PYA Covid-19 Information Hub
Published May 14, 2020

“…But Planning is Everything” — Restarting Health System Strategy

“Plans are worthless, but planning is everything.” Those words, uttered in 1957 by President Dwight D. Eisenhower, have perhaps never been more applicable than they are to the U.S. healthcare industry of 2020.

As we find ourselves getting swept up in the transition from crisis management to restarting the furloughed segments of the healthcare industry, it is critical to recognize that uncertainty, now and as far into the future as one can see, reigns.

In times of uncertainty, planning is most critical, for in the absence of thoughtful planning, organizations are left only to react, thereby placing entire industry sectors (e.g., hospitals, physician practices) at the mercy of “the crisis du jour.” As it has in other periods of turmoil, today’s market environment will most certainly punish those only capable of reacting.

Fortunately, there is a useful, proven discipline for such an uncertain market environment. Since the end of the Second World War, scenario planning has proven highly effective and has been used by governments and industries traversing tumultuous, even uncharted, terrain. Scenario planning enables the user to identify key, market-making factors; plan contingencies; and effectively “see around corners” in fast-moving, unforgiving territory—the type of territory in which U.S. healthcare squarely finds itself today.

Building resilient, scenario-tested strategies is a critical first step all providers must undertake now as they approach an unknowable future. As you begin your journey, PYA offers the following guidance for conducting a thoughtful, beneficial scenario planning process—one that should take no longer than days, not weeks, for leadership teams to develop:

    1. Understand Drivers of the “New Normal”

Macro-level and market-specific business conditions have materially—and potentially permanently—shifted, resulting in an impact on economies, political outlooks, and potentially social norms (e.g., consumer expectations). The first step in a successful scenario planning exercise is to identify those macro-level trends that will drive change in your market and organization. Questions you should ask include:

      • How long will it take patients to return for well and/or elective care?
      • How quickly, and to what degree, will our commercially insured business return?
      • How much of our business will be “digital or virtual” in the coming year?
      • How does a resurgence in COVID-19 volume impact our growth and financial plans?
    1. Re-Set Your Run Rate

Upon understanding the degree of change in business conditions your organization may experience, adjust your market and financial baseline projections. These revised projections will form the fact base against which future scenarios can be developed and tested.

    1. Build Scenarios

Identify the major competitive, macro-economic, micro-economic, legal/regulatory, and social drivers in your market, and brainstorm the degree to which leadership believes it may change, as well as the magnitude of that change. From there, strategies can be developed to address the changes and any potential negative impacts on the provider organization, prompting questions that will advance the dialogue, including:

      • What does the new market trajectory mean for our physician enterprise? Do current fundamental structural elements need to be changed? Does it remain right-sized for the future?
      • What are the cost realities of creating and operating a “two-track” (i.e., COVID-19 and non-COVID-19) delivery system?
      • What implications do high unemployment rates and impaired state budgets have on our long-term financial outlook?
      • Has our (or our competitors’) risk tolerance eroded to the level that makes market consolidation feasible?
    1. Apply Financial Rigor

At no point in recent history have provider financials been as precarious as they are now. Upon developing a shared understanding of the likely range of futures your organization is likely to experience, it is critical to soberly and thoroughly quantify the financial implications of your organization’s strategic priorities and actions within each scenario.

    1. Return to and Re-Read Article Title

Going forward, providers’ success will be driven first and foremost by the decisions and actions of committed leadership and staff, as opposed to words on a printed page. Armed with the knowledge of effective planning, however, organizations will be better equipped to engage, and thrive, in their forever-changed operating environments. To borrow from an even older historical quote, we continue to believe that “fortune favors the bold.”

Over the course of days, not weeks, provider leadership must unite to chart viable paths forward. Scenario planning will build resilience and awareness, enabling providers to quickly adapt amid constantly shifting market conditions.

The one thing certain at this time in history: It’s time to plan.

If you would like additional guidance related to restarting healthcare amidst the pandemic, or for other COVID-19 guidance, visit PYA’s COVID-19 hub, or contact a PYA executive below at (800) 270-9629.

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