Shockwaves have rattled hospitals and health systems in the past five years. Amid the chaos, some executives have abandoned strategic planning in favor of addressing immediate needs. But successful leaders are using it to gain a competitive edge.
Gone are the tedious 5x5 strategic plans: five years of Five Pillars, tracked on a balanced scorecard. While this approach helped guide organizations in stabler times, top hospitals and health systems now gain a competitive edge through focus, engagement and agility in their strategic plans.
To focus a strategic plan, an organization identifies three to five critical issues that need addressing. Leaders select the issues based on an external and internal strategic assessment, then develop goals to address them.
The four goals described below demonstrate how to focus a strategic plan. These examples reflect the challenges and opportunities many hospitals and health systems face, although they of course will differ for each organization.
1. Maximize Physician Impact
Enhancing alignment and engagement with physicians is a competitive differentiator, which is especially crucial to regain or grow market share. As clinician burnout increases and physicians become more active in unions, adopt a dedicated strategy to strengthen the organization’s physician enterprise.
A multifaceted, strategic approach includes initiatives spanning the comprehensive portfolio of alignment approaches, addressing current and anticipated issues for the enterprise. Programs include enhancing employed network financial performance, achieving clinical excellence, offering innovative relationship options for independents, and developing (or partnering to provide) comprehensive practice management and population health capabilities. This will likely require redesigning physician compensation models and changes to the organization’s physician governance structure and function.
An organization’s commitment and ability to tackle these complex challenges requires strong physician leadership and attention to organizational culture. When done correctly, they will form a strong foundation for organizational success.
2. Improve Access to Care
As clinician shortages extend wait times, access to care is becoming a competitive advantage. To truly enhance access, examine wait times and bottlenecks across primary, specialty, ancillary and surgical care.
A welcoming digital front door, AI-driven scheduling and virtual provider options can optimize patient access. Expanding and integrating advanced practice providers can extend clinician capacity, creating an environment where patients are more likely to schedule appointments when they feel they need to be seen and spend less time in the office overall. To improve recruitment and retention, partnerships with a physician practice manager or aggregator can grow the physician base.
At the same time, right-size the ambulatory footprint, offering primary and specialty services aligned with community needs. Also, adjust surgical capacity so patients can receive care in the right setting, efficiently maximizing capacity to further enhance access.
These changes require organizations to think and act very differently than they do today, which may spark resistance. To mitigate opposition, proactively engage stakeholders in cultivating a shared vision for the optimal care delivery model of the future and embrace a plan to achieve it over time. Additional measures include ongoing and transparent communication across the organization.
3. Embrace the Journey to Value
The journey to value is often filled with twists and turns, and 2025 is no different. Committing (or recommitting) to value-based care in a strategic plan may look different for health systems than in years past. Some components remain, including goals to eliminate avoidable and high-cost care, which will free up clinical capacity for better-reimbursed services.
Additional focus may include establishing a strong plan for government payers, particularly as the segment grows. Systems that aim to achieve a margin on government payers through value-based contracts, coupled with a focus on commercial value-based contracting opportunities, may expand market share and enhance access.
The expertise that drives success on the journey to value has led some organizations to consider partnering with value-based care enablers that offer new expertise, speed transformation and may provide capital that helps realize higher rewards in risk contracts.
4. Enhance Governance Effectiveness
Today’s dynamic healthcare environment has increased public scrutiny on hospital and health system boards. At a time when public perception of hospitals is at an all-time low, it is imperative for boards to be in top form, making timely, informed and community-centric decisions to foster a positive public image.
A high-performing board requires a range of experience and perspectives to appropriately understand and address the challenges the organization may face. Boards that proactively recruit this expertise and continuously invest in education are positioned to ensure members are well-versed in vital industry topics. Education is particularly critical for new board members, allowing them to get up to speed quickly and contribute effectively from the start.
The board, working closely with senior management, drives the strategic planning process. The planning effort must be efficient, inclusive and engaging, and it should contain the right strategies for organizational success over the short and long term.
