STRATEGIC PLANNING

Importance of Strategic Planning................................2

Roles and Responsibilities...........................................3

Governing Board
Strategic Planning Committee
Chief Executive Officer
Medical Staff
Department Heads
Patients and Community
Planner
Consultants

The Steps of Strategic Planning..................................5

Get Organized
Perform an Environmental Assessment
The Internal Assessment
The External Assessment
Develop a Vision
Review the Mission Statement
Develop Strategies
Goal Approach
Critical Issues Approach
Scenario Approach
Prepare the Strategic Plan
Approve the Plan
Implement the Plan
Monitor and Evaluate the Plan

Resources..................................................................11

Summary...................................................................11

References................................................................12
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The Governing Board of a hospital/health system is responsible for

that hospital’s planning process. A strategic planning process must be
established to position the hospital/health system in a rapidly
changing environment.

Strategic planning is the process of determining what an organization

wants to be in the future and how it will get there. Hospitals that
develop and implement strategic plans tend to be more successful
than those that don’t.

Strategic planning is different from short-term or operational planning.

Operational planning usually focuses on an annual cycle and requires
the development of yearly objectives and plans. This becomes part of
the annual budgeting process. Operational plans lay out how the
hospital will move toward its future during that year. The future is
described in the hospital’s strategic plan.

Strategic planning requires that choices be made about your hospital’s

future. These choices concern your vision and mission, the goals to be
pursued, what services will be offered and to whom, the resources
that will be needed (people, facilities, technology, money and
knowledge) and how they will be acquired.

IMPORTANCE OF STRATEGIC PLANNING

A hospital/health system should plan for its future to:

ν Improve the hospital’s performance

ν Determine the hospital’s future direction
ν Provide high quality health care services
ν Optimize resource allocation
ν Meet accreditation and regulatory requirements
ν Meet the hospital’s vision and mission statement
ν Maximize its chances for success

Strategic planning is widely practiced by Washington hospitals and

health systems. Strategic planning can have a positive effect on a
hospital, but it is not the answer in all situations or to all problems.
Before engaging in strategic planning, the Governing Board needs to:

ν Understand what strategic planning is and how to do it

ν Determine if the hospital is stable. If the hospital is in a crisis – for
example, in danger of closing – the crisis must be dealt with
immediately
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ν Identify whether a need for change exists

ν Be committed to the planning process and include the participation
of the hospital administration, community, physicians and staff
ν Decide if the hospital has the capability, resources and
commitment needed for the planning process

Planning takes time and money. Both must be allotted to the process.
It is important to make sure that the necessary resources, including
Board and staff time, are available to plan for the future and keep
operating in the present.

ROLES AND RESPONSIBILITIES

GOVERNING BOARD
The Governing Board has the principal responsibility for strategic
planning. The Board guides the development of the plan consistent
with the hospital’s mission, philosophy and values. The role of the
Governing Board in strategic planning process includes:

ν Approval of the hospital’s vision, mission statement and goals

ν Suggestion and considerations of strategies
ν Approval of the strategic plan and its implementation
ν Monitoring and updating the plan and its implementation

The chair of the Governing Board appoints the Strategic Planning

Committee.

STRATEGIC PLANNING COMMITTEE

The Strategic Planning Committee is responsible for:

ν Organizing the planning process

ν Scheduling and conducting meetings
ν Focusing the planning process
ν Ensuring that Board and community values are reflected in the plan
ν Developing the strategic plan
ν Periodically reviewing the hospital’s mission and vision statement
ν Monitoring trends, demographics, technology and community
needs
ν Reviewing and approving annual strategic planning goals and
objectives
ν Monitoring progress toward objectives

CHIEF EXECUTIVE OFFICER

The hospital’s chief executive officer (CEO) is involved in the planning
process as a strategist, organizer, tactician and facilitator. The CEO is
 4

responsible for carrying out the strategic plan after it is approved by

the Board.
5

MEDICAL STAFF
Involvement of the medical staff in strategic planning is fundamental
to ensuring the development and implementation of the strategic
plan. This involvement can take several forms. Representatives of
the medical staff should serve on the Strategic Planning Committee.
The medical staff may have its own planning responsibilities and, upon
completion of those responsibilities, report the results to the Strategic
Planning Committee.

DEPARTMENT HEADS
Hospital department heads make an extremely valuable contribution
to the strategic planning process. Their internal, functional planning
serves a major role in developing objectives, weighing alternatives
and implementing the Board-approved plan.

PATIENTS AND COMMUNITY

The role of patients and the community in the strategic planning
process merits special consideration, for these groups provide
information which nourishes two vital steps in the hospital’s planning:
analysis of the internal and external environments, and development
of the hospital’s mission. While actual participation by these groups in
the process may be limited, community and patient use of and
attitudes about the hospital are reflected in all steps of the planning
process.

