business planning in healthcare

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Strategic Management in Healthcare: A Call for Long-Term and Systems-Thinking in an Uncertain System

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Strategic management is becoming increasingly important for sustainable management in healthcare. The reasons for this can be seen in the increasing complexity, dynamics and uncertainty of the system’s regimes and the resulting need for strategic thinking in a long-term period. The scientific discussion of this issue is the aim of the present analytical framework. The starting point is the definition of the term strategic management itself, followed by a reflection on the requirements resulting from the changes in the political, social and economic value systems of our post-industrial society. In this context, Dynaxity Zone III is used to explain the long-term perspective, the high levels of complexity and uncertainty and the responsibility of strategic management as important parameters. For a practical illustration, we demonstrate two selected applications (German hospital financing systems and development process of implants) and how the implementation of strategic management in the health care system shows success.

1. Introduction

“Strategy” and “strategic management” have become buzzwords that are frequently used in the practice and theory of healthcare. However, the terms are not as simple as they might seem, and in reality, many managers are still micromanaging without a strategic perspective. Consequently, it is worthwhile to unfold the meaning of the terms and to analyse their relevance in healthcare.

The term “strategy“ stems from ancient Greek word “στρατηγός“ (strategos) meaning “general” or “leader of an army”. Thus, the original meaning of strategy is the theory or study of warfare and everything a good leader of an army should know. Carl von Clausewitz (1780–1831) developed in his famous book “ Vom Kriege ” ( About War) the first (European) theory of strategy distinguishing between tactics and strategy [ 1 ]. The first term describes the organization and fighting of forces on or near the battlefield, while the latter term goes far beyond that and tries to utilize different instruments for the final objective of winning the war. This not only includes battles but also withdrawals, alliances, negotiations and circumventions. V. Clausewitz was a Prussian officer serving the Russian Czar during the Russian Campaign (1812–1813). He realized that the French army won all battles but finally lost the war. The strategy of Prince Mikhail Illarionovich Golenishchev-Kutuzov (1745–1813) was to withdraw and even avoid battles—an approach of warfare that was unusual at that time and even made some to accuse him as coward. His credo “We must win the war—not the battle” strongly influences the strategic thinking of v. Clausewitz in his later years as the director of the Prussian “Kriegsakademie” (college of war) and enfolded his theory of strategy.

For v. Clausewitz, strategy has four dimensions that are relevant not only for warfare but are widely applied in management today such that “ Vom Kriege ” is mandatory reading in many business schools until today. These dimensions are as follows [ 2 , 3 ]:

• Long-term: Strategy always focusses on the long-term consequences of actions. The manager—as the commander-in-chief—should pay more attention to the final result than to the intermediate gains.
• Strategic apex: Strategy is the main responsibility of the top-leaders as it always covers and affects the entire organization. There is no “middle-management strategy”.
• Complexity: As the strategy covers the entire organization and long-term consequences, many different elements and dimensions are involved, i.e., strategy has to deal with a high degree of complexity.
• Uncertainty: The long-term consequences of actions are highly uncertain.

The terms “complexity” and “uncertainty” are crucial for strategy and require more explanation. “Complexity” stems from Latin “cum plectrum“, meaning connected, interwoven or interdependent. Thus, a system is not complex because it consists of many similar elements, but because the elements are different and have a high number of relations between them. These relations are frequently non-linear or even non-monotonous. Consequently, complex systems cannot be described with all their behavior even if all information on each single component exists [ 4 ].

Uncertainty means that the conditions of the environment and system behavior are not known and/or their transitions are subject to certain probabilities [ 5 ]. The longer the distance between the point of planning and the point of action, the higher the degree of uncertainty. Some uncertainty (e.g., epidemics and crop failure) is external and cannot be influenced (“Act of God”); other uncertainty includes the consequence of many small decisions and events, which add up and result in chaotic system behavior. Frequently, this kind of uncertainty exists because we have a rational opponent or antagonist. This is the field of strategy seeking to achieve one’s own objectives while expecting countermeasures of the opponent but also building alliances with protagonists [ 6 ].

Consequently, a strategy is a long-term plan of action of the strategic apex of an organization that analyses the complexity and uncertainty of the system and makes decision under the consideration of all potential stakeholders [ 7 ]. For a business unit, we have to distinguish the following:

• Domaine: What is our business field, i.e., with what products to do want to serve which group of customers with which needs?
• Competition: How do we want to set ourselves apart from competitors (quality leaders, price leaders and niche)?
• Competence: What is our core competence and how can we develop it (resources and potentials)?
• Alliance: With whom do we want to achieve our goals and how strongly do we cooperate?

It was frequently stated that operational management means “to do things right”, while strategic management means, “to do the right things” [ 8 ]. With v. Clausewitz, we could argue that it is correct but insufficient. Strategic management means “to do the right things right” by focusing on the long-term consequences of our actions in an environment of uncertainty and complexity. While we develop strategies, we do not know all the parameters, we expect new interdependencies to arise and we have to deal with stochastics and decide on alliances and competition. Strategy is the supreme discipline of management.

Figure 1 shows the strategic management process. The starting point always involves strategic objectives including the vision and mission of the enterprise. This is the domain of business ethics, i.e., strategic management without ethical reflection on the value and resulting objectives is infeasible. Based on these objectives, we analyse the environment and the enterprise for chances and risk with respect to strengths and weaknesses. This includes the development of a strategy or a set of strategies. Based on the objectives, the strategic manager selects a strategic program and implements it. In principle, the strategic management process is similar to a general management process, but the time-frame, the degree of uncertainty, the relevance of the decisions and the number of sub-units of the environment and the enterprise involved are much higher [ 7 ].

Strategic Management Process. Source own, based on [ 7 ].

These days, many healthcare services are more influenced by etatism than many other fields of business administration. The traditional time-horizon of healthcare is the annual budget provided by governments or parastatals (e.g., social health insurances) [ 9 ]. The main purpose of the “traditional” administration of healthcare services is the compliance with laws and regulations, while the efficiency and long-term development of potentials are still less focused upon. Even if the first efforts towards a strategic approach have already been made by larger healthcare systems and individual profit-oriented institutions, strategic thinking and management have not yet been sufficiently recognized and implemented in most traditional healthcare systems and non-profit organisations. In this paper, we argue that more long-term systems thinking on the strategic apex with consideration of dynamics, complexity and uncertainty are crucial for the healthcare system.

For this purpose, the next two sections discuss the characteristics of healthcare systems in the post-industrial era. Afterwards, we analyse the instruments and personal characteristics required to implement successful strategic management in the healthcare field. This knowledge is applied to examples, namely hospital financing in Germany and research and development of implants. The paper closes with some conclusions on how strategic thinking and management can contribute to the health and wellbeing of human beings.

2. Dynaxity

There seems to be general agreement that the last decades have witnessed tremendous changes in political, social, economic and value systems of our societies. The development from the industrial era to the dominance of service industries, globalisation and individualisation has frequently been discussed [ 10 ], but their impact on healthcare systems is insufficiently reflected. Rieckmann introduced the term “Dynaxity” as an artificial construct to describe the economy and society of the new millennium with the three characteristics: dynamics, complexity and uncertainty [ 11 , 12 ]. In this section, we will unfold these dimensions of Dynaxity and analyse their relevance for healthcare systems and management.

The term Dynaxity describes the dynamics, complexity and uncertainty of a system. Every an open system has a tendency to restore its steady-state-equilibrium and avoid changes because any alteration requires energy and induces uncertainty; i.e., open systems are usually homeostatic [ 13 ]. Only when the differences between goals and outcomes of the system are so strong that the formal and material structure cannot be maintained is the system has to react and adjust its structure. Otherwise, homeostasis will lead to the extinction of the system. Economic systems are constantly under the pressure to change as the environment changes frequently. Under the pressure of change, they will only survive if they can expand beyond their original limitations.

2.1. Transformation

Originally, the system is in a steady-state equilibrium. It fulfils its function in its environment and is able to absorb smaller internal or external perturbations (synchronic systems regime). If the perturbations grow so strongly that they cannot be absorbed any longer within the existing structures, the system begins to fluctuate until it reaches a bifurcation point where it is obvious that the system will never be the same again. In most cases, the system will find a new equilibrium, which is adjusted relative to the new environment and usually on a higher energy level ( Figure 2 ).

Transformation into a new systems regime. Source own, based on [ 13 ].

Changes in the environment are first absorbed by the microstructure (e.g., personnel, customers). Only if the perturbations are rather strong such that the microstructure cannot handle it will the meso structure (entire system) become involved. Moreover, the mesostructure will be passed onto the macrostructure, i.e., the economic or political system, only if it cannot absorb the fluctuations. A stable mesostructure can absorb quite an amount of pressure, but if the necessary changes are blocked by the macrostructure, the mesostructure might become inflexible or even fragile.

The development of new structures and functions of systems require a steady flow of energy. Ecological systems are finally based on the flow of energy from the sun, but social systems can utilize the creativity of human beings as the ultimate source of energy to adjust the systems. With creativity, humans develop innovations to respond to changes of the environment and survive them. Thus, innovations are the foundation of the survival of open systems, and their evolution is the condition for survival. However, innovations are not only the solution for problems but also the cause of perturbations. In a dynamic economy, an innovation will prosper the innovative enterprise but challenge other organisations based on old standard technology. As Schumpeter showed more than a century ago, competition usually means “creative destruction” [ 14 ]. One enterprise solves its challenges by an innovation, and others are driven in a crisis by exactly this innovation. They require further creativity and innovation to respond to this crisis and develop another innovation, which will then become the new standards again and cause another crisis in other enterprises.

2.2. Zones of Dynaxity

The sequence of synchronic and diachronic system regimes is not only accompanied by an increase in energy but also an increase in complexity and dynamics. Depending on the degree of complexity and dynamics, different zones of Dynaxity (I-IV) can be derived [ 15 ]. In zone I, the system consists only of a few elements and the number of interdependencies and relations between these elements is small. The number of relevant changes within a time interval (dynamics) is rather limited at well; i.e., the system can be called static. Consequently, almost all elements, their behaviour and the interdependencies are well-known; there is little uncertainty within the system. Zone I is typical for pre-industrial organisations, but even today, some private practitioners work in zone I with a small number of staff, clear hierarchies, strict control of processes and a stabile function within the village where they are located. According to Mintzberg, this is a simple structure [ 16 ].

If complexity and/or dynamics increase, simple structures will be insufficient for survival in an altered environment. Consequently, zone II is an industrial era with big organisations comprising many hierarchical levels. These organisations follow strict rules of the division of labour, leading to efficiency gains that are previously unknown. However, they are also slow because the flow of information through the different layers of hierarchy takes some time. Thus, these technocracies and bureaucracies [ 16 ] are inadequate if the dynamics or complexity grow even stronger.

The post-industrial era is characterised by very high complexity and dynamics leading to high uncertainty. The “dinosaur” organisations with long information pathways cannot adjust sufficiently rapid to survive the ongoing changes. Instead, organisations must be networks with a tremendous number of interrelations, institutional memory and intrinsic motivation of co-workers who are able and willing to sense changes of the environment early, adapt the structure of the network accordingly and develop innovations to keep the original function of the enterprise [ 11 ].

Finally, if dynamics and complexity increase even further, uncertainty will grow to a degree that makes any prediction or separation of diachronic and synchronic phases impossible. Rieckmann calls this system “Chaos” (χάος) in the sense of a state of complete disorder [ 12 ]. Proactive management becomes impossible as there is no reliable information on the interdependencies and behaviour of the multitude of different elements of the system with a complete tohu wa-bohu (( תֹהוּ   וָבֹהוּ , Genesis 1:2) without any predictability. Figure 3 shows the four zones of Dynaxity.

Zones of Dynaxity. Source own, based on [ 12 ].

The zones I-IV can also be interpreted as development pathways of systems regimes, as shown in Figure 4 [ 9 ]. In a system of zone I, the systems regime changes only rarely, i.e., the synchronic phase has a duration of at least one generation. In zone II, the synchronic phases are shorter than in zone I, but they are long enough to permit a complete stabilisation. Traditional change management includes the final stage of “freezing” which makes only sense if the period of stability is sufficiently long to establish stabile meta-structures with organisational designs, regulations and hierarchies [ 17 ]. In zone III, however, stabile phases are so short that no steady-state equilibrium is possible at all. Instead of freezing the organisational structure at the end of the diachronic systems regime, a new and fundamental perturbation waits for the system. Consequently, no fixed rules can be developed and implemented, but ad hoc decisions and structures are required to deal with a steady flow of fundamental changes. However, the decision in a highly complex environment needs a high density of information requiring turbo networks without hierarchies and with a broad span of interaction instead of slow hierarchies. The chaotic system, finally, does not allow distinguishing phases or predicting the pathways of development.

Dynaxity and Systems Regime. Source own, based on [ 9 ].

For the longest period of time in human history, societies and economies persisted in zone I. Most severe perturbations were external shocks such as famines, epidemics or wars, which could have disastrous consequences such as the medieval plague epidemic (1346–1353) that killed about 1/3 of the population in Europe. For the individual and for enterprises, these shocks were “act of Gods”; i.e., they could not proactively take action or make fundamental changes as they did not have the knowledge how to alter their fate. After the external shock was no longer a threat, life continued—in principle—unchanged, with only a few innovations of limited relevance for daily life within a lifetime. Innovations were seen for the longest period by human beings as something negative—a swear word challenging the (God-given) order of the society. For instance, Wilhelm von Conches (1080–1154) expressed his own mission with the words “sumus relatores et expositores veterum, non inventores novorum” [ 18 ] (we are the mediators and explainers of the old, not the inventors of something new). The technology and regulations of the past were right—innovations were seen with suspicion.

Several basic changes increased the speed of economies and societies and opened the doors for industrial revolution, bringing unknown dynamics and complexity until then. At least for Europe, we can state that the reformation and the age of enlightenment together with the French revolution and liberalism (for instance, Adam Smith) made it possible for innovations to become the driving force of development. “Creative destruction” started and constantly increased the speed of changes [ 19 ].

2.3. Uncertainty

In zone III, we face all forms of uncertainty: We do not know which elements of the system are relevant to us, because while we observe the system, it is changing dramatically with new elements coming up and others being left out. We do not know the interdependencies between these elements as the system has become so complex that it cannot be described in its system behaviour even if we can describe each element. Moreover, all behaviours of the elements and the system are stochastic processes with fairly unknown probabilities. There is even a risk that the system becomes chaotic where no trends can be determined and even minor changes of seemingly irrelevant parameters have major impact on the entire system.

A major cause of uncertainty is the complex system of side effects, feedback effects and knock-on effects ( Figure 5 ). Any action has a primary effect, i.e., an intended effect of a parameter A at the time of intervention. At the same time, the action has a side effect on another parameter B at the same time as the action but without any intentions. This change of parameter B might have an impact on parameter A, which can be delayed, accelerated or decelerated and is called feedback effect. Furthermore, a change of parameter B can have an impact on parameter C (knock-on effect), which will itself induce side effects, feedback effects and other knock-on effects resulting in a chain reaction, which is highly uncertain.

Side, feedback and knock-on effects. Source own, based on [ 6 ].

Summarizing these findings, we can state that the post-industrial society and economy are in Dynaxity zone III characterised by high dynamics and complexity resulting in high uncertainty without stable phases. Change is the “new normal”, and peaceful stability is the exemption. The system cannot be described or analysed to the full extent as many new elements and interdependencies develop and any action has an impact on many elements now and in future. These characteristics constitute major challenges to our ability to design systems and make meaningful decisions because our brains are not designed for systems with these characteristics.

Dörner demonstrates that the human capability to understand complex, dynamic and stochastic systems and make rational decisions within such systems is limited. Without referring to Dynaxity or the post-industrial age, Dörner shows that human beings have, in particular, problems in understanding the dynamics of exponential developments. The human brain thinks linearly, but nature grows exponentially. He shows that human brains are overburdened with increasing growth rates and systematically under-estimate the increasing speed of exponential processes. In addition, uncertainty with incomplete information (because of complexity) leads to false hypotheses about causal connections. The more complex, dynamic and uncertain a decision situation is, the more likely human beings make poor decisions, and the overburdening grows itself exponentially with the size of these three parameters.

Consequently, management in zone III is bound to fail unless it explicitly considers dynamics, complexity and uncertainty. Traditional management was short-term, comprised rather limited sub-systems and ignored uncertainty. However, the more intensive zone III becomes, the less it will be functional. Instead, managers have to develop a strategic mindset with explicit considerations of these three dimensions, the appropriate instruments for strategic leadership and a strategic leadership style with a strategic leadership personality.

3. Management in the of Post-Industrial Era

Management in Dynaxity zone III must be different from management in zone II. In principle, management in zone II focused on operational management, but during the short diachronic phases, the elements of strategic management were added. During the fluctuations, the existing structures were broken-up (unfreezing) and new elements were designed so that the enterprise fits again with respect to the changed environment (moving). Afterwards, everything was fixed again (freezing) with the aspiration that this condition should last as long as possible. During the synchronic phase, strategic management was grossly neglected.

In zone III, there are no synchronic regimes; thus, change is an ongoing process without freezing. Consequently, managers have to perform strategic management permanently and not only during certain phases. Instead, they are constantly seeking for challenging changes of the environment and upcoming innovations, risks and potentials. Thus, strategic and operational management are not contradictory but have to be implemented simultaneously and have to be synchronised constantly. However, their instruments are quite different and this requires a completely new armamentarium of the manager.

Table 1 shows the differences between operational and strategic management. It is obvious that successful instruments and approaches of operational management are quite different from what is needed for strategic management. If the environment does not change strongly during a synchronic phase, the organisation can focus on short-term plans, leave decisions to middle- and lower-level management and limit the decision-field to a few alternatives. The main instrument here is managerial (cost) accounting, expressing business success in currency units. However, when the environment becomes turbulent, this approach is likely to fail. Adoption and adaption, changes and evolutionary jumps are required to survive in diachronic phases. Thus, accounting and focusing on finances are insufficient to conquer the future. Instead, potentials have to be developed in the end, and chances and risks as well as strengths and weaknesses have to be analyzed.

Operational and Strategic Management. Source own, adapted from [ 20 ].

Typical instruments of strategic management are portfolio analyses, causal-loop diagrams and simulations/scenarios. A portfolio analysis is a visual presentation of the different products and their relevance for the achievement of the long-term targets. Based on the classic BCG-matrix [ 21 ], many portfolio analyses have been suggested for different purposes. For instance, Schellberg designed a portfolio matrix for nonprofit organizations distinguishing the dimensions of “ethical call” and “finance ability” [ 22 ] ( Figure 6 ). The first dimension describes the relevance of a service for the achievement of the target system of the non-profit organisations (NPO); i.e., each NPO has to decide whether a specific service is crucial for the achievement of the target system of the NPO or not. The second dimension analyses whether an NPO can breakeven at a given financing regime. The arrows indicate that many products start as touchstones (high ethical call, but deficit), move towards stars (high ethical call, profit) and end as goiters (low ethical call, deficit).

Portfolio Matrix of a non-profit organisation. Source: own, based on [ 22 ].

The portfolio analysis reduces complexity by developing norm strategies for the four fields. It also allows analyzing the life cycle of products and, thus, reducing the perceived dynamics and uncertainty. Thus, it is an appropriate instrument of strategic management.

Causal loop diagrams are a visualisation of causes, consequences and interdependencies. Figure 7 shows a causal loop diagram for the infectious cycle of malaria [ 23 ]. An infected anopheles bites a non-infected human who might become infectious after some time. If another anopheles bites this infectious human, it can be infected and become—after some delay—infectious again so that the cycle starts anew. The autocatalytic cycle is the basis for exponential growth, which is very difficult to understand for human brains. However, the causal loop diagram clearly demonstrates the interdependencies between the variables. Thus, it reduces complexity and, consequently, uncertainty.

Causal Loop Diagram of Malaria. Source own, based on [ 24 ].

The balanced score card (BSC) can also be described as a causal loop diagram as it connects the different dimensions of strategic business performance [ 25 ]. While operational management frequently focusses on one performance dimension (usually profit), a BSC includes other dimensions (such as potentials, customer satisfaction, etc.) and shows their interdependencies. This approach reduces complexity and uncertainty by indicating the respective causalities of strategic success.

Finally, the degree of uncertainty grows exponentially with the distance between the day of planning and the day of action, i.e., the higher the time horizon, the higher the uncertainty. Consequently, strategic planning is planning under uncertainty with many different alternatives that can occur. This is reflected by scenarios or simulations. Uncertainty can have different dimensions, i.e., we can have uncertainty concerning parameters (e.g., medical infectivity of a virus), uncertainty about certain structures (e.g., natural reservoir of a virus) and uncertainty concerning processes (e.g., impact of an intervention program on incidence) [ 26 , 27 ]. Consequently, we simulate the impact of changes of parameters, structures and equations on the long-term results of a system or an intervention in the sense of “What-if?” Furthermore, we analyse which parameters, structures and processes are necessary for achieving a certain result in the sense of “How-to-achieve?” Finally, we develop scenarios of constellations of parameters, structures and relationship, which are “worst”, “likely” or “best” in order to determine a corridor of potential developments of outputs. Thus, scenarios and simulations are instruments for reducing uncertainty and—partly—dynamics by developing a sensation of future realities and their probabilities.

