at e g i c p l a n n i n g s t i l l r e l e va n t ? 5
Figure 1.1: Healthcare Strategic Planning: A History
2000+
Chaos +
1990s
• Dynamic
environment
1970 to Chaos
early 1980s • Competition
• Managed care Strategy =
• Regulation • Uncertainty Contingency-
Pre-1970 based
• Fee for service
approaches
• Fee for service Strategy =
• Cost plus Maximize
Strategy =
reimbursement reimbursement
Build it (facilities)
and they will come
Little need for
strategic
planning
© 2004 Health Strategies & Solutions, Inc.
must be prepared to cope with a variety of contingencies that can best
be managed by a comprehensive and sound strategic plan.
THE STRATEGIC PLANNING PROCESS
Many variations of a strategic planning model have emerged in both
the business and healthcare sectors, but the basic model has remained
relatively unchanged since its inception. Two similar versions of strate-
gic planning emerged in the 1980s. Sorkin, Ferris, and Hudak (1984)
presented the following basic steps of strategic planning:
• Scan the environment;
• Select key issues;
• Set mission statements and broad goals;
6 h e a lt h c a r e s t r at e g i c p l a n n i n g
• Undertake external and internal analyses;
• Develop goals, objectives, and strategies for each issue;
• Develop an implementation plan to carry out strategic actions;
and
• Monitor, update, and scan.
Simyar, Lloyd-Jones, and Caro (1988) tailored the process to health-
care strategic planning.
• Identify the organization’s current position, including present
mission, long-term objectives, strategies, and policies;
• Analyze the environment;
• Conduct an organizational audit;
• Identify the various alternative strategies based on relevant data;
• Select the best alternative;
• Gain acceptance;
• Prepare long- and short-range plans to support and carry out the
strategy; and
• Implement the plan and conduct an ongoing evaluation.
For the purposes of this book these various steps of strategic plan-
ning have been synthesized into the four stages illustrated in Figure
1.2. The first stage is the environmental assessment that focuses on the
question of where we are now; it includes four activities:
1. Organizational review, including mission, philosophy, and culture;
2. External assessment of the market structure and dynamics;
3. Internal assessment of distinctive characteristics; and
4. Evaluation of competitive position, including advantages and dis-
advantages.
The goal of the environmental assessment is to determine which
factors are subject to the organization’s control and how external forces
will affect the organization.
The second stage of the planning process is organizational direc-
tion, followed by the third stage of strategy formulation. Stages two
and three address the question, Where should we be going? The main
activity of the organizational direction stage is to develop a future strate-
gic profile of the organization by examining alternative futures, mis-
Figure 1.2: Strategic Planning Approach
Focus Where are we now? Where should we be going? How do we get there?
Organizational Strategy Implementation
Environmental Assessment
Direction Formulation Planning
Organizational
Review
i s s t r at e g i c p l a n n i n g s t i l l r e l e va n t ?
• Mission
• Philosophy
Approach
• Culture
External Evaluate Develop Establish Identify
Assessment Competitive High-Level Goals and Actions
• Market Position Direction Objectives Required
structure and
• Competitive • Alternative • For critical • Implementa-
dynamics
advantages futures issue areas tion plan
and • Mission, identified in – Schedule
Internal
disadvantages vision, preceding – Priorities
Assessment
(SWOTs*) values, and activities – Resources
• Distinctive key strategies
characteristics
Selected • Which factors are subject to our influence • How are mission and business • How are resources
Issues or control? responsibilities balanced? allocated?
• How will our competitive position be • What is our stance in terms of total • What are the
affected by external forces? independence vs. affiliation or collaboration? priorities for
implementation?
Update/Revise
7
* SWOTs = strengths, weaknesses, opportunities, and threats.
© 2004 Health Strategies & Solutions, Inc.
8 h e a lt h c a r e s t r at e g i c p l a n n i n g
sion, vision, values, and key strategies. Strategy formulation, stage three,
establishes goals and objectives for the organization. The purpose of
these stages of the planning process is to determine what broad, future
direction is possible and desirable and what, generally, the organiza-
tion is going to target as its future scope of services and position.
The fourth and final stage is action planning, determining how we
get there. This stage involves identifying the actions needed to imple-
ment the plan. Key activities include setting a schedule, determining
priorities, and allocating resources to ensure implementation. While
implementation needs to occur as soon as possible after completion of
the plan, if not actually during this final stage, a return to the initial
stages and updating of the plan, at least in part, ensures that strategic
planning becomes an ongoing activity of the organization. Each of
these stages will be discussed in detail in the following chapters.
WHY STRATEGIC PLANNING?
With the chaos pervading the healthcare field, many executives and
not-for-profit boards may wonder if it is possible to plan effectively or
plan at all given the uncertainty ahead. Why not rely on ad hoc plan-
ning based on educated guesses and intuition? Healthcare organiza-
tions may have historically survived using less formalized approaches
to make policy decisions, but today’s providers must be more thought-
ful about their choices. Mistakes will result not only in lost revenue
but also closure.
Fogg (1994) suggests the following benefits of strategic planning:
• Secures the future for the organization and the individual by
crafting a viable future business.
• Provides a road map, direction, and focus for the organization’s
future—where it wants to go and the routes to get there. It lets
the organization align its activities with the thrust of the corpora-
tion, a continuous process that most people and organizations
subconsciously and inherently seek. People know that aimlessness
gets you anywhere the winds of competition and serendipity take
you, often to detours and dead ends.
