Strategic Healthcare Planning for the Road to Financial Recovery
April 30, 2021
Healthcare organizations have started on the path to financial recovery following the chaos and confusion of the COVID-19 virus and global pandemic. Leaders now seek new ways to improve margin, reorient their financial plan and strategic process and see realized savings. For many hospitals and healthcare delivery systems, a key strategy for getting their organization back on track will require thoughtful, optimized strategic planning.
To plan for the future despite unforeseen changes, healthcare organizations will need strategic healthcare planning and tools that allow them to own the strategic management process and their planning process, whether it’s a traditional budget or a rolling forecast.
What is Strategic Planning?
Strategic healthcare planning involves setting financial goals and creating objectives for a company’s future state. For some organizations, this means developing both short- and long-term forecasting, and using a tool that will allow them to develop a rolling forecast and long-range financial planning. Regardless of whether an organization has adopted dynamic planning (or a rolling forecast) or is using a traditional budget, strategic planning should be an integral part of any organization’s financial planning process.
When integrated, this level of strategic planning can help guide your organization toward where you’d like to be in the future. You can then take that same plan and reassess, iterating multiple times throughout the year (with a rolling forecast) to ensure the organization is still on track.
How is Strategic Healthcare Planning Different?
Strategic healthcare planning is more complex even than other industries. Strategic healthcare planning is under the influence of many different factors and future changes:
- Upcoming or potential government policy changes (such as Medicare for All, price transparency, risk-based payment)
- Advances in technology (like robots, telehealth, digital era)
- Economic trends (like a bullish or bearish market) could significantly shift the way the organization operates.
Strategic plans allow hospitals and health systems to plan for their future, encouraging both short- and long-term financial success.
What Makes a Successful Strategic Healthcare Plan?
Key factors that should form the basis of the strategic plan for healthcare organizations are the structure and governance of the organization. Each part of your organization serves specific needs and can help ensure success as a whole. Organizations that understand this can effectively plan and utilize the right teams and strategies for gathering the assumptions and initiatives that will get layered into the plan. In fact, reexamining who owns certain responsibilities and decision-making within the organization—and the hierarchy that enables those decisions—can help set new, better action into motion.
Objectives and goals for the company that are communicated at every staff level can help drive financial success at a greater level. Simply taking these goals, initiatives and future plans and making them more concrete by putting them into a short-term rolling forecast or long-term, long-range financial plan can help solidify them within the organization.
From administrators to clinicians, your upfront strategic planning can help transform the passion and dedication of your staff into financial outcomes necessary for success across the organization.
Strategic planning allows organizations to translate efficiencies into investments back into the patient experience, whether via increased operational or capital spend.
What Are the Benefits of Strategic Planning?
Strategic planning is intended to help your organization connect larger, high-level organizational goals to day-to-day challenges and operations. These goals should be tied to ongoing objectives that an organization’s staff are held accountable to through performance.
Some of the key areas that a hospital strategic plan can significantly improve include:
- Company Culture
- Goals and Objectives
- Operating Budgeting
- Service Line Decisions
- Risk Management
- Capital Budgeting
- Cost Accounting
- Long Range Forecasting
Consider how your strategic plan will allow your healthcare organization to progress, driving patient care and outcomes, performance and efficiency and even better capital ecosystems of new devices and technologies. Since strategic planning is driven from day-to-day performance and operations, organizations observe impact of smaller changes at more granular levels to help meet larger financial goals. From patient care to financing, planning is necessary to ensure future operational efficiency and quality.
Strategic planning for healthcare encompasses both a short-term rolling forecast that looks out 18-24 months into the future and a long-term financial plan with a 5+ year outlook. These both work together to let your most recent operational/financial performance become the base of your long-range plan. In addition to laying out the baseline forecast, you can start to introduce initiatives, scenarios and risk into your planning process. Leverage initiative modeling and scenario analytics to test the bounds of your forecast and model potential changes to understand if your organization is prepared for anything.
By focusing on the specific financial goals of your organization, forming them into a plan, you can help drive those goals into fruition. Further, effective strategic plans are those that take into account where specifically an organization expects to grow. As you plan for the future, leverage your strategic planning process to determine expansion by way of new locations, access points and services—and leverage growth in the market to help plan ahead.
One important benefit of strategic planning is that it helps you to look ahead while managing day-to-day functions that can serve the larger vision. By accounting for changes that could impact your financial goals, strategic planning helps you and many organizations to pivot and adjust to headwinds. With the right tool, your organization can pivot with real-time updates and new data, reforecasting to restate your short- and long-term plan. This creates a kind of ongoing reiteration, allowing for monthly, quarterly, or ad hoc rolling forecasting. With this nimble, agile approach, your organization can reassess your short- and long-term strategies on an ongoing basis, for the most accurate, effective plan.
What Can Long-Range Financial Planning Do For Your Strategic Healthcare Plan?
By using a long-range financial planning tool, healthcare organizations can more easily and accurately analyze the future impact of local changes and major shifts in the market. A strategic planning tool enables leaders to evaluate long-range investment goals, operational plans and strategic initiatives, understanding their impact on P&L, balance sheet and cash flow.
For more resources on strategic healthcare planning, check out: