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Forget Predictive Modeling, Try Leadership Forecasting

Philip Betbeze, for HealthLeaders Media, January 3, 2014

Instead of attempting to predict outcomes based on aging data, healthcare leaders should rely more heavily on forecasting, which is a less precise but more accurate gauge of how a strategy is likely to pay off, says a medical economist.

Health futurist and medical economist Jeffrey Bauer, PhD., was once a weather man. For the first six years of his career, he focused much of his research on when and where hail was likely to occur as part of a research grant from the National Science Foundation. Eventually, he left that interest in weather behind.

But even as he moved his career away from weather and into the "dismal science," of economics, he retained his meteorological roots by keeping his focus on forecasting, rather than predicting, the future. Now a well-known author and speaker for healthcare executive audiences, Bauer has a forecast for healthcare over the next decade, as radical transformation of the business model takes hold.

But a forecast is only one set of probabilities that can be assumed with varying degrees of accuracy based on current and future conditions. It's what you do with the forecast to adapt to future patterns that's the key to whether your organization survives the purge that Bauer sees coming.

Forecasting vs. Predicting
His new book, Upgrading Leadership's Crystal Ball, focuses on ways healthcare top leadership can effectively work to reduce the probability that their scenarios will fail by employing forecasting techniques, rather than predicting techniques.

First, it's helpful to see the difference between forecasting and predicting, says Bauer.

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4 comments on "Forget Predictive Modeling, Try Leadership Forecasting"


Jeffrey C. Bauer, Ph.D. (1/14/2014 at 4:53 PM)
While I appreciate Dr. Fischer's interest in my book, I respectfully disagree with his observations. He could not have made several of his comments if he had read the book first. For example, Upgrading Leadership's Crystal Ball clearly differentiates forecasting from scenario planning. Forecasting is a specific tool for estimating the realm of future possibilities; scenario planning focuses effort on preparing for a limited number of possible outcomes generally based on predictions, not forecasts. The last chapter provides considerable information about the strategic implications of this difference. Contrary to Dr. Fischer's assumption, my book also addresses the different circumstances under which predicting and forecasting are relevant in health care today. Mr. Betbeze's interview accurately captures my view that health care leaders are more likely to steer their organizations in better directions when they use possibility-driven forecasts [INVALID] not data-driven predictions [INVALID] to envision opportunities like vertically integrated, multi-stakeholder partnerships rather than predictable, horizontal networks of physicians and hospitals that have generally failed to solve the problems of cost and quality. Upon reading the book, Dr. Fischer will find extensive discussions of the modeling methodologies he suggests I should "learn about." I've been teaching and applying them for 40+ years and come to the conclusion that forecasting best fits the new and unprecedented realities of the 21st century.

Wayne G. Fischer, PhD (1/6/2014 at 12:36 PM)
What the quoted "expert" is describing is called scenario planning - it is a well-known and well-documented methodology. A classic case was Royal Dutch Shell's use of it to capitalize on the major disruption of crude oil prices back in the 1970s by OPEC. Either the author or the quoted expert misuse / confuse precision and accuracy, causing this reader to wonder if they really have any meaningful grasp of the subject matter. And the fact that if a system fundamentally changes, a model based on data before that change is no longer valid is a first principal of which anyone who has done any modeling is well aware. "Prediction," contrary to the quoted expert's implication, has a very important role to play in healthcare - operationally, tactically and strategically...because there are *many* types of modeling and prediction methodologies. I suggest the author and quoted expert learn about a few of them.

Frank Poggio (1/6/2014 at 11:11 AM)
Great piece, excellent points. Particularly liked his comment; "If the underlying circumstances that created that data have changed, then extrapolating from that data gives you stupid answers". In medicine the baseline and historical data are changing all the time. Medical protocols can get 'outdated' in a matter of months. Many of Mr. Bauer's points predict, as I do, that Big Data and Analytics will be the next HIT sink hole. Big Data and Analytics – The Next HIT Boondoggle! See: http://www.kelzongroup.com/Big_Data.html Frank Poggio The Kelzon Group