Today's healthcare environment very much resembles the River of Doubt in Brazil that former president Theodore Roosevelt explored in 1912, after his failed bid for a third term as President of the United States.
The River Of Doubt (now named Rio Roosevelt) is one of the Amazon tributaries and at that time not yet explored. Treacherous rapids, waterfalls, piranhas, snakes, mosquitoes and natives armed with poison-tipped arrows posed a constant threat to the expedition. Wrongly equipped and ill prepared, the explorers encountered numerous obstacles and setbacks that killed three men and Roosevelt almost died during this most dangerous expedition. The story is beautifully recounted by Candice Millard in "The River of Doubt: Theodore Roosevelt's Darkest Journey".
It seems that many healthcare organizations are on their own River of Doubt, ill prepared and unsure how to navigate and exploit the dizzying number of simultaneous opportunities and challenges. In this turbulent environment, the traditional "straight line" strategic planning approach, in which the future is treated as a continuation of last year, along with an "optimistic" and a "pessimistic" version, is no longer adequate for developing effective strategies for achieving success.
Many healthcare organizations still base their strategies and plans on a single, "most likely" future scenario, solely focused on growing market share, revenues and the bottom line. A growing but still limited number of healthcare organizations are also focused on improving quality of care and the patient experience, however these two performance indicators may be defined. To date, only a small number of healthcare organizations truly focus their strategic initiatives on learning how to create better value for their customers. To complicate matters more, strong personalities at the top all too often arrive quickly at a narrow set of solutions in the form of strategic initiatives and base them on untested assumptions and strong personal opinions. As Edwards Deming once said: "if you don't have data, you are just another person with an opinion". Lastly, many strategic plans are based on fairly predictable and obvious developments and leave little room for the unexpected or unthinkable.
Therefore, placing bets on the right strategies and associated investments in this brave new healthcare world requires a great deal more than faith and a strong conviction. It requires more thoughtful analyses and discussions about plausible, alternative futures that bring to light unanticipated, potential opportunities and existential threats.
Effective techniques have been developed that can help healthcare organizations better prepare for unexpected and emerging developments critical to the future success of the healthcare organization. Arie de Geus, former senior executive at Royal Dutch/Shell, describes in his book "The Living Company" the creation of multiple, equally possible scenarios to test the strength of the strategies under different circumstances. Peter Schwartz describes this methodology in greater detail in his book "The Art Of The Long View".
Humans are simply not good at anticipating and recognizing signs of emerging opportunities or challenges, as our ability to see "around the corner" is limited. But we are good at remembering compelling stories. Thus, by creating four equally plausible scenarios and a mix of challenges and opportunities in the form of short and compelling stories with a plot, healthcare leaders can help their organizations think about and prepare for different, equally plausible futures. The result is that healthcare leaders are less likely to concentrate on the "middle" or "most likely" scenario. In addition, the use of scenarios in strategy development reduces the risk of judgment bias and groupthink.
The collapse of the Soviet Union in 1991, terrorist attacks on 9/11 and the economic crisis in 2008 were anticipated by few and, yet, had profound, global and long lasting consequences. Recently, the economic slowdown in China and the precipitous slide of oil prices are again creating a great deal of volatility and uncertainty. In addition, many new, disruptive entrants in the healthcare marketplace, such as CVS, American Well (a telehealth-based primary care provider) and others who compete for patients based on convenience, access and cost. So it pays to think more creatively about what might become reality in the not-too-distant future.
Instead of thinking about scenarios as "optimistic", "most likely" or "pessimistic", the best scenarios are not defined by some subjective value statement but by some type of future.
"The river of doubt"
The plot: what if significant change in healthcare continues but no real progress is achieved? Rapid technological advances, new entrants, new substitutes and new business models, combined with ongoing political and economic uncertainty, produce new opportunities and existential threats in equal numbers. Deductibles and co-pays continue to increase steadily for patients, while healthcare remains fragmented. In addition, consolidation of healthcare providers and payers to secure negotiating power and market share continues unabated, threatening the existence and independence of smaller healthcare organizations and practices. Meanwhile, achieving the (new) triple aim "Care better than we have ever seen, health better than we have ever known, cost we can all afford, ...for every person, every time " remains elusive and physician burnout continues as well.
