healthcare executives brace for change after trump's victory_nov 2016
TRANSCRIPT
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Hospital Executives Brace for Change after Trump’s Victory
By Ben Sawyer, President of the Strategy Deployment Institute, and Donovan Kendrick, MD, Neurosurgeon
and Chief Medical Officer, Baptist Health, Montgomery, Alabama
Like navigating a ship in rough seas, healthcare executives have spent the last six years acclimating to the
turbulence caused by the Affordable Care Act. Just when many thought they had found safe passage, the
presidency of Republican Donald Trump promises to bring challenging winds of change from the opposite
direction. While no one knows exactly the size and direction of the turbulence, all executives agree that
change is imminent and want to get out ahead of the storm. Fortunately, there are three competencies
that can be developed to enable healthcare organizations to navigate safely to the right strategic position.
The first competency is understanding where your organization can best thrive in the new market. When
asked the secret to his success, Wayne Gretsky, perhaps the greatest hockey player of all time, said: “you
have to skate to where the puck is going to be”. That seems pretty obvious when stated so clearly, but just
knowing that does not make it easy. That’s why he is Wayne Gretsky, and we’re not.
Given the turbulence of healthcare, “skating to where the puck is going to be” is considerably harder than
in hockey. No one can tell the future, but the variables of strategy remain the same. They include
answering these four questions:
1. Where do we compete?
2. What unique value do we bring to win in those markets?
3. What resources and capabilities do we utilize to deliver that value?
4. How do we sustain our ability to provide that unique value?
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Together, these variables make up the ‘right strategy, right time, right place, right execution’ equation.
The second competency is being able to successfully navigate within a rapidly changing marketplace. In
complicated markets, like healthcare, where the entire delivery and reimbursement system is transitioning
from volume to value, not knowing where the puck is going to be can mean you can be out of the game –
quickly. As this graph and list of current market conditions demonstrates, there is a lot of turbulence, and
the roadmap is unclear.
Era of the hospital as we know it is
ending
Financial crisis in the economy is
accelerating hospital losses and the need
for change
New business models are emerging and
accelerating
Cost pressures are rising on the
healthcare enterprise
Profitable volume is declining
Performance accountability is
accelerating: HCAHPS, VBP, Bundles,
ACO’s Population Health, and Full Risk
Scenarios.
The third competency is operational responsiveness and strategic execution. Peter Drucker said,
“turbulent change does not scare me. Living by yesterday’s rules in today’s environment does scare me.”
It’s not the current turbulence that should concern us. The scariest thing is to try to navigate this rapidly
changing environment using outdated rules, ways of acting that are too rigid or slow, or depending on
approaches that no longer match the times. For example:
Decision making processes – Is your organizational decision-making decentralized and
empowered, or top down and bureaucratic?
Responses to changing market conditions – Is your organization nimble, or does it still take a
while to turn the ship?
Customer service – Is your organization streamlined and responsive, or silo-based and delayed?
Process execution – Is your organization efficient, or wasteful?
Planning and deployment – Is your strategy implementation orchestrated and effective, or is your
planning and deployment process synonymous with your budget cycle, and your responses
reactive?
Wayne Gretsky and Peter Drucker are both providing us the same advice. We all need to develop the
organizational competencies to effectively “anticipate and execute” no matter what the conditions! But,
since change is nearly constant in many organizations, and your people are being pummeled by wave after
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wave, they’re often left feeling depleted. How do you achieve organizational readiness when your team is
already struggling with change fatigue? Nothing energizes an organization like knowing they are winning.
When your team has clarity of purpose, which Dr. W. Edwards Deming referred to as the “aim of the
system,” along with the delineation of core business fundamental strategies, key process measures, and
change management mechanisms, your associates can focus on making positive progress.
The diagram below represents the Strategy Deployment process, the ultimate “anticipate and execute”
system. In Japan, strategy deployment is referred to as Hoshin Kanri. Ho means “direction”, shin means
“needle”, and Kanri means “execution”. Appropriately then, Hoshin Kanri is represented by the metaphor
of “a ship in a storm going in the right direction”.
This metaphor is important, as Strategy Deployment is often implemented during turbulent market
conditions. In fact, as its metaphor implies, Strategy Deployment is the solution to implement when there
is turbulence, and aggressive market conditions.
Effective Strategy Deployment requires both vertical integration and cross-functional alignment so that
everyone is on the same page and working together for a shared purpose. No role is left out of the
process. From executives to frontline associates, everyone is involved. Silos are overcome in the most
effective way within the Strategy Deployment process. Departments that used to be pockets of
knowledge and control, now become active participants in an enterprise-wide customer first, zero defect
journey.
The Strategy Deployment process reflects the natural maturation of high-performance organizations.
Operational improvement occurs in this order:
©Strategy Deployment Institute, LLC
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1. Stabilize – Ensuring that the four M’s (manpower, methods, machines, and materials) are
adequate and functioning effectively.
2. Flow – Eliminating bottlenecks, unnecessary delays, or workarounds in the process so that
production progresses smoothly from one functional area to the next.
3. Pull – Creating just-in-time demand fulfillment so that upstream actions consistently fulfill
downstream production requirements.
4. Improve the system (seek perfection) – By continuously evaluating performance against target
measures, and conducting rapid cycle improvements, called Kaizens, to ensure that goals are
consistently achieved. (Kaizen is the practice of continuous improvement).
Even though political events like the direction of the new administration can’t be fully anticipated in
advance, the resulting challenges can be anticipated and planned for so that your organization can
navigate safely and effectively to a successful strategic destination, and win. The imminent changes will
likely be disruptive and a catalyst for necessary improvements. A well-executed Strategy Deployment
process, launched now, can lift your organization to new levels of success. As Peter Drucker famously
stated: “Strategy is a commodity, execution is an art”.