Scenario Planning Can Help Health Care Leaders to Reset their Strategies | Deloitte US has been saved
By Ryder Riess, strategy principal, and Jane Makhoul, health care senior consultant, Deloitte Consulting, LLP
We should consider striking the concept of normal from our health care dictionaries. Nothing normal remains for health care organizations—the consumers and communities they serve, the people they employ, their operations and how they match supply to demand, and their broader ecosystem and relationships across it. While we might find ourselves in a world that resembles the status quo, it’s more likely that the future will be very different.
Strategy leaders at health systems and health plans should answer two key questions:
- What about my strategy is no longer relevant?
- How do I assess the relevance of my strategy and core asset portfolio while so much uncertainty remains?
Dynamic planning—embracing the agile mindset—is one approach leaders can use to help respond effectively to uncertainty. This type of planning can enable leaders to manage businesses in an agile manner to maintain a continuous pulse on the organization’s performance relative to market needs and opportunities. As organizations begin rebooting or ramping up services, their mindset should be rooted in dynamic planning. See a recent LinkedIn post (The Great Health Care Rebalancing Act) for more on dynamic planning.
Critical, dynamic planning is not a strategy in and of itself. If dynamic planning was a high-performance car, strategy would be the navigation system that directs the driver from Point A (current location) to Point B (aspiration for the future). A navigation system helps the driver make a series of choices that help to make the trip efficient. While a high-performance car can shift gears quickly, handle potholes, and alert the driver to blind spots, it’s not useful if the driver doesn’t know the final destination. Strategy tells us where to go and dynamic planning helps us get there.
But how can strategies evolve amidst so much uncertainty? The answer could lie in scenario planning.
The purpose of scenario planning
Humans typically believe the future will mirror the past—we make decisions and take action based on what we know (even gut feelings are the product of synthesized facts and experiences). Sometimes, if faced with tremendous uncertainty, organizations can become brash and make decisions hastily.
There is no playbook for developing a strategy in the context of COVID-19, but scenario planning can force us to remove ourselves from the context of the past. It can give us an opportunity to think critically and methodically about the future in order to plan for it while being positioned to recognize (and respond to) potential disruption, like COVID-19. Scenario planning can outline and frame uncertainties. It orients users to a future state that accounts for conflicting or ambiguous market signals, and it helps set priorities across respond, recover, and thrive phases.
Scenarios are stories that try to describe the future. They are created through a structured process to stretch thinking, challenge conventional wisdom and beliefs, and drive thoughtful decisions. Scenarios are neither predictions about the future, nor simply sensitivities as to how a business might incrementally deviate from the status quo. They are hypotheses about what could happen, which can help us more effectively assess, manage, and mitigate risk and define a strategy that can be resilient and create value in the future.
Four primary post-COVID-19 uncertainties
No one knows exactly how market uncertainties will unfold, but they will dictate which scenario might be closest to the future reality. We have identified eight COVID-19-related uncertainties—four of which are especially critical today (see chart). Keep in mind, these uncertainties could evolve over time or look different for each organization. The top four uncertainties are:
Degree of regulatory change: Will health care regulations hurt or hinder innovation and progress to delivery better care and outcomes?
Economic impact: How long-lasting and how severe will the economic impact be, and how will that affect businesses and the patient’s ability to afford care?
Consumer behavior: How has COVID-19 forced new behavior (i.e., social distancing) that impacts consumer expectations for services such as virtual health and emotional and physical needs for safety?
Drivers of health: How will COVID-19 impact various populations, and will regulators and health care stakeholders manage exacerbated inequalities?
Based on how these uncertainties play out, we believe three possible scenarios could emerge in the near term.
- Gridlock: Resources diminish across all stakeholders as regulatory gridlock stalls progress and organizations are severely strained financially and find it difficult to sustain normal operation.
- Return to the status quo: Health care organizations have survived the pandemic, but they lack incentives and are hesitant to make significant innovative investments as they strive to return to a world with which they are familiar.
- An accelerated evolution: COVID-19 has highlighted the need to challenge orthodoxies, while regulations, business incentives, and consumer demand align to transform the health care model.
Undoubtedly, these scenarios will continue to shift and play out differently market by market. To see which scenario is trending over time, organizations should track signals (e.g., changing unemployment rates) and signposts to maintain a pulse on how to adapt. In the meantime, organizations can define a strategy that can hold true in any of the scenarios. By considering critical success factors across all scenarios, organizations can define near-term roadmaps to activate those universal success factors. Even with roadmaps, however, strategies should continue to incorporate dynamic planning to remain resilient and help ensure that strategic activation is agile and responsive to changes in uncertainties.
Back to the race car analogy…scenario planning places a driver’s focus on the road ahead instead of glued to a rear-view mirror. Dynamic planning is the wheel that is essential for making quick corrections as unforeseen issues and events appear.