In summary, we can state that strategic management is different from operational management. Strategic management has to deal with dynamics, complexity and uncertainty and requires a different set of instruments. However, strategic management is not primarily a question of a toolbox with strategic instruments. Instead, we see our organizations and the environment with a paradigm. This mindset must be future-oriented, risk-taking, cooperative and open for innovations. The strategic manager is constantly seeking new opportunities to serve the function of his organization better.

Henning and Rieckmann introduced the term “dynaxibility” to express the ability of an individual or an organisation to deal with Dynaxity [ 28 ]. In zone III—in terms of their conclusions—technical or hierarchical solutions are insufficient for achieving organisational objectives. Instead, the networks have to be viewed as “living systems” with human beings with personalities that go beyond the traditional assumption of the agent of production “labour”. Co-workers in zone III are seen as “complex men” [ 7 ] with their own feelings, aspirations, likes and dislikes. They cannot be fully “managed” but require identifying a valuable goal, sense the meaning of their work and have a chance of personal development [ 29 ]. Table 2 shows some characteristics of effective leaders in zone II. We allocate the terms given by Rieckmann to the characteristics of zone III. It becomes obvious that the characteristics of a “good leader” in Dynaxity zone III focus on the ability to deal with dynamics, complexity, uncertainty and people. It is also obvious that no single leader can have all these abilities; i.e., management in zone III has a tendency to result in team-effort.

Characteristics of high dynaxibility. The allocations to the terms dynamics, complexity, uncertainty and people-orientation are marked with an X. Source: own, based on [ 11 , 12 ].

4. Applications

The healthcare sector of many countries is now in Dynaxity zone III. In this section, we will present different examples from the healthcare sector to underline our statements and show the impact of zone III for the management of healthcare services and systems as a call for more strategic management.

The first example follows the synchronic and diachronic phases of the pathways of German hospital financing and demonstrates the relevance of the Dynaxity model for this development. The second example provides a model of the development of innovative implants and, in particular, the need to reflect on the lifelong consequences of implants as the strategic dimension.

4.1. Hospital Financing in Germany

Figure 8 exhibits the phases of German hospital financing. We can distinguish five major phases [ 9 ]. Until 1936, hospital financing in Germany was almost free and did not have to follow any Governmental regulations. Health insurances funds negotiated rebates with the hospitals, which were based on daily rates and covered all costs (monistic financing). The system was functional for decades, but medical and social progress required more Government interferences. More and more services could be provided by hospitals and the costs exploded such that the national socialists interfered in the previously free hospital market and ordered a price stop. Hospital financing instruments (monistic and daily rate) remained unchanged, but the Government fixed the rules of calculating the rates. A consequence was that German hospitals could not follow international medical and technical developments. In 1948, the Government of Western Germany attempted to return to the original free system, but the prices exploded. Consequently, only six months later, the government interfered again and fixed the prices.

Phases of German hospital financing. Source own, based on [ 9 ].

During the first years after World War II, the prospering economy provided sufficient funds to finance hospitals (at least in Western Germany). However, the rapid technological progress of medicine as well as the first economic crisis after WWII in the 1960s placed pressure on the government to support hospitals financially. The solution was dual financing (1972), where the health insurance funds refund current expenditure while the government is responsible for funding the buildings, equipment and vehicles of hospitals irrespective of ownership. At that time, some people preferred returning to a government-free system, but dual financing strengthened the role of the government.

The innovative financing system was quite successful, but German hospitals remained quite inefficient in comparison to other countries. After reunification, Eastern German hospitals (which had had a budget-based hospital financing system since 1946) required tremendous funds to reach the Western German level such that the inefficiencies became a challenge. Consequently, policy makers searched for alternative financing regimes. Some wanted to return to the monistic system prior to 1972, but it was agreed that the system should remain dualistic but based on flat rates, which involved the so-called German Diagnosis Related Groups (G-DRG).

One consequence of this system was that the payment of the insurance schemes is a price that need to be paid and the hospitals decided how they could use this price to recover their costs. For different reasons, nurses became the piggy bank of hospitals; i.e., the number of nurses and their salaries declined in comparison to other cost items and staff categories. The result was a “nursing crisis”, which placed strong pressure on politicians. Some wanted to return to monistic financing, and others wanted to return to daily rates. The selected solution is a mixed financing regime where the cost of nursing is taken out of the G-DRG system and financed by a specific nursing budget while other recurrent costs are financed by flat rates. This system (called aG-DRG) was introduced in 2019 [ 30 ].

Based on Figure 8 , we can conclude that German hospital financing went through a number of synchronic and diachronic system regimes. The solution of the old crisis was frequently the seedling for the new crisis [ 31 ]; i.e., it is likely that the fifth phase is not the final endpoint but new phases will occur. During the five phases, the hospital financing system developed from Dynaxity zone I to zone III. The number of changes (expressed in major regulations for hospital financing) has steadily increased in the last 100 years. While there were hardly any major alterations in the first decades, there are currently several major changes per year. The dynamics has proceeded from static to turbulent.

At the same time, the system has become increasingly complex. Until the year 1983, hospitals produced only one single service unit, the bed day. From 1983 to 2003, hospitals (with some exceptions) were also financed by daily rates, but they were not calculated per bed day for the entire hospital, but for each department; e.g., a hospital with 10 departments had 10 different services. Since the introduction of G-DRGs as a compulsory financing system, hospitals have more services (year 2022), with almost 1300 different services. Thus, not only has the technology of medical services become increasingly complex but also the financing regime. Instead of having a one-product enterprise, we have a complex multi-product enterprise. There is no doubt that German hospital financing is in zone III and uncertainty with unexpected frequent substantial changes is a constant threat for hospital planning.

The introduction of G-DRGs was a major call for strategic management in German hospitals. While the annual budget was the pivotal unit in German hospital management before, DRGs forced management to think years ahead and to develop a production plan that allows fulfilling the function of the hospital and its survival on the market. Until 1983, hospitals in Germany could not make up a loss because the costs of previous years were refunded in the new year by calculating the daily rate accordingly. Even until 2003, it was rather difficult to run into a loss because, in most cases, the daily rates of the departments were calculated accordingly. However, since the introduction of DRGs, hospitals have to decide on the service portfolio, i.e., what products they want to offer for certain customers with certain needs. This is a new challenge for hospitals, and the answer to these questions goes far beyond the one-year-perspective.

A service portfolio is a typical instrument of strategic management that has only become relevant for hospital managers in the last decades. Until 1993, hospitals could not specialize on certain services but had to provide every service in their catchment area, which was obligatory at the level of the hospital. Currently, hospitals can specialize as long as the needs of the populations are covered. In the example of Figure 9 , the portfolio covers three departments (ENT, orthopaedic surgery and paediatrics) and analyses the marginal contribution and the number of competitors in the catchment area. The circles represent services, and the area of the circles is proportional to the turnover of this service.

Portfolio of a hospital. Source: own.

In this example, ENT has three different services. All of them have positive marginal contributions and should be sustained. Paediatrics has three services; two of them have a positive marginal contribution and one has a negative contribution. However, the latter is a unique service in the catchment area; i.e., it cannot be closed-down without bringing problems to the population. The other two services will have to subsidize this service. Orthopaedic surgeries also have a negative contribution, but none of them are unique in the catchment area. They can be closed without making patients suffer.

Portfolio analyses reduce complexity because norm strategies can be utilized for different constellations. Such a portfolio is highly relevant in zone III where short-term and deterministic solutions are not sufficient to cover the complexity and dynamics of the system. Instead, portfolios can be used as instruments of strategic management to make evidence-based decisions relative to the services provided.

4.2. Development of Innovative Implants

Therapy concepts with innovative implants are used more and more frequently in the treatment of chronic degenerative diseases, additionally reinforced by the high prevalence and further increasing incidence rate in the aging population [ 32 ]. In order to be able to meet these challenges adequately, a strategic approach in implant development management will be indispensable in the future.

From the initial idea of a physician or engineer of a new implant to the market-ready product and the implementation of the innovation as a standard therapy, there are many process steps to go through [ 33 ]. This includes phases of research and development, certification, reimbursement options and launch. The classic view of the implant development process ends with its adoption as a standard. However, improving the patient’s quality of life should play a decisive role in the development of innovative implants. Above all, the aim should be for the patient to use the implant for as long as possible after successful implantation. This adds a strategic dimension that expands the planning horizon by including the lifelong consequences of innovative implant.

For a long-term patient-centred perspective, specific aspects must be taken into account. First, the decision between doctor and patient of an implant must also be considered with regard to a benefit that may only occur later. Second, there should be an ethical assessment of the costs and benefits of current and future periods. Third, lifetime implants require more extensive clinical investigations and fatigue strength testing, which could create additional innovation barriers throughout the implant development process and need to be addressed.

In conclusion, a long-life perspective focused on the patient should be systematically integrated into the implant development process. This is based on several requirements for the implant, including durability, maintenance, interchangeability and compatibility with other implants and future therapies. In Figure 10 , an innovation model of the implant development process is shown, which embraced both strategic and operative management decisions. It enables a targeted orientation to the life perspective and an effective response to the high demands of an increasing residual lifetime after the first implantation.

Modified implant development process with long-life perspective. Source own.

Management in Dynaxity Zone III must take into account dynamics, complexity and uncertainty. As shown in the last section, this is already reflected in areas of healthcare. Another example is the high relevance of leadership in dealing with the COVID-19 pandemic. The greatly increased speed of interactions and the complexity of our societies require more strategic thinking when fighting pandemics than in previous centuries. Strategic COVID-19 management is not only a question of technical prognosis but also, in particular, is a question of communication, motivation and inspiration. The same applies to dealing with other “new” pathogens such as multi-resistant bacteria that healthcare facilities are confronted with today. A long-term strategy is required that takes into account the interactions between the various different health areas and the people actively addressed for networking.

5. Conclusions

It is obvious that the post-industrial society and economy are in Dynaxity zone III, which is characterised by high dynamics and complexity, which at the same time leads to an unknown degree of uncertainty without pausing stabilizing phases. Change is the “new normal”, and peaceful stability is the exception. The healthcare sector is no exception to this.

It must be understood that in today’s world is a system that cannot be fully described or analysed in a conventional manner as many new elements and dependencies are evolving and every action has an impact on many elements now and in the future. These challenges call for a response of the top management of nations, economies, health care services and all other institutions with a long-term perspective, consideration of interdependencies and synchronisation of different levels of plans. With the implementation of strategic management, the necessary long-term perspective is appropriately weighted and new analysis and planning tools are available. This has already been carried out in many areas of the health sector, as was demonstrated in this paper for several exemplifications. Other areas will inevitably follow.

At the same time, these new managerial and intellectual requirements pose a great challenge to our personal ability as human beings to design systems and organisations or to make meaningful decisions. The correct handling and use of information as well as the derivation of sustainable measures are prerequisites for strategic management, and employees are more indispensable than ever. Healthcare facilities such as hospitals must also be aware of this fact in their personnel policies and react to it. This includes investing in human capital by training and other educational opportunities to acquire comprehensive methodological and social skills. Ultimately, a completely new mindset and long-term and systematic thinking need to be established. What we require in health care—now more than ever—are co-workers with the ability to deal with complexity, survive under uncertainty, interrelate in networks and follow the values of health care with intrinsic motivation. Nobody has these strategic talents by nature, but we can foster, encourage and cultivate them in our collaborative cultures in the health care system.

Strategic management is based on strategic thinking. Consequently, any healthcare strategy must begin with a change in mindset or even the underlying paradigm. Strategic management is not primarily an application of management tools (although there is a lot to know and learn about these tools), but it is a mindset: the mindset for a dynamic, complex and stochastic postmodern world with ever-increasing speed, dependencies and uncertainty. These meta-parameters must come to mind for healthcare decision makers if they are to successfully manage change. Moreover, it helps to summarize these parameters in one concept or one word: Dynaxity. Therefore, knowing the fundamentals of Dynaxity can guide the thinking, decisions and actions of healthcare managers by directing their thoughts in the right direction.

Funding Statement

The project “Analyses of effectiveness and efficiency of regional MDRO-Networks—EARN” was funded by the BMG (grant: 2516FSB107). The ‘partnership of Innovation in Implant Technology (RESPONSE)’ was funded by the BMBF (grant 03ZZ0914C and 03ZZ0934A).

Author Contributions

Both authors have substantially contributed to the conception, writing and revising of the manuscript. All authors have read and agreed to the published version of the manuscript.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Data availability statement, conflicts of interest.

The authors declare no conflict of interest.

Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

How To Implement Effective Strategic Planning In Healthcare

Are you feeling overwhelmed and uncertain about the future?

According to Deloitte , “The global healthcare sector stands at a crossroads in 2024, poised for profound changes. The future of global healthcare is likely to be shaped by innovation, sustainability, social care integration, cost management, and workforce adaptation.”

If you work in the healthcare industry, you know firsthand how quickly things can change. As technology advances, regulations change, the population ages, and new diseases evolve at lightning speed, it can be tough to keep up.

That's why implementing an effective strategic planning process that is execution-ready is so important. It's a tool that helps healthcare organizations prioritize their goals, anticipate potential roadblocks, and quickly adapt to seize new opportunities.

Whether you’re a manager or a top-level executive, this article will provide valuable insights and guidance to help you develop and execute a successful strategic plan.

We'll also show you how Cascade can help you successfully plan, execute, and track your healthcare strategy in one centralized location. Plus, as a bonus, we'll provide a free strategic planning template prefilled with healthcare examples to help you get started.

So, let's dive in and discover how strategic planning can help you navigate the changing landscape of the healthcare environment and achieve your organization’s goals.

Strategic Planning In Healthcare: What Is It?

Strategic planning in healthcare helps you set business goals and decide how to allocate resources to achieve these goals. It involves looking at your organization’s internal and external environments using established strategic tools .

Doing so lets you develop a strategic plan outlining what you want to achieve and an action plan to get there. Think of it like building a roadmap that helps you get to where you want to go.

With a healthcare strategy, you’ll have a framework for improved decision-making that is aligned with your overarching business objectives . This ensures you’re moving towards your long-term goals and objectives, even when making short-term decisions.

Examples Of Strategic Planning In Healthcare

Strategic planning can significantly enhance the operational efficiency and service quality of healthcare organizations. Here are some specific examples of how you can use strategic planning:

• Boosting Patient Care Quality : Tackle specific challenges like lowering the rates of hospital-acquired infections or enhancing the coordination of patient care. By pinpointing these areas, you can implement targeted improvements that directly benefit patient outcomes.
• Optimizing Staff and Resource Management : Utilize data analytics to make evidence-based decisions regarding staffing and resource distribution. This approach ensures that your workforce is optimally aligned with patient needs, and your resource allocation is efficient, contributing to a more effective healthcare system.
• Exploring New Avenues for Growth : Seize opportunities to expand your services and reach by integrating telehealth, offering home healthcare solutions, or developing specialized programs tailored to unique patient demographics. Such strategic initiatives can open new revenue streams and meet the evolving needs of your community.
• Improving Financial Health : Identify strategies for cost reduction and revenue enhancement, such as streamlining supply chain operations or venturing into untapped markets. These measures can bolster your organization's financial stability, allowing for reinvestment in key areas.
• Fostering Partnerships for Comprehensive Care : Establish collaborations with community organizations, other healthcare providers and facilities, or specialists to broaden your service offerings and improve patient care. Partnerships can lead to a more integrated care model that addresses a wide range of patient needs.

📚 Recommended read: Strategy study: The Ramsay Health Care Growth Study

Healthcare Strategic Planning: Why Is It Important?

Strategic planning in healthcare is more than just setting goals; it's about ensuring your organization is on the right track for success.

These are some of the countless benefits of strategic planning in healthcare:

Boost profitability

Strategic planning helps healthcare leaders improve their organization’s financial performance and achieve long-term sustainability. It's about using resources wisely, cutting costs where possible, and smoothing out inefficiencies by streamlining processes and creating better strategic initiatives to increase patient volume and improve experience.  

Additionally, strategic planning plays a crucial role in uncovering new opportunities for revenue, enabling healthcare organizations to diversify their sources of income.

Enhance collaboration and engagement

Strategic planning in healthcare goes beyond identifying operational challenges; it's about bringing to light the issues that affect our teams daily, such as the strain of long work hours. When staff feel overburdened, their motivation dips, leading to decreased engagement and higher turnover rates.

By articulating a clear vision for the organization and actively involving employees in the strategic planning process, we can significantly boost morale. It's about making sure everyone feels seen and heard, understanding that their contributions are valued. This inclusive approach not only enhances team engagement but also encourages stronger retention.

Strategic planning also fosters collaboration across different teams and business units within the healthcare organization. By working together towards common goals, departments can better align their efforts, share insights, and support each other in achieving the organization's objectives. This synergy not only improves efficiency but also builds a more cohesive and motivated workforce.

💡Pro Tip : Ensure your vision statement is crystal clear organization-wide for unified strategic alignment.

Increase efficiency

Strategic planning helps you align your operational activities with the organization’s goals. This ensures that every action contributes toward achieving your business objectives. Strategic planning also empowers healthcare leaders, providing them with the insights needed to make resource allocation decisions wisely in the dynamic healthcare landscape.

Improve communication

A good strategic plan should be shared with all stakeholders so they can form a clear picture of how their actions affect a future outcome. This transparency promotes better communication within the organization, as employees align their efforts towards achieving a common goal. The end result is a more collaborative environment where the collective focus is on attaining shared objectives.

Drive alignment and strategy execution

Involving key stakeholders in the strategic planning process is crucial for aligning your healthcare organization's goals with its overarching strategy. This ensures that everyone, from top management to frontline staff, is aligned and moving in the same direction. Achieving this level of strategic harmony across the organization reduces confusion and clarifies the collective mission, paving the way for successful strategy implementation. This collaborative approach not only fosters a unified effort towards common objectives but also enhances the overall effectiveness of the organization's strategic initiatives.

💡Pro Tip : Ensure you balance a top-down and bottom-up for enhanced vertical and horizontal strategic alignment .

5 Strategic Planning Tools For Your Healthcare Strategy

Here’s a list of strategy tools and frameworks that can help you identify gaps in your healthcare strategy, prioritize strategic initiatives, and develop business goals:

1. Balanced Scorecard (BSC)

The Balanced Scorecard translates strategic goals into measurable indicators or metrics to help you balance four critical organizational perspectives: financial, customer, internal processes, and organizational capacity.

Using this tool ensures that your organization aligns with your strategic objectives and that you’re measuring the right KPIs to track progress toward those objectives.

2. Objectives and key results (OKR)

The OKR framework sets specific and measurable objectives and tracks progress toward them using key results. Objectives should be ambitious and challenging but achievable. Meanwhile, key results should be specific and measurable and have defined target values.

This framework promotes accountability and transparency since everyone works toward the same goals.

3. Political, economic, sociocultural, and technological (PEST) analysis

PEST analysis helps you understand the external factors that may impact your operations. By using this tool, you can identify potential opportunities and threats so you can anticipate and respond to changes in the external environment.

For example, PEST can help you identify a shift toward consumer-driven healthcare. Consequently, this enables you to invest in telemedicine and other digital healthcare technologies to meet patients’ changing needs.

4. Strengths, weaknesses, opportunities, threats (SWOT) analysis

SWOT analysis is a simple yet powerful way to identify the internal and external factors that can impact your organization’s success.

For example, if you discover that staffing levels are a weakness, you may decide to invest in staff training or recruitment programs. Or, if you identify an opportunity to expand into a new service area, you may choose to allocate resources for the expansion.

By leveraging your organization's strengths through this analysis, you can craft targeted strategies that address challenges and capitalize on opportunities for sustained success.

5. Theory of change (TOC)

The theory of change is a framework that helps your organization articulate the desired outcomes and specific steps you need to take to achieve them. This model provides a more structured approach to achieving goals by identifying the inputs required for success.

For example, if you want to reduce hospital readmissions, you may use the theory of change to identify the inputs needed (staff training on patient education), activities needed (discharge planning), and desired outcomes (reduction in hospital readmissions). By mapping out this logic model and continuously evaluating the initiative, your organization can adjust its activities to achieve your desired outcomes and improve the quality of care for your patients.

📚 Recommended read: 26 Best Strategy Tools For Your Organization in 2024

How To Implement A Strategic Plan In Healthcare

Implementing a strategic healthcare plan can be challenging. Follow this step-by-step framework to help you get started.

💡Pro Tip : Streamline your healthcare strategy planning, execution, and tracking with Cascade Strategy Execution Platform .  It serves as a centralized hub for enhanced decision-making and accelerated results. Unsure of where to begin? Kickstart your strategic planning process with our complimentary pre-filled healthcare strategy template .

