Strategic Planning and Execution

Barry Arbuckle, PhDPresident and Chief Executive Officer

MemorialCare Health System

Becker’s Hospital ReviewMay 16, 2014

“It’s interesting how many organizations do strategic planning and yet how little value is

considered to be delivered as a result. ”

– Does the process produce a plan that's "real?"

– Does the plan really work for the organization?

– How to know if the plan was deployed…well?

Automotive IndustryEnvironment Effects on Sales• 2000-10 Decade

– Employee wages/benefits/pensions– Emission Standards

• Oil Prices– 2006 - $62.36– 2008 - $91.35

• Hummer Sales– 2006 - 71,524 – 2008 - 9,046

In Process

UC Irvine Health Partnership

Seven Deadly Sins

Lacks rigor, insight, vision, ambition or practicality People not sure how the

strategy is to be implemented

Strategy communicated on a “need to know”

Some or all aspects lack a specific person in charge

Strategic leaders send mixed signals by dropping out of

sightUnforeseen obstacles occur,

and not prepared to overcome them

Strategy all-consuming, details of day-to-day are

neglected

Corboy, O’Corribui, 1999

Strategic Planning• Both inward and outward focused• Longer-term, then reel back in

– 3 - 5 years ---> 1• Involves evaluating and prioritizing among

opportunities to: – Create superior value for customers– Differentiating the organization from competitors– Enhancing the organization’s ability to anticipate

and proactively adapt to pending environmental change

– Purposeful resource allocation

MemorialCare’s Standard Work

Goals Objectives Strategies

Mission Values

Culture

Balanced Scorecard

Resource Allocation

1

5

2

34

1.Identify a Vision: Share It• Environmental Assessment

Scenario Analysis• SWOT

2. Set a Course of Action• Leadership Retreat• Outcomes• Implementation Plan

3. Implement• Operations Enhancement• Leadership Training• Physician Alignment• Accountability• Communication Plan

4. Measure and Monitor Results

5. Update Strategies and Tactics as Necessary

• Financial performance targets• Operational performance targets

(quality, satisfaction, efficiency)• Facility, equipment, staffing needs

• Financial projections• Capital formation plan• Medical staff plan• Facility master plan

update• Foundation plan

Performance Reporting:• Financial• Operational (outcomes, quality, etc.)• Organizational learning• External customers (satisfaction)

• Corrective action and contingency plans

• Updated financial projections

Strategic Planning Cycle

8 Keys to Success1. Building a timeline that allows for advanced

education and study2. Creating a system-wide prioritization process3. Developing cascading entity planning (Lean

Management System)4. Linking to the 10-year Financial plan and

budgeting process5. Incorporation of Kata principles for detailed

initiative planning 6. Use of “90-day cycle thinking” to communicate

system-wide on key progress and next steps7. Deep Dives for “gnarly issues” and consensus

building8. Creating linkages into system-wide strategic

marketing for our patients, physicians and staff

1. Building a Timeline• Standard

Schedule– Published, no

surprises

• Example: MemorialCare– MHS BOD Strategy Retreat - Nov– Sr. Executive Group Retreat -Jan– Strategy Committee - Jan

• High level initiatives reviewed & endorsed • To full Board for approval in January

– Feb-Mar• Staff development of initiative detail• Syncing to financial and capital plans• Campus retreats/development of aligned

local plans– Apr

• Final version/detail for full Board approval – Strategy Committee, MHS Board, campus Boards

– May-Jun• Finance plan for full Board approval• Strategic Plan disseminated

– Jul • Tracking initiated for each initiative• Quarterly Strategy Close

MHS Strategy RetreatsHistory of Action

Affiliations & Alliances (2012)

• 2013: UCI Health

• 2013: Ambulatory growth

Population Health (2011-12)

• 2013: Roadmap, Seaside

• 2012: Explore Knox Keene

Debt Issuance (2010)

