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Massachusetts mayors, city and town leaders, and state officials, including Governor Deval Patrick, have launched repeated efforts to rein in the expense of providing healthcare to municipal workers, retirees, and elected officials. But organized labor has largely resisted local efforts to transfer more healthcare costs to workers and move communities onto the state's healthcare plan. And Massachusetts lawmakers have shown little effort for forcing an overhaul of the system, the Boston Globe reports.

Groundbreaking goals and strategies can be developed by reviewing the long-term vision and mission of an organization. Strategic planning efforts should answer, Where is our hospital now? Where should we be going? and How are we going to get there?

An environmental assessment will address Where is our hospital now? Organizational direction and strategy will address Where should we be going? And implementation planning addresses How are we going to get there?

Strategic planning initiatives are designed to improve financial performance, market positioning and mission success. A decentralized, but integrated, process should challenge healthcare leaders to broaden their system-wide horizons and justify long-term implications of significant capital expenditures with long-term strategic positioning improvements. In the process, healthcare leaders will review financial, operational, clinical and marketing realities to identify the most valuable allocations of resources for success. Such forecasting models as volume projection, facility configuration, care delivery, functional capacity, physician resources, financial capacity, and others must be analyzed.

It begins with forming a process of regularly scheduled meetings with executives, physicians, administrators, service-line directors and functional leadership. Structured systems for compiling and reporting internal and external data will be necessary. Using nonlinear methods such as sophisticated modeling, scenario studies, financial analytics, operational, primary and secondary research, and knowledge management systems will keep the strategic planning efforts focused and knowledge-based. Information is imperative. As Sir Arthur Conan Doyle's protagonist said in The Adventures of Sherlock Holmes, "It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts."

Strategic planning should be a flexible, continuous, "rolling" process that is dynamic in nature. The ability to adapt to a changing environment will allow for quick adjustments of external factors vital for developing a culture of continuous improvement within an organization. As naturalist Charles Darwin said, "Survival under conditions of intense competition and accelerating change depends on the ability to adapt and take advantage of the [changing] environment better than others."

Also critical is to assure the strategic plan accommodates a range of possible futures. What appears to be the best approach today may become less appealing as the world changes. The ability to make course corrections without having to overhaul the strategic plan needs to be preserved.

This advice may sound easier than it is done. The Society for Healthcare Strategy and Market Development of the American Hospital Association and Health Strategies & Solutions conducted a study in 2006 to gauge the sophistication of strategic planning in hospitals around the country. They found that although strategic planning seems to be well-adopted and used regularly in most hospitals, most leadership teams do not advance past vision and critical issues analysis as part of their process.

Suggested steps in the strategic planning process include:

1. Long-Term Vision
2. Critical Issues Analysis
3. Strategies Development
4. Competitive Differentiation
5. Trackable Benefits

Long-Term Vision
Navigating through unclear health reform and unstable economic realities, hospital leadership works in an ever-changing, dynamic environment. The latest burning issue at hand draws focus from long-term vision. Pressure to produce quick results leads to short-term tactics—versus the ambitious long-term strategies that lead to the Cleveland Clinics of the world.

This is not to recommend turning a blind eye to immediate critical issues, but rather to begin each decision with the long-term vision of "who you want to be when you grow up" to align the planning efforts. Plus, properly setting priorities will help achieve the long-term vision and help prevent getting mired in the fires.

I urge you to keep the focus of this phase on the long-term vision of your organization. I would also recommend reading The Art of the Long View: Planning for the Future in an Uncertain World, by Peter Schwartz, and keep in mind you are planning for a range of possible futures, not a single solution. Begin with an understanding of Where is our hospital now? and Where should we be going? and How are we going to get there? An environmental assessment will address Where is our hospital now?

Internal Environmental Assessment
The long-term-vision stage begins with an environmental assessment, which examines mission, philosophy and culture. Through this exercise, the planning leadership should gain an objective assessment of past successes and failures. Understanding why former plans and implementation processes have worked and not worked will be invaluable when going into the coming stages of the planning process.

After reviewing past strategic processes, take a look at specific areas of success and failure within the organization. The numbers don't lie, and they will unveil key opportunities to lead discussions. Areas of focus may include:

• Market share overall and by service line
• Out-migration statistics
• Profit & loss statements
• Managed care reimbursements
• Charity care, bad debt, Medicare, Medicaid mix
• Transfer agreements
• Referral statistics and physician liaison(s) logs for leakage issues
• Physician, employee and patient satisfaction scores

A recent study conducted by Forbes Insights and FD in conjunction with the Association for Strategic Planning and the Council of Public Relations Firms analyzed which initiatives would be considered strategic in your organization. The results are as follows (Source: Forbes Insights and FD):

1. New market entry – 71%
2. Acquisitions or divestures - 63%
3. Business model transformation (e.g., pricing) – 58%
4. Repositioning or rebranding – 57%
5. New product launch – 48%
6. Reorganization – 47%
7. Sourcing/outsourcing – 30%
8. Channel transformation – 29%
9. Recapitalization – 24%
10. Technology platform replacement – 23%
11. Reengineering – 23%
12. Changes to the compensation model – 23%
13. C-level leadership training – 17%

Keep in mind—this stage is entirely about your organization—not what your competitors are doing. This is your hospital's visionary work, not a short-term reaction to an attempt to keep up or benchmark with local competition.

External Assessment
It is helpful to conduct an external assessment to understand national and regional trends that are largely out of your organization's control, but will have an effect on your strategic planning outcomes. The evaluation should include policy, technology and medical advancements. Consumerism, reimbursement and payers, work force, academic, economic and other trend assessments should be absorbed. Trend analysis should forecast the next three to five years. National best-practice review and benchmarking should also be conducted in this stage. The primary deliverable at the conclusion of this phase is the realignment of your vision and mission.

Critical Issues Analysis
Once the long-term vision is clarified, organizational critical issues should be attached. Organizational direction and strategy will address Where should we be going? A SWOT analysis (strengths, weaknesses, opportunities and threats) should be conducted at this stage. Once the critical issues are revealed in this process, utilizing Six Sigma tools such as a KJ Analysis and affinity diagrams may help categorize the critical issues. These tools deliver a sense of objectivity to the work. Other tools, such as a QFD, can help prioritize them.

Once the critical issues have been determined and prioritized, they should be attached with a clear understanding of what defines "success." Defining the goals is the key deliverable of this stage. This phase is entirely about What needs to be done?—and not How will it be accomplished? That is next.

Strategic planning goals may be developed around such areas as:

• A comprehensive fundraising program
• Implementing quality improvements
• Employee satisfaction initiatives
• Patient experience initiatives
• Human resources develop programs
• Facilities improvement initiatives
• Medical staff development initiatives
• Program development
• Ambulatory care development
• Post-acute care programs
• Identity/branding initiatives

Strategies Development
Implementation planning answers the question How are we going to get there? Having a better understanding of the regional environmental shifts and competitive factors will help identify barriers to success. Competitive information has not been introduced before now because it creates too much temptation for hospital leaders to become distracted from the long-term vision of what "should be" by the pressure to react to immediate competition.

In Part 2 of this article, we will explore secondary research including competitive analysis, market trends analysis and marketing audits, primary research, setting up strategic service line and cross-functional teams, competitive differentiation analysis, defining trackable benefits and critical success factors, and unveil a case study on AtlantiCare's Baldridge Award-winning strategic planning and execution process.