1. Establish goals

The first step is to establish clear and measurable goals. These goals should align with your organization’s mission and vision , and be SMART (specific, measurable, achievable, relevant, and time-bound).

Examples of goals in healthcare include reducing hospital readmission rates, improving patient satisfaction scores, or increasing revenue.

👉🏻How Cascade can help? With Cascade's Planner feature , you can simplify the process of constructing your strategies. It provides a structured approach, making it effortless to break down complex high-level initiatives into actionable outcomes.

2. Set milestones and measure progress

Once you establish goals, it’s important to set milestones and measure progress regularly. This allows your organization to track its progress toward achieving its goals, identify areas for improvement, and make necessary adjustments.

Make sure to establish a timeframe for your milestones, whether it's monthly, quarterly, or yearly, depending on the nature of your goal.

👉🏻How Cascade can help? Cascade's Metrics Library offers a centralized repository for your business metrics, allowing you to seamlessly link these metrics to your plan's Key Performance Indicators (KPIs). Integrating core metrics becomes a breeze, whether they originate from your business systems, data lakes, Business Intelligence (BI) tools, or spreadsheets.

3. Develop an execution plan

To successfully achieve your goals, it is essential to have a comprehensive execution plan . This plan should detail all the necessary activities and strategies that will guide you toward success.

An effective execution plan must include a well-structured timeline, a checklist of required resources, and clearly defined responsibilities for each action or project.

👉🏻How Cascade can help? Cascade's Alignment Maps feature empowers you to monitor the interactions between activities by documenting and examining dependencies, blockers, and risks that might arise during your strategic journey. This ensures a smooth path to successful strategy execution.

4. Monitor performance and adapt as needed

Once the plan is in motion, you should monitor its performance regularly and make necessary adjustments when you notice deviations. You must be flexible and willing to change your execution plan as needed.

For example, if the original plan doesn't turn out to be effective, it's important to quickly reevaluate and come up with an alternative strategy.

👉🏻How Cascade can help? Cascade's Dashboards & Reports allow you to gain accurate, real-time insights into your strategic performance, enabling you to easily share this information with your stakeholders.

5. Communicate regularly

Communication is key in implementing a strategic plan . Each stakeholder should understand their role and how their work fits into the big picture. You must inform them of progress toward the established goals, any changes to the execution plan, and other relevant information. This will help you build trust and get buy-in, which are essential for successful strategy execution.

6. Celebrate successes

Celebrating successes helps maintain motivation and momentum. It shows staff and stakeholders that their hard work is paying off. This can be done in various ways, such as recognizing staff members who have contributed significantly to the plan or sharing positive feedback from patients.

Positive reinforcement will motivate employees to keep striving to achieve your organization’s objectives.

📚 Recommended read: How Parker University uses Cascade to help them hold a position as a leader in Patient-Centric Healthcare

Case Study: Perley Health’s Strategic Ambition  

Perley Health, a healthcare organization dedicated to improving care for veterans and seniors, faced some significant challenges in their strategic planning and execution processes. These challenges included making assumptions about the stability of the external environment in their long-term planning, inconsistency in how different departments planned and reported, a lack of clarity in how they measured success, and a somewhat fragmented approach to strategic and departmental plans.

Perley Health's journey toward strategic improvement began with the adoption of Cascade, a pivotal decision for them. Initially, they used Cascade to bring together all their strategic plans and initiatives, which brought about greater transparency and alignment with their organizational priorities. This not only made resource allocation more efficient but also provided a standardized way to measure results, making it easier to discuss return on investment (ROI) and track progress systematically.

Empowered by Cascade's capabilities, the management and various teams could now propose forward-thinking initiatives with a clear view of how they aligned with strategic priorities. This sped up decision-making and made funding allocation more precise.

With the right tools in place, Perley Health is now confidently working towards their goal of doubling senior care and establishing themselves as a center of excellence in frailty-informed care. They keep a close eye on their progress using the Cascade platform.

This case underscores the critical importance of strategic planning in navigating the complexities of healthcare, demonstrating a clear path to achieving and surpassing organizational objectives.

📚 Read the complete Perley Health Case Study!

Execute Your Healthcare Strategy With Cascade 🚀

Take the guesswork out of strategic planning in healthcare. With Cascade , you can easily create an execution plan customized to your goals and objectives, including assigning initiatives and setting deadlines for each team member involved.

Take a look at this example of a healthcare strategic plan in Cascade:

You can also leverage easy-to-use dashboards and visualizations that provide real-time data on your progress toward your goals.

Here’s an example of a real-time dashboard:

Cascade lets you collaborate with your team, assign responsibilities, and communicate progress, ensuring everyone is aligned and working toward the same objectives.

Whether you run a small clinic or a large healthcare organization, Cascade will help you make strategic planning in healthcare a breeze. Learn more about Cascade for healthcare !

Looking for a tailored tour of our platform? Book a demo with one of our Strategy Execution experts.

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The future of healthcare: Value creation through next-generation business models

The healthcare industry in the United States has experienced steady growth over the past decade while simultaneously promoting quality, efficiency, and access to care. Between 2012 and 2019, profit pools (earnings before interest, taxes, depreciation, and amortization, or EBITDA) grew at a compound average growth rate of roughly 5 percent. This growth was aided in part by incremental healthcare spending that resulted from the 2010 Affordable Care Act. In 2020, subsidies for qualified individual purchasers on the marketplaces and expansion of Medicaid coverage resulted in roughly $130 billion 1 Federal Subsidies for Health Insurance Coverage for People Under Age 65: CBO and JCT’s March 2020 Projections, Congressional Budget Office, Washington, DC, September 29, 2020, cbo.gov. 2 Includes adults made eligible for Medicaid by the ACA and marketplace-related coverage and the Basic Health Program. of incremental healthcare spending by the federal government.

The next three years are expected to be less positive for the economics of the healthcare industry, as profit pools are more likely to be flat. COVID-19 has led to the potential for economic headwinds and a rebalancing of system funds. Current unemployment rates (6.9 percent as of October 2020) 3 The employment situation—October 2020 , US Department of Labor, November 6, 2020, bls.gov. indicate some individuals may move from employer-sponsored insurance to other options. It is expected that roughly between $70 billion and $100 billion in funding may leave the healthcare system by 2022, compared with the expected trajectory pre-COVID-19. The outflow is driven by coverage shifts out of employer-sponsored insurance, product buy-downs, and Medicaid rate pressures from states, partially offset by increased federal spending in the form of subsidies and cost sharing in the Individual market and in Medicaid funding.

Underlying this broader outlook are chances to innovate (Exhibit 1). 4 Smit S, Hirt M, Buehler K, Lund S, Greenberg E, and Govindarajan A, “ Safeguarding our lives and our livelihoods: The imperative of our time ,” March 23, 2020, McKinsey.com. Innovation may drive outpaced growth in three categories: segments that are anticipated to rebound from poor performance over recent years, segments that benefit from shifting care patterns that result directly from COVID-19, and segments where growth was expected pre-COVID-19 and remain largely unaffected by the pandemic. For the payer vertical, we estimate profit pools in Medicaid will likely increase by more than 10 percent per annum from 2019 to 2022 as a result of increased enrollment and normalized margins following historical lows. In the provider vertical, the rapid acceleration in the use of telehealth and other virtual care options spurred by COVID-19 could continue. 5 Bestsennyy O, Gilbert G, Harris A, and Rost J, “ Telehealth: A quarter-trillion-dollar post-COVID-19 reality? ” May 29, 2020, McKinsey.com. Growth is expected across a range of sub-segments in the services and technology vertical, as specialized players are able to provide services at scale (for example, software and platforms and data and analytics). Specialty pharmacy is another area where strong growth in profit pools is likely, with between 5 and 10 percent compound annual growth rate (CAGR) expected in infusion services and hospital-owned specialty pharmacy sub-segments.

Strategies that align to attractive and growing profit pools, while important, may be insufficient to achieve the growth that incumbents have come to expect. For example, in 2019, 34 percent of all revenue in the healthcare system was linked to a profit pool that grew at greater than 5 percent per year (from 2017 to 2019). In contrast, we estimate that only 13 percent of revenue in 2022 will be linked to profit pools growing at that rate between 2019 and 2022. This estimate reflects that profit pools are growing more slowly due to factors that include lower membership growth, margin pressure, and lower revenue growth. This relative scarcity in opportunity could lead to increased competition in attractive sub-segments with the potential for profits to be spread thinly across organizations. Developing new and innovative business models will become important to achieve the level of EBITDA growth observed in recent years and deliver better care for individuals. The good news is that there is significant opportunity, and need, for innovation in healthcare.

New and innovative business models across verticals can generate greater value and deliver better care for individuals

Glimpse into profit pool analyses and select sub-segments.

Within the context of these overarching observations, the projections for specific sub-segments are nuanced and tightly connected to the specific dynamics each sub-segment is currently facing:

• Payer—Small Group: Small group has historically seen membership declines and we expect this trend to continue and/or accelerate in the event of an economic downturn. Membership declines will increase competition and put pressure on incumbent market leaders to both maintain share and margin as membership declines, but fixed costs remain.
• Payer—Medicare Advantage: Historic profit pool growth in the Medicare Advantage space has been driven by enrollment gains that result from demographic trends and a long-term trend of seniors moving from traditional Medicare fee-for-service programs to Medicare Advantage plans that have increasingly offered attractive ancillary benefits (for example, dental benefits, gym memberships). Going forward, we expect Medicare members to be relatively insulated from the effects of an economic downturn that will impact employers and individuals in other payer segments.
• Provider—General acute care hospitals: Cancelation of elective procedures due to COVID-19 is expected to lead to volume and revenue reductions in 2019 and 2020. Though volume is expected to recover partially by 2022, growth will likely be slowed due to the accelerated shift from hospitals to virtual care and other non-acute settings. Payer mix shifts from employer-sponsored to Medicaid and uninsured populations in 2020 and 2021 are also likely to exert downward pressure on hospital revenue and EBITDA, possibly driving cost-optimization measures through 2022.
• Provider—Independent labs: COVID-19 testing is expected to drive higher than average utilization growth in independent labs through 2020 and 2021, with more typical utilization returning by 2022. However, labs may experience pressure on revenue and EBITDA growth as the payer mix shifts to lower-margin segments, offsetting some of the gains attributed to utilization.
• Provider—Virtual office visits: Telehealth has helped expand access to care at a time when the pandemic has restricted patients’ ability to see providers in person. Consumer adoption and stickiness, along with providers’ push to scale-up telehealth offerings, are expected to lead to more than 100 percent growth per annum in the segment from 2019 to 2022, going beyond traditional “tele-urgent” to more comprehensive virtual care.
• HST—Medical financing: The medical financing segment may be negatively impacted in 2020 due to COVID-19, as many elective services for which financing is used have been deferred. However, a quick bounce-back is expected as more patients lacking healthcare coverage may need financing in 2021, and as providers may use medical financing as a lever to improve cash reserves.
• HST—Wearables: Looking ahead, the wearables segment is expected to see a slight dip in 2020 due to COVID-19, but is expected to rebound in 2021 and 2022 given consumer interest in personal wellness and for tracking health indicators.
• Pharma services—Pharmacy benefit management: The growth is expected to return to baseline expectations by 2022 after an initial decline in 2020 and 2021 due to the COVID-19-driven decrease in prescription volume.

New and innovative business models are beginning to show promise in delivering better care and generating higher returns. The existence of these models and their initial successes are reflective of what we have observed in the market in recent years: leading organizations in the healthcare industry are not content to simply play in attractive segments and markets, but instead are proactively and fundamentally reshaping how the industry operates and how care is delivered. While the recipe across verticals varies, common among these new business models are greater alignment of incentives typically involving risk bearing, better integration of care, and use of data and advanced analytics.

Payers—Next-generation managed care models

For payers, the new and innovative business models that are generating superior returns are those that incorporate care delivery and advanced analytics to better serve individuals with increasingly complex healthcare needs (Exhibit 2). As chronic disease and other long-term conditions require more continuous management supported by providers (for example, behavioral health conditions), these next-generation managed care models have garnered notice. Nine of the top ten payers have made acquisitions in the care delivery space. Such models intend to reorient the traditional payer model away from an operational focus on financing healthcare and pricing risk, and toward more integrated managed care models that better align incentives and provide higher-quality, better experience, lower-cost, and more accessible care. Payers that deployed next-generation managed care models generate 0.5 percentage points of EBITDA margin above average expectations after normalizing for payer scale, geographical footprint, and segment mix, according to our research.

The evidence for the effectiveness of these next-generation care models goes beyond the financial analysis of returns. We observe that these models are being deployed in those geographies that have the greatest opportunity to positively impact individuals. Those markets with 1) a critical mass of disease burden, 2) presence of compressible costs (the opportunity for care to be redirected to lower-cost settings), and 3) a market structure conducive to shifting to higher-value sites of care, offer substantial ways to improve outcomes and reduce costs. (Exhibit 3).

Currently, a handful of payers—often large national players with access to capital and geographic breadth that enables acquisition of at-scale providers and technologies—have begun to pursue such models. Smaller payers may find it more difficult to make outright acquisitions, given capital constraints and geographic limitations. M&A activity across the care delivery landscape is leaving smaller and more localized assets available for integration and partnership. Payers may need to increasingly turn toward strategic partnerships and alliances to create value and integrate a range of offerings that address all drivers of health.

Providers—reimagining care delivery beyond the hospital

For health systems, through an investment lens, the ownership and integration of alternative sites of care beyond the hospital has demonstrated superior financial returns. Between 2013 and 2018, the number of transactions executed by health systems for outpatient assets increased by 31 percent, for physician practices by 23 percent, and for post-acute care assets by 13 percent. At the same time, the number of hospital-focused deals declined by 6 percent. In addition, private equity investors and payers are becoming more active dealmakers in these non-acute settings. 6 CapitalIQ, Dealogic, and Irving Levin Associates. 7 In 2018, around 40 percent of all post-acute and outpatient deals were completed by an acquirer other than a traditional provider.

As investment is focused on alternative sites of care, we observe that health systems pursuing diversified business models that encompass a greater range of care delivery assets (for example, physician practices, ambulatory surgery centers, and urgent care centers) are generating returns above expectations (Exhibit 4). By offering diverse settings to receive care, many of these systems have been able to lower costs, enhance coordination, and improve patient experience while maintaining or enhancing the quality of the services provided. Consistent with prior research, 8 Singhal S, Latko B, and Pardo Martin C, “ The future of healthcare: Finding the opportunities that lie beneath the uncertainty ,” January 31, 2018, McKinsey.com. systems with high market share tend to outperform peers with lower market share, potentially because systems with greater share have greater ability not only to ensure referral integrity but also to leverage economies of scale that drive efficiency.

The extent of this outperformance, however, varies by market type. For players with top quartile share, the difference in outperformance between acute-focused players and diverse players is less meaningful. Contrastingly, for bottom quartile players, the increase in value provided by presence beyond the acute setting is more significant. While there may be disadvantages for smaller and sub-scale providers, opportunities exist for these players—as well as new entrants and attackers—to succeed by integrating offerings across the care continuum.

These new models and entrants and their non-acute, technology-enabled, and multichannel offerings can offer a different vision of care delivery. Consumer adoption of telehealth has skyrocketed, from 11 percent of US consumers using telehealth in 2019 to 46 percent now using telehealth to replace canceled healthcare visits. Pre-COVID-19, the total annual revenues of US telehealth players were an estimated $3 billion; with the acceleration of consumer and provider adoption and the extension of telehealth beyond virtual urgent care, up to $250 billion of current US healthcare spend could be virtualized. 9 Bestsennyy O, Gilbert G, Harris A, and Rost J, “ Telehealth: A quarter-trillion-dollar post-COVID-19 reality? ” May 29, 2020, McKinsey.com. These early indications suggest that the market may be shifting toward a model of innovative tech-enabled care, one that unlocks value by integrating digital and non-acute settings into a comprehensive, coordinated, and lower-cost offering. While functional care coordination is currently still at the early stages, the potential of technology and other alternative settings raises the question of the role of existing acute-focused providers in a more integrated and digital world.

Would you like to learn more about our Healthcare Systems & Services Practice ?

Healthcare services and technology—innovation and integration across the value chain.

Growth in the healthcare services and technology vertical has been material, as players are bringing technology-enabled services to help improve patient care and boost efficiency. Healthcare services and technology companies are serving nearly all segments of the healthcare ecosystem. These efforts include working with payers and providers to better enable the link between actions and outcomes, to engage with consumers, and to provide real-time and convenient access to health information. Since 2014, a large number and value of deals have been completed: more than 580 deals, or $83 billion in aggregate value. 10 Includes deals over $10 million in value. 11 Analysis from PitchBook Data, Inc. and McKinsey Healthcare Services and Technology domain profit pools model. Venture capital and private equity have fueled much of the innovation in the space: more than 80 percent 12 Includes deals over $10 million in value. of deal volume has come from these institutional investors, while more traditional strategic players have focused on scaling such innovations and integrating them into their core.

Driven by this investment, multiple new models, players, and approaches are emerging across various sub-segments of the technology and services space, driving both innovation (measured by the number of venture capital deals as a percent of total deals) and integration (measured by strategic dollars invested as a percent of total dollars) with traditional payers and providers (Exhibit 5). In some sub-segments, such as data and analytics, utilization management, provider enablement, network management, and clinical information systems, there has been a high rate of both innovation and integration. For instance, in the data and analytics sub-segment, areas such as behavioral health and social determinants of health have driven innovation, while payer and provider investment in at-scale data and analytics platforms has driven deeper integration with existing core platforms. Other sub-segments, such as patient engagement and population health management, have exhibited high innovation but lower integration.

Traditional players have an opportunity to integrate innovative new technologies and offerings to transform and modernize their existing business models. Simultaneously, new (and often non-traditional) players are well positioned to continue to drive innovation across multiple sub-segments and through combinations of capabilities (roll-ups).

Pharmacy value chain—emerging shifts in delivery and management of care

The profit pools within the pharmacy services vertical are shifting from traditional dispensing to specialty pharmacy. Profits earned by retail dispensers (excluding specialty pharmacy) are expected to decline by 0.5 percent per year through 2022, in the face of intensifying competition and the maturing generic market. New modalities of care, new care settings, and new distribution systems are emerging, though many innovations remain in early stages of development.

Specialty pharmacy continues to be an area of outpaced growth. By 2023, specialty pharmacy is expected to account for 44 percent of pharmacy industry prescription revenues, up from 24 percent in 2013. 13 Fein AJ, The 2019 economic report on U.S. pharmacies and pharmacy benefit managers , Drug Channels Institute, 2019, drugchannelsinstitute.com. In response, both incumbents and non-traditional players are seeking opportunities to both capture a rapidly growing portion of the pharmacy value chain and deliver better experience to patients. Health systems, for instance, are increasingly entering the specialty space. Between 2015 and 2018 the share of provider-owned pharmacy locations with specialty pharmacy accreditation more than doubled, from 11 percent in 2015 to 27 percent in 2018, creating an opportunity to directly provide more integrated, holistic care to patients.

Challenges emerge for the US healthcare system as COVID-19 cases rise

A new wave of modalities of care and pharmaceutical innovation are being driven by cell and gene therapies. Global sales are forecasted to grow at more than 40 percent per annum from 2019 to 2024. 14 Evaluate Pharma, February 2020. These new therapies can be potentially curative and often serve patients with high unmet needs, but also pose challenges: 15 Capra E, Smith J, and Yang G, “ Gene therapy coming of age: Opportunities and challenges to getting ahead ,” October 2, 2019, McKinsey.com. upfront costs are high (often in the range of $500,000 to $2,000,000 per treatment), benefits are realized over time, and treatment is complex, with unique infrastructure and supply chain requirements. In response, both traditional healthcare players (payers, manufacturers) and policy makers (for example, the Centers for Medicare & Medicaid Services) 16 Centers for Medicare & Medicaid Services, “Medicaid program; establishing minimum standards in Medicaid state drug utilization review (DUR) and supporting value-based purchasing (VBP) for drugs covered in Medicaid, revising Medicaid drug rebate and third party liability (TPL) requirements,” Federal Register , June 19, 2020, Volume 85, Number 119, p. 37286, govinfo.gov. are considering innovative models that include value-based arrangements (outcomes-based pricing, annuity pricing, subscription pricing) to support flexibility around these new modalities.

Innovations also are accelerating in pharmaceutical distribution and delivery. Non-traditional players have entered the direct-to-consumer pharmacy space to improve efficiency and reimagine customer experience, including non-healthcare players such as Amazon (through its acquisition of PillPack in 2018) and, increasingly, traditional healthcare players as well, such as UnitedHealth Group (through its acquisition of DivvyDose in September 2020). COVID-19 has further accelerated innovation in patient experience and new models of drug delivery, with growth in tele-prescribing, 17 McKinsey COVID-19 Consumer Survey conducted June 8, 2020 and July 14, 2020. a continued shift toward delivery of pharmaceutical care at home, and the emergence of digital tools to help manage pharmaceutical care. Select providers have also begun to expand in-home offerings (for example, to include oncology treatments), shifting the care delivery paradigm toward home-first models.