At the same time, the board should empower management to flexibly address issues within the strategic plan’s framework. This flexibility may be needed to address local strategies in a health system strategic plan. Flexibility is also needed to adjust and refine strategies as internal and external circumstances change.
Other Potential Focus Areas
The goals above are just a few examples of what a particular hospital or health system may prioritize. Others can include partnerships, mergers and affiliations, achieving benefits post-merger, innovation, community engagement, technology and AI, and more. Each serves as the foundation of the plan while also allowing flexibility to be responsive as the strategic environment changes.
Other issues that may be important to address in the planning process include:
Engagement
While incorporating the right critical issues in your plan is important, what else can healthcare leaders do to ensure their strategies result in a competitive advantage for the organization? The answer lies in having effective processes, meaningful data, engaged people and flexibility.
The Human Factor
One of the toughest challenges in healthcare right now is motivating staff who are already feeling burned out. Asking staff to take on strategic plan implementation in this environment may feel counter to the overarching goal of decreasing burnout. However, sharing a future vision for the organization may bring out the best in staff, both individually and collectively as a team.
Clear communication and involvement in the strategic planning process can increase the buy-in needed to achieve results. Making the process engaging (and not burdensome) can spark joy and commitment to achieving the organization’s shared goals. The key is for your organization to identify issues that need your team’s strategic focus, while providing the resources, authority and flexibility to address other issues as they evolve.
An organization’s people and culture drive its ongoing success. Leaders who understand, appreciate and harness their teams to work together toward a common goal will position their organization to thrive.
Implementing for Success
Former GE CEO Jack Welch aptly said, “In reality, strategy is actually very straightforward. You pick a general direction and implement like hell.”
When leaders have done the analysis, selected the right issues, and cultivated a culture to motivate and engage staff, the last piece of the puzzle is execution. Implementation is (of course) easier said than done. Organizations that are prepared and vigilant during implementation can secure a strong start, maintain momentum and allow for course corrections along the way.
Ensuring a strong start to implementation includes formalizing a communication plan and tracking mechanism so that leaders and staff are clear on deliverables, responsibilities and timelines. Executive leadership and the board should also allocate appropriate resources to the plan’s initiatives. Schedule regular meetings with initiative owners to gauge progress and troubleshoot where necessary. Additionally, provide the board with regular updates to keep them informed and engaged.
Agility
A stale strategic plan is worse than no strategic plan. Failure to update a strategic plan makes it ineffective in responding to new challenges or opportunities. Once leaders see that a strategic plan no longer addresses key issues, they will abandon it completely or let it limp along, losing the thoughtful insights that led to each strategy.
Use annual reviews to ensure your plan is an up-to-date vehicle that can revise market insights, goals and key strategies to accommodate evolving challenges and opportunities.
Real-time data allows leaders to refine strategies quickly and effectively, allowing for the monitoring of key indicators that may signal a need to change course on specific strategies. Taking advantage of business intelligence and other project management tools can also help with scenario planning, ensuring leaders are prepared for unforeseen challenges so they can flex the strategic plan accordingly.
A healthy strategic plan typically undergoes material revisions to roughly 25% of its strategies each year. Exceptional leaders show a willingness to adapt and can cultivate a culture of resilience among their teams that will allow the organization to succeed in the face of market changes.
Strategic planning is no longer just about survival and predictability; it’s about positioning for excellence in a rapidly changing healthcare landscape. Strategic planning empowers leading organizations to establish a lasting competitive edge. By capitalizing on new data resources, engaging stakeholders, and continually updating strategies, organizations can increase the likelihood of fully executing the plan and achieving their potential.
Leaders who embrace this new approach to strategic planning with focus, engagement and agility will create a sustainable competitive advantage, ensuring their organization stays resilient and continues building on its success for years to come.
Meredith Inniger, FACHE, is principal, VMG Health, Bentonville, Ark. John Harris is managing director, VMG Health, Philadelphia. This article was adapted from their book Healthcare Strategic Planning, Fifth Edition (ACHE Learn, 2024).