What Should Be Included in a 5-Year Hospital Strategic Plan

Since the Affordable Care Act (ACA) was signed into law in 2010, the environment for healthcare has changed dramatically. Consider a few healthcare scenarios that are common today:

• The financial model in healthcare has changed. The ACA has helped more people get health insurance, which means hospitals need greater coverage capabilities to deal with higher volume. And insurance companies have more leverage to negotiate prices with the increase in the number of insured.
• Relationships between medical providers and hospitals are evolving. Liability insurance has forced some healthcare providers to reexamine their working relationships with hospitals and switch independent operators in a hospital to becoming employees of the hospital.
• Technology is rapidly improving. We’re seeing major advances in both drug technology and machinery year after year.
• Hospital systems are increasingly complex. Many hospitals are becoming more specialized, and more healthcare centers are part of a greater healthcare system—whether it’s for-profit, nonprofit, or government-related.
• Urgent care centers are more common. For the last 10 years, urgent care centers have become a popular way to take care of basic but serious ailments, and can be independent or housed within drug stores. Some are related to hospitals, but most are separate.

With these major and constantly evolving changes, it’s more important today than ever before to consider healthcare and hospital strategic planning. You must be aware of where your organization is going as a whole and carefully consider where your organization is spending money as you navigate this rapidly changing environment.

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If you have a strategic plan that reflects your operations accurately—and can understand the business aspects and strategy of your hospital—you’ll have a better idea of where your organization is running effectively and where it needs improvement. Below, we’ve outlined the seven steps you need to take to create a five-year strategic plan.

What To Include In Your 5-Year Healthcare Strategic Plan

1. Look 10 years out.

Above, we mentioned a few ways healthcare has changed in the last six years. But those things won’t remain stagnant. So it’s critical to practice what is often called “scenario planning” or “creating an envisioned future.” To do this, answer the following questions to the best of your knowledge:

• What changes are coming to the healthcare industry over the next 5-15 years?
• Where is regulation headed?
• How is the practice of medicine evolving?
• What treatments, research, and operations will be changing?

2. Look at your role in this future.

In this step, you need to consider what kind of healthcare clinic or hospital you are (i.e., for-profit, research, children’s, etc.) and determine how your healthcare strategy is being affected by changes around you. For example, if there are a number of new urgent care clinics coming to your area, how will you fare? Will they be a source of competition or a lead for additional revenue?

3. Create your objectives.

The first two steps have helped you create the context for your healthcare strategic planning. Now you need objectives—or high-level organizational goals. When you create an objective, it should be focused on what your organization is trying to accomplish strategically. So you’d want to consider what your hospital’s goals are and how those goals link together. You obviously want great health outcomes, but where do finances fit in? And what about your staff, skills, and technology?

For example, if you are in a highly diverse area and are serving many different populations, you may need translators or healthcare professionals who speak a number of different languages. This may be an objective when you think about the skills that your staff needs in the future. And if you’re providing care to a number of different populations, those populations may have different medical needs. So as a hospital, you need to be prepared for the types of medical problems you could run into more frequently and be able to communicate effectively with the patients in question.

Many hospitals and healthcare groups pull their objectives together into a Balanced Scorecard with a strategy map showing how they link together.

Check out five sample medical strategy maps in this free eBook.

4. Measure your goals.

You now need to think through how you are going to measure your high-level organizational goals. You’ll want to consider the following:

• What measures are critical for your plan?
• What other things must you measure for regulations or other reporting requirements?
• How much of this can you overlap?

In traditional strategic planning, all of your measures are closely aligned to your strategic goals. In the healthcare space, you’ll find that both regulators and insurers have their own set of measures they’ll want you to track. So you’ll need to think about your measurement system as a whole and consider that some of your strategic measures might be the same.

Note: It may be worth talking to insurance providers or state regulatory agencies to get a common set of measures. For example, the way you measure the cost of each MRI will ideally be the same for your healthcare strategic plan, for your insurance provider, and for your regulatory agency.

5. Add your initiatives.

Initiatives—also referred to as “projects” or “activities”—are key action programs developed to achieve your objectives. Most organizations will have 1-2 initiatives underway for every one of their objectives.

Your initiatives should include all projects over a certain dollar amount (related to the size of your organization). You may choose the dollar amount to get your top 10-15 strategic initiatives, which should be discussed at the leadership-team level. Make sure you have a business plan for the initiative and that it links to some part of your strategic plan.

