- Email: [email protected]
Organizational Renewal and Strategic Planning: A Winning Combination
SprindPrintemps 1994
Volume 7, No. 1
Brief Report
Organizational Renewal and Strategic Planning: A Winning Combination b y R. Cercone, D . McDonald, CHE, L. Tarrant and K . Tremblay, CHE
Several approaches to organizational renewal have been described, but few are reported for health care institutions in Canada. In contrast, approaches to strategic planning in health care facilities have been well documented. From our experience over the past six years, the theory and practice of organizational renewal complement the focused activitiesof strategic planning. This combination can be an effectivemeans to enhance organizational performance, employee commitment and a shared vision among the various stakeholders within the hospital and community. This article outlines the process and benefits that can accrue through such efforts. It demonstrates how the investment of organizational renewal strategies can produce sustainable,operational and strategic planning benefits for community hospitals.
Si plusieurs dkrnarches reliks au renouvellernent organisationnel ont dkjh ktk dkcrites, peu d’entre elles concernent les ttablissements de santk au Canada. Par contre, les mkthodes de planification stratkgique utiliskes dans les installations de santk sont trks bien documentkes. L’expkrience que nous avons vkcue au cours des six dernikres annkes nous dkmontre que les aspects thkoriqueset pratiques du renouvellement organisationnel viennent complkter les activitks de la planification stratkgique. Cette combinaison peut se rkvkler tris efjicace pour accroitre le rendement de l’organisation, pour stimuler la participation du personnel et pour amener les diffkrents intervenants au sein de l’hdpital et de la communautk h partager une mCme vision. Cet article vient souligner le processus et les avantages qui peuvent dkcouler de tels efforts. I1 permet de dkmontrer comment le recours h des stratkgies de renouvellement organisationnel peut donner suite h des avantages durables en rnatikre de planification opkrationnelleet stratkgique pour les hdpitaux communautaires.
T
he methods by which an organization relates to its changing environment will determine its likelihood for future viability. Strategic planning has been described as an effective instrument for designing and creating a desired future; in the minds of many, a strate& plan is an essential precursor to the way organizations relate to changing envir~nments.l-~ Across the country, we have recognized that the health care environment of the 1990s will be turbulent. Numerous variables that have and will continue to affect all players, as well as hospitals, include: In most provinces, health goals and priorities have been established by senior planning reports. They focus on a shift in emphasis from treatment to health promotion and disease prevention, alternative means of delivery, and so on. These shifts will have a major effect on the types of services hospitals provide and how they are provided. In some cases, 32
these shifts may change the very existence of hospitals as we have known them. There will be continued and escalated financialpressure on hospitals. With the increasing focus on quality, as measured by outcomes and pressures to reduce the cost of care, hospitals will need to ensure that all services operate as efficiently as possible. As future changes to funding become oriented toward case-costing systems, hospitals will need to ensure that all programs make the best use of available resources. Health-planning guidelines have been established in many provinces that identify utilization targets for hospital use and, ultimately, physicians. They have been developed with the goal to reduce hospital use; it is likely that approvals for new programs, services and capital resources will be linked directly to overall achievement of these utilization targets. Regional planning will be a major theme throughout the 1990s. This will necessitate that all providers and Healthcare Management FORUM
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consumers plan services together and search out new opportunities to rationalize service, reduce costs and make the best use of regional resources. In some provinces, such as Ontario, the system for providing long-term care and related support services is under review. In keeping with provincial health goals, the challenge will be to reduce the reliance on institutional services and improve local and regional co-ordination of services. In redesigning the system, facilities will have to satisfy consumer needs while ensuring effective use of resources. This will have a major impact on hospitals as they define their role within the continuum of care available in the community. The issues and processes of these ”social contracts” will create new dimensions to the traditional planning framework of hospitals and other providers. As contemporary management strategies and concepts, such as program-based management, interdisciplinary teamwork, employee empowerment and continuous quality improvement, challenge traditional approaches, the resultant culture clashes can destabilize an organization. Accordingly, there is a great need for congruency of vision, goals and shared commitment among the various players within the organization. Strategic planning is an essential activity for all organizations, including hospitals. It is a proactive process that enables the organization to adapt effectively and proactively to pressures imposed on it by its internal and external environments. Although a comprehensive strategic plan (the document) is fundamental to the effective management of a hospital, our experience indicates that the process by which a strategic plan is developed is as important as the plan itself. This premise was the essence of our organizational renewal program and the transition to strategic planning (the process).
