You’re great at your job, but you’re not a superhero (unfortunately, the concept of Super Planner never took off with comic book writers). So why does your boss or your board expect you to know exactly where the market will go in the next 5 to 10 years?
All hospitals and health systems work on near-term analytics—for example, looking at expected inpatient volumes for next year; most organizations engage in vision-setting for what health care will look like in 20 years. But only the most progressive providers can plan for the next five years, which gives them a huge advantage in our current, volatile market.
It’s not easy to wade through all of the millions of potential future states and calculate the probability and impact each might have on your revenue; it’s also not worth your time. So when you’re asked to flex your psychic muscles, here’s where to start.
Know that not all trends are created equal
We already know where some, slow-growing trends are going, and we already take them into account. For example, everyone knows the population is aging; everyone also thinks about what that means for their geriatric service lines. Then there are events that are completely unforeseeable, like natural disasters, where planning doesn’t give any strategic advantage. These are not the market movements you should incorporate into your five-year strategic plan.
Instead, think about the local market dynamics you’ll have to face. There are a finite number of players for which you need to plan: patients, payers, competitors, employers, and physicians. These players have a finite number of decisions they can make. Take physicians—they can seek employment, open their own care site, or form an ACO (for example). Focusing on these potential movements as well as incoming industry innovations like virtual care (trends that could become the status quo at any moment) narrows the future you’re expected to predict.
Flexibility beats precision
Seeking an exact number for your forecasts is a dangerous game. On the one hand, concluding that you can rely on a single number for your volumes can diminish leadership confidence—what if we don’t get that number? What will that mean? On the other hand, acknowledging that your forecasts will never be 100% accurate and thus choosing not to make any estimates at all will leave you in the dark.
You’d be surprised that many organizations—in health care and out of industry—live and die by these precise forecasts. But there’s a limit to predictive analytics, especially when dealing with fickle consumers. So rather than poring over expensive data sets trying (and likely failing) to get to that perfect number, your forecasts should:
- Give you a good idea of the magnitude of change you can expect. For example, instead of counting on capturing exactly 5,423 new patients you can count on capturing about 20% of the market.
- Give you a reasonable range of probable outcomes. Calculating a minimum and maximum can be useful when communicating your estimates with stakeholders across the organization.
It’s a step, not a process
You’re probably thinking that these sound like interesting exercises. But do you have time to add a whole new process to your strategic planning process?
Good news: scenario planning can be a singular added step to activities you already do. Do you have a strategic planning retreat? Use this time to have the conversation about the possible moves industry players will make throughout the timeline of your strategic plan. Are you considering a new investment? Develop contingency plans based on how your competitors or patients might respond.
In short, scenario planning needs to be embedded in ongoing forecasts, business plans, and strategic planning. Although doing things differently might initially require more effort, this should mostly involve approaching your work with a forward-looking set of questions and new methods to make assumptions using what you have.