6. Add responsibility and accountability to your strategic plan.

The first five steps have helped you build your strategic plan—and while it may seem like an in-depth process, building the plan is the easy part. But executing your plan appropriately and achieving your objectives over the course of your guideline is much more difficult. The best way to ensure that this happens is to have clear roles and responsibilities laid out in the strategic plan:

• Who is responsible for employee turnover? Is it the HR department or is it the responsibility of each department’s management team?
• How are you going to make decisions related to a particular cost curve?
• What people interact with each objective on a regular basis?

Making sure individuals both on the administrative side and in the medical profession have clear roles and responsibilities will help ensure you work together as a team and have more effective healthcare strategic planning.

7. Report on your plan.

In order to build credibility inside and outside your organization, you need to show that you are living by the strategic plan you’ve created. Here are a few ways to do this:

• Have a process in place to regularly review your plan and the information in it. Most organizations look to report out on how they did with their strategic plan after 3-5 years, at the end of the plan. The reality is that in order to increase the odds of achieving your plan in this timeline, you should be examining it more regularly during that time frame. Most people do this on a monthly or quarterly basis, discussing the progress they’re making and making adjustments along the way.
• Make sure you have the right balance of medical and administrative staff in your meetings to have an informed discussion about the strategy. If the right people aren’t in your high-level healthcare strategic planning meetings, the meetings aren’t going to be very successful.

Time To Get Started With Your Hospital Strategic Planning!

Getting started with your hospital strategic planning depends entirely on where you already are in the process.

If you haven’t started, your first step is to gain leadership buy-in on the importance of a five-year plan—and then begin with the steps we’ve outlined. Or, if you have done several disparate activities that look similar to the steps above, you can use the steps as a guide to organize these things into an integrated strategic plan.

Regardless of where you’re at, the important thing is to simply get started and get organized as quickly as possible.

FAQ:

What are the key components of a strategic plan?

The key components of a strategic plan include:

- Vision Statement: A future-oriented declaration of the organization’s purpose and aspirations.
- Mission Statement: A concise explanation of the organization’s reason for existence and its core values.
- Objectives: Specific, measurable goals that the organization aims to achieve.
- SWOT Analysis: An assessment of the organization’s strengths, weaknesses, opportunities, and threats.
- Strategies: Broad approaches and initiatives to achieve the defined objectives.
- Action Plans: Detailed steps and tasks needed to implement the strategies.
- Metrics and Evaluation: Criteria and methods for measuring progress and success.

How do you write a strategic plan?

To write a strategic plan:

- Define Vision and Mission: Clearly articulate the organization’s purpose and future aspirations.
- Conduct Analysis: Perform a SWOT analysis to understand internal and external factors.
- Set Goals: Define specific, measurable objectives aligned with the vision and mission.
- Develop Strategies: Create broad approaches to achieve the objectives.
- Create Action Plans: Outline detailed steps and tasks required to implement the strategies.
- Allocate Resources: Ensure the necessary resources, including budget and personnel, are in place.
- Establish Metrics: Set criteria for measuring progress and evaluating success.
- Document and Communicate: Compile the plan in a clear, comprehensive document and communicate it to all stakeholders.

How do you make a strategic plan?

To make a strategic plan:

- Engage Stakeholders: Involve key stakeholders in the planning process.
- Define Vision and Mission: Establish the organization’s purpose and future direction.
- Conduct a Situational Analysis: Use tools like SWOT or PESTEL analysis to assess internal and external environments.
- Set Strategic Goals: Define clear, measurable objectives.
- Develop Strategies and Actions: Create strategies and specific action plans to achieve the goals.
- Allocate Resources: Assign the necessary resources to support the strategies and actions.
- Implement and Monitor: Execute the plan, monitor progress regularly, and make adjustments as needed.

What is a strategic plan?

A strategic plan is a comprehensive document that outlines an organization’s long-term goals, vision, and mission. It provides a roadmap for achieving these goals through specific strategies and action plans. The strategic plan also includes an analysis of internal and external factors, allocation of resources, and metrics for measuring progress and success.

Why is a strategic plan important?

A strategic plan is important because it provides a clear roadmap for achieving long-term objectives. It aligns the organization’s resources and efforts with its vision and mission, helps anticipate and manage risks, and ensures that all stakeholders are working towards common goals. In healthcare, a strategic plan is essential for improving patient care, meeting regulatory requirements, and ensuring organizational sustainability and growth.