PLANNER
The hospital planner is involved in staffing all aspects of the planning
process. The planner performs feasibility and planning studies,
develops the environmental assessment for the Strategic Planning
Committee’s consideration and provides assistance in developing the
plan’s format, timetables and evaluation procedures. In hospitals
without a planner, these functions are the responsibility of the chief
executive officer and/or administrative staff.

CONSULTANTS
Consultants are helpful in the strategic planning process to:

ν Prepare the Governing Board for the planning process through

education or retreats
ν Give an objective assessment of the hospital’s strengths and
weaknesses
ν Steer the Board and Strategic Planning Committee through the
process
ν Keep the planning process on track
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A consultant cannot substitute for the Board’s unique knowledge of

the hospital and its mission. The consultant is not the planner.
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THE STEPS OF THE STRATEGIC PLANNING

The steps of the strategic planning process usually include:

ν Get organized
ν Perform an environmental assessment
ν Develop a vision
ν Develop the mission statement
ν Develop strategies
ν Prepare the strategic plan
ν Approve the plan
ν Implement the plan
ν Monitor and update the plan

Each Governing Board should design a process that is realistic and

that works for its hospital. Steps can be combined and completed at
the same time. They may be completed in a different order
depending on the planning process. Planning should focus on the
critical issues that will determine the hospital’s future success or
failure. As you design your strategic planning process, answer these
questions:

ν What is the Governing Board’s experience with planning?

ν What is the Board’s commitment to strategic planning?
ν How much time and resources are needed from the Board,
administration and staff?
ν Does the Board or hospital have a knowledgeable person to guide
the planning process?
ν What technical or political issues may arise?

Strategic plans have been completed in a one-day retreat. However,

it is more likely to take 40 to 120 hours of actual Strategic Planning
Committee meeting time. The length of time depends on the
availability of needed information, the expertise of the Strategic
Planning Committee and the staff and resources allocated to the
process.

Two to six hours is a good length for Strategic Planning Committee

meetings. Meetings should be long enough to discuss issues and
should occur at least once every two weeks until the plan is
completed.
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With the recent rapid changes in the health care environment,

hospitals may want to develop a two- to three-year strategic plan with
an annual update and review.
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GET ORGANIZED
Everyone needs to be committed to the planning process. Don’t begin
without the commitment of Board members, the CEO and the medical
staff. Learn about strategic planning and how your hospital can use it.
Discuss what strategic planning can accomplish, any concerns Board
members have and what problems may occur. Decide if outside help
is needed. Outline the planning steps your hospital will take.

It is important not to design a planning process that takes more time

than can realistically be expected from staff or the Board. Form a
planning team of five to ten people. The larger the team, the more
structure will be needed at strategic planning team meetings. The
team could include:

ν Board representatives
ν The CEO
ν Medical staff representatives
ν Staff members who have patient care responsibilities
ν Community representatives
ν Consultants or other resource people

The planning team members need to be able to work together, have

different viewpoints, be creative and understand health care trends
and the hospital.

PERFORM AN ENVIRONMENTAL ASSESSMENT

One step in strategic planning is a thorough, objective environmental
assessment. This includes a realistic assessment of the hospital’s
history and present situation, its strengths, weaknesses, opportunities
and threats (SWOT). The result of this analysis is a list of critical
issues for the future. The hospital functions in two environments –
external and internal.

The Internal Assessment

Review your hospital’s history including its beginning, original mission

and services, any significant events, major changes, successes or
failures and values or traditions.

Review the hospital’s present environment including services,

products, programs, staffing, financial position and current plans.
Historical and projected utilization statistics, patient origin data and
financial reports, as well as medical staff profiles and patient opinion
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polls, are instructive and should be gathered. This information,

prepared by consultants or administrative staff, provides a sense of
how the hospital has evolved.

Through its Strategic Planning Committee, the Governing Board

probes and assesses the institution’s current internal position. This
assessment of strengths and weaknesses may be difficult or even
unpleasant. A candid evaluation performed at this stage is necessary
to position the hospital for a strong future.

The External Assessment

Every hospital functions within a larger setting, and is affected by

surrounding forces. The external assessment focuses on demographic
data, political trends, social change, the economic climate, community
perceptions and competitive providers. Painting scenarios of how the
hospital might be affected is helpful in exploring threats, opportunities
and potential strategies.

DEVELOP A VISION
Strategic planning is about being ready for the future. It is also about
creating your hospital’s future. The vision statement describes the
way you want the hospital to be in the future. Discussions about the
hospital’s vision include:

ν Clarification of the organization’s values

ν Agreement on the basic beliefs that guide the hospital
ν Exploring what ideas and trends could change the way the hospital
is doing business
ν Identifying what needs are emerging as a result of demographic,
technological, economical, political and regulatory trends
ν Identifying who is needed to make the vision possible

REVIEW THE MISSION STATEMENT

The mission statement provides the purpose or reasons for the
hospital’s existence. It expresses philosophy, community service,
research or educational commitments, affiliations and major functions
or services offered by the hospital.