• Sets priorities for the really important strategic tasks that
absolutely must be accomplished, including those hairy, burning
issues, such as lack of direction and growth, lack of profitability,
i s s t r at e g i c p l a n n i n g s t i l l r e l e va n t ? 9
and organizational ineffectiveness, that everybody talks and
knows about, while wondering why they are not being addressed.
• Allocates resources available for growth and change to the pro-
grams and activities with the highest potential payoff.
• Establishes measures of success so that the progress of the
organization and individuals can be measured. It is a fundamental
business and human need to know where you stand.
• Gets input and ideas from all parts of the organization on what
can be done to ensure future success and eliminate barriers to
that success in accordance with the old adage that ten or one
hundred or one thousand heads are better than one.
• Gains commitment to implement the plan by involving the
organization in its development.
• Coordinates the actions of diverse and separated parts of the
organization into unified programs to accomplish objectives.
Fogg (1994) notes that
When all is said and done, employees also recognize what’s in it for
them personally: the resources to do what they want if they plan;
a more secure future if the organization plans well and does well;
financial rewards if they make themselves heroes as a result of the
process; recognition by their peers and superiors if they succeed;
and, of course, the inverse of all the above if they fail.
Ginter, Swayne, and Duncan (2002) believe that strategic planning
• Ties the organization together with a common sense of purpose
and shared values;
• Improves financial performance in many cases;
• Provides the organization with a clear self-concept, specific goals,
and guidance as well as consistency in decision making;
• Helps managers understand the present, think about the future,
and recognize the signals that suggest change;
• Requires managers to communicate both vertically and horizontally;
• Improves overall coordination within the organization; and
• Encourages innovation and change within the organization to
meet the needs of dynamic situations.
10 h e a lt h c a r e s t r at e g i c p l a n n i n g
According to Nadler (1994), for many organizations the true value
lies in the planning process, not the plan: “Most plans have a tremen-
dously fast rate of depreciation. By the time they’re printed and bound
they’ve become obsolete. The value of planning is largely in the shared
learning, the shared frame of reference, the shared context for those
small decisions that get made over time.”
Indeed changes may occur daily that influence a strategic plan,
and new ideas may surface once the plan is complete. A successful
strategic plan enables providers to establish a consistent, articulated
direction for the future. But the plan is also a living document that
must be monitored and revised to meet both anticipated and unan-
ticipated needs of the organization and the market, whether these
changes are related to managed care, integrated delivery, healthcare
reform, systems development, technological advances, or other chal-
lenges on the horizon.
WHAT IS EFFECTIVE STRATEGY?
Beckham (2000) indicates that when strategy is effective, it has seven
key characteristics:
1. Sustainability. It has lasting power, with greater long-term
impact than other initiatives.
2. Performance improvement. It results in significant improvement
in key performance indicators.
3. Quality. It is a demonstrably superior approach versus those of
competitors.
4. Direction. It moves the organization toward a defined end,
although not necessarily in a linear fashion.
5. Focus. It is targeted and represents a choice to pursue a certain
course over other attractive alternatives.
6. Connection. The set of strategies employed have a high level of
interdependence and synergy.
7. Importance. It may be not essential to organizational success,
but it is certainly significant or fundamental.
Considerable strategic planning and strategizing occur in health-
care organizations, yet much of this effort fails to achieve the bene-
fits and outcomes cited in this chapter, and some is blatantly ineffective.
Measuring the performance of strategy against Beckham’s seven char-
acteristics and avoiding many of the problems described in the next
i s s t r at e g i c p l a n n i n g s t i l l r e l e va n t ? 11
section should go a long way toward increasing the value of strategic
planning.
TYPICAL PROBLEMS THAT LIMIT THE EFFECTIVENESS
OF STRATEGIC PLANNING
Many healthcare organizations that have undertaken strategic plan-
ning experienced problems that jaded their leaders to the value of plan-
ning. Several problems are typically encountered during the strategic
planning process.
Failing to Involve Appropriate People
Sometimes there is too much involvement; sometimes too little. In
other cases, the amount of participation is fine but does not necessar-
ily come from the right people. Thoughtful involvement of the right
type and mix of internal and external stakeholders is essential.
Conducting Strategic Planning Independently of Financial
Planning
If financial considerations are excluded from the strategic plan, strate-
gies may never become a reality. Sound strategic planning will explic-
itly incorporate financial realities and capabilities.
Falling Prey to Paralysis of Analysis
The fast-paced healthcare market demands that providers respond to
opportunities and threats without extensive delays. Many providers are
lulled into a sense of security when they are planning and squander
time over endless fine-tuning and revisions. When exhaustive planning
takes over, little change or progress occurs.
Not Addressing the Critical Issues
The most pressing issues may not be addressed because they are too
difficult to deal with or so many issues are identified that none are
appropriately addressed. If leadership is not prepared to initiate dis-
cussions of key issues, strategic plans focus on minor topics and ignore
the most critical and threatening ones.
Assuming that Established Objectives Take Care of Themselves
Failure to implement a strategic plan is one of the most common
flaws of the planning process. Staff may be overwhelmed with man-
aging day-to-day crises, leaving little time to implement strategic
