CASE STUDY: Helping a Major Hospital Develop a New Vision

By Jim Austin
Director of Life Sciences, DSI

“Scenario planning is a disciplined method of storytelling that predicts how different factors may interact in the future. It is used to challenge tunnel vision, and to stretch and refocus thinking. … Managers who can anticipate a wider range of possibilities will be better positioned to take advantage of unexpected opportunities.”
     --Dr. Paul Schoemaker, “Scenario Planning: A Tool for Strategic Thinking”
       Sloan Management Review; Winter, 1995

Earlier this summer, Decision Strategies International, Inc. (DSI) was contacted by a large, tertiary-care hospital in southern Florida, to help them deal with a major problem: the hospital’s endoscopy group wished to open a competitive outpatient facility literally across the street. Initial estimates were that such a move could reduce inpatient surgeries by roughly 10%. The hospital, a religious-affiliated, not-for-profit organization, had only recently brought itself into financial balance; the loss of such a major physician group would be deeply challenging.

In discussing this issue with the client, it quickly became apparent that while the endoscopy group’s plans were certainly troubling, the hospital faced a series of other strategic issues as well, specifically:

• Increased competition from for-profit institutions in their primary market area;
• Changing local-area demographics leading to more “charity care” and difficulty with employee recruitment; and
• Health insurance structures, such as Health Savings Accounts (HSA), that were likely to increase patient deductibles and over time, hospital receivables. As one hospital administrator explained, “Will we turn away a patient with an HSA if they need a procedure, but can not meet their $1000 deductible? And if we accept that patient—which is the right thing to do—will we end up writing off the deductible?”

In reviewing these broader issues, it was clear that the concerns with endoscopy group, while troubling, were symptomatic of more fundamental strategic questions. The client then hired DSI to work with the Hospital’s Senior Management Team in an intensive effort to:

1. Develop scenarios of the future, especially a profile of a vibrant, values-centered hospital of the future;
2. Agree on a new, bold vision for the hospital, building on their strong history as well as future opportunities; and,
3. Integrate these efforts into the Hospital’s Strategic Planning process, outlining the steps that the client should take to realize their new Vision of the Future.

To meet these objectives, DSI worked with the client on a three-step process that included:

1. Data Gathering: Through structured interviews, Senior Executives were queried on their: a). Visions of the Future; and, b). Perceived Strengths/Issues for the Hospital in meeting those Future Opportunities. These data were compiled and discussed during the two-day, on-site workshop (see below).
2. Scenario-Planning Workshop: Led by Dr. Paul Schoemaker, the workshop focused on outlining a strategic vision for the Hospital.
3. Strategic Plan Support: In the month following the workshop, DSI consultants worked with various members of the Hospital’s Senior Team to refine the outputs from the meeting (both process and priorities) and integrate them into the Hospital’s strategic planning efforts.

The Scenario Planning Process: Developing a Bold Vision

While the Scenario Planning Workshop was the main analytic component to this project, DSI conducted interviews prior to the workshop in order to gauge the mean and dispersion of perspectives among key decision-makers. This allowed for more rapid identification and exploration of key issues during the actual workshop. Because this particular project raised issues of both current and future direction, a survey was developed that questioned the Senior Team on:

1. Perceived current capabilities;
2. Future trends and competition;
3. Market vs. internal strategic priorities; and
4. Actions to realize a bold, sustainable future.

The results were then presented at the beginning of the Scenario Planning Workshop to establish key issues, concerns and the range of perspectives in the room. As can be seen from the Summary, below, key areas that Senior Management felt the Hospital did well in were:

• Promoting High Quality, and
• Having Strong Community Relations.

Figure 1 – Survey Summary

Given these insights, the Scenario Planning Workshop covered the following five-steps over a two-day period:

1. Outlining Key Trends and Uncertainties
2. Developing Different Future Scenarios
3. Agreeing on Core Competencies of the Hospital
4. Developing a New Vision for the Institution
5. Summarizing Key Short-Medium-Longer Term Priorities to Realize the Vision.

While the discussions were often contentious and spirited, the Senior Team stayed on-track through a mix of full group and break-out team interactions over the two day workshop. Discussions ranged from very strategic, long-term perspectives, to specific dialog around existing and future service lines. For example, part of the effort, once key trends and uncertainties were outlined, was to review specific departmental options as summarized below. We used the Blue Ocean framework discussed in the article by Roch Parayre in this newsletter issue.

Across All Business Lines...

Expand?	Cardiovascular, Orthopedics, Cancer JV with MDs, especially outpatient
Reduce?	Pediatrics Bariatrics Waste/re-work Plastic Surgery
Eliminate?	Pediatrics, Obstetrics and Gynecology Outsource the Wellness Center
Create?	Quality Leadership Aging/Quality of life for geriatrics ("wholistic services") "Something new and wonderful" Medical Office Building Partnerships Allicances with other hospitals ("Children's for our pediatrics")

Key results from the workshop included:

• Agreement around Core Competencies that emphasized the Hospital’s religious mission, but allowed for more flexible operating responses. For example, the hospital had been maintaining an expensive, underutilized pediatric intensive care unit. As a result of the workshop, the Senior Team agreed to develop stronger alliances with a local area Children’s Hospital and over-time close their own pediatric-care operations, shifting care to their alliance partner.
• A new, bold vision emphasizing holistic healthcare—keeping adults healthy, not simply curing the sick—that could include developing on the current medical campus a Spa, Exercise/Workout Facilities, Nutrition Clinics and Restaurants, as well as continuing to upgrade their state-of-the art tertiary care facility.
• A set of Priorities that will help guide the institution over the next decade, taking them from where they are today to where they want to be by 2015, in order to realize their ministry and new vision.

After the workshop, DSI helped several senior management team members outline the necessary Strategic Planning process steps to develop required Investments and critical choices to realize their new vision. The Hospital is reviewing these recommendations. While still being finalized, it is likely that Strategic Working Teams will be organized covering areas such as Master Planning, New Funding and New Businesses, all reporting to a Senior-Level Steering Committee, ideally chaired by the hospital President. These teams should be made up of a cross-section of hospital personnel, ensuring broad input and support for the resulting strategies. The outcomes are projected to be presented to the Hospital Board in December for review and approval. As outlined below, it will be a hectic period for the hospital to be prepared for their December Board Meeting.

Figure 2 – Strategic Plan Timeline: Sept-Dec Intensive Efforts

Conclusions and Key Benefits

For any large institution, developing a new vision and charting the steps forward is typically a daunting, very difficult (and often frustrating) process. DSI’s use of Scenario Planning helped a major hospital system develop a future vision that while building on the past, will move the institution in new directions. DSI provided the necessary framework and support for this Hospital to chart a new direction: a faith-based healthcare “enterprise” addressing the holistic needs of the region’s adult population. To paraphrase Yogi Berra, this client saw the fork in the road, and did more than “take it”—they made a choice for the future.

As the VP of Professional Services concluded at the end of DSI’s efforts, “This is very clear. I now understand what we need to do going forward.”

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