A range of new models to better integrate pharmaceutical and medical care and management are emerging. Payers, particularly those with in-house pharmacy benefit managers, are using access to data on both the medical and pharmacy benefit to develop distinctive insights and better coordinate across pharmacy and medical care. Technology providers, together with a range of both traditional and non-traditional healthcare players, are working to integrate medical and pharmaceutical care in more convenient settings, such as the home, through access to real-time adherence monitoring and interventions. These players have an opportunity to access a broad range of comprehensive data, and advanced analytics can be leveraged to more effectively personalize and target care. Such an approach may necessitate cross-segment partnerships, acquisitions, and/or alliances to effectively integrate the many components required to deliver integrated, personalized, and higher-value care.

Creating and capturing new value

These materials are being provided on an accelerated basis in response to the COVID-19 crisis. These materials reflect general insight based on currently available information, which has not been independently verified and is inherently uncertain. Future results may differ materially from any statements of expectation, forecasts or projections. These materials are not a guarantee of results and cannot be relied upon. These materials do not constitute legal, medical, policy, or other regulated advice and do not contain all the information needed to determine a future course of action. Given the uncertainty surrounding COVID-19, these materials are provided “as is” solely for information purposes without any representation or warranty, and all liability is expressly disclaimed. References to specific products or organizations are solely for illustration and do not constitute any endorsement or recommendation. The recipient remains solely responsible for all decisions, use of these materials, and compliance with applicable laws, rules, regulations, and standards. Consider seeking advice of legal and other relevant certified/licensed experts prior to taking any specific steps.

Before the COVID-19 pandemic, our research indicated that profits for healthcare organizations were expected to be harder to earn than they have been in the recent past, which has been made even more difficult by COVID-19. New entrants and incumbents who can reimagine their business models have a chance to find ways to innovate to improve healthcare and therefore earn superior returns. The opportunity for incumbents who can reimagine their business models and new entrants is substantial.

Institutions will be expected to do more than align with growth segments of healthcare. The ability to innovate at scale and with speed is expected to be a differentiator. Senior leaders can consider five important questions:

• How does my business model need to change to create value in the future healthcare world? What are my endowments that will allow me to succeed?
• How does my resource (for example, capital and talent) allocation approach need to change to ensure the future business model is resourced differentially compared with the legacy business?
• How do I need to rewire my organization to design it for speed? 18 De Smet A, Pacthod D, Relyea C, and Sternfels B, “ Ready, set, go: Reinventing the organization for speed in the post-COVID-19 era ,” June 26, 2020, McKinsey.com.
• How should I construct an innovation model that rapidly accesses the broader market for innovation and adapts it to my business model? What ecosystem of partners will I need? How does my acquisition, partnership, and alliances approach need to adapt to deliver this rapid innovation?
• How do I prepare my broader organization to adopt and scale new innovations? Are my operating processes and technology platforms able to move quickly in scaling innovations?

There is no question that the next few years in healthcare are expected to require innovation and fresh perspectives. Yet healthcare stakeholders have never hesitated to rise to the occasion in a quest to deliver innovative, quality care that benefits everyone. Rewiring organizations for speed and efficiency, adapting to an ecosystem model, and scaling innovations to deliver meaningful changes are only some of the ways that helping both healthcare players and patients is possible.

Emily Clark is an associate partner in the Stamford office. Shubham Singhal , a senior partner in McKinsey’s Detroit office, is the global leader of the Healthcare, Public Sector and Social Sector practices. Kyle Weber is a partner in the Chicago office.

The authors would like to thank Ismail Aijazuddin, Naman Bansal, Zachary Greenberg, Rob May, Neha Patel, and Alex Sozdatelev for their contributions to this article.

This article was edited by Elizabeth Newman, an executive editor in the Chicago office.

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The Complete Guide to Strategic Planning in Healthcare

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supply chain

Healthcare institutions around the world must adapt their strategies to meet current trends and patient preferences. By using reliable and thoughtful planning, healthcare facilities can initiate patient-centric approaches and boost success.

Strategic healthcare planning consists of creating objectives, setting goals and then creating a plan for achievement. In other words, it’s the process of outlining goals and taking the necessary steps to achieve them. Most healthcare plans also consider government policies and technological advancements that could alter health goals and operations.

Read on to learn more about the importance of planning in healthcare.

In This Article

The Importance of Planning in Healthcare

• New Technologies
• Mass Adoption of Virtual Care
• Continued Management of Cybersecurity Risks
• Evolving Coding Requirements
• Population Health Management

The Benefits of Healthcare Strategic Planning

Questions to ask, partner with achieveit today.

Strategic planning is essential for a healthcare facility’s overall success. Planning allows organizations to adjust to the changing demands of the healthcare industry while supporting goal achievement.

You can also see the importance of strategic healthcare planning in other areas, including:

• Adapting to current trends:  Having strong plans in place can help your facility adjust to current trends. By strategically thinking about the future of the field, you can avoid surprises later. For example, a significant change facing the healthcare industry is  the rise of hybrid and remote  work. Many facilities offer telehealth services or remote appointments for patients. With strategic management in healthcare, institutions can take note of these changes and adjust upcoming hiring policies and staff positions. 
• Meeting patient needs:  Strategic planning can also aid facilities in meeting patient needs. As technological advancements progress and the number of available providers grows, patients are seeking personalized and high-quality options. Facilities can examine patient demands and use these to craft their upcoming strategy in healthcare. In turn, they can create a patient-centric approach that improves the quality of care and sets them apart from competitors.
• Reduc ing  supply chain disruption impacts:  The COVID-19 pandemic disrupted the supply chain for all industries, including healthcare. Without the proper tools and equipment, healthcare professionals cannot provide care for all patients. Your strategic plan could help you analyze current supply chain trends and alter ordering decisions in response. For instance, if you notice a specific type of equipment is consistently out of stock, you could order extra quantities for your facility.
• Meeting rising hospital numbers:  After the COVID-19 pandemic, the healthcare industry experienced  a sudden increase in hospitalizations . Strategic planning allows facilities to allocate necessary resources to meet these trends. They can also become more prepared for other potential health crises.
• Helping with public funding:  Strong performance helps healthcare facilities receive more funding from public sources. Most donors use various quality metrics to determine how much funding institutions should gain each year. A strategic plan can boost your facility’s performance on many levels, from care quality to maintaining supplies.

Overall, strategic planning in hospitals and other facilities is essential for institutional success and responding to current trends in the healthcare industry.

Top 5 Strategic Challenges in Healthcare

From the Affordable Care Act’s (ACA) influx of insured patients to the increased strain of COVID-19, healthcare facilities have been constantly adapting. Here are some examples of strategic planning in healthcare today.

1. New Technologies

In the medical field, new technologies seem to appear every day. From remote patient monitoring to robust patient portals, healthcare facilities must consider the evolution of the tools used during day-to-day care. These resources may impact workflows, budgets and the patient experience.

Many new technologies offer benefits like improved efficiency and positive experiences, but they can also create healthcare challenges in the form of new requirements for your IT team and staff training. Remaining flexible can help you accommodate these possibilities, stay ahead of the competition and improve care with modern capabilities.

2. Mass Adoption of Virtual Care

From a cost perspective, one shining light for healthcare systems is the rise of virtual care, commonly referred to as telemedicine. Using internet-enabled services, healthcare providers are able to consult with patients virtually and provide diagnoses, thereby saving time and resources associated with an in-person hospital consult.

As this technology continues to proliferate, and patients become more comfortable with interacting with their doctors over virtual systems, healthcare systems will be able to trim significant expenses across departments, helping to control costs. In creating their strategic plans, healthcare leaders should take a deep look at how they continue managing telemedicine technology to help aid in future cost savings.

3. Continued Management of Cybersecurity Risks

Data security has become a significant challenge across industries, but none more so than the healthcare industry. Due to the extensive nature of personal information inherent in healthcare records, insurance companies and healthcare systems should be cautious regarding the security of their patient records.

As regular security breaches always remind us, healthcare entities should pay special attention to the security of their systems to ensure the privacy of subscribers. Healthcare leadership will need to collaborate extensively with IT, in a strategic sense, to ensure the department has the resources and technology necessary to guarantee data security and HIPAA compliance.

4. Evolving Coding Requirements

The next version of the International Classification of Diseases (ICD)  is currently under review  in the U.S. If you’ve been in the industry for a while, you might remember the transition to ICD-10 back in 2015. Although we may not see ICD-11 for a while, healthcare strategy must consider this eventual implementation and other potential changes to reporting and documentation requirements. To ensure full reimbursement, organizations may need to upgrade existing systems and train employees accordingly.

5. Population Health Management

Healthcare systems across the country are being confronted with a new paradigm of healthcare delivery: Ensuring the overall health of demographic cohorts within their communities.

Shifts toward value-based care only increase the focus on population health, requiring healthcare leaders to design strategic plans and allocate resources to educate the populations they serve on preventative care. This will require the participation of stakeholders across departments and often will necessitate new programs to be established to help further population health interests.

Committing to a strategic plan can bring many benefits to healthcare facilities, including:

• Establishing a shared vision:  A plan requires your facility to focus on specific goals. As you develop these objectives, you and your team can establish the overall purpose of your facility. Then, you can create  concrete ways to meet this vision . You can also inform employees, shareholders and other crucial team members of this vision, inspiring members at every level. All members can unite around a shared purpose and find more value in their work, improving overall performance. 
• Prioritizing critical issues:  By focusing on a strategic plan, you can prioritize vital issues. Every healthcare facility has specific areas for improvement, whether it’s improving collaboration or meeting staffing requirements. Strategic management in healthcare allows you to identify these areas and brainstorm specific ways to address them. You can focus on resolving the most significant issues first, instead of getting overwhelmed with secondary problems.
• Improving team communication:  Strategic planning also assists with communication across your facility. Your plan should address key issues and goals, then outline the steps you will take to achieve these. You can share these plans with all institutional members, giving everyone a clear idea of future actions. With everyone on the same page, your facility can collaborate more easily and stay on track with goals.
• Enhancing motivation:  A clear vision and plan can motivate employees to work harder. They can feel empowered to make decisions that support institutional goals. As they work toward a shared purpose outlined in a healthcare strategy, they feel more motivated by their daily work and can improve their performance.
• Solidifying leadership:  All healthcare facilities rely on strong leadership to lead employees and meet goals. Leaders can use strategic plans to clearly identify goals for employees. They can clarify expected behaviors and encourage employees to work toward their personal best. Passionate leaders and hard-working employees can establish your facility as a leading healthcare option.

Because the purpose of strategic planning in healthcare is to work towards improvement, asking questions can help you. Healthcare institutions should ask a few crucial questions during their planning. By thinking about particular circumstances, you can tailor plans for your needs. These questions can also help you identify goals and develop a shared purpose.

Here are a few examples of questions to ask during strategic planning:

• What is the current financial situation of your institution? 
• What are your goals for finances moving forward?
• What areas need more help or growth?
• What are the needs of your facility’s typical population? 
• How could these needs change over time?
• What current trends in the healthcare industry or government policies could impede these goals?
• Where would you like to see your organization in five years or ten years?

You can use questions like these to establish objectives and an overall vision. Once you have developed these, you can develop steps for achievement. Structures like SMART goals can help you  create measurable and timely actions . 

At AchieveIt, we understand the importance of well-defined healthcare goals and addressing the challenges of healthcare strategy. You can move directly toward your shared vision with a strategic plan and clear-cut goals.

Our  strategic planning software  helps healthcare institutions meet their goals. The technology helps you analyze data to identify specific goals and areas for improvement. Then, we can help you form quantifiable and actionable goals that move you toward your overall purpose.

AchieveIt software also features:

• Integrated reports
• Automated reminders for deadlines and goals
• Real-time data updates
• Speedy set-ups and communication processes

Our expert team of specialists can help your facility through each step of the planning process. We can enhance your plans and offer specific suggestions for improvement. Whether you want to improve physician care or reduce waiting room times, our software can help you meet these goals.

Let’s actually do this.  Schedule a demo with AchieveIt  today.

Meet the Author   Chelsea Damon

Chelsea Damon is the Content Strategist at AchieveIt. When she's not publishing content about strategy execution, you'll likely find her outside or baking bread.

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5 Tips For Strategic Planning Professionals in Healthcare

Enhance your strategic planning with our 5 tips for healthcare professionals. Elevate your planning and contribute to your organization's success now!

In healthcare, things change quickly. Some hospitals and healthcare organizations believe that’s a reason to avoid strategic planning—because the change lurking just around the bend is sure to derail even the best-laid plans. But the truth is, a strategy can be your best resource in times of change, as long as it’s grounded in your mission and vision.

As a leading strategy management software provider, we’ve helped numerous healthcare organizations plan and execute their goals for the future. Keep reading to get our take on why strategic management in healthcare is critical for succeeding in a volatile world, and learn a few tips that can help you carry out strategic planning more effectively.

Looking for some examples of healthcare strategic plans? Download sample strategy maps created specifically for medical and healthcare organizations like yours.

Strategic management in healthcare: what is it.

Strategic management in healthcare is the process of defining the future of your organization, setting goals that will move you toward that future, and determining the major projects you’ll take on to meet those goals. It also includes sustaining that strategy focus over a period of three to five years.

Why is strategic management important in healthcare?

‍ Like other companies, healthcare organizations benefit from having a plan for the future—one that all employees are aware of and consistently working toward. Strategy should serve as a guidepost for all important decisions to make sure your facility stays on track.

But as we mentioned above, healthcare is even more complex than your average business—and frequently affected by external forces. If asked to describe how strategic management helps your facility control the future, we’d answer with the following:

• The strategic planning process naturally includes assessing changes in the external environment (through exercises like the SWOT analysis) and thus helps your organization stay on top of them.
• It provides focus and direction for daily work even as circumstances (internal or external) may change.
• It provides leaders with a consistent flow of information about organizational performance, promoting better, more timely decision-making. The availability of such data also helps organizations reprioritize or pivot as needed.

5 Tips For Healthcare Strategic Planning Professionals

1. keep your organization’s mission top-of-mind..

Mission and vision are the cornerstones of your organization and provide a foundation for strategic planning. Make sure the priorities and objectives outlined in your plan support those key elements—and reconsider any goals that are not aligned.

2. Narrow your strategy’s focus.

Too many healthcare organizations try to be everything to everyone. As a result, their strategies touch nearly every base imaginable, from being the best at research and innovation to serving as many potential patients as possible to being customer-centric, etc. Narrowing down your strategy requires courage—it may feel as if you’re passing up opportunities to improve. But in reality, you run the risk of not excelling in anything if you’re trying to achieve everything . Home in on the areas you want to pursue and direct your resources and energy to accomplishing those specific goals.

3. Align your plan with in-progress accreditations or certifications.

If you’re pursuing an accreditation or award like PHAB or Baldrige, your strategic plan needs to align with that goal. Make sure your plan points you in the right direction and supports tracking all the data required by the administering body.

4. Do a SWOT analysis.

Periodically analyzing your organization’s strengths and weaknesses, as well as external opportunities and threats, is a useful exercise that can inform your strategic plan. Follow the steps outlined here to complete the analysis, and see some healthcare-specific examples.

5. Communicate.

Strategic plans are only effective if everyone knows about them. Every department head should be charged with explaining how their team fits into the strategy and why it matters. (Read some tips here on how to effectively communicate with employees.) You’ll also need to create tailored presentations for other stakeholders—patients, administrators, community members, etc.

And finally, remember: Don’t overload yourself and your team with goals and metrics right out of the gate—having too many makes it hard to prioritize and makes communication difficult. Ease into it. The first year, start by creating a high-level plan for the organization as a whole; the following year, try to tackle planning for business units, service lines, etc.

Support Your Efforts With ClearPoint Strategy Reporting Software

Understanding why strategic planning is important in healthcare is the first step; however, the strategic planning process is complex.

In fact, creating the strategy is just the tip of the iceberg. Once it’s been launched, you need to know if you’re making progress—and that requires reporting regularly on your results.

‍ Reporting can sink even the best strategy efforts because, without the right tools, strategy management quickly becomes overwhelming. ClearPoint is the only strategy reporting software that helps healthcare organizations effectively manage all the fundamental activities that go into reporting:

• You need to gather data that will help you draw conclusions about your performance. Your data is likely scattered across locations, systems, and services. ClearPoint seamlessly integrates with your on-premise and SaaS software applications to make data collection easy.
• You need to pull together data in a way that helps you make sense of it. In ClearPoint, you can make sense of any data set. Use data aggregations and complex calculations to get your data in any format you need. Then, automatically evaluate your results so it’s easy to tell if you’re on track.
• You need to analyze data to understand the story it is telling. ClearPoint allows you to link projects with strategy objectives to understand how everything you’re doing fits together; it also facilitates the analysis of both quantitative and qualitative data. This allows your organization to spot problems early and make corrections to areas that need the most help.
• You need to create reports that your leadership teams can review and discuss for decision-making purposes. With ClearPoint, you can create beautifully branded reports (and dashboards like the one below) for any audience—your board, your management team, and your individual providers. ClearPoint lets you create reports in a variety of formats and even schedule reports to automatically generate and send.

When it comes down to it, the fundamental challenge of strategic management in healthcare is managing it all—coordinating resources and people to ensure everyone is continuously working toward a common goal, and staying on top of your successes and failures.

Ted Jackson

Ted is a Founder and Managing Partner of ClearPoint Strategy and leads the sales and marketing teams.

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Strategic Planning for Healthcare Organizations

Judith N. Aburmishan, MBA, CPA, CHBC

Neil Baum, MD

July 1, 2022

Volume 9, Issue 4, Pages 40-43

https://doi.org/ 10.55834 / plj.6555794318

A key element in business management is strategic planning, which can move a business/practice that is being buffeted by changing economic forces to one that shapes its own future. It is an organized, step-by-step review of the business, the economy, and the environment in which the business operates.

Physicians and healthcare executives can no longer treat the business of a medical organization as an afterthought. Increased regulation, dominance by government payers, remote and internet delivery systems, and electronic medical records have all entered the industry uninvited and often are met with resistance by current management.

One of the reasons healthcare managers resist change is that many of the individuals who manage medical practices and organizations come from a provider background and have been trained in the science of healthcare, not in the business of healthcare.

Strategic Planning

Choosing Strategies

One of the key elements of strategic planning is evaluating alternative strategies that have been identified as necessary next steps. A conceptually easy method of evaluating alternative strategies is to identify the project or result’s key drivers of success by having a roundtable discussion with all the stakeholders about a completed project or successful result and working backward to identify the elements that created the success.

Examples of the key drivers include:

Time to implement

Cost to implement

Impact on staff

Fiscal impact

Impact on patients

Impact on volume

The next step is to work with the implementation team to identify strategies to establish the project or produce the desired result. One strategy is for the team to develop a grid with the key elements across the top and each strategy along the left side. They then assign each strategy for each key driver a numeric score between 1 and 5, with 5 being the most positive and 1 the least positive. The strategy with the most points can be considered the most promising. For example, Table 1 illustrates that adding morning hours is the best strategy for this organization.

This is a simplified method; the rating scale can be modified to a scale of 1–10 or 1–100. In addition, the topics to consider can be changed based on the key issues that need to be addressed in the medical organization.

Although the process of getting to these strategies may seem like a considerable amount of work, time spent on this process often eliminates costly selection processes. More importantly, it puts the organization in the position of creating its own success. Medical organizations that make researched decisions regarding strategy are more successful than those that simply react to market forces.

Leaders, Teams, and Timelines

After each strategy is ranked and prioritized, the next step is to identify who will be accountable for the strategy’s implementation. In smaller groups, this often falls to one or two individuals, but having several people engaged and supporting the process will make each strategy easier to implement and will improve the chances of long-term success.

The person responsible for the strategy is also responsible for conducting the research and compiling all the relevant information necessary to create a detailed action plan. For example, if the organization plans to add morning hours, an example of a simple step-by-step process is:

Select a launch date.

Designate the earlier hours.

Determine staffing needs for additional hours.

Determine if additional hours can be staffed without increasing overhead.

Identify barriers to access by patients during nonpeak hours (building access and parking).

Develop a provider schedule.

Create a staff schedule and hire additional staff.

Publicize the new hours.

Design marketing materials that announce the new hours (ads, social media).

Develop a budget for marketing and staffing.

Submit a plan for approval by the leadership.

Finalize a launch or go-live date.

During the creation of the detailed implementation plan for any strategy, it’s important to get the feedback and buy-in of the other employees. A plan that doesn’t have employee support will be doomed to failure. Listen and acknowledge objections. It is better to recognize objections before launching the project than to try to solve problems after the launch.

The next step is to identify specific steps and assign a realistic completion date to each (see Table 2 for a simple format). It’s helpful to know how long each of the steps will take to complete so the timeline is reasonable and realistic. For example, placing ads and publicizing the new hours might require 60 minutes to call local media, or it might take weeks as internet posts are updated, websites are changed, and ad rates and other agreements are negotiated.

