Strategic planning is often considered the province of large, complex health systems: a largely academic exercise that saps time and attention away from more worthy activities. However, when strategic planning is rooted in rigorous quantitative analysis and approached in a practical fashion, it can energize and mobilize organizations of all sizes.
We’ve outlined our approach for applied strategic planning, which should begin by answering the questions:
1. What does the market need?
2. What is our organization good at?
3. What does our organization enjoy doing?
Phase 1: Setting the foundation
While most strategic planning processes begin by setting an organization’s vision for the future, we advocate providers begin by developing a strong understanding of the quantitative and qualitative positioning of their business. This initial phase should begin by undertaking quantitative and qualitative analyses that lay a pragmatic foundation on which to build a strategic plan.
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Importantly, as organizations approach these analyses, it is critical for them to consider the status of their finance and accounting functions. Having reliable, well-organized financial data at hand is a fundamental imperative for every organization. At a minimum, this initial phase should include the following:
- Market analysis: Organizations of all sizes need an understanding of where the market is headed, what competitors are doing, and what gaps exist that they might be positioned to fill. Additionally, organizations need to understand the evolving regulatory and reimbursement landscapes.
- Profitability analysis: Depending on the nature of the organization, the complexity of this analysis will vary. The objective of this piece is to understand which services, providers, or business units drive profitability to the practice. For larger organizations, Citrin Cooperman works with clients to develop contribution margin analyses to understand profitability at a granular level; however, for smaller organizations, the analyses can be simpler. In our experience, providers are often surprised by the activities that actually drive margin to the business.
- Core competencies: In addition to quantitative analyses, organizations should spend time considering their internal capabilities. What are the organization’s strengths and what does it need to improve in order to succeed in the market?
Phase 2: Envisioning the future
Building off this first phase of work, organizations can then begin defining their vision for the future. Organizations should pick a visioning approach that feels authentic and relevant to them. While large organizations can draw significant benefit from lofty, inspirational visions, smaller organizations may benefit from more pragmatic visions. Regardless of the approach, a vision for the future should be sufficiently specific to ground decision-making, sufficiently achievable to be operationalized, and sufficiently quantifiable to allow for progress tracking.
The next step of this phase should join the output from Phase 1 with the vision of the organization to develop the organization’s goals and objectives. At this point, organizations should consider how to leverage their market opportunities and financial strengths to drive toward their vision.
Phase 3: Operationalizing and funding
The aim of this final phase is to put the goals and objectives defined in Phase 2 into action. During this phase, it is critical to align strategic goals and objectives with the standard finance, operations, and oversight functions of the organization. We recommend organizations embark upon this phase in the following steps:
- Gap analysis and business planning: Organizations should identify the gaps between their current state and their goals and objectives. These gaps will become the organization’s strategic initiatives. Organizations should then build rigorous business plans to project the financial performance of initiatives, contemplating resource needs, financing, and, as necessary, organizational debt capacity. In our experience, it is common for organizations to begin projects without “stress testing” the associated business plan, only to find out that the project is much more expensive or much less profitable than expected.
- Prioritization: As organizations consider their portfolio of initiatives, we recommend using a prioritization approach that contemplates both return on investment (ROI) and alignment with the organization’s vision. Using business plans to estimate ROI, organizations should look to prioritize initiatives with high ROI and high vision alignment.
- Budget process, operations integration, and funding: One of the most common pitfalls of strategic planning is when organizations do not integrate strategic initiatives with their standard budgeting process. Without alignment to budgeting, strategic initiatives can languish as approved projects that lack the necessary funding to accomplish the agreed-upon goals. Depending on organization type, it is also important to look at alternative funding sources (such as donations or grants) that can be leveraged for a specific strategic purpose.
- Performance and project management: Most strategic planning functions are staffed very leanly, if they have any dedicated staff at all. However, it is essential that the strategic plan is appropriately resourced and that expectations are clearly set. Organizations need to go through the process of translating their goals and objectives into tactical execution plans that focus on driving accountability for results. Ensuring initiatives are tied to metrics that are, in turn, tied to the responsibilities of key leaders helps to ensure initiatives are consistently pushed forward.
- Communication: A critical piece of translating any strategic planning process into action is communication. This cascade should help clinical and non-clinical stakeholders understand how their work supports the organization’s vision. This element of strategic planning can be one of the most overlooked; without buy-in from stakeholders, strategic plans tend to stall.
Once strategic initiatives are in motion, organizations then need to work toward ongoing measuring and monitoring to understand how they are tracking toward their visions. Critically, as the healthcare industry continues to rapidly evolve, organizations need to continually reexamine their strategic plans, rather than working on outdated five-year strategic planning cycles. For all organizations, undertaking an applied, practical strategic planning process is a foundational element for future success.
Our professionals work with organizations to design and execute an applied process that meets their needs. From developing a process to performing analytics to delivering ongoing reporting dashboards, our team can help empower leaders to confidently assess their plans for the future.
To learn more about how Citrin Cooperman’s Healthcare Practice can help your organization navigate complex issues, please contact Kate Broderick and Amber Bichun.
“Citrin Cooperman” is the brand under which Citrin Cooperman & Company, LLP, a licensed independent CPA firm, and Citrin Cooperman Advisors LLC serve clients’ business needs. The two firms operate as separate legal entities in an alternative practice structure. Citrin Cooperman is an independent member of Moore North America.
Kate Broderick is a director in Citrin Cooperman’s Healthcare Practice. She works closely with the healthcare practice leadership to develop financial and strategic analysis and recommendations. Amber Bichun is an audit director in Citrin Cooperman’s Providence, Rhode Island office with over seven years of experience. She works with clients in the healthcare, not-for-profit, and employee benefit plan industries to provide financial statement audits and other services.
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