The mission statement should be a specific, succinct articulation of

what the Board wishes the hospital to be. Although the mission
statement defines what a hospital is, it also sets forth any limits or
restrictions on a hospital’s activities. The hospital’s articles of
11

incorporation, charter, enabling legislation, Board minutes and annual

reports are valuable sources for the review and development of the
mission statement. The mission statement establishes the guiding
principles from which the strategic planning process flows. Your
mission statement is unique to your hospital.
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DEVELOP STRATEGIES
There are three methods which are used for developing strategies for
the future. Strategies tell “how to get there.” These are:

ν Goal approach
ν Critical issues approach
ν Scenario approach

Goal Approach

Once the Board has approved vision and mission statements,

development and prioritization of goals becomes the next challenge.
A goal identifies an end to which the organization aspires, what is
hoped to be achieved. For purposes of clarification, this is
distinguished from an objective, which is an activity necessary to
reach the goal.

Each proposed goal should be examined against community need and

acceptability, relation to the mission, feasibility and effectiveness in
addressing a problem or concern. Obtaining a consensus on goal
priorities may be difficult, for it calls into play a complex set of value
judgments, biases and differences in degree of relative urgency or
importance. Recognizing that resources are limited is a key
consideration.

The next step is to explore options for achieving organizational goals.

Here, creativity is a welcome skill for discovering innovative strategies
or solutions. The Strategic Planning Committee generates several
possible approaches to accomplish goals. Each alternative is then
subjected to an evaluation of costs, equipment and personnel
resources, benefits and constraints. Consultants and the experiences
of other hospitals may prove helpful in assembling the information
needed to assess each option.

Upon completion of this research, the Committee focuses on selecting

the most appropriate specific course(s) of action. If numerous steps or
objectives are necessary to achieve each goal, develop a breakdown
of those goals which would require two to five years, as well as short-
term actions. In this way, goals are less overwhelming, and
organizational achievement of each goal is another step toward the
desired end.

Critical Issues Approach

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The result of the environmental assessment is a list of critical issues.

Take this list and focus on the four to eight issues most critical to your
hospital’s future. Each issue should be stated in question form. Put
the critical issues in a logical order. Each issue should be discussed,
possible solutions/options identified and the best solutions selected.

The hospital’s strategy for the future becomes clear after all of the
critical issues questions are answered. That strategy needs to be
reviewed for clarity and coherence. The strategic plan is then
developed.

Scenario Approach

The scenario approach requires the development of several pictures

(scenarios) of what your hospital might be in one, two or more years.
Scenarios should be evaluated in terms of your hospital’s vision and
mission, community needs and financial feasibility. Identify the
advantages and disadvantages of each scenario and select one. The
chosen scenario may be a combination of more than one original
scenario. Determine if the scenario is feasible, and then translate it
into a strategic plan.

The scenario approach is particularly useful when dealing with major

changes in health care delivery, its emphasis or direction. It produces
“big picture” thinking, is fairly quick and people find it interesting.

The scenario and critical issues approaches can be used with the goal
approach. After the strategy for your hospital’s future has been
identified using the scenario or critical issues approach, specific goals
can be determined using the goal approach.

PREPARE THE STRATEGIC PLAN

Documentation of the decisions made occurs through preparation of
the strategic plan. Focusing on goals, strategies and objectives, the
Strategic Planning Committee assigns responsibility for achieving
these objectives, specifies the timetable by which each is to be
accomplished and determines what resources are required to
accomplish each objective.

The plan should serve as a guide for all activity and direct the hospital
toward a preferred future. A simple, brief plan with short- and long-
 14

term objectives encourages the hospital to move ahead and

specifically identifies the path for doing so.

Decide on the format for your written strategic plan and outline what
it will look like, based on the needs of your hospital. The plan might
include:

ν Summary of the strategic planning process

ν History of the hospital
ν Vision statement
ν Mission statement
ν Target population
ν Community served by the hospital
ν Future issues facing the hospital
ν Analysis of strengths and weaknesses, including market share and
competition, facilities, programs and services, medical staff,
operations and finances
ν Assumptions upon which the plan is based
ν Goals and objectives
ν Implementation strategies
ν Organizational structure planned for the future
ν Plans for buildings, technology or renovation
ν Marketing plans
ν Key relationships and how they will be maintained, improved or
developed
ν Organizational polices for the future
ν Plans for the Governing Board – structure, role and responsibilities
ν Contingency plans

Draft your strategic plan. It is easier if one to two members of the

Strategic Planning Committee put together the draft of the plan.