A process for ensuring accountability is also necessary. For a project to proceed in a timely fashion, each team member should have specific dates and times to complete assigned tasks. Often, actions necessary for completing new strategies will require team members to step outside of their comfort zone and accomplish tasks that are not in their job description ( e.g. , negotiating rates for a new ad) or are in addition to a full schedule. If the strategies are to be implemented in a timely fashion, everyone responsible for implementing the strategy must be accountable for completing their assignments on time.

Measurable Results

Just as in any clinical treatment, a strategic plan should measure the results. For example, in measuring the results of expanded hours for a medical organization, factors to be considered might include expenses, net income resulting from the new hours, and the number of new patients per week.

Once these results have been selected as measures of success, the accounting and recordkeeping system must be modified to track the relevant numbers. Most organizations do not measure revenue generated by hour or expenses incurred by hour, and they may not keep track of new patients per week. Therefore, the current bookkeeping systems should be reviewed and additional levels of recordkeeping designed so that the values used in the measurement are tracked properly from the beginning of the project. This is also critical for the start-up expenses that are incurred. Remember, what gets measured gets done!

Many accounting systems can code all income and expenses to a special “class” that can generate its own profit and loss. Depending on the significance of the strategy, accounting records measuring the results may be kept for a few months or a year, or they may become part of the regular monthly reports the accountants provide. The reports should not only cover the results for the current period (week, month, quarter), but also they should be comparable week over week or month over month, so that progress or trends can be identified.

Once the reports are designed and the systems are revised to track the relevant data, the team members accountable for the success of the project should begin receiving weekly reports on results. These reports will give the team regular and ongoing feedback regarding what is working and what is not.

The Final Step

The last step is to have a final meeting with the team members accountable for implementation and other stakeholders who have an interest in the success of the strategy. At this meeting, everyone should raise potential problems and obstacles to overcome if the project is going to be a success. Everyone should envision any obstacles or problems that are likely to occur, assume a worst-case scenario, and list potential issues. Then, put in place solutions that will resolve these problems should they appear.

Another consideration is how the new strategy will affect all areas of the enterprise and what potential problems and obstacles will be created by the new strategy. If the organization adds more hours, this will increase the traffic in the office, which could interfere with patients coming in for early blood draws.

Anticipating potential pitfalls and creating solutions will likely reduce the number of fires that need to be put out in the first few weeks of the implementation of the plan.

Proceeding from Concept to Reality

Almost by definition, a strategy can never be fully implemented because everything that is assumed when formulating it — about customers, technology, regulation, competitors, and so on — is in a constant state of flux.

CEOs and their business unit leaders must continuously evolve their strategies ( i.e., the fundamental choices listed above) if they are to remain relevant and competitive. And if that’s the case, there will always be a gap between where their companies are and what their strategies call for. Closing that gap is “implementation.” Thus, strategy and implementation are running continuously in parallel rather than in sequence, as Ken Favaro describes in his March 2015 Harvard Business Review article, “Defining Strategy, Implementation, and Execution.”

Garnering Support for the Strategy

Implementation consists of taking the actions to create something new and then evaluating the result and constantly modifying the actions until the desired result is achieved. An informal survey of business publications identifies several key elements necessary during the implementation stage of any strategy: acceptance and support for the strategy by the key stakeholders, a clear understanding of the decision-making rights of the staff accountable for implementation, and open and immediate communication from the top down and the bottom up.

Any significant strategy should be communicated to the staff throughout the planning process, and all levels of staff should have been given the opportunity to contribute to the plans. The physicians, providers, and administrators of a medical organization must be 100% in support of the strategy, and it must be clear to their staff, patients, and others that they are excited about the upcoming changes. Any hesitancy or second-guessing must be resolved immediately and not left to spread throughout the organization.

Everyone should be encouraged to bring concerns or problems to the person accountable for the strategy and be acknowledged, not ignored, when they do bring up a problem. Any problem identified is an opportunity to make the strategy more successful.

A critical part of this step is that administrators and staff be given the authority to make decisions at a certain level of operations on the spot and that the owners and higher management will support those decisions if they are within the approved guidelines. This gives each employee the ability to react quickly to unexpected issues that might arise in implementation.

Once the situation is resolved, the decision should be reported to the person accountable for implementation so that any impact of the decision on other areas of the process is identified and accounted for. In this way, the action plan is constantly being updated for new actions and revised dates. The plan should be available to the entire team and be discussed at a weekly meeting.

Declaring Completion

An often-over-looked step in implementation of a strategy or set of strategies is to declare completion when the project is operational, the strategy has been implemented, and the action is complete. Unlike a celebration by the members of an athletic team at the end of a game or match, the completion of a business project is seldom formally celebrated. The acknowledgment of completion is often obscured by day-to-day problems or the dragging out of finishing touches so that the project has been operating for months before all the details are finished.

When developing an action plan, it is always important to include milestones — places where sections of the plan can be declared complete, and the progress to date can be celebrated. At this point, some of the results from the action should be reported, and the entire group can be acknowledged for their contribution to the new reality.

Reaching milestones should be shared with not only the employees, but also all stakeholders in the organization, such as the patients, referring physicians, and hospital staff. By sharing these accomplishments, you are establishing in the minds of these people that you have an organization that is growing and expanding, and it is a great place to be. You are seen as a successful organization, and this alone can increase referrals.

Rewarding Performance

It’s a common axiom in business that what gets measured and reported gets done. This is because it’s a human trait to want to be accepted as a valuable member of the group. It is also important to be aware that direct rewards always affect performance, so we can say that what gets measured, reported on, and rewarded gets done faster.

Therefore, all strategies should have milestones, as discussed above, and along with the celebration of completion, there should be a reward. The reward doesn’t always have to be monetary; it can be recognition through an inexpensive gift, such as a coffee mug, or a prize with another perceived value, such as a coveted parking space. It really doesn’t matter; the real reward is public recognition for a job well done. These little breaks to celebrate completion keep the energy and commitment up for the project and allow the entire staff to feel part of the team.

Evaluating Success

Evaluation is the final step in the strategic management process. Without this step, the organization does not know whether it reached the desired goal and whether that goal was indeed in line with the organization’s mission and vision statements.

Every planned and executed action will produce results. The question is whether the results are what was expected or anticipated — and even whether they are results worth keeping.

The evaluation should take place 6-9 months after the project is complete and operating. By then, results will have been measured for a determined period, and performance month over month can be tracked. The project’s effect on the organization should be clear, as should the results of mid-implementation changes.

Once all the data have been analyzed, management and the implementation team should identify the three most desirable results of the project. One of the desirable items might even be a process that didn’t work well and was eliminated quickly.

The key is to identify what made those results work and then determine how that success can be replicated in any future project. When possible, a complete summary of the steps that led to the success should be documented in memo form and kept in the project resource file.

The team should also identify areas that could have been done better, then determine what led to the problems and how the process could be revised so that a different result might be obtained. These notes should also be kept in the project resource file.

It is important to set up analysis and measurement as an ongoing process. Many of the measurements should be incorporated into the monthly or quarterly reports so that the organization can make sure that the new process or strategy continues to create the success envisioned and continues to align with the mission and vision statements.

The Bottom Line

This process of identification and implementation in a business strategy is detailed and can be time-intensive. A busy organization might take a year to fully identify and implement a strategy; another organization might identify and implement a strategy during a single meeting. Regardless, the process is similar in each case.

When deciding to implement a new strategy, management should consider the time and dollars committed when determining how many of these steps to incorporate. Clearly, when the time and financial commitment are large, the process should be done in its entirety, but if it is a decision as simple as changing the professional staff uniform, some of the steps identified above can be modified and combined.

The bottom line is that for an organization to thrive and not just survive in the current healthcare environment, it needs to be proactive. This is easily accomplished by having a strategic plan to address where the practice is within the market, where it wants to be, and what gap or gaps must be closed for the practice to be operating consistently at the top of the industry.

Strategic Perspective

Critical Appraisal Skills

Differentiation

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Why Strategic Planning is Important in Healthcare

December 1, 2018

The healthcare industry is sometimes too complex and confusing for most to understand. It’s always changing due to technological advancements or government mandates . It’s becoming more important to plan the success of your healthcare organization. By preparing for the future, your organization can better prepare for the unknown. A strong strategic plan helps all levels of your business, no matter how large or small.

What is Strategic Planning in Healthcare?

Strategic planning in healthcare organizations involves creating objectives and setting goals for where the organization sees itself in the long-term. With these goals and objectives in mind, you can create a plan to achieve them. You can’t just set goals and objectives based on your needs. You also have to set them according to economic trends, government policies, and technological advancements.

Strategic planning in healthcare is critical for healthcare organizations to succeed. Understanding how your organization operates is the key to creating an effective strategic plan for the entire healthcare system to succeed. Sometimes you need to look at the hierarchy of your organization. Determining your company’s goals and setting a path to achieve these goals motivates your staff at every level to succeed with you.

Why Strategic Planning is Important in Healthcare?

Improved communication among all chains.

It’s easy for departments at every level to become confused as to what’s going on. Both your employees and stakeholders want to ensure that your organization will have a long-lasting future. They want to know where your organization is headed and the steps it takes to get there. Effective planning in healthcare management can help you create clarity and improve communication. Your strategic plan should address the key issues, your organization’s vision and goals, and the steps to get there. Your employees and stakeholders will have improved confidence and faith in your organization.

Developing and sharing a vision

With this in mind, you can make an impact on every level of your organization. Employees will be committed and motivated to help achieve your vision. Stakeholders will have the confidence and clarity they need to make sound financial decisions. Strategic planning for healthcare facilities that’s clearly developed, executed, and communicated can help each of your individuals carry out your out vision that can lead to a fulfilling future.

Increased employee motivation and engagement

Each of your employees wants to be recognized and heard. Being recognized by their leaders can greatly impact their productivity, engagement, and safety management. Every employee wants to have the responsibility to make decisions they know will benefit your organization. This also motivates them to perform above the minimum acceptable standards as outlined in the job description or performance evaluation. Employees won’t be motivated to improve themselves for an organization that doesn’t state a clear vision or a well-executed game plan.

Transformational leadership and authority

Transformational leadership is a type of leadership that inspires your employees to work harder and to do better. It incorporates techniques that have been cited in organizational behavior literature. Transformational leaders clearly communicate their organization’s vision, believe in their individual employees, and have the abilities to produce high levels of performance. Helping your employees understand how their roles can contribute your organization’s mission and vision is a crucial part of strategic management.

Increased team cooperation and collaboration

Team collaboration and cooperation is an essential component in delivering high-quality healthcare. Employees must work together to make your organization a success. Teamwork is essential for every healthcare industry in order to improve their performance and service. Effective strategic planning models in healthcare can bring your employees together to deliver quality care, great customer service, and increased performance.

Take the time to work on your strategic plan before sharing it with your employees. A well thought-out and executed strategic plan can increase teamwork, improve performance accountability, and increase employee engagement. With all levels working harmoniously together, you can quickly achieve the long-term goals of your organization.

Strategic Planning In Healthcare: 2024 Guide + Examples

Sara Seirawan

This guide contains new healthcare planning strategies, their benefits, examples, traps to avoid, and all you need to know.

Whether you’re a medical business owner, an executive, or a practitioner, my promise to you is that, by the end of this article, you’ll get a razor-sharp understanding of what strategic planning is and how it can skyrocket your operational efficiency.

Here’s a brief outline of what I’ll cover:

What is strategic planning in healthcare?

• The importance of strategic planning in healthcare
• 3 Common Mistakes when implementing strategies
• The best 8 healthcare planning strategies
• ‘Secret’ to a fruitful healthcare planning campaigns

Strategic planning in healthcare is setting long-term objectives for your medical business and an action plan to hit your target goals. It’s about taking a proactive approach to building a future-proof medical brand.

There are many strategies (which we’re going to look at) to achieve a strategy-driven business model, but before we go deep into the details, let’s check how this can benefit your practice.

The benefit of strategic planning in healthcare

With a good strategic approach comes great advantages for your medical business.

1) It protect your medical business from unforeseen risks

With the Covid-19 situation, healthcare providers no longer can afford to function reactively. And this is where SP (strategic planning) comes into place. SP, by nature, is a proactive approach. It is focused on long-term goals and future-oriented planning.

This not only immune you against any unlooked-for risks but arms you with a well-crafted plan of what should be done in the face of uncertainty.

The Planning Strategy should work as the shatterproof window for your practice.

2) It speeds up your medical business growth

Having a strategy in place holds everyone involved accountable. This means an increased commitment from your team and faster work processes.

Furthermore, according to Parkinson’s Law, any team, when giving a task, will fill whatever time was allocated for its completion. This not only quickens your operational efficiency, but it also skyrockets your work productivity and patient outcomes.

This enhanced workflow will accelerate the rate at which your medical business grows. Resulting in a faster profit cycle.

The next graph illustrates how business growth rate correlates with operational efficiency.

3) It creates a cohesive workplace for your medical business

Medical businesses routinely separate functions to hierarchical levels to achieve efficiencies, However…

These divides lead to confusion, anxiety, and distrust as employees work at cross-purposes, taking refuge in functional silos instead of a collaborative ecosystem.

This makes your medical staff sub-optimizing when you need all parts working together.

Employees go about directionless, without an understanding of their role in delivering the (non-existent) consistent experience for patients.

To combat this, putting a strategic vision for your business ensures cohesiveness and a united workforce.

The bottom line is : the result of having a shared strategic vision is coherence; the result of aimless workflow is wasted resources.

4) It increases your profit margin

Great medical business owners aim for the stars and land on the moon. And this is what makes strategic financial planning great. It forces you to aim high. This kind of planning breaks the chains of the self-limiting beliefs that are preventing you and your staff from achieving a higher rate of profit margins.

Not only that, but it also makes sure that what you’re doing is directed by a strategy and measurable KPIs (key performance indicators) and not by a mere accumulation of tactics that don’t add up together.

This results in a well-tracked process, efficient way of working, and increased profitability.

3 Common mistakes when implementing healthcare strategic planning

Let’s explore common mistakes medical business fall into when implementing strategic planning workshops.

1) Disregarding their branding efforts

Any medical practice can have strategies, but great medical businesses let their brand act as a decisional filter for their planning effort.

Does your strategy align perfectly with your brand’s core attribute? Does this plan solidify your place in the market or does it weaken your brand’s perceived value? If you don’t have a grounded brand in place, your strategy might end up hurting your medical business.

If you’d like to learn more about brand building and how can you build a mouth-watering brand, you can check our free healthcare branding guide .

2) Focusing on too many metrics and KPIs

Getting distracted by too many metrics is the fast lane to a crumbling healthcare plan. Many practices try to implement a strategy but end up focusing on the wrong metrics and getting overwhelmed.

It is best to list out critical KPIs (key performance indicators) for your medical brand before embarking on a strategy.

3) Lack of professional facilitators

Any healthcare strategic plan needs a good facilitator. A facilitator that has a great knowledge of the healthcare industry know-how and its business side of things. Common trap healthcare organizations or practices fall into is trying to implement these strategies in-house. This leads to unproductive workshops and unfruitful results.

We strongly advise you to outsource these strategies to great facilitators that have past-experience running healthcare strategic planning workshops. This will save you time and provide you with the best result for your medical business.

Best Healthcare Planning Strategies (With Examples)

Let’s go through some of the essentials of strategic planning methods in healthcare.

1) S.W.O.T Analysis Strategy

S.W.O.T is a strategic planning technique used to define your healthcare organization’s (or practice’s) Strengths , Weaknesses , Opportunities , and Threats in the competitive landscape.

SWOT Analysis arms you with a clear overview of critical metrics that are key for your performance and the overall success of your medical business.

Let’s see some examples of SWOT Diagrams in healthcare.

Hospital strategic plan: SWOT example

Strategic planning in nursing: swot example, 2) s.w.o.t strategy canvas™.

SWOT Analysis is not enough to measure the success of your efforts.

That’s why our team at unnus developed the SWOT Strategy Canvas™ (SSC), a visual representation graph of the impact SWOT has on your medical brand.

The SSC could be conducted every 6 months to track the efficiency and the effort of SWOT.

SSC graph tracks the Impact Rate of each element of the SWOT (strengths, weaknesses, opportunities, and threats). The goal is to witness a low Impact Rate of weakness and threats and a high Impact Rate of Strengths and Opportunities.

If you’d like to know more about the how-tos and other details of SWOT analysis and SSC, check our step-by-step guide on SWOT here .

3) Brand Vision Strategy

Brand Vision Strategy is a planning method used to define concrete objectives for your medical brand and set up trackable metrics for the overarching vision.

The Brand Vision Strategy has three stages:

• 15 Year Vision Timeline
• Brand Obituary
• Vision Strategy Matrix

Let’s see how the three stages overlap.

#First~ The 15 Year Vision Plan

The 15 Year vision Plan is where we start defining the higher goals and aspirations that your medical business needs to achieve.

The benefit of this stage are threefold:

• It ensures that you know where your medical business is headed
• It works as a pathway to check back against when measuring your progress
• Forces you and your team to aim high and set a bold goals

#Second~ Brand Obituary

What will happen if your practice closes its door tomorrow? Would journalists write headlines heralding your past achievements, or would their stories simply add you to a list of bygones? Would employees wonder how it could have ended, or would they have known it was inevitable? Would patients mourn your passing, or would the demise of your medical brand go unnoticed?

Unlike the 15 Year Vision Plan, this method works as a risk assessment and proactive approach for future commitment.

This exercise will force you to think through some of the key elements that make up your brand.

Here’s an example of this technique from our client, a dental practice Confidental™.

#Third~ Brand Vision Matrix

In this stage, we get strategic by defining a set of metrics to track and check back against your overarching vision. This stage focuses on tracking and measuring your progress towards the final goal of the strategy.

The metrics that we’re going to measure in this stage fall into four categories:

• Some of the most important measures of internal business performance are overall productivity rates, ability to meet deadlines on time, and ability to achieve previously set goals and this category will contain all necessary metrics for that.
• Tracking how your medical staff is growing will help facilitate the overall team goals. You’ll want to keep track of employee morale, how knowledgeable staff is, and how reliably they use the business’s best practices.
• It is critical to capture the efficiency of your stakeholders to gauge the overall performance of your medical business. This section is focused on staff, team, and shareholders.
• Most medical businesses find it useful to measure the business’s progress toward financial goals. Common measures of financial performance include revenues, return on investment, earnings, cost per case, etc.

Each category will contain the following:

• Set of objectives that are relevant to it
• Measurement and matrices
• Progress Record of each target
• Initiatives (what are we doing hit that target)

Here’s an example of a hospital’s Brand Vision Matrix:

4) Brand Cause And Effect Strategy

This strategy helps you pinpoint the root causes of complex problems that are hindering your business growth. The premise of this strategy is to take on a big problem and start dissecting it into categorical components or “sub issues”.

This way you can spot deeply-embedded issues that are causing the main problem. You can think of this strategy as more a way to treat the problem rather than finding it.

The benefits of this strategy are:

• Better visualization of your medical business risks
• Treating the causes rather than the symptoms of the problem
• Gets you out of the tunnel vision trap and provide you with a clear picture of the challenges your business might face

Here’s an example for this strategic planning technique for a hospital

5) Patient Journey Strategy

The patient journey strategy (PJS) is a visual representation strategy of your patient’s experience. It allows you to capture the path that a patient follows when they book an appointment, sign up for a care service membership, or otherwise interact with your medical business.

This strategy focuses on every single touchpoint (places where patients interact with your business) and hone in on what can be improved, fixed, or removed.

Patients are the lifeblood of your business and zero in on your patient’s pain points, challenges, and needs are critical for success.

Some of the benefits of using this strategy are:

• Anticipate multiple patient pathways
• Understand the patient’s perspective
• Inform your staff and employee about what should be improved
• Target patient more closely and increase personalization
• Improve patient experience
• Uncovering easy-to-overlook aspects of your business

Here’s a snapshot of a patient journey of medical practice and how the team identified potential issues and problems

Click here for to larger version .

6) Risk Assessment Matrix Framework

The Risk Assessment Matrix creates a framework where you can assess the urgency and the likelihood of any potential threat that might affect your business.

This strategy also allows you to better allocate your efforts across multiple aspects of your business based on the potential severity of any risk. In addition, it’s a great way to visualize and prioritize where and when should you take action against any business threats.

Risks in this framework should be ranked according to low probability and severity (one- colored green) to the highest possible likelihood (ten-colored red). Ranking them in this way lets your team tackle the biggest threats with a sharp action plan.

Here’s an example of this framework:

You can access the full version here .

7) OKR (Objectives & Key Results) Framework

OKRs stands for Objectives & Key Results. An OKR framework helps medical businesses solve their critical organizational problems. As a framework, OKRs also help healthcare leadership teams discuss how the work of the staff ties back to the overall business strategy.

OKRs should be transparent to everyone: top-down, bottom-up, and cross-functional. When everyone’s looking at the same framework, everyone has the opportunity to work toward the same outcomes.

