The Growth Channel

Planning departments at health systems: Should you centralize?

by Shay Pratt

"How centralized should our planning department be?" That’s the question I heard most from health system planners in 2014—and I’m not surprised. Many large health systems have shifted their focus from asset acquisition to asset management. Planning teams, like other departments, are now reevaluating their organizational model to pursue "systemness."

However, achieving systemness in planning functions doesn’t mean you have to centralize planning authority at the corporate level. Before pursuing a highly centralized model, I encourage you to answer one question: What are you trying to accomplish?

Form follows function

The level of centralization you should pursue in your planning functions depends on the specific goals important to your organization. Trying to rationalize capital spending across sites of care? You may need to give the corporate planning office ultimate decision-making authority over technology investment.

But what if you’re trying to encourage aggressive adoption of new ambulatory models? The system planning office assumes the role of internal consulting shop, advising individual hospitals on business cases and implementation.

Most health systems I speak to tell me their biggest priority is service line growth. Many of these organizations specifically decide against a centralized model. Instead, the system planning office becomes a catalyst, creating forums for individual sites to collaborate on key growth initiatives and helping affiliate hospitals prioritize the growth tactics with the highest likelihood of return. The office still performs critical functions like establishing growth dashboards and communicating system strategic priorities, but ultimately it works for the individual site, not the other way around.

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A shared accountability

I find that few health systems choose to pursue a truly centralized planning model. Instead, they opt for a hybrid approach that takes into account both their system’s market objectives as well as the available talent across the organization for achieving those objectives. The geographic spread of the health system also matters. Systems with hospitals dotted across multiple, diverse markets need both system integrators as well as hospital planners with strong, local market knowledge.

Organizations using hybrid system planning structures create a two-way street. They clearly delineate responsibilities between corporate and hospital planning. They strive for efficient planning processes that preserve speed in decision making and agility in responding to competitive threats and market opportunities.

The best hybrid models follow a few important principles:

  • Accountability with support: system offices communicate strategic goals and advise hospitals in designing high-impact initiatives to achieve them. Hospital planners are accountable for execution.
  • Role clarity and efficiency: system leaders provide clear delineation of responsibilities for key planning functions. They quickly scrap and redesign any inefficient processes.
  • Local flexibility: hospital planners communicate to system planning leaders when market conditions require the hospital to go “off script.” Hospital planners are often best positioned to determine if system goals require modification when applied to local market conditions.

We’re happy to help you plan: Request a system planning workshop

My team and I are available to help you design the best planning structure for your health system. Email me directly at prattm@advisory.com if you’d like to set up a phone call.

Get your systemness conversation going with our discussion guide

Systemness discussion guide

In my conversations with planning teams on the question of centralization, I use the one-page tool below to guide discussions. I designed this tool to serve as a straw-man model for distributing responsibilities across key planning functions, fully expecting that planning teams will make substantial edits based on conditions specific to their systems. I’ve provided this tool hoping that it will be useful for anchoring your own discussions on planning systemness.

DOWNLOAD THE GUIDE



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