• 2012: Refinanced debt

• 2011: Researched options

Mergers & Acquisitions (2008-9)

• 2011: Acquired CHLB

• 2010: Hospital evaluations

• 2009: Roadmap

Medical Foundation (2007, 2009)

• 2012: Added IPA

• 2011: Seeded MCMG

• 2008-10: Roadmap

2. Creating System-Wide Prioritization• SWOT

2. Creating System-Wide Prioritization• SWOT

• Retreat Flow/Culture– Learning/study/fun!– Starting Pyramid discussion– Clarifying and narrowing

• World Café• Top 5• Multi-voting, debrief• Red Dot discussion

– Re-draft, review

The Rules of Dots

• Can’t get more• No begging, borrowing or otherwise

coercing • Yours to use or not use• Colors

– Green – have to do in next year– Yellow – good to do but multi-year or later– Red – advise against (or don’t

understand)

3. Developing the Cascading Plan• Standard Framework - Pyramids

System-Wide •MHS system-wide plan•Owned by all

Entity •Medical Centers, Medical Foundation, Health Plan•Specific focus

Key Processes •Cascade•Departments, Key Teams

Definition of Our Terms• Strategic 5-Year Vision

– A vivid mental image of our future state (years out) • 3-Year Strategy

– A systematic plan of action that will result in steady movement toward our desired future state

• Fiscal Year (FY) Initiative– An act which originates or begins movement toward the

desired future state • FY Activity

– A very specific action aimed at achieving specific and measurable “what by when” goals and defining related capital and operating requirements

• System-Wide– Initiative that is intended to be deployed across the system,

generally initiated by distributed function leader / executive• Entity

– Initiative that is intended to be deployed at a campus or other entity according to their own specific needs

Result

Cascade Example

Putting In the Detail

Focus Area VisionFY Initiative

What Success Looks LikeAccountable

Planned Activities to Meet Initiative

Target by (incremental deadline Qtr)

Goal / Measure

Financial Plan Linkage

4. Linking to 10-Year Finance Plan• 10-Year Plan & Budgeting Process

– Bounding Measures (EBIDA, Operating Margin, cash)

– Detailed Strategic Plan Tracker, answers:• What Success looks like?• Who is Accountable?• Which are the key supporting Activities• What is the Timeline, Measure, Financial Plan linkage?

Focus Area VisionFY 13 Initiative What Success Looks Like Accountable Planned Activities to Meet Initiative Target

Completion Goal/Measures Financial Plan Linkage Explanation of Status, Planning Steps 1FQ 2FQ 3FQ 4FQ

D. Explore regionalized services

We have identified regionalization opportunities, completed assessments, and initiated work to accomplish key service design changes as approved

K. Testman, M. Schafer, CEOs (B. J ames, C. Capaldi, W.DorchesterH. Folli)

1) Initiate system leadership Strategy Deep Dive(s) to oversee regionalization opportunities and identify where further study warranted (services, COE, ancillary)2) Engage external unbiased expertise where deemed helpful to analyze our opportunity/ benefit analysis of options (regionalization / centralization / partnership / sell or contract)3) Activate plans for regionalized Imaging and ASC strategy as each approved4) Initiate analysis/ planning for regionalized aspects of Laboratory services, and activate as approved (inpatient, Outreach)5) Analyze opportunities within Centers of Excellence (oncology, cardiology, other) and make recommendations for next steps6) If we decide to regionalize, identify resource to oversee

FYE Completion of opportunity assessment, activation of

approved path

ROI based

ASC $8.0M in FY 13, $2.0M in FY 14

Imaging $10M in FY 13

FIVE-YEAR VISION FOR THIS FOCUS AREA: MemorialCare will maintain the top position in our communities for market share, financial strength, and brand awareness.

THREE-YEAR STRATEGY FOR THIS FOCUS AREA: Establish MemorialCare Health System as a market leader with recognized centers of excellence through 1) strategic growth and development of key service lines in each market and 2) effective consumer marketing to the communities we serve.