In business, the term “organizationalrenewal” is used to describe a process that empowers all employees of an organization to work together to create a common vision about the organization’s purpose and how it will achieve success. Such proc,gssesprovide an opportunity to renew relationships, generate energy and build unity. Organizational<:gnewal strategies recognize that the employee has ”cwAership”responsibilities which affect the future viability of any successfulorganization.5 The impetus for renewal is usually a crisis of change, most notably financial, facilities, vision or quality. Renewal strategies commonly accept ”change” as an ally, a perspective to enhance organizational success over time. At St. Joseph’s Hospital in Brantford, Ontario, a 121bed community hospital, the principles of organizational renewal were used, and continue to be used, to guide its ongoing strategic planning and implementation processes.
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The decision to undertake the renewal and strategic planning processes During the early 1980s, St. Joseph’s Hospital, one of three hospitals in Brant County and one of two acute care community hospitals in Brantford, underwent numerous organizational changes. In 1981-82,a rationalization process between the two hospitals in Brantford resulted in the transfer of some of St. Joseph’s major programs to the Brantford General Hospital. The process to reach this outcome was not well managed and resulted in a polarization of the community, including its medical population. Also, as a single event, it did not provide a mechanism for ongoing collaborativeplanning among the providers of care. As a result, relationships within the health service delivery system within the county continued to be weak and fragmented. Many programs and services provided at each hospital continued to reflect physician preferences, historical patterns of practice; in short, duplication of effort and services. Despite this vacuum, formalized long-term or strategic planning had not occurred at St. Joseph’s. Thus, the hospital had no clearly stated priorities upon which to focus plans or direct staff energy. Individual commitment to the organization was less than ideal and morale was poor. Communication or its absence was a recurring complaint among employees, managers and physicians. At the board level, “strategic” decisions were made based on the annual operating budgets rather than a strategic plan. Consequently, decisions were often reactive and focused more on the ”management” of the physical plant than the hospital’s programs and services (i.e., the core businesses of the organization). Although a Planning Committee of the board existed, it had not functioned at a strategic level; it had been more focused on ad hoc plans from staff and physicians. Issues such as human resource plans for medical staff, regional planning and program market share had not been discussed. Chenoy‘ noted that organizations tend to perpetuate themselves until some event or trend occurs that challenges organizational inertia and initiates change. Our research indicated that change in top management is the event most likely to spur action. At St. Joseph’s, the first lay chief executive officer was appointed in 1986. Until that time in the 30-year history of the hospital, this person had historically been a member of the sponsoring religious congregation, the Sisters of St. Joseph of Hamilton (i.e., an owner). Collectively, the chief executive officer, board, management and medical staff leaders recognized the need for an ongoing mechanism that would guide the hospital’s future. An executive planning retreat mandated a comprehensive plan that would: clarify direction and priorities; 33
Volume 7, No. 1
SpringFrintemps 1994
develop a defensible basis for decision-making; build teamwork; develop shared goals among players; improve organizational performance; provide an ongoing mechanism for operational and facilities planning; re-establish local and regional planning processes; and ensure high quality in programming and care. Although the need to develop a strategic plan was evident, the chief executive officer recognized that without renewed commitment to the organization at all levels, implementation of any plan could be in jeopardy. As such, the overriding priority for strategic planning was to ensure that the individuals (stakeholders) who would implement the new directions would be active participants in shaping them. Also, recognizing that ”change” is the only constant in health care planning, we wanted to ensure that our process produced the skills needed to address future planning challenges.
