Strategic initiatives and future planning conversations ceased while our economy, society, and industry absorbed the events of the COVID-19 pandemic. Hospitals and health systems focused solely on day-to-day operations—as a matter of survival—and paused the strategic initiatives imperative to advancing an organization. Fifty percent of providers paused strategic initiatives during the pandemic.1 The impact of these interruptions became increasingly evident as healthcare leaders struggled to reprioritize their organizations’ strategic initiatives and regain momentum. Balancing strategic initiatives with day-to-day operations requires leaders to embrace strategic agility as a critical capability to inform the path forward on their transformational journey to a Value-Centric Enterprise.
To learn more about pursuing a Value-Centric Enterprise, read our Healthcare Market Point of View.
Challenge
Consolidating markets, narrow margins, and macroeconomic pressures conspire to keep the focus on day-to-day operational challenges and distract from longer-term strategic goals. Organizations must ensure their strategic plans are sustainable by building capabilities for long-term, measurable results. Effective coordination and communication are exponentially more difficult as organizations grow in size and complexity. Unclear roles, responsibilities, accountabilities, and timing impede daily operations and progress against strategic goals. Value-Centric Enterprises require operating models and organizational design capabilities that provide a framework for agile responses to market trends and a focus on strategic and operational imperatives.
Path Forward
Organizations will better position themselves for a sustainable future by establishing a transparent and prioritized focus. To drive daily operations and effectively execute strategic initiatives, organizational leaders must integrate the following aspects to develop the strategic agility required for long-term success.
Prioritization Through Data-Driven Insights
To better understand current and future state needs, organizations will leverage data-driven insights to inform the order of initiatives. Tools such as market and facility assessments can help leaders understand volume and demand trends in both their facilities and their competitors. Understanding the provider landscape in one’s market is critical to informing the prioritization of strategic and operational initiatives. Other tools, such as change readiness diagnostics, provide insight into an organization’s ability to effectively navigate change, identify the root cause of employee fatigue and resistance, and analyze individuals’ interpretation and response styles to change. A human capital database empowers leaders by giving them granular insight into the state of their workforce. An organization’s ability to assign importance to initiatives in the context of market data, change readiness, organizational capabilities, risks, and broader financial goals is critical to long-term success.
Leadership Alignment
Leadership alignment is essential to driving daily operations and activating strategic plans. Misalignment among leadership teams sidetracks organizations causing initiatives to disperse and resources to scatter, ultimately leading to a continual shift in focus and lessened impact. Health system leaders who develop a shared vision, close organization gaps, invest resources appropriately, and capitalize on emerging market opportunities through comprehensive strategic planning will establish a path toward success.
Governance Structure Implementation
Mobilizing a governance structure within an organization will power daily operations and accomplish strategic initiatives. A robust organizational infrastructure provides the foundation for a health system’s operating models to function effectively and efficiently, reducing the need for expensive human capital overhead and better enabling organizational priorities. As a result, it is essential to examine the organization’s current design and the roles, responsibilities, knowledge, skills, and abilities the future will demand.
By focusing on these areas, leaders can execute key strategic initiatives toward long-term sustainability while navigating day-to-day operations.
Outcomes
Focusing on strategic agility and the elements within provides meaningful results in large healthcare organizations. One regional health system operating over 10 hospitals engaged in a robust two-year strategic planning and execution process to identify a new vision and direction for the organization following the COVID-19 pandemic. This structured process went beyond tactical project planning to more fully prepare the organization to achieve its strategic vision by engaging critical stakeholders in the enterprise strategic planning process, evaluating existing organizational priorities to understand how they would align or not align with future strategic priorities, and mobilizing a governance structure with clear accountabilities and decision-making rights to drive execution.
In another example, two large nonprofit health systems leveraged their strategic agility to execute a newly formed joint-venture agreement that emerged from their strategic planning process following the COVID-19 pandemic. Both organizations utilized market data insights to create better access to care within the state by identifying the joint-venture opportunity in two small communities between the two larger cities where the organizations are based. The organizations needed to develop strong alignment among their leadership teams to empower dedicated work teams to meet success.
Both case studies emphasize the importance of developing strategic agility for leadership alignment, stakeholder engagement, and data-driven decision-making when implementing strategic and operational initiatives for a sustainable future.
Conclusion
The healthcare industry is facing disruption to historical strategic and operational norms. Sixty-nine percent of healthcare executives reported operating margins below pre-pandemic levels.2 These changes require an agile and timely response from health system leaders. Proper operating models and organizational design capabilities improve transformational agility and contribute to the sustainability of a healthcare organization.
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- 1MINDSETS: FORVIS Executive Leadership Survey Results, forvis.com, November 2021.
- 2MINDSETS: FORVIS Executive Leadership Survey Results, forvis.com, November 2021.