Strategic Planning in the C-Suite and Board Room: How Hospital Leaders Can Jointly Develop a Roadmap for Success

Often, people use the term "hospital leadership" to mean people in the C-suite, particularly the CEO. However, there are other leaders who play an equally critical role, if not equally visible: hospital board members.

One of the most important responsibilities of hospital boards is leading strategic planning. How can hospital CEOs and other C-suite members effectively collaborate with hospital boards to develop a shared strategy? Here, a leader at the AHA, a hospital board chairman and a hospital CEO offer their insights into hospital boards' and senior executives' roles in strategic planning.

Dr. John Combes is president and COO of AHA's Center for Healthcare Governance.

Dr. John Combes

Building a strategic plan: The beginning

Hospitals typically begin the strategic planning process by holding an annual retreat with hospital administration, board members, medical staff and sometimes community members. The meeting serves as a platform for hospital leaders to discuss the organization's overall strategy and goals.

Each group of stakeholders should have the opportunity to voice their ideas and concerns at the strategic planning meeting. David Pederson, chairman of the board of Great Plains Regional Medical Center in North Platte, Neb., says Great Plains thinks of hospital leadership as a three-legged stool, with each leg representing hospital administration, the board and medical staff, respectively. All three groups are included in the strategic planning process, which in recent years has been facilitated by a member of Community Hospital Corp., a consulting company the hospital works with. The facilitator serves to keep the meeting on track and provide information when needed.

"It really is a situation where any member of the senior leadership team is valued as much as a member of the board and medical staff. They're not in a position where they just listen and do whatever the board and medical staff say," Mr. Pederson says.

Gathering information

To begin developing a strategic plan for a hospital, the board needs data from hospital senior executives on the organization's operations, finances, quality and community demographics to guide objectives. "The hospital board has a key role in the beginning of the strategic planning process," says John Combes, MD, president and COO of AHA's Center for Healthcare Governance, which recently released a report on hospital boards' role in transforming healthcare. "We're encouraging hospital boards to ask for information about the community's heath status — what the community needs assessment is — as well as demographic information and business aspects, like market share and service lines." Hospital C-suiters should also share the demographics of the medical staff, such as who is nearing retirement, to help board members monitor medical staff development, Dr. Combes says.

Hospital data, in addition to input from the hospital CEO and other administrators, can help hospital boards determine what goals are reasonable within a given timeframe. The hospital's senior leadership team interacts with the organization's employees and physicians more than board members do, which may give the senior team a better sense of what the organization can accomplish. Honest discussion between hospital executives and board members is critical to developing a strategic plan with attainable goals.

"One of the challenges is not getting too much in front of us, because right now we're going through a $100 million construction project, which alone takes a lot of administrative time," Mr. Pederson says. "It's up to the board to make sure it's being realistic about expectations and what can be done."

Affirming the mission and vision
Strategic planning meetings serve not only to develop goals and strategies, but also to reaffirm the hospital's mission and vision. "The board needs to reaffirm the mission and vision of the organization, which is really the core of what a strategic plan should be all about," Dr. Combes says. "The plan helps move the organization from its current mission to the vision it sees [for the future]; the strategic plan is the roadmap to get there." The hospital C-suite, medical staff and board members need to ensure they understand the mission and vision and that the strategies outlined in the plan all stay true to the hospital's mission and will help it reach the vision.

Reviewing a strategic plan

Robert Meyer is president and CEO of Phoenix Children's Hospital.

Robert Meyer
After hospital administrators, medical staff and board members agree on a strategic plan, hospital management typically writes the plan, which the board then reviews. The board and hospital management then jointly determine metrics to measure performance on each strategy and assess progress toward goals. The plan should also include a specific timeline to complete each tactic, Dr. Combes says. Metrics and deadlines enable the board to hold hospital executives accountable for the goals they set forth in the strategic plan.

Accountability for the strategic plan has become more pronounced at Great Plains Regional Medical Center since the hospital decided to end its relationship with a management company and began a relationship with Community Hospital Corp., according to Mr. Pederson. The management company hired the CEO and managed the hospital. Now, the hospital is self-governed and uses a consulting company for guidance. "The move we made to manage ourselves has created greater awareness of the fact that we're all in this together; there's no one to bail us out if we make mistakes or don't do a good job," Mr. Pederson says.

