Strategic Planning: A Practical Primer for the Healthcare Provider: Part I

This article is the first of two parts.

Entrepreneurs are primarily concerned with recognizing profitable opportunities and seizing the initiative to take advantage of that opportunity.(1) Once seized, success without competition is relatively easy. However, success breeds competitors and requires a different skill set for further survival and ultimate economic success. To survive in today’s fast-changing healthcare environment, the primary care physician needs management skills in addition to entrepreneurial skills already held.(2) This article provides primary care physicians with a practical primer to strategic management. We present the strategic management process using a fictional private medical practice located in an urban environment.

Purpose

Entrepreneurs pour their hearts and souls into new ventures for years hoping for that elusive pay-off.(3) Perhaps they have heard of strategic management but haven’t really had time to pursue it as a process. Few know much about strategic management, and fewer still have ever participated in the process. And unlike in larger organizations that may have strategic management departments, the onus for everything in smaller, start-up organizations falls to the owner/manager/physician.

Therein lies the purpose of this article—to remove some of the mystery associated with strategic management. And we hope we’ll be able to provide some practical guidance toward taking the next step in managing an ongoing business. A summary of the strategic planning process and a list of suggestions for conducting the process are provided. We think you will find that the process is pretty much common sense and easier to accomplish than originally perceived.

The importance of strategic management to a business can be summed up with the old saying, “If you don’t know where you are going, any road will take you there.” Prudent use of the information contained in this article will help ensure that you and your company will find the road to success and will continue to follow it year after year.

The Strategic Management Process

Your first step in learning the strategic management process should be to put yourself at ease. Although the term “strategic management” invokes a grandiose technique that may seem larger than life, it is, in fact, little more than an exercise in proactive time management. It’s all about how to achieve what’s important when faced with conflicting demands and limited resources. Second, don’t get caught up in the hype of strategic management. Too many organizations go through the motions but lose sight of the intent. These companies are ridiculed in mainstream culture such as in the Dilbert comic strip—often, when you want a plan bad enough, you get a bad plan. Remember that the intent of strategic management is to set up your company for future success.

Your mission is your starting point.

Planning is the first phase of strategic management, followed by the implementation phase. We concentrate on the planning process here by showing how things should progress while giving some practical examples.

Mission

Your mission is your starting point. Just as important as knowing where you are going, you need to know where you are starting from—where you are today.(4) A good mission statement provides an introduction to your company and tells readers what you’re doing and how you’re conducting business. Clearly state your company’s name, location, major product/service offering, major customer(s), and source of competitive advantage. Think of yourself trying to answer the following questions: Why am I in business? What am I doing? How am I going to make any money?

For illustration, assume a fictitious single physician, Dr. Smith, who opened his own general practice, The Smith Clinic. Smith provides general clinical services in an urban downtown office and provides surgical procedures in a major hospital located across the street from his practice. A good mission statement would be:

The Smith Clinic provides a nonthreatening, comfortable setting for patients in the uptown area who desire preventative and acute treatment of medical discomfort or concerns. We will see you at your scheduled appointment time or quickly as a walk-in. By the time you leave our office, you will know what you need to do to address your condition. If further treatment is necessary, it will be arranged prior to your departure. Our success rests on our ability to provide all patients with accurate and timely diagnoses and treatments better than our competitors.

After reading this mission statement, one can easily picture what the business does. It would be difficult to develop a similar understanding if the mission was simply “To make money” or “Keep people healthy.” In a capitalist economy, it’s a goal of most businesses to make money. The issue at hand is to structure and position your company so that it has the best possibility to make more money than the competitors.

Vision

Once you have defined the current state of your business with your mission statement, you then need to define where you’re going. Your destination will be described in your vision statement. We can all remember President John F. Kennedy’s vision of “A man on the moon by the end of the decade” and Martin Luther King’s vision of “I have a dream.” Both are simple yet extremely powerful.