W h y use organizational renewal strategies? The appointment of a lay chief executive officer and the concern of declining participation by members of the congregation created anxiety about the preservation of the hospital’s mission and Catholic identity. The middle management ranks had weathered significant turnover through retirements and replacements; traditional working relationships had been interrupted. Medical staff leaders were somewhat critical of their limited access to participation in resource decision-making.The organizational structure was a traditional hospital hierarchy. Middle managers expressed concerns regarding centralized power and decision-making and communication. Some trustees had encroached into operational issues during management vacancies. These and a variety of other factors highlighted the need for the organization to become more cohesive and functional as a team with clear demarcation of roles and expectations. Thus, numerous management issues required solution. Most notable were improvement in communication, team-building, conflict resolution processes, delegation of authority and accountability, and participation in management processes. As well, the congreg$ion had made the mission of the hospital ”noh-negotiable”throughout the change process. To address these and related issues, renewed commitment and enthusiasm by all its participants was needed. As a first step, we facilitated the development of a management philosophy for the hospital. The entire organization, including the employees, medical staff, managers, trustees and the Sisters of St. Joseph, participated in a variety of workshops to model our management behaviours and expectations.This philosophy set the foundation for working relationships within and external to the organization and 34
guided our strategic planning processes (e.g., mission, role, strategic plan). Clearly, the relationships resulting from this activity facilitated the later planning process.
The planning framework A planning framework was developed which was based on the renewal strategies already described in our management philosophy. This framework was augmented by our collective expectations for the organization: The organization would solidify its commitment to the individuals it served, both those who receive service as well as those who provide service. Rewards for commitment would be built into the planning process as well as day-to-day operations. Creativity and excitement would be encouraged. Decision-making would be pushed down to the lowest possible level and employees would be openly encouraged to embrace this responsibility. Change would be recognized to be the only constant of the process at both the structural and program level. Change would be accepted to be an expected outcome by the board, medical staff leaders, administration and direct service providers. Our process would take several years to achieve. Our research confirmed that where individuals perceive control over their jobs, performance improves drastically. Our participative approach, characteristic of our organizational renewal process, gave those with the expertise to carry out tasks the opportunity to determine the most appropriate and effective manner in which to do so. We believe that by involving everyone in the direction and operation of the organization, each person’s personal investment of time, expertise and willingness to accept change (regardless of their level in the organization) would contribute directly to the goals and performance of the hospital. To combine strategic planning and organizational renewal processes effectively, the hospital subsequently developed a detailed ”plan to plan”: an essential precursor to a planning process. The plan was presented to and endorsed by all internal stakeholders and approved by the board. It was noteworthy that while the outcome of the planning process was not certain, everyone was aware that once it commenced, the planning process would result in its logical conclusion, whatever that might be. From our experience, when organizations find that the results of a planning process are actually or potentially difficult to accept, they are abandoned. This “phenomenon” of the shelved consultant’s planning report was a feature we wished to avoid. Our process was characterized by the following elements: development of a management philosophy; Healthcare Management FORUM
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revision of the organization’s mission; analysis of the internal and external environment; definition of the organization’s role; development of strategic directions; development of clinical program plans to reflect the strategic directions, including scope of services, gaps and barriers to services and utilization targets; identification of resources (business plan) in terms of operational and capital needs through development of a master program and plan; establishment of implementation (operating plan) strategies; development of an organization structure to implement the plan; evaluation of the process; and revision of the planning process. Although the steps to develop the plan were not unique to St. Joseph’s, the approach reflected the organization’s new culture and priority for full staff and community involvement. It focused on renewing commitment, generating opportunities to link the mission and role of the hospital with day-to-day operations and ensuring that participants had ownership of the outcomes. This was achieved through the following activities: Development of a management philosophy which focused on and encouraged employee participation. The philosophy was incorporated into the mission statement. Both the mission statement and management philosophy accepted and expected that ”change” would be embraced as an