"The slide"
The plot: what if external conditions get worse? The local economy declines, as does the local and aging population. Many young people move to other regions with better opportunities, while the tax base erodes and access to capital becomes more difficult. In addition, aggressive retailers offer more affordable and accessible health services and take away market share. Some local employers are leaving the area, while others are trying to reduce the cost of healthcare by contracting directly with local providers. Deductibles and co-pays remain high and continue to increase as health insurance remains complex, fragmented and inefficient. Meanwhile, the complexity of local health care needs increases significantly as the local population ages and begins to reach the limits of available healthcare expertise and capabilities. Achieving the triple aim remains elusive and physician burnout continues.
"Happy days are here again ..."
The plot: what if external conditions actually get better? Economic growth, both domestically and locally, leads to local population growth and more employers expand or decide to settle in the area. Consequently, the need for health services grows steadily. Furthermore, after years of political stalemate, both Republicans and Democrats have come to realize that to govern, they must work together in good faith and through compromise. As a result, healthcare policies at the federal, state and local level have led to more stable, improved and more affordable health insurance programs for all. Key was a concerted effort to move from volume to value. New technologies, simplified health insurance, savvy healthcare consumers looking for better value, more predictable revenue streams and improved access to capital create new opportunities for growth. Income stability and predictability, combined with simplified health insurance requirements, have led to improved physician morale. More young people decide to pursue a career in healthcare as a nurse, physician extender or nurse. Climate change leads to a local increase in, what used to be, rare diseases and other health problems that require new services.
"The unthinkable"
The plot: the healthcare organization or practice faces an imminent and major existential threat. Such an imminent and existential threat may be as simple as a large employer leaving the area, thus threatening a collapse of the local economy. Or a powerful competitor moves into the area through a merger or acquisition and invests significantly in new and better services, along with a vigorous marketing campaign. Alternatively, a major earthquake or extreme weather threatens the local population and infrastructure, as well as local healthcare organizations and physician practices. Also, a major epidemic or terrorist attack can threaten to overwhelm local healthcare providers. Finally, existential threats may also be posed by geopolitical events that send shock waves through the U.S. and local region. What ever the nature of the existential threat, it is important that leaders of healthcare organizations think seriously about them and think through what that means for survival strategies.
Four such well researched, future scenarios, each briefly describing a mix of appropriate and plausible events - good and bad - in the form of brief narratives, may help healthcare leaders and their organizations think more creatively and offer a fresh perspective about possible future conditions. Scenarios can, thus, facilitate the development of truly effective and innovative strategies for future growth and success. In addition, scenarios can help test the robustness of strategies, as they provide the minimum requirements for success under different circumstances.
Key drivers
The following key drivers of scenarios should be researched thoroughly and included in each scenario:
• Economics and legislation (local and national)
• Global and local politics
• Demographics and consumer behavior
• Medical, information and communication technology
• Payer strategies
• Local employers
• Competitors, new entrants and substitutes for healthcare services
• Environment (e.g., hurricanes, tornados, earthquakes, droughts, increase in tropical diseases, etc.)
It is important to ask "what if ...?" after you research of these key drivers with the goal of establishing the key elements of the plots for each scenario. International journalist Thomas L. Friedman published an excellent example of asking "what if ...?" as he framed possible global scenarios in his recent post in the New York Times.
Pulling it together
The research of the key drivers, combined with the subsequent creation of two to four scenarios through an iterative process, will provide the leadership healthcare organizations with valuable insights about which strategies to pursue. In addition, the use of such scenarios will enable the leadership team to "stress test" the robustness of their decisions under different but equally plausible future conditions.
About the author
Paul Schilstra is President and founder of primeASCENT, LLC, a healthcare consulting firm that focuses on helping healthcare providers re-imagine patient care and on creating adaptive organizations that learn to provide better value to their customers. He has over 25 years of domestic and international experience in healthcare, having previously served in a number of executive positions at global companies. He can be reached at paul.schilstra@primeascent.com.
The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.