A good vision statement need not be as powerful as those above, but it should be useful. The business’s vision statement should paint a clear picture of the company in the distant future—one that can easily be visualized. In general, vision development should be easy for an entrepreneur. After all, the vision is simply a representation of the opportunity that was recognized and led to the formation of the business in the first place.

A good vision should inspire and motivate everyone at the company.

A vision is often less defined than the mission and more goal-oriented. Visions provide a unifying motivation for the organization. The time frame is flexible, but three to five years is a reasonable goal. A good vision should inspire and motivate everyone at the company. Building on Smith’s example, a decent vision could be, “When experiencing or even thinking about medical concerns, The Smith Clinic is the first choice that comes to a mind for how to answer questions quickly and accurately.” This vision provides sufficient direction for managers at Smith’s to use when setting priorities.

Now that we know where we are (i.e., the mission) and where we want to go (i.e., the vision), it’s time for a reality check. The owner/manager needs to evaluate his or her company relative to competitors to see what needs to be done to make sure that the company will reach the desired future. This issue is addressed in the next part of the process and has two steps. We start by looking inside the business with an internal evaluation of what the company has and then look outside at the external environment to see how the company compares to competitors in ways that are useful in attracting customers (i.e., be competitive).

Internal Evaluation

Internal evaluation involves some serious soul-searching. You need to look around and take inventory of everything that you have at your disposal. Put yourself in Smith’s shoes, and the inventory should include everything he has: people, buildings, desks, chairs, waiting rooms, examination rooms, consultation rooms, computers for electronic health records, and so on—these are resources. Now look at what’s being done with those resources: greeting patients, registering patients, examining patients, maintaining records, consulting, cleaning, and sterilizing—these are activities.

The internal evaluation process should provide a very detailed description of the business—what it has and what it does. The more detail the better. In fact, the soul-searching session will be more effective if you can remain objective and refrain from assigning adjectives during this identification phase. To illustrate by building on Smith’s example, one resource could be the clinic’s address/location. Although the location may be a reason for success (e.g., ease of access, close to hospital, good parking), avoid any claims of “prime” location for the moment. Simply list everything; the list will be pared down and prioritized later.

Smith’s resources would include: a physician with credentials from a particular medical institute; two nurses; a receptionist; 100 square feet each for a waiting area and two examination rooms (each with appropriate medical instruments and a computer with Internet access); a combination consulting space and general office for the owner; a lease on the property; and so on. Smith’s activities would include: meeting and greeting patients; making appointments; examining patients; running tests; documenting results; communicating results to patients; preparing the examining room for the next patient; disposing of waste; paying the employees; paying the bills; and so forth.

The more detail you can provide, the better—because you have to evaluate each of these activities to see where you rank relative to competitors. We want to find out what Smith does better than his competitors. Furthermore, why should potential patients choose Smith over Brown, Jones, or Williams? This is the question we want to answer next, and the more activities we have in our description, the more options we have in our next step—external evaluation.

Bottom Line: Every practice, regardless of size, location, or specialty, needs to create a strategic plan. Getting started requires creating a mission, followed by creating a vision. In Part II, we will connect the internal analysis to the external analysis and show how everything fits together into your strategic plan.

References

1. Baron RA, Ensley MD. Opportunity recognition as the detection of meaning patterns: evidence from comparisons of novice and experienced entrepreneurs. Management Science. 2006;52:1331-1334.

2. Ireland RD. 2007. Strategy vs. entrepreneurship. Strategic Entrepreneurship Journal. 2007;1(1-2):7-10.

3. Mitchell RK, Busenitz L, Lant T, McDougall PP, Morse EA, Smith JB. Toward a theory of entrepreneurial cognition: rethinking the people side of entrepreneurship research. Entrepreneurship: Theory & Practice. 2002;27:93.

4. Ireland D, Hitt MA. Mission statements: importance, challenge. Business Horizons. 1992;35:34.