Living a strategic plan

Writing and reviewing a strategic plan is only the beginning of a board and administration's joint work on strategy; hospital senior executives have to carry out the plan and the board has to monitor progress on the plan to ensure the organization meets its goals. "The planning session itself is really the easy part," Mr. Pederson says. "The more difficult part is monitoring the plan and making sure you're using what you talked about." To assess progress on the strategic plan, Great Plains' board holds quarterly reviews in which the hospital CEO and other senior executives share how they have implemented the plan as well as successes and challenges.

Dr. Combes suggests hospital boards tie the strategic plan into their agendas. "We encourage boards to organize their agendas according to the strategic plan to see that every item somehow relates to the advancement of that plan. If they have items that don't fit into the plan, they should ask why they're pursuing that particular item if it's not part of the strategy for their organization," he says.

Updating the strategic plan

In addition to discussions of the strategic plan at board agendas and regular progress reports on the plan throughout the year, many hospital boards and management teams review the strategic plan every year to make any necessary changes. "People used to do 10-year plans or 15-plans; then they did five-year plans. Most of the plans I see now are three-year evolving plans," Dr. Combes says. "They lay the plan out for three years, look at progress over the first year, revise it for the second year and go back and revisit it after three years."

The changing nature of today's healthcare environment is primarily responsible for the shorter horizon of many current strategic plans. "We're going through so much transition that we're doing strategic planning more often than other places might do," Mr. Pederson says. "It doesn't work to just have a three-year plan. We need to revisit it on a regular basis." Reexamining the strategic plan and being willing to change strategies and tactics as the environment changes is necessary for hospitals to meet regulatory and consumer demands over time.

"It's an ongoing, living strategic plan," says Robert L. Meyer, president and CEO of Phoenix Children's Hospital. "You don't do it and just set it on the shelf; it's very much a living document."

David Pederson is chairman of the board of Great Plains Regional Medical Center.

David Pederson

Hospital board-management relationship

The hospital board and C-suite has to be in constant communication throughout the development, review, implementation and update of the strategic plan. Hospital administration and board members need to have a strong working relationship to be able to openly share ideas and concerns and agree on a strategic direction for the organization. However, while the board and administration need to agree on the mission, vision and overall strategy of the hospital, neither is meant to be a "yes man" to the other.

One of the greatest values of a board is the new perspectives and experience board members bring; they can challenge hospital administrators to think in new ways about improving the hospital. In turn, hospital senior executives are in constant connection with the hospital's patients, physicians and employees, and may therefore have a better sense of the culture of the hospital and what it needs to succeed. To reach a balance in which hospital board members and senior executives can present new views but also support each other, hospitals need a robust recruitment process, according to Mr. Meyer. Phoenix Children's Hospital experienced a significant change in its strategic planning process when the hospital overhauled its board governance.

Phoenix Children's Hospital
Originally, Phoenix Children's Hospital's board consisted principally of middle managers whose focus was more on operations and specific functions than a big-picture, strategic view of the organization, according to Mr. Meyer. To improve the strategic guidance of the organization, the hospital developed a new set of criteria for the board that included serving in a CEO or equivalent position in an organization. The hospital also wanted the board to collectively have expertise in a range of areas, including medicine, research and finance. "If you don't have people [on the board] who think strategically, it won't work," he says. "We moved to a more experienced, higher caliber board. It helped us immensely in our strategic planning process."  

One of the results of the hospital's new board member recruitment strategy is its new $50 million Ronald A. Matricaria Institute of Molecular Medicine, named for a member of the board who proposed the idea for the institute and provided the initial investment. Mr. Matricaria formerly served as president and CEO of St. Jude Medical, a medical device company. He previously held leadership positions at Eli Lilly and Company, a pharmaceutical company. "He brought to the table a different point of view on how we might accelerate Phoenix Children's movement in the arena of research," Mr. Meyer says. "[His] expertise, point of view and experience brought a different mindset to a traditional strategic planning process."

Hospital leaders in the C-suite and board room
A hospital board is responsible for the strategic direction of the organization. To provide the greatest value to the organization, the hospital board should include people with a range of experiences and should work collaboratively with the hospital's senior executive team to develop a strategic plan. A strategic plan affirms the mission and vision of the organization and outlines tactics for reaching the hospital's goals. Hospital leaders in the C-suite and board room need to communicate frequently to ensure the goals speak to the vision of the organization, to assess progress and update the plan as needed to stay current with the changing environment.

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