Objectives are the vaccine to “blue sky thinking” – their goal is to help articulate what you want to accomplish. An objective is significant, concrete, and drives you to get tasks done.

Key results are the way you’re going to get those tasks done. Specific and measurable, these quantitative goals act as benchmarks for how you’ll reach objectives. (Think outcomes or results in real numbers.)

8) Brand Prioritization Framework

The Brand Prioritization Framework (BPF), or priority matrix, helps your medical teams prioritize initiatives or service lines based on their impact on your medical brand and the level of effort needed for success.

With nine “buckets” or areas of interest, your team can decide if an idea or plan is low, medium, or high effort. The team can also accordingly decide if that plan will likely have low, medium, or high impact.

As a visual framework, the Brand Prioritization Framework helps you promptly reach an agreement on quick wins, big projects, filler tasks, or anything that could waste time.

An example of the BPF for might be:

You can access a large resolution here .

The ‘secret’ to a fruitful healthcare strategic plan

A great healthcare strategy is always directed by the brand’s attributes. A strategic plan won’t take any business anywhere if it is not guided by your branding strategy.

A planning strategy could potentially hurt your healthcare brand equity (your perceived worth) if it veers off from your brand’s positioning . If you’d like to learn more about branding in healthcare and how it can overhaul your strategic plan, you can check our guide here .

If you’re busy and looking for great healthcare brand strategy facilitators, contact us here and we’d gladly help you.

• what is strategic planning in healthcare
• the benefit of strategic planning in healthcare
• 3 common mistakes when implementing healthcare strategic planning
• best healthcare planning strategies with examples
• the secret to a fruitful healthcare strategic plan

Sara Seirawan, Head of content, manages unnus's content distribution and marketing efforts. She's also a chief author at unnus Magazine.

• Free course

What are business models and how do they work in health care?

• Format Ann Somers Hogg
• Format May 17, 2022
• Health Care
• New Health Care Business Models

What are health care organizations capable of? How much change can they bear? What types of innovations can they successfully deploy? Which ones require a fundamental restructuring of how organizations operate?

The answers to these questions lies in a deeper understanding of business models, which ultimately determine what organizations can and cannot do.

The Christensen Institute has a unique framework that clarifies the often nebulous concept of a “business model.” (See Figure 1.) The framework defines a business model as four interlocking elements that, when taken together, create and deliver value: value proposition, resources, processes, and profit formula/priorities. 

Figure 1. The four components of a health care business model

Note: This graphic was originally published in Clayton M. Christensen and Mark W. Johnson, “What Are Business Models, and How Are They Built?” Harvard Business School Module Note, August 2009 (revised November 2021). It has been modified to focus on health care business models.

Business models determine an organization or company’s capabilities (what it can and can’t do) and its priorities (what it must accomplish). This, in turn, defines which innovations it can and will pursue.

The framework is powerful because it enables the prediction of which initiatives will succeed and which ones will fail. It’s critical for leaders to understand these four components of a business model so they know what to leverage from their core business when they need to employ a new business model approach.

What makes up a business model

The first component of the business model is the value proposition , or the set of value propositions, a company offers to its customers. These are the promises an organization makes to fulfill customer needs or goals. Most businesses have multiple value propositions, which are delivered to customers as products or services. In health care, this includes promises the organization makes to its consumers (a.k.a. patients or members) and customers (a.k.a. insurers or employers) as the two are often different.  

Resources are required to deliver value propositions. These are assets—people, technology, products, facilities, equipment, brands, and cash—that can be both tangible and intangible.

As an organization works to deliver its value propositions repeatedly and effectively, processes emerge. These are the habitual ways of working together that emerge as people address repeated tasks successfully. Some processes are explicitly stated, documented, and followed. Others are unstated and executed as part of the unspoken culture. Examples include training, budgeting, planning, performing a well-visit exam, etc.

To cover all the costs associated with the resources and processes needed to deliver on the value propositions, and establish a margin to promote sustainability, organizations create a profit formula . This defines how the company will maintain viability and sustainability to support its cost structure over time. To support its profit formula, organizations establish priorities that encompass policies, rules, and culture to guide investment decisions about how to use resources and processes to deliver the value proposition. 

How business models solidify

In an organization’s early days, when it is operating as a startup, all business model components are flexible. To survive infancy, organizations pivot their value propositions and adjust their resources and processes until they identify how to bring in the revenue they need to survive. Once this is determined, business model components become increasingly interdependent and resistant to change, especially in successful organizations. The ways in which the four components reinforce one another makes the business model highly interconnected, and thus more challenging to alter the longer it exists.

This happens because when resources and processes meet a need or solve a problem, they get replicated, repeated, improved, and standardized. Even though value propositions were an organization’s starting point, a mature organization can only successfully deliver value propositions that fit its existing resources, processes, and profit formula . As a result, all four components become interdependent, creating a durable set of capabilities and priorities.

What about innovation? 

So what occurs when leaders call for a change to the business model? If a proposed innovation creates friction with established capabilities, it won’t gain internal traction. Similarly, if it threatens the existing profit formula, it won’t survive. As models solidify and strengthen over time, employees become stakeholders with vested interests in supporting how the organization works. If a change or innovation threatens the established way of doing things, stakeholders will use their political power to resist the change and uphold the status quo. 

This occurs because every resource and process in a settled, successful organization exists to solve a problem for the company and to support delivering the established value propositions to consumers and customers. Stakeholders resist change that threatens the established model as long as the purpose for which the model was created still exists. 

This poses a challenge in our current health care landscape where traditional organizations are seeking to shift to value based care. We also see this conflict arise as traditional organizations seek to address drivers of health (a.k.a. social determinants of health), which aren’t established parts of their value propositions and profit formulas, nor their solidified capabilities that have led to past success.

As a result, if leaders of established organizations want to pursue an innovation that conflicts with their existing capabilities and priorities, they must establish a new business unit with a new business model approach. 

In our latest paper, coming out next week, we’ll share how this business model framework applies to leaders seeking to address drivers of health, and provide guidance for leaders to follow on their transformation journey. 

Note: This blog builds off of the HBS course note referenced under Figure 1, as well as the overview of business models found in the Institute papers “Will schools change forever?” and “You are what you treat.”

Ann Somers Hogg is the director of health care at the Christensen Institute. She focuses on business model innovation and disruption in health care, including how to transform a sick care system to one that values and incentivizes total health.

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Healthcare Business Plan Template

Written by Dave Lavinsky

Healthcare Business Plan

You’ve come to the right place to create your Healthcare business plan.

We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Healthcare companies.

Below is a template to help you create each section of your Healthcare business plan.

Executive Summary

Business overview.

Riverside Medical is a family medical clinic located in San Francisco, California. Our goal is to provide easy access to quality healthcare, especially for members of the community who have low to moderate incomes. Our clinic provides a wide range of general and preventative healthcare services, including check-ups, minor surgeries, and gynecology. Anyone of any age or group is welcome to visit our clinic to get the healthcare that they need.

Our medical practitioners and supporting staff are well-trained and have a passion for helping improve the health and well-being of our clients. We serve our patients not just with our knowledge and skills but also with our hearts. Our clinic was founded by Samantha Parker, who has been a licensed doctor for nearly 20 years. Her experience and compassion will guide us throughout our mission.

Product Offering

Riverside Medical will provide extensive general care for all ages, creating a complete healthcare solution. Some of the services included in our care include the following:

• Primary care: annual checkups, preventative screenings, health counseling, diagnosis and treatment of common conditions
• Gynecology: PAP tests, annual well-woman exam, and family planning
• Pediatrics: infant care, annual physicals, and immunizations
• Minor procedures: stitches, casts/splints, skin biopsies, cyst removals, and growth lacerations
• Health and wellness: weight loss strategies, nutrition guidance, hormone balance, and preventive and routine services

The costs will depend upon the materials used, the physician’s time, and the amount designated for each procedure. Medical bills will be billed either directly to the patient or to their insurance provider.

Customer Focus

Riverside Medical will primarily serve the community living and working within the San Francisco bay area. The city is diverse and growing and includes people of all ages, ethnicities, and backgrounds. Everyone is welcome to visit our clinic to receive the health care they need.

Management Team

Riverside Medical’s most valuable asset is the expertise and experience of its founder, Samantha Parker. Samantha has been a licensed family doctor for 20 years now. She spent the most recent portion of her career on medical mission trips, where she learned that many people are not privileged to have access to quality medical services. Samantha will be responsible for ensuring the general health of her patients and creating a viable and profitable business medical practice.

Riverside Medical will also employ nurses, expert medical staff, and administrative assistants that also have a passion for healthcare.

Success Factors

Riverside Medical will be able to achieve success by offering the following competitive advantages:

• Location: Riverside Medical’s location is near the center of town. It’s visible from the street with many people walking to and from work on a daily basis, giving them a direct look at our clinic, most of which are part of our target market.
• Patient-oriented service: Riverside Medical will have a staff that prioritizes the needs of the patients and educates them on the proper way how to take care of themselves.
• Management: Samantha Parker has a genuine passion for helping the community, and because of her previous experience, she is fully equipped and overqualified to open this practice. Her unique qualifications will serve customers in a much more sophisticated manner than our competitors.
• Relationships: Having lived in the community for 25 years, Samantha Parker knows many of the local leaders, newspapers, and other influences. Furthermore, she will be able to draw from her ties to previous patients from her work at other clinics to establish a starting clientele.

Financial Highlights

Riverside Medical is seeking a total funding of $800,000 of debt capital to open its clinic. The capital will be used for funding capital expenditures and location build-out, acquiring basic medical supplies and equipment, hiring initial employees, marketing expenses, and working capital.

Specifically, these funds will be used as follows:

• Clinic design/build: $100,000
• Medical supplies and equipment: $150,000
• Six months of overhead expenses (rent, salaries, utilities): $450,000
• Marketing: $50,000
• Working capital: $50,000

The following graph below outlines the pro forma financial projections for Riverside Medical.

Company Overview

Who is riverside medical, riverside medical history.

Samantha Parker started the clinic with the goal of providing easy access to good quality health service, especially to those members of the community with low to moderate income. After years of planning, she finally started to build Riverside Medical in 2022. She gathered a group of professionals to fund the project and was able to incorporate and register Riverside Medical with their funding support.

Since its incorporation, Riverside Medical has achieved the following milestones:

• Found clinic space and signed Letter of Intent to lease it
• Developed the company’s name, logo, and website
• Hired a contractor for the office build-out
• Determined equipment and fixture requirements
• Began recruiting key employees with previous healthcare experience
• Drafted marketing campaigns to promote the clinic

Riverside Medical Services

Industry analysis.

The global healthcare market is one of the largest and highest-valued industries in the world. According to Global Newswire, the global healthcare services market is currently valued at $7548.52 billion and is expected to reach $10414.36 billion in 2026. This growth is expected to continue for the foreseeable future.

The biggest drivers of industry growth throughout the next decade will be a continual increase in illnesses and diseases as well as a quickly aging population. With more people aging and needing daily/frequent care, hospitals and medical clinics are bound to be in even more demand than they already are.

One obstacle for the industry is the rising cost of care. Though this results in greater profits, more and more Americans cannot afford basic medical care. Therefore, they are opting out of procedures they believe are unnecessary or unimportant.

Despite the challenges of the next decade, the industry is still expected to see substantial growth and expansion.

Customer Analysis

Demographic profile of target market.

Riverside Medical will serve the residents of the San Francisco bay area as well as those who work in the area.

The population of the area experiences a large income gap between the highest earners and the lowest earners. Therefore, it is hard for middle and lower-class families to find quality care that is affordable. As a result, they are in need of the services that we offer and are looking for accessible medical care.

The precise demographics of San Francisco are as follows:

Customer Segmentation

Our clinic is a general family practice and will treat patients of all ages, incomes, physical abilities, races, and ethnicities. As such, there is no need to create marketing materials targeted at only one or two of these groups, but we can appeal to all with a similar message.

Competitive Analysis

Direct and indirect competitors.

Riverside Medical will face competition from other companies with similar business profiles. A description of each competitor company is below.

City Medical

Founded in 2008, City Medical is a membership-based, primary-care practice in the heart of the city. City Medical offers a wide range of primary care services for patients who subscribe to the practice for an annual fee. Patients enjoy personalized care, including office visits, as well as the diagnosis and treatment of common health problems. The patient membership fee covers the services listed below, and most care is received in-office. However, some additional services, such as lab testing and vaccinations, are billed separately. Furthermore, though the annual fee is convenient for some, it is too high for many families, so many are priced out of care at this facility.

Bay Doctors

Bay Doctors is a primary care practice that provides highly personalized medical care in the office or patients’ homes. Bay Doctors includes a team of dedicated healthcare professionals with dual residency in Emergency Medicine and Internal Medicine. The practice offers same-day/next-day appointments, telemedicine, office visits, and home visits. Some of the medical care services they provide are primary care, urgent care, emergency care, gynecology, pediatrics, and minor procedures.

Community Care

Established in 1949, Community Care is a non-profit regional healthcare provider serving the city and surrounding suburbs. This facility offers a wide variety of medical services, including 24-hour emergency care, telemedicine, primary care, and more. In addition to their medical care, they have a wide variety of fundraising activities to raise money to operate the hospital and help families cover the costs of their care.

Competitive Advantage

Riverside Medical enjoys several advantages over its competitors. These advantages include:

Marketing Plan

Brand & value proposition.

The Riverside Medical brand will focus on the company’s unique value proposition:

• Client-focused healthcare services, where the company’s interests are aligned with the customer
• Service built on long-term relationships
• Big-hospital expertise in a small-clinic environment

Promotions Strategy

The promotions strategy for Riverside Medical is as follows:

Riverside Medical understands that the best promotion comes from satisfied customers. The company will encourage its patients to refer their friends and family by providing healthcare benefits for every new client produced. This strategy will increase in effectiveness after the business has already been established.

Direct Mail

The company will use a direct mail campaign to promote its brand and draw clients, as well. The campaign will blanket specific neighborhoods with simple, effective mail advertisements that highlight the credentials and credibility of Riverside Medical.

Website/SEO

Riverside Medical will invest heavily in developing a professional website that displays all of the clinic’s services and procedures. The website will also provide information about each doctor and medical staff member. The clinic will also invest heavily in SEO so the brand’s website will appear at the top of search engine results.

Social Media

Riverside Medical will invest heavily in a social media advertising campaign. The marketing manager will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.

Riverside Medical’s pricing will be lower than big hospitals. Over time, client testimonials will help to maintain our client base and attract new patients. Furthermore, we will be able to provide discounts and incentives for lower-income families by connecting with foundations and charities from people who are interested in helping.

Operations Plan

The following will be the operations plan for Riverside Medical.

Operation Functions:

• Samantha Parker is the founder of Riverside Medical and will operate as the sole doctor until she increases her patient list and hires more medical staff. As the clinic grows, she will operate as the CEO and take charge of all the operations and executive aspects of the business.
• Samantha is assisted by Elizabeth O’Reilly. Elizabeth has experience working as a receptionist at a fast-paced hospital and will act as the receptionist/administrative assistant for the clinic. She will be in charge of the administrative and marketing aspects of the business.
• Samantha is in the process of hiring doctors, nurses, and other medical staff to help with her growing patient list.

Milestones:

The following are a series of path steps that will lead to the vision of long-term success. Riverside Medical expects to achieve the following milestones in the following twelve months:

3/202X Finalize lease agreement

5/202X Design and build out Riverside Medical location

7/202X Hire and train initial staff

9/202X Kickoff of promotional campaign

11/202X Reach break-even

1/202X Reach 1000 patients

Financial Plan

Key revenue & costs.

Riverside Medical’s revenues will come primarily from medical services rendered. The clinic will either bill the patients directly or their insurance providers.

The major cost drivers for the clinic will include labor expenses, lease costs, equipment purchasing and upkeep, and ongoing marketing costs.

Funding Requirements and Use of Funds

Key assumptions.

Below are the key assumptions required to achieve the revenue and cost numbers in the financials and to pay off the startup business loan.

• Year 1: 120
• Year 2: 150
• Year 3: 200
• Year 4: 275
• Year 5: 400
• Annual lease: $50,000

Financial Projections

Income statement.

Balance Sheet

Cash Flow Statement

Healthcare Business Plan FAQs

What is a healthcare business plan.

A healthcare business plan is a plan to start and/or grow your healthcare business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Healthcare business plan using our Healthcare Business Plan Template here .

What are the Main Types of Healthcare Businesses?

There are a number of different kinds of healthcare businesses , some examples include: Nursing care, Physical home health care, or Home health care aides:

How Do You Get Funding for Your Healthcare Business Plan?

Healthcare businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Healthcare Business?

Starting a healthcare business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Healthcare Business Plan - The first step in starting a business is to create a detailed healthcare business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your healthcare business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your healthcare business is in compliance with local laws.

3. Register Your Healthcare Business - Once you have chosen a legal structure, the next step is to register your healthcare business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your healthcare business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Healthcare Equipment & Supplies - In order to start your healthcare business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your healthcare business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Other Helpful Business Plan Templates

Nonprofit Business Plan Template Non-Emergency Medical Transportation Business Plan Template Medical Practice Business Plan Template Home Health Care Business Plan Template

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Successful business planning for new programs in health care organizations

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• PMID: 10111952
• DOI: 10.1177/016327879101400104

Health care organizations implement business strategies through programs and services, and success depends on careful program design and execution. A conscientious design requires thorough efforts in organizing the planning process, conducting the decision analysis, and obtaining approval for a program. Weak methods and processes in the management of these efforts can result in faulty assumptions and costly errors in the development of new health care ventures, thus preventing the achievement of financial and operating goals. This article reviews the stages of business planning, and the points at which success may be impaired.

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Medical Clinic Business Plan PDF Example

• February 28, 2024
• Business Plan

Creating a comprehensive business plan is crucial for launching and running a successful medical clinic. This plan serves as your roadmap, detailing your vision, operational strategies, and financial plan. It helps establish your medical clinic’s identity, navigate the competitive market, and secure funding for growth.

This article not only breaks down the critical components of a medical clinic business plan but also provides an example of a business plan to help you craft your own.

Whether you’re an experienced entrepreneur or new to the healthcare industry, this guide, complete with a business plan example, lays the groundwork for turning your medical clinic concept into reality. Let’s dive in!

Our medical clinic business plan is carefully designed to cover all the important parts needed for a good strategy. It explains how the clinic will run, how we’ll take care of patients, how we’ll tell people about our services, what the healthcare situation is like, who our competitors are, who’s in charge, and how much money we expect to make.

• Executive Summary : Provides an overview of the Medical Clinic’s business concept, healthcare market analysis , management structure, and financial strategy.
• Facility & Location: Describes the clinic’s physical setup, including its architectural design, medical equipment, patient amenities, and the strategic choice of its location to maximize accessibility for its target patient base.
• Treatments & Pricing: Enumerates the healthcare services the clinic will provide, from general medical consultations to specialized treatments, alongside a transparent pricing model .
• Key Stats: Shares industry size , growth trends, and relevant statistics for the healthcare market.
• Key Trends : Highlights recent trends affecting the healthcare sector, such as technological advancements, patient care innovations, and regulatory changes.
• Key Competitors : Analyzes the main competitors in the vicinity and differentiates the clinic based on services, patient care quality, and operational efficiency.
• SWOT: Strengths, weaknesses, opportunities, and threats analysis tailored to the healthcare context.
• Marketing Plan : Strategies for attracting and retaining patients, including digital marketing, community health programs, and patient service excellence.
• Timeline : Key milestones and objectives from the clinic’s establishment through the first year of operation, including licensing, staff recruitment, and service launch.
• Management: Information on the healthcare professionals managing the medical clinic and their roles, emphasizing their medical expertise and healthcare management experience.
• Financial Plan: Projects the clinic’s 5-year financial performance, including revenue from medical services, operational costs, profits, and expected expenses, ensuring a sustainable and profitable healthcare service model.

Medical Clinic Business Plan

Fully editable 30+ slides Powerpoint presentation business plan template.

Download an expert-built 30+ slides Powerpoint business plan template

Executive Summary

The Executive Summary introduces our medical clinic’s business plan, offering a concise overview of the clinic and its healthcare services. It details our market positioning, the comprehensive medical services we provide, its location, size, and an outline of our day-to-day operations. 

This section will also delve into how our clinic will integrate into the local healthcare market, including an assessment of the direct competitors in the area, identifying who they are, and highlighting our clinic’s unique selling points that set us apart. 

Additionally, it includes information about our management and co-founding team, outlining their roles and contributions to the clinic’s success. A summary of our financial projections, including expected revenue and profits over the next five years, will also be presented to offer a clear view of our clinic’s financial outlook.

Make sure to cover here _ Business Overview _ Market Overview _ Management Team _ Financial Plan

Dive deeper into Executive Summary

Business Overview

For a medical clinic, the Business Overview section can be concisely structured into 2 main components:

Facility & Location

Briefly describe the clinic’s facilities, highlighting the state-of-the-art medical equipment, patient-centric design, and a welcoming atmosphere that ensures comfort and privacy.