System-wide focus areas:

Market Differentiation & Growth

5. Incorporating Kata• Coaching Kata – behavior

or pattern 1. What is the target condition?2. What is the actual condition now?3. What obstacles are preventing you

from reaching the target condition?• And which are you addressing now?

4. What is your next step?5. When can we go and see what we

have learned from taking that step?

Making Sure We Stay on Track• Monitoring

– Ongoing assessment – status, on-track or address• Bi-weekly Strategy Cabinet (Council), monthly Exec• Quarterly system-wide roll-up, campus also• Quarterly – Deep Dives (topical)

– Board receives semi-annual report at mid-year, end of year, as well as key reports on initiatives and tactics• Our Strategy Committee of the Board reviews quarterly

– Their charter calls for anything > $5M, strategic risk vs benefit, or “just cause we want their input”

– Visibility Board

6. Use of 90-Day Cycles

Tactic implemented, work completed, no further action required (some multi-year, incorporated in to next FY)Tactic initiated, work in progress, status on track for expected timeframe or target goal as of this reportTactic initiated, work in progress, status not on track for expected timeframe or target goal as of this reportTactic not initiated per expected timeframe

Tactic evaluated, determined not to pursue

Tactic initiation deferred, not yet due as of this report

Sample Report

Ex: FY’14 2FQ Close ReviewMarket Diff and Growth

Initiative (PG)

Status / Key Updates 2FQ

Next 3FQ Focus

Achieve same store growth and membership acquisition (TB, CC, MS)

• Onboarded new VP Clinical Integration & Business Development (Capaldi)

• MHVI clinical integration team launched (report to S. Close)

• Pursue direct to employer (DTE) opportunities- targets identified, outreach begun

• Sales team training approach developed, training held Dec for 90 staff across the system, opportunity to cross-sell

• Open enrollment plan & strategy group implemented

• Wave Imaging centers deal closed for 5 centers with SimonMed, reporting to MCMF, integration with Next Gen EMR

• Lab Outreach evaluation completed, Deep Dive held, workstreams launched

• Ensure MHVI work group targets are met according to timeline/plan. Determine approach/timeline for next one

• Host Deep Dive for DTE, continue to pursue, continue dialogue with additional targeted employers

• Advance sales team strategy and measurement tools

• Tracking impact of enrollment campaign

• Monitor impact of SimonMed• Evaluate further SCA-

Surgery Center opportunities

• Activating Lab Outreach recommendations

• Advance vertical integration plan – update analysis, activate prioritized plans for vertical services (buy/partner)

• BD VAT re-initiated, meetings scheduled for the rest of the FY to ensure progress

7. Deep Dives, Gnarly Issues• Consideration of strategic need• Taking a time out - shorter retreat

– Focused topic – ex. Population Health roadmap, shared PHO contracting strategy, employing specialists, Proton Beam…

– Focused invitees– Focused agenda

• Report out linked back in to overarching plan

8. Linking to the Plan• Communicating 7 times, 7 ways

– System-wide webcasts, videos and publications– Manager and staff evaluations– Long term comp objectives– Staff User-Friendly plan– Available on intranet

Designing aStrategic Planning Framework

+ • What makes this

work?– Plans key

implementation steps– Accountability clear– Monitoring progress– It’s… Standard Work

8 Keys to Success1. Building a timeline that allows for advanced

education and study2. Creating a system-wide prioritization

process3. Developing cascading entity planning (Lean

Management System)4. Linking to the 10-year Financial plan and

budgeting process5. Incorporation of Kata principles for detailed

initiative planning6. Use of “90-day cycle thinking” to

communicate system-wide on key progress and next steps

7. Deep Dives for “gnarly issues” and consensus building

8. Creating linkages into system-wide strategic marketing for our patients, physicians and staff

Encouraging CreativityInnovation is a GOOD thing!