What is healthcare strategic management?
Amid the day-to-day operation of hospitals and health systems, bigger picture questions may get overlooked. Which departments are delivering the most value? Which service lines are underperforming? How would a substantial capital investment in a particular area impact profits? Healthcare strategy management is how hospitals seek to answer these questions and more, using internal and external financial, clinical, operational, and benchmarking data to rate a facility against peers, discover strengths and weaknesses, and set a course for improvement.
Why is healthcare strategic management important?
The healthcare strategic plan is the operations manual for a hospital. Like all industries, healthcare is dynamic. As wave after wave of COVID-19 infections showed, a hospital’s solid strategic management plan can be rendered useless overnight. Strategic planning in healthcare is never one and done — it’s an ongoing process that requires monitoring, regular updates, and the ability to move quickly when business conditions change.
Who controls the healthcare strategic management process?
Although the CEO and Board of Directors ultimately set the strategic course for a hospital or health system, the finance department is responsible for leveraging financial, clinical, and operational data to create reports and dashboards. The ability to dynamically plan is critical, with scenario modeling and ad hoc reporting capabilities to show decision-makers the potential impacts of different scenarios. Although finance leaders can leverage spreadsheets for reporting, an enterprise performance management (EPM) system allows for more dynamic modeling and reporting, building reports in minutes instead of hours or days.
What are the stages of healthcare strategic management?
The outcomes of the healthcare strategic management process should produce clear directives in the form of actionable initiatives that focus on growth, cost containment, and process improvement. The four elements of strategy management are: strategy formulation, strategy alignment, performance monitoring, and model/prioritize strategic initiatives.
- Formulate your strategy: The tools and activities that support strategy formulation should directly answer these questions: “Where are we going as an organization?”, and “What initiatives related to market and growth are needed to get there?” Hospitals and health systems usually concentrate on three areas: service line costing and profitability, what-if modeling, and capital planning.
- Align your strategy: Finance plays a crucial role in helping translate the impact of defined strategies on operational and tactical plans. When aligning strategy, most hospitals and health systems focus on statistical planning approaches and initiative-based planning.
- Monitor your performance: Continuous monitoring helps an organization measure against goals and discover where outliers exist within a strategy. Organizations use rolling forecasts, executive reporting/dashboards, and alerts/notifications to gain visibility into improvement efforts.
- Model and prioritize strategic initiatives: Create a comprehensive view of business performance using key performance indicators (KPIs), tools that model and evaluate new initiatives, and features that promote collaboration in tracking ongoing project milestones.
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