Mention the clinic’s strategic location, emphasizing its accessibility and conveniences such as proximity to main transit routes and ample parking. Explain how this location was selected to serve the clinic’s target patient demographics effectively.

Treatments & Pricing

Detail the comprehensive range of medical services provided, from routine health check-ups to specialized treatments in areas like cardiology, pediatrics, or orthopedics.

Describe your pricing model, ensuring it mirrors the high standard of care offered and is competitive within the healthcare market. Highlight any health plans, membership options, or loyalty programs designed to offer added value to patients, fostering long-term relationships and patient loyalty.

Make sure to cover here _ Clinic & Location _ Treatments & Pricing

Market Overview

Industry size & growth.

Start your medical clinic business plan by looking at how big the healthcare world is, especially for the services you provide like general health, special treatments (skincare, children’s health), or quick care. Think about how this area is growing and where you might find new chances to grow.

Key market trends

Then, talk about what’s new in healthcare, like how people want care that’s just for them, using tech to help patients (like video doctor visits or digital health records), and focusing on keeping people healthy before they get sick. Point out that people are looking for services that meet their specific health needs and that there’s a growing interest in clinics that care for the whole person.

Key competitors

Lastly, look at who you’re up against, which could be big hospitals, small clinics that focus on one area of health, or even online health services. Think about what makes your clinic different and better, maybe because of the great care you give, the wide range of services you have, or new ways you’re bringing health care to people. This part should clearly say why people need medical services, who else is providing them, and how your clinic can stand out and do well in this busy world.

Make sure to cover here _ Industry size & growth _ Key market trends _ Key competitors

Dive deeper into Key competitors

First, conduct a SWOT analysis for the medical clinic , identifying Strengths such as a team of expert medical professionals and a comprehensive suite of healthcare services. Weaknesses might include factors like high operational costs and the complexity of insurance processes. Opportunities can arise from the growing emphasis on health and wellness and the potential for telemedicine services. Threats could stem from increased competition and the impact of economic downturns on discretionary healthcare spending.

Marketing Plan

Next, develop a marketing strategy aimed at attracting and retaining patients. This strategy should focus on targeted advertising to reach specific demographics, offering promotional incentives for referrals, maintaining an active and engaging presence on social media, and fostering community ties through health education and events.

Finally, create a detailed timeline that marks essential milestones for the clinic. This includes the initial setup and opening phase, followed by the launch of marketing initiatives, efforts to expand the patient base, and strategies for broader service offerings, all designed to ensure the clinic progresses with a clear and defined purpose.

Make sure to cover here _ SWOT _ Marketing Plan _ Timeline

Dive deeper into SWOT

Dive deeper into Marketing Plan

The management section focuses on the medical clinic’s management and their direct roles in daily operations and strategic direction. This part is crucial for understanding who is responsible for making key decisions and driving the medical clinic toward its financial and operational goals.

For your medical clinic business plan, list the core team members, their specific responsibilities, and how their expertise supports the medical clinic’s mission.

Financial Plan

The Financial Plan section is a comprehensive analysis of the medical clinic’s financial strategy, including projections for revenue, expenses, and profitability. It lays out the clinic’s approach to securing funding, managing cash flow, and achieving breakeven.

This section typically includes detailed forecasts for the first 5 years of operation, highlighting expected revenue, operating costs and capital expenditures.

For your medical clinic business plan, provide a snapshot of your financial statement (profit and loss, balance sheet, cash flow statement), as well as your main assumptions (e.g. prices, customers, expenses, etc.).

Make sure to cover here _ Profit and Loss _ Cash Flow Statement _ Balance Sheet _ Use of Funds

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How to Write a Business Plan for Healthcare

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How to Start a Financial Services Business

Example of a medical transportation business plan, how do i start a home business caring for elderly people.

• How to Create an Audit Template for a Client Account Review
• How to Get Federal Funding for a Clinic Start-Up

Writing a business plan for a healthcare involves preparing a document that outlines the services you plan to provide and how you intend to run your company. Health care businesses usually deal with reimbursement, fee schedules, billing systems, managed care contracts and operational issues. By describing how your company handles these challenges, you can prove to potential investors that your business strategy is sound and worthy of their investment.

Available Internet Resources

Use the resources provided by websites, such as the Business.gov and the Small Business Administration Small Business Planner websites, to get started writing your health care business plan. Use the self-assessment tool provided by the Small Business Administration website as well as other resources, such as free online courses, access to online mentoring and templates.

Description of Your Health Care Business

Write a description of your health care business. For example, list how your service offers elderly or disabled clients non-medical support at home. If you plan to purchase and run a franchise operation, the parent company typically provides information and training that describes the business.

For example, urgent care center businesses typically provide care by a certified physician, on-site lab services, prescription services and extended hours. Describe the skills and experience of your staff, such as technicians.

Marketing Strategy and Competitive Analysis

Use resources, such as the Plunkett Research website, to identify the industry outlook and trends in the health care industry. Identify your competitors. Analyze their strengths and weaknesses. Prepare your own promotional campaigns, which could mean describing your plans to develop a website to advertise your services or conduct an email marketing campaign to attract new customers.

Describe your community and how you intend to obtain referrals, such as making connections with doctors and hospital administrative personnel. These health care professionals frequently refer patients requiring home health care to local reputable agencies providing quality service to discharged patients.

Organization and Management 

Add a section describing how you intend to organize your health care business. List the software programs you intend to use for charting and billing. Establish a mechanism for receiving payment and obtaining reimbursement for services. List the licenses required to operate a health care business in your state, using the resources provided by the Business.gov website.

Ensure that you meet the guidelines for providing health care services and that your services can be reimbursed by Medicare, Medicaid and private insurance.

Financial and Strategic Goals

Describe how you plan to finance your company and specify a multi-year plan. For example, state the number of patients you hope to serve by the end of the first year. Classify these patients by type, such as home health care or personal injury cases. Set success criteria, such as 80 percent customer satisfaction as reported by follow-up surveys you conduct with clients.

Use the resources provided by the Business.gov website to pay your taxes and ensure you adhere to all the required regulations.

• Bplans.com: Free Medical and Health Care Business Plans
• Applied Health Strategies: Working Draft of the Safety Net ACO Business Plan for the “Next Coalition”
• Entrepreneur: Health and Personal Care
• SCORE: Templates for Your Business
• Small Business Administration: Assessment Tool

Tara Duggan is a Project Management Professional (PMP) specializing in knowledge management and instructional design. For over 25 years she has developed quality training materials for a variety of products and services supporting such companies as Digital Equipment Corporation, Compaq and HP. Her freelance work is published on various websites.

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18 Health Care Business Ideas for Passionate Entrepreneurs

Rieva Lesonsky covers small-business trends, employment and leadership advice. She is the CEO of GrowBiz Media, a media company specializing in small business and entrepreneurship. Before GrowBiz Media, Rieva was the editorial director at Entrepreneur Magazine.

Sally Lauckner is an editor on NerdWallet's small-business team. She has over 15 years of experience in print and online journalism. Before joining NerdWallet in 2020, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content and specializing in business financing. Her prior experience includes two years as a senior editor at SmartAsset, where she edited a wide range of personal finance content, and five years at the AOL Huffington Post Media Group, where she held a variety of editorial roles. She is based in New York City.

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The health care sector is an amazing place for aspiring entrepreneurs to open up shop. Exploring health care business ideas is smart for lots of reasons.

There’s an opportunity to do a world of good by serving an aging American population and helping those struggling with the national drug crisis. There are lots of new medical and technological advances, and widespread interest in health and wellness, too. And those are all great incentives for passionate entrepreneurs.

Plus, these factors combined mean there's a thriving market for health-related businesses. Aspiring new business owners can turn one of many health care business ideas into a viable way to make a living, including those entrepreneurs who want to work remotely.

This list of health care business ideas should get you started — and maybe inspire you to explore starting a business.

Why businesses in health care are worth exploring

Nationwide spending on health is projected to grow at an average rate of 5.5% annually through 2026. That’s one percentage point faster than the national GDP is projected to grow during that same time. And by 2026, health care is projected to account for nearly 20% of the GDP.

Employment in health care-related occupations is projected to grow 18% from 2016 to 2026, much faster than the average for all occupations, according to the U.S. Bureau of Labor Statistics. Nearly half of the 20 occupations projected to have the highest percentage increase in employment by 2026 are in the health care industry.

What that spells is a lot of opportunity.

One big reason for the surge in health care spending: By 2030, the Census Bureau projects, approximately one-fifth of the population will be 65 and older. This will be the first time in history that the number of Americans over age 65 will surpass the number of Americans under 18.

Keep those numbers in mind as you look through this list of health care business ideas.

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Once we uncover your personalized matches, our team will consult you on the process moving forward.

18 health care business ideas to consider

1. medical transcription services.

Medical transcriptionists transcribe doctors’, nurses’ and other health care practitioners’ voice recordings into written documents for patients’ records. Speech recognition technology has definitely improved the efficiency of medical transcription, sure. But it certainly hasn’t yet replaced the need for human transcriptionists to review and correct the transcriptions to make sure they’re accurate.

This is a great business to run from home because you can make your own hours, and all of the work can be done digitally. Plus, if you’re digitally savvy and can create an efficient (and secure) way to share files, you can really one-up the competition.

2. Medical records management

Start a service that manages medical records for hospitals, clinics and doctors’ offices. You can work with clients to identify the best records management systems, implement them and provide their staff with training on how to use the systems.

Another approach? You can offer full-service medical records management, and clients can outsource the work to you. This can be helpful for boutique practices and sole practitioners who need the organization but can’t afford the in-house staff.

3. Physical/occupational therapy center

Physical therapists help patients recover from injuries to regain their full range of motion and reduce pain. Occupational therapists provide more specific therapy to help patients perform tasks of daily living, such as dressing themselves or feeding themselves. You can specialize in one or the other, or put both under one roof. Note that this does require certification.

4. Develop a health care app

Both health care providers and individuals alike are increasingly turning to mobile apps to track, record and manage medical conditions. The world is your oyster if you’re skilled in app development, so you might want to consider developing your own health care app targeting these markets. Do some field research to find out where your skills can fit a need.

5. Diabetic care center

According to the CDC, 9.4% of all Americans either have diabetes or are prediabetic . Opening a diabetic care center can help diabetic patients improve their quality of life by providing nutrition counseling, dialysis and other medical services. You can also provide preventive help such as teaching healthy eating habits or providing support groups for diabetics.

6. Home health care service

A home health care business provides in-home medical care for recently discharged hospital patients, patients with chronic health conditions, seniors and others who need assistance managing their health.

In states with rapidly aging populations, like Florida and California, not only could this be a benefit to the community — but also a strong business prospect for you.

7. Medical foot care

A growing population of seniors and diabetics means more need for foot care services. Something as simple as trimming toenails can be impossible for seniors and overweight patients who can’t reach their feet. You can either open a foot care clinic or save patients a trip to the podiatrist by providing mobile foot care services in their homes or in a van. You’ll need to train as a podiatrist or hire one.

8. Drug treatment/rehabilitation center

As drug use has escalated to become a national crisis in the United States, legitimate places for people to seek treatment for their addictions and rebuild their lives are needed more than ever. Every day, more than 115 Americans die after overdosing on opioids, according to the National Institute on Drug Abuse .

Open a drug treatment and rehabilitation center to help clients with drug addiction. You can specialize in different types of patients, such as juveniles or more senior patients.

9. Childbirth services

Today's expectant parents want to control every aspect of childbirth, and that often includes having a midwife or doula present at the birth. The use of midwives is increasing , according to the American College of Nurse-Midwives.

Midwives are trained health care providers who assist women during childbirth, while a doula is more like a pregnancy coach who helps couples arrange all aspects of the birth and caring for the newborn. You can either become certified yourself or open a business that employs contractors under your umbrella.

10. Medical billing service

Medical billing requires performing complex coding when submitting insurance claims. Keep in mind, certification is required in this field to ensure that doctors and other health care practitioners get paid.

Although big hospitals and health care organizations often have in-house staff, small medical practices that don’t have time to manage billing and coding themselves are an ideal market for medical billing services. Acquire and learn medical billing software, get trained in proper coding and target these smaller medical practices to take medical billing hassles off their hands. And you can even earn your certification online.

11. Nutritionist/dietitian

If you want to help people improve their nutritional intake and habits, you can build a business as a nutritionist or dietitian. Only nutritionists who get a license with the Commission on Dietetic Registration, or CDR, can advertise themselves as dietitians. Some states regulate nutritionists and others don’t.

You can specialize in different types of clients, such as sports nutrition, nutrition for weight loss or holistic nutrition.

12. Alternative health care

Acupuncture and massage therapy are two alternative health care business ideas that are becoming more popular. Many are using these services to supplement their traditional medical treatment — or as a primary treatment unto itself.

Check with your state to see what the requirements are to practice; they vary across the country. Even when health insurance plans don’t provide coverage, Americans are more willing to pay out-of-pocket for these types of care than they used to be.

13. Health information website

If you have health care expertise — or access to people who do — consider starting a website to provide health care information and advice. You can create all kinds of content, such as podcasts, YouTube videos and even online classes, in addition to blog posts.

You might even be able to get health care experts to contribute content for free in exchange for the publicity your site offers. There are a lot of options; just make certain that you do some market research to figure out the white space to fill, and find viable revenue streams to make your business highly sustainable, too.

14. Medical supply sales

Seniors, people with disabilities and those with chronic illnesses have an ongoing need for medical supplies and equipment. This can include walkers, braces, bedpans and more.

Although you can open a physical store, keep in mind that your target customers will often have difficulty getting to your location, so an online store is likely a better bet. Again, research here will be key so you can make sure that you’re stocking the right products and marketing in the right places.

15. Stylish uniforms for medical professionals

Medical professionals who wear scrubs to work are always looking for affordable and durable uniforms. They’re also looking for stylish options — and those aren’t as easy to find. Start a store selling scrubs, comfortable shoes, lab coats and other gear for health care professionals. You can design the goods yourself or source them from multiple places, and encourage your customers with word-of-mouth incentives to drive sales.

16. Hearing aid dispensary

Because hearing aids generally aren’t covered by health insurance, this can be a lucrative health care business idea if you find the right customer base. You might want to open a location to provide hearing tests, recommendations and hearing aid fittings and care. You could even outfit a mobile van to come to customers' homes to clean and repair their hearing aids as an extra service.

17. Respite care service for caregivers

Whether they’re parents caring for severely disabled children or adult children caring for aging parents, caregivers have a stressful job. Provide a much-needed break for caregivers by starting a respite care business. Your caregivers can come in for a few hours or a few days, giving family caregivers a chance to rest.

18. Medical marijuana dispensary

As a growing number of states legalize medical marijuana, this $8 billion industry is projected to continue its growth, according to IBISWorld . Opening a medical marijuana dispensary can be a profitable business in the right location; however, changing state and federal regulations could affect your startup. (Marijuana is still illegal under federal law.)

Frequently asked questions

How do i start a health care business.

When you start a health care business, it can be helpful to begin by writing a business plan, registering your business and hiring employees. While all businesses need to obtain any necessary licenses, permits and forms of insurance, health care businesses may require earning professional designations or taking out extra forms of insurance. Research what you need to run your business safely and legally before you launch.

How do I start a home health care business?

Starting a home health care business requires a high level of professionalism, even if you’re running a business where the bulk of the work will occur in your clients’ homes. For example, you may still need office space to train your employees. Like starting any business, it is important to write a business plan, register your business and create proper business procedures. You should also obtain any necessary licenses, permits and insurance for running a business in your area, as well as for working within the health care industry.

How do I write a business plan in health care?

In general, a business plan is an organizational tool that business owners can follow when they need guidance. This document can also tell outside parties, such as investors, about your business and its value. A good business plan should include thorough research about your industry, market and competitors, as well as dive into your financials, products and services and your marketing plan. When writing a business plan in health care, it will be important to do heavy research on the industry, as well as outline clearly what medical services or products you will be offering and why you or your staff are qualified to run a health care business safely.

Start Your Dream Business

The bottom line

There are a lot of potential great health care business ideas for entrepreneurs interested in the health care sector — and many opportunities for health care business ideas to become real, sustainable businesses.

Be sure to check regulations, licensing, professional training or degrees needed for these businesses before you get started, and do lots of market research. Don’t forget that “care” part, of course.

On a similar note...

• For Proposal Writers

Understanding Healthcare Business Models: Feasibility vs. Possibility

• Hazel Nguyen

Developing a company requires some work for the entrepreneur about business planning, and within the healthcare sector, a highly innovative field, the exercise could appear complex. However, some tools such as healthcare business models and innovative approaches exist to support the entrepreneur or the business development manager in the design and the mapping of his or her activities, customers, channels, etc.

A business model is a high-level conceptual description of the activities of value creation (the creation of a product that meets customers’ needs), value capture (the marketing, support, and sale of the product), and value architecture (the chain of activities that link customers to the suppliers of a product).  To start, you need to understand how the business model can affect your business. As the information revolution is slowing its influence in the business world, a new trend is emerging in the face of platform business models.

The Feasibility and Application of a Good Healthcare Business Model

The healthcare niche is seemingly stagnated when it comes to its transformation and adoption of the business model, to be specific: the canvas business model. It is important to understand that the models entail the intertwining of technology with the physical and biological aspects of living. It entails people relying on networks and various techniques to carry out activities that were not possible in the recent past. The state of the platform model in the healthcare sector remains largely underutilized. Despite the challenges, healthcare platform models have been established.

An organization’s healthcare business plan should be consistent with its overall mission and vision and should consider the competitive market. While the business plan is a written document, it is subject to change. Factors such as a shift in community demographics or competitors’ actions will require an organization to revisit its plan and revise it as necessary.

The typical business plan includes a detailed discussion of the proposed healthcare service, the identification of target markets, and financial projections. After the new service has been implemented, planners evaluate it over a multiyear. The initiative’s development can be monitored by setting targets and seeing whether those targets are met in that three-year time frame. Periodic evaluation over multiple years will return a fair, realistic assessment of the initial period, usually three years.

The 4 Important Elements Your Business Plan Must Cover

An example of business model is business model canvas. This is a template for developing new business models or documenting existing ones. It is designed for use by a group of people to either brainstorm a new business model, or to discuss, analyze, and change an existing business model. It splits a business model into four components — the client, the offer, resources, and finance — which are then further broken down into nine building blocks, each interacting with the other. The business model is a tool gathering all components of the strategy and the operations and helping the owners to plan their business. Instead of focusing on the 9 elements of the regular canvas business model, you can answer these 4 elements when it comes to writing a business plan.

A good business plan is always evolving, and every last detail is rarely ever set in stone. This means that the first version of your plan probably won’t be your last. As your business progresses and your ideas about it shift, it’s important to revisit your business plan from time to time to make sure it reflects those changes, keeping everything as accurate and up-to-date as possible.

Product-Market-Fit

A difficult decision for a startup or entrepreneur is understanding when your product is good enough to drive sustainable, scalable customer growth. Trying to scale too early can easily kill your startup. Using a survey asking the key question: How would you feel if you could no longer use the product with your customers gives you an objective measure?

Then, if you find that over 40 % say that they would be “very disappointed” without your product, there is a great chance you can build sustainable, scalable customer acquisition growth on this “must-have” product.

You may meet another questions such as: What painful problem are you solving for your patients? And what is your elegant solution to that problem? You can use these questions to cover why your new product delivers crazy value to your patients by breaking down the ways that it benefits your customers and meets a highly specific need for them. Besides, the market overview provides color around the industry that you will be competing in as it relates to your product or service.

Market overview will include statistics about industry size, growth rate, trends, and overall outlook. If this part of your business plan can be summed up in one word, it’s research. The idea is to gather as much raw data as you can to make the case for your readers that: This is a market big enough to get excited about. And, you can capture a big enough share of this market to get excited about. Now it’s time to use your product to get into the finer details around the mechanics of how it does so.

Key questions to consider:

• What are some of your product’s key features?
• How will customers use your product or service?
• Is there any technology underlying your solution you will need to explain for readers to fully understand what your company does and how it works?

If your product or service has some sort of proprietary element or patent at the core of what makes it work, you might be a bit hesitant to show your hand for fear that someone might run off with your idea. While this is a completely understandable concern, know that this pretty much never happens.

That being said, you can still give your readers a clear idea of how your product or service works by explaining it through the lens of how it relates to the problems that your customers face without giving up your secret sauce. Put another way, you don’t have to explicitly tell your readers the precise source code to your new app, but you will want to call attention to all of the great things it makes possible for your customers.

Resources and Revenue

Healthcare is a tricky market that can be highly segmented. There are multiple settings of care, which can dictate who uses your product, how cost-sensitive they are, who the payers are, and more. The following part will give you a little more insight into this industry market.