APPROVE THE PLAN

The Strategic Planning Committee reviews the draft. The draft plan
should also be reviewed by others, such as staff members, interested
community leaders and people who have a stake in the hospital’s
future. Then make needed revisions. It is important to develop a plan
that can be understood and carried out. The Committee submits the
plan for Board approval.

IMPLEMENT THE PLAN

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The Board authorizes the CEO to initiate the implementation process

through policy modifications, hiring staff or purchasing equipment,
appointing special task forces or allocating and budgeting funds.

The Board, the community and the medical and hospital staff should
be aware of and understand the plan. The plan should be
communicated to all.

MONITOR AND UPDATE THE STRATEGIC PLAN

Strategic plans should be monitored continually and updated annually.
Given the rapidly changing health care environment, quarterly reviews
of processes may be needed. Updating of the strategic plan should
occur before budget development. Updating requires reviewing the
hospital’s performance, the plan’s objectives, changes in
opportunities, threats, strengths and weaknesses and critical issues.
Revisions to the plan are then made and included in the budget.

The strategic plan needs to be adjusted when conditions change,

when new information becomes available or when the health care
delivery system changes.

RESOURCES
More information about strategic planning for healthcare organizations
can be found in the following websites and books:
1. Center for Healthcare Governance: www.americangovernance.com
2. American Hospital Association: www.aha.org
3. The Governance Institute: www.governanceinstitute.com
4. Healthcare Strategic Planning, 2nd Edition by Alan Zuckerman,
FACHE
5. Fundamentals of Strategic Planning for Healthcare Organizations
by Robert Stevens, David Loudon and R. Henry Migliore.

SUMMARY
Positioning the hospital for the future is the purpose of strategic
planning. The strategic planning process provides a hospital/health
system with the ability to determine its future and achieve it.
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REFERENCES
Allison, Michael and Judy Kaye, Strategic Planning for Nonprofit Organizations: A
Practical Guide and Workbook, 2nd edition, Englewood Cliffs, NJ: John Wiley & Sons,
2005.

American Hospital Association, The Guide to Governance for Hospital Trustees,

Chicago, IL, 1990.

Bader, Barry, “Strategic Planning,” www.GreatBoards.org., February, 2006.

Bader, Barry, Five Keys to Building an Excellent Governing Board, Rockville, MD:
Bader and Associates, Inc., 1991.

Barry, Bryan, Strategic Planning Workbook for Nonprofit Organizations, St. Paul, MN:
Amherst H. Wilder Foundation, 1991. (Reprinted with permission)

Dalton, James, Jennifer Jarrett and John Mahaffie, From Scan to Plan: Integrating
Trends Into the Strategy-Making Process, Washington, D.C.: American Society of
Association Executives, 2003.

Hospital Trustee Association of Pennsylvania, HTA Trustee Folios, Harrisburg, PA.

Jennings, Marian C., editor, Health Care Strategy for Uncertain Times, Chicago, IL:
American Hospital Association Publishing, Inc., 2000.

Jennings, Ryan Fedra and Company, Strategic Planning Workbook, Chicago, IL:
American Hospital Association, 1989.

Landry, Charles, “Strategic Planning by Rural Texas Hospitals,” Texas Journal of

Rural Health, Third Quarter, 1992.

Laycock, Kerry D., “Strategic Planning and Management Objectives”, The Nonprofit
Management Handbook: Operating Polices and Procedures, ed. Tracey Conners, New
York: John Wiley and Sons, 1992.

Mankins, Michael and Richard Steele, “Turning Great Strategy Into Great
Performance, “Harvard Business Review, July-August, 2005, pp.65-72

Mintzberg, Henry et.al., The Strategy Proces, 4th edition, Englewood Cliffs, NJ:
Prentice Hall, 2002.

Orlikoff, James and Mary Totten, “Strategic Planning by the Board,” Trustee
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Orlikoff, James and Mary Totten, The Trustee Handbook for Health Care Governance,
second edition, Chicago, IL: American Hospital Publishing, Inc., 2001.

Park Jr., Dabney G., Strategic Planning and the Nonprofit Board, Washington, DC:
National Center for Nonprofit Boards, November, 1992.

Pointer, Dennis D., Orlikoff, James E., Board Work: Governing Health Care
Organizations, Jossey-Bass, San Francisco 1999
17

Quinn, James Brian, et. al., The Strategy Process, Englewood Cliffs, NJ: Prentice Hall,
1988.

Short, John, Managing Partner, Phase II Consulting, Salt Lake City, UT.

Walker, Larry President, The Walker Co., Gresham, OR.

Wheelen, Thomas and J. David Hanger, Strategic Management and Business Policy,
3rd edition, Reading, MA: Addison-Wesley Publishing Co., 1989.