The evaluation of costs and benefits in healthcare, in general, is a perennial problem involving a large number of different stakeholders and sometimes conflicting views on the value of a particular course of action. Some have approached this problem by focusing only on the cost and benefits to healthcare providers, intending to develop business models that can be supported without external funding.

Most of the business models are not straightforward for-profit businesses. Although most require some sort of fee from the user, they also rely, directly or indirectly, on funding from governments or charities. Similarly, a number of the cases use activities in one area, such as education, to support or subsidize activities in another. The philosophical, moral, economic, and political arguments about the funding of healthcare are beyond the scope of this article; however, the prevailing view about the provision or, as some see it, the rationing of healthcare must be taken into account.

Physicians today find themselves at a disadvantage with the private and public insurance organizations they must deal with to be compensated for their services. The large payers are equipped with complex computing systems, large staffs of programmers and clerks, and a myriad of different payment plans and contracts to make the process of revenue collection very complex. Physicians, on the other hand, have small staffs, with little or no computing capability, and no time to deal with the complexities.

The majority of medical practices have solved the problem of collecting revenue by engaging a medical billing company to collect revenue for them, using professional staff and complex computer systems. While on the surface this seems to even the playing field, in reality, the physicians are still at a huge disadvantage, because the payers all have sophisticated business intelligence tools to ensure that they don’t pay one penny more than necessary and that they negotiate contracts that severely limit the physician’s ability to collect full compensation for services provided.

Customers Oriented

First, you need to answer the question: Who will be the end-users for your product? Take the time to think about all the people involved with the use of the product. This will be important as you think about how you produce impacts on the current standard of care. Typically, in medical settings, the end-user is not the purchaser or decision-maker. So, who makes purchasing decisions in the healthcare settings you are targeting? The next consideration is the payers. Who pays for your product? Does it need a reimbursement code or is it part of a bundled payment? What code exists and what is the typical payment? How will you get your produce reimbursed? All these questions are important and you need to know them before you head down any regulatory pathway.

Then, you need to identify the initial customers who will help you develop the product and provide ongoing feedback on iterations. In Silicon Valley, they call it ‘Customer Development’ and it is this concept that needs mastering to increase your probability of success.

You need feedback quickly; you need to know why a certain customer segment (who is already proven to get your problem) likes or does not like your product so that you know where to focus your efforts. Only by building a community of real users and providing value, you can get objective feedback. The reality is that you do not necessarily get paid for the value of the thing you are creating. You get paid for the value that the market assigns to it.

Technology Adoption Options

Given that technology is often put forward to address the problems of healthcare provision, it is interesting to note that in most of the companies, the IT platforms are either relatively simple, standard technologies or are merely additions to existing systems or networks. In most cases, the key resources are human, such as doctors, health workers, or counselors, or links to broader networks that can be used to leverage existing resources, such as universities, pharmacies, or volunteer groups.

The healthcare industry faces similar challenges today. There has been a long-standing approach to customization in the industry due to the lack of robust technology to deliver the necessary functionality. Healthcare practices must adopt a strategy for IT planning that carefully considers the option of outsourcing parts of their operations to third party suppliers – who can deliver high-quality service, provide the IT platform needed, and all for less than what an internal solution would cost.

The final piece of advice is the technology adoption strategy. With all the possibilities available in the industry today, there is an immediate conflict between the cost of implementing and supporting all the functionality and the desire to start taking advantage of the new solutions. Most successful companies have adopted the new technologies in a well thought out and prioritized approach. These companies prioritized the implementation based on cost-benefit analysis so that the functionality that delivered the greatest returns to the business could be enabled quickly, while the less beneficial initiatives are pushed out over time.

In addition to the cost-benefit of each initiative, it is important to consider the impact on patients and their willingness to adopt the new processes and technology. A practice with older patients may opt to postpone patient portals a bit, while practice with mostly young patients may choose to make the patient portal a priority. The caveat here is that even practice with older patients needs to adopt the patient portal, or they will be at a competitive disadvantage in attracting new, young patients to the practice.

The IT Plan must consider the technology trends in each key business area and then map the business needs to an IT platform and architecture that will accommodate current needs and enable scalability to meet future needs. To help you develop a planning template which could provide to each of our practices, Mr. Seale – President of Orion HealthCorp has developed these IT planning templates for the large pediatric practices that use these templates for their RCM clients to whom they also provide practice management services. The key planning categories are listed below:

• Patient-Centric Applications
• Clinical Centric Applications
• Provider Centric Applications
• Practice Management Centric Applications
• Technology Infrastructure

Patient-Centric Applications include patient portals and mobile apps for scheduling and changing appointments, renewing prescriptions, paying bills and modifying demographic information. Patient portals are also utilized for providing patient self-service for medical records access. The planning process must consider if and when these patient-oriented functionalities should be made available to our patients.

The IT infrastructure must be part of the planning process. Without an integrated and holistic approach for the IT infrastructure, integration becomes an expensive and difficult undertaking. Lack of planning here also results in poor systems performance and costly upgrades in the future.

The Future of Sustainable Business Models in Healthcare Space

Most players within healthcare industry over the past these years has focused on the many negative forces combining to reduce the earnings of Healthcare practices and Healthcare professionals. There is no doubt that these dire warnings and reports of actual negative impacts are accurate and precise. There is no shortage of evidence to support the claims of industry pundits that dramatic changes to the healthcare industry were just around the corner and across the board cuts in reimbursements, increased regulatory complexity, and rising costs would dramatically reduce Industry profitability.

The healthcare industry is being buffeted by a tide of rising costs, while at the same time government and private payers are making the reimbursement process more complex and less lucrative for practitioners who have invested heavily in their education and their practices.

Foreign competition, deregulation, unions, and new technologies were driving costs up and profits downward. The companies that survived the turmoil of those gut-wrenching days have dramatically lowered their costs, increased the quality of their products. The winners were able to become profitable by changing their business models. The innovators and visionaries in the Healthcare Industry are already working on a new business model.

From the standpoint of practice managers from all types and sizes of practices, the most common concern is that the managers are unsure whether or not their organization will be able to make this transition. Clearly, the transition to the new business model is not viewed as low risk and high reward undertaking.

Driven by this industry pressure, there is an increasing move toward partnering with large service providers to leverage their technology, professional expertise in coding, billing, finance and accounting, practice management, compliance, and the deep knowledge of the nuances of each medical specialty provided by their practice management consultants.

It is already possible to describe the basic characteristics of the successful practice of the future. By looking at the solution for business model, it becomes clear that the new model for successful medical practices will have the following common characteristics:

#1 Patient Focus

• Patient portal for service scheduling and records lookup
• Patient information collected and validated before a visit
• Patient information updated in real-time (clinical and financial information)
• Quality of service tracked and recorded by the patient

#2 Electronically enabled

• Electronic Health Records
• Electronic Procedure and Diagnosis Documentation
• Demographic information validated by external databases (used by financial institutions today)
• Fully integrated systems (PM –> EHR –> RCM –> CMS/Insurance/etc.)
• No duplicate data entry, data corrected in one system seamlessly passed to all others
• Business Intelligence and Analytics

#3 Process Oriented

• Pre-visit process and activities
• Visit processes (clinical and financial)
• Charge and Billing Process
• Payments and Collections Process
• Insurance Processes (credentialing and contracting)
• Administration (Management, HR/Payroll, Accounting/Finance, etc.)

#4 Quality and Performance Focused:

• Compliance Management
• Performance Metrics and Key Performance Indicators
• Quality Management and continuous improvement
• Information based decision making

Certainly, some aspects of these business models are relevant to a discussion of how best to provide healthcare in the 21st century. However, it seems to be tied to the particular social and economic conditions that possobly pose challenges to healthcare services providers.

The Bottom Line

Although, business models may travel well, the challenges of transforming a business model designed to deal with or the problems of aging patients with chronic conditions in the United States are considerable. Information technology and appropriate business models surely are part of the solution to the effective and efficient delivery of healthcare. Ultimately, however, the key to overcoming any problems encountered along the way to achieving that goal may lie in the next step: the legal and social environment in which these decisions take place.

• Business Improvement
• About: Hazel Nguyen Hazel joins EnvZone as a Growth Analyst. She is a passionate individual who has a very high responsibility in her role. Here at EnvZone, Hazel is responsible for providing and…

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Cook Children’s takes legal action against state to save Medicaid contracts

The fort worth-based hospital lost its star and chip contracts, allowing it to provide medicaid-based care to low-income texan families..

By Andrew Long

5:24 PM on Jun 26, 2024 CDT

FORT WORTH — Cook Children’s Health Plan is filing a lawsuit against the Texas Health and Human Services Commission in response to the state’s decision to remove its longstanding Medicaid contracts.

The HHSC revealed earlier this year that it would be discontinuing STAR and CHIP contracts , which provide Medicaid health insurance coverage for low-income children and pregnant women, with Cook Children’s Health Plan and other nonprofit providers in favor of national for-profit companies like Aetna, UnitedHealthcare, Blue Cross Blue Shield and Molina. Cook Children’s Health Plan’s lawsuit alleges that HHSC failed to follow protocol in selecting providers for STAR and CHIP contracts and neglected the Fort Worth-based nonprofit health insurer’s track record of managing care, according to a news release.

“Texas Health and Human Services’ decision to deny us a renewal of our contract won’t hurt Cook Children’s nearly as much as it will hurt the families we serve, while denying them a meaningful choice of plans and the right to choose us,” Cook Children’s Health Plan President Karen Love said at a Wednesday news conference.

Earlier this year, HHSC went through one of its periodic recontracting processes to assess providers’ performance, handing out STAR and CHIP contracts worth billions of dollars to plans and insurance companies that score highly, Love said. This is where Cook Children’s Health Plan claims an error was made.

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“HHSC announced contract awards ( Notice of Intent ) following a competitive solicitation where all respondents were scored using the same evaluation criteria,” an HHSC spokesperson wrote in an email. “The resulting awards across all service areas were to MCOs (managed care organizations) that received the highest scores. This will provide the best value to the state and quality of care and service to all STAR & CHIP recipients.”

The nonprofit has filed two suits in Travis County in response: one petition for declaratory judgment and injunctive relief leveled at HHSC commissioner Cecile Erwin Young, as well as a temporary restraining order to “stop HHSC from finalizing its procurement results.”

The HHSC spokesperson said in the email that procurement will remain open “until all protests and appeals submitted by respondents have been resolved, and contracts have been executed.” The spokesperson declined to comment on pending litigation.

More than 125,000 low-income people throughout the Fort Worth area could be left without health insurance, Love said, and many families simply can’t afford the time or resources required to find a new provider if they are forced out of their current plans.

“These are just unnecessary hassles for these families that have enough struggles in their lives,” Love said. “They don’t need the added stress of having to pick up a new plan.”

“A change in managed care organizations holding contracts with HHSC does not affect whether a Medicaid recipient receives services, nor does it affect the services that a recipient is eligible to receive,” the HHSC spokesperson said. “MCOs are contractually required to provide continuity of care for both newly enrolled recipients and recipients transferring from another MCO. HHSC requires that the transition to a new MCO be as seamless as possible for Medicaid recipients and their providers.”

The decision to remove Cook Children’s Health Plan’s contracts is the latest development in a growing statewide health coverage problem, with more than two million Texans losing Medicaid coverage since March 2023.

Love said nearly half of Texas children — those in families with an income 200% of the poverty line or below — are eligible for Medicaid and CHIP, with 300,000 across six counties around Fort Worth. Somewhere between 40% to 46% of the area’s kids are covered by Cook Children’s Health Plan, as well as roughly 80% of children with severe conditions requiring intensive care.

Cook Children’s Health Care System, which primarily operates a pediatric hospital, created its health insurance wing specifically to allow local families to access Medicaid services through CHIP and STAR contracts. The nonprofit has received Medicaid contracts from the state for nearly 20 years.

Andrew Long , Staff Writer

What Is Benefits Administration? (2024 Guide)

Updated: Apr 17, 2024, 11:50am

Table of Contents

What is benefits administration, benefits of benefits administration, steps in benefits administration, benefits administration technology, frequently asked questions (faqs).

Companies that offer benefits attract and retain better and more loyal employees. This is because benefits show your employees that you care about them and their goals and well-being on top of their performance. If you have a benefits package for employees, you’ll need benefits administration to ensure that it is maintained properly and used appropriately.

Benefits administration is how a company manages and implements the employee benefits program. Benefits administration usually falls under the responsibility of the human resources (HR) department or a hired professional employer organization (PEO) company . Benefits include things, such as health insurance, retirement plans, vacation time and paid time off (PTO).

The benefits administrator will roll out benefits to employees, often during hiring periods and enrollment periods. Additionally, the benefits administrator manages these programs. For example, the benefits administrator will track vacation time accumulated and used by employees. A benefits administrator must have a good eye for details and be extremely organized, too, especially for larger companies with more than 50 employees.

United Insurance reports that 78% of employees are more likely to remain with their employers because of their benefits plan. This is a critical benefit of having an employee benefits plan. Less turnover means fewer interruptions to business operations, fewer costs of hiring, onboarding and training new people and a consistent staff for consumers.

On top of loyalty, employers are able to find better employees because they offer a benefits program. Prospective employees consider the benefits package to see if it meets their needs. In some cases, prospects will take a position with a slightly lower wage if it has a better benefits package compared to other companies.

Because health insurance is fundamental to most benefits programs, employers also benefit from healthier employees. Employees will go to the doctor more frequently and be able to better care for themselves, reducing the number of sick days taken that can disrupt operations.

Benefits administrators spend their time getting employees enrolled in benefits packages, shopping for better plans and managing the accounts. Here’s what you need to know about the steps involved in benefits administration:

• Shop for plans: Benefits administrators must look to the market for health insurance plans, retirement plans, and more to find the plans that meet employees’ needs for a cost that the company (and employees) can bear.
• Roll out the plan: New plans are usually rolled out in a comprehensive enrollment period. Benefits, such as health insurance, will also have an annual enrollment period. Rolling out the plan involves letting employees know about the benefits and sharing how to sign up with them.
• Manage the plan: Once you have a plan in place, the benefits administrator will manage it. This means that they answer questions that employees may have regarding enrollment in benefits and track things, such as PTO. Benefits administrators may use software to manage this plan. In the management of benefits, each payroll processed would make the proper deductions and credits to the appropriate benefits accounts.
• Maintain compliance tasks: Benefits administrators will help keep the company in compliance with various regulations, whether this is maintaining an appropriate health insurance plan or limiting contributions to retirement plans.

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Benefits administration software can significantly assist a benefits administrator in the daily tasks required to manage the benefits program. This is especially true if the benefits plan is for more than 25 employees. There are different ways to access software. Administrators may get solutions from major software companies, such as Oracle or SAP, or they may have platforms offered by the benefits technology companies, such as Benefitfocus or Zenefits.

The benefits software platform provides a benefits administrator with a resource that tracks each employee and where they are at with enrollment, contribution and use of benefits. Some solutions actually help to match employees with certain benefits selections by assessing their usage of benefits. This is a powerful tool to help benefits administrators help employees get the most out of their benefits packages and keep employees happy.

What are the four types of benefits?

The four major types of benefits are medical, life, disability and retirement packages.

Is it hard to be a benefits specialist?

A benefits specialist is a person who handles compensation benefits packages, such as health and retirement accounts. Though paying attention to details is essential, this is not considered a difficult position.

What are the top three most sought-after employee benefits?

The top three employee benefits are healthcare, PTO and a retirement savings plan.

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Kimberlee Leonard has 22 years of experience as a freelance writer. Her work has been featured on US News and World Report, Business.com and Fit Small Business. She brings practical experience as a business owner and insurance agent to her role as a small business writer.

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Bankruptcy trustee discloses plan to shut down Alex Jones’ Infowars and liquidate assets

Alex Jones speaks to the media after arriving at the federal courthouse for a hearing in front of a bankruptcy judge, June 14, 2024, in Houston. A U.S. bankruptcy court trustee is planning to shut down Jones’ Infowars media platform and liquidate its assets to help pay the $1.5 billion in lawsuit judgments Jones owes for repeatedly calling the 2012 Sandy Hook Elementary School shooting a hoax. (AP Photo/David J. Phillip, file)

FILE - The lawyers representing the families of the victims of the shooting at Sandy Hook Elementary speak to the media in Waterbury, Conn, Oct. 12, 2022. A U.S. bankruptcy court trustee is planning to shut down conspiracy theorist Alex Jones’ Infowars media platform and liquidate its assets to help pay the $1.5 billion in lawsuit judgments Jones owes for repeatedly calling the 2012 Sandy Hook Elementary School shooting a hoax. (AP Photo/Bryan Woolston, File)

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A U.S. bankruptcy court trustee is planning to shut down conspiracy theorist Alex Jones’ Infowars media platform and liquidate its assets to help pay the $1.5 billion in lawsuit judgments Jones owes for repeatedly calling the 2012 Sandy Hook Elementary School shooting a hoax.

In an “emergency” motion filed Sunday in Houston, trustee Christopher Murray indicated publicly for the first time that he intends to “conduct an orderly wind-down” of the operations of Infowars’ parent company and “liquidate its inventory.” Murray, who was appointed by a federal judge to oversee the assets in Jones’ personal bankruptcy case, did not give a timetable for the liquidation.

Jones has been saying on his web and radio shows that he expects Infowars to operate for a few more months before it is shut down because of the bankruptcy. But he has vowed to continue his bombastic broadcasts in some other fashion, possibly on social media. He also had talked about someone else buying the company and allowing him to continue his shows as an employee.

Murray also asked U.S. Bankruptcy Judge Christopher Lopez to put an immediate hold on the Sandy Hook families’ efforts to collect the massive amount Jones owes them. Murray said those efforts would interfere with his plans to close the parent company, Free Speech Systems in Austin, Texas, and sell off its assets — with much of the proceeds going to the families.

On Friday, lawyers for the parents of one of the 20 children killed in the shooting in Newtown, Connecticut, asked a state judge in Texas to order Free Speech Systems, or FSS, to turn over to the families certain assets, including money in bank accounts, and garnish its accounts. Judge Maya Guerra Gamble approved the request, court records show, prompting Murray’s emergency motion.

The parents, Neil Heslin and Scarlett Lewis, whose 6-year-old son, Jesse Lewis, was killed in the shooting, won a $50 million verdict in Texas over Jones’ lies about the shooting being a hoax staged by crisis actors with the goal of increasing gun control. In a separate Connecticut lawsuit, Jones was ordered to pay other Sandy Hook families more than $1.4 billion for defamation and emotional distress.

Referring to the families’ collection efforts, Murray said in the Sunday court filing that “The specter of a pell-mell seizure of FSS’s assets, including its cash, threatens to throw the business into chaos, potentially stopping it in its tracks, to the detriment” of his duties in Jones’ personal bankruptcy case.

“The Trustee seeks this Court’s intervention to prevent a value-destructive money grab and allow an orderly process to take its course,” Murray said.

Murray also asked the judge to clarify his authority over Jones’ bank accounts. As part of Jones’ personal bankruptcy case, his ownership rights of FSS were turned over to Murray. Jones has been continuing his daily broadcasts in the meantime.

It was not immediately clear when the bankruptcy judge would address Murray’s motion.

Bankruptcy lawyers for Jones, Heslin and Lewis did not immediately return messages seeking comment Monday.

Christopher Mattei, a lawyer for the Sandy Hook families in the Connecticut lawsuit, said they supported the trustee’s new motion. He also said the families were disappointed with the motion filed Friday in the Texas court by Heslin and Lewis, which he said would “undercut” an equitable distribution of Jones’ assets to all the families.

“This is precisely the unfortunate situation that the Connecticut (lawsuit) families hoped to avoid,” Mattei said.

The families in both lawsuits, who have not received anything from Jones yet, appear likely to get only a fraction of what Jones owes them.

Jones has about $9 million in personal assets, according to the most recent financial filings in court. Free Speech Systems has about $6 million in cash on hand and about $1.2 million worth of inventory, according to recent court testimony.

On June 14, Lopez, the bankruptcy judge, approved converting Jones’ personal bankruptcy case from a reorganization to a liquidation , which Jones requested. Lopez also dismissed the reorganization bankruptcy case of FSS, after lawyers for Jones and the Sandy Hook families could not agree on a final bankruptcy plan.

The bankruptcy cases had put an automatic hold on the families’ efforts to collect any of the $1.5 billion, under federal law. The dismissal of the FSS bankruptcy meant the families would have to shift those efforts from the bankruptcy court to the state courts in Texas and Connecticut where they won the legal judgments.

Jones and Free Speech Systems filed for bankruptcy protection in 2022, the same year that relatives of many victims of the school shooting that killed 20 first graders and six educators won their lawsuits.

The relatives said they were traumatized by Jones’ hoax conspiracies and his followers’ actions. They testified about being harassed and threatened by Jones’ believers, some of whom confronted the grieving families in person saying the shooting never happened and their children never existed. One parent said someone threatened to dig up his dead son’s grave.

Jones is appealing the judgments in the state courts. He has said that he now believes the shooting did happen, but free speech rights allowed him to say it didn’t.