opportunity rather than a barrier to progress. Analysis of stakeholder satisfaction with current service. The analysis included the identification of primary and secondary stakeholders and methodologies to assess their satisfaction with the hospital and to identify future perceived needs. Methodologies included focus groups, individual questionnaires and interviews, and round tables at various luncheons. Extensive participation of various stakeholders through a series of staff and community forums. Opportunities were avdable for various stakeholders to have direct input into the hospital’s future direction. From ses_ions with the police chief, to school trustees, indiuidbals came together to review the issues and pressures facing the hospital and the range of options and possible solutions that the hospital could develop. Specific focus group meetings were tailored to various community agencies and interest groups. Hosted by the Planning Committee of the board, community health agencies (e.g., public health, Victorian Order of Nurses), social agencies (e.g., women’s shelters, Children’s Aid Society),other services (e.g., education, police, fire, ambulance) and other self-help/consumer groups (e.g., Alcoholics
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Anonymous, Lung Association, cancer associations) were organized in groups of eight to twelve representatives to discuss directions for the hospital in relation to the hospital’s mission, the changing role of hospitals, and delivery systems, among others. Community questionnaires were randomly conducted in shopping malls, through local newspaper inserts and through the mail. Telemarketing was considered but not used because of the high number of community responses obtained from earlier strategies. Clinical program planning was achieved by the development of multidisciplinary groups that focused on consumer health needs in relation to role opportunities for the hospital. The groups consisted of management and employee representatives from the hospital, as well as community, medical staff, board and consumers. Services provided within the hospital were critically reviewed with respect to gaps, duplication of service in the county and opportunities for and barriers to change. Following analysis and consensusbuilding sessions, future directions were developed in the form of clinical program plans and included the potential scope of services, utilization objectives and resource requirements for each program. Decisions were also made about services that the hospital should not provide. Consultants were used to facilitate the process, obtain feedback from key leaders in other agencies, analyze data and evaluate options as they took shape. Our clinical program groups recommended amendments to the hospital’s master program which included a detailed assessment of the hospital’s physical plant and its ability to accommodate future program changes. At each major decision-makingpoint of the process (and there were several), planning retreats were held with representation from all stakeholder groups, including line staff and medical staff. Although the actual membership has been variable, most stakeholders were common to all sessions. More than 100 participants have been selected to represent respective internal interest groups and the clinical programs. The retreats provided excellent opportunities to reward commitment and encourage positive team-building among all levels of people within the organization, from the Sisters to the part-time service workers. Following each retreat, staff and other groups received a communiquk about the outcome of the session and next steps. Each year, the board hosts a planning retreat with internal and selected external representatives to evaluate progress on the previous year’s strategic directions and approve new ones developed for the coming year. These directional statements form the basis for board committee goals, those of management and the medical staff. 35
Spring/Printemps 1994
In turn, the clinical programs outline their goals and resource requirements which complement the budgeting process. In some instances, program groups have been given the mandate to develop strategies for acquiring new or enhanced operational resources. This whole process culminates in the annual operating plan approved by the board for district health council and government submissions.
Use of external consultants External consultants were used sparingly and only at key points throughout the process. Specifically, they were retained for two: - as facilitators of change and consensus-building at the various retreats and decision-makingsessions; and - as technical planning specialists to provide expert analysis. The roles of the technical specialists were to: facilitate the analysis of clinical data beyond Brant County experience and identify opportunities for realistic clinical improvements; - provide objectivity to the process and co-ordinate specific utilization, demographic data analysis; and - provide specific technical expertise where objective assessment of personnel and facility requirements were potentially controversial.
-
None of the consultants was involved in every aspect of the strategic planning process. This was a conscious decision made by the chief executive officer and board to protect the ownership of the process and the eventual content by the hospital and community participants. We believe that this ownership has been key to our success.
Outcomes of the approach The success of a hospital’s strategic plan can be measured by the degree to which positive change has occurred within the organization and its community. At St. Joseph’s, since the inception of its ongoing strategic planning process in late 1986, the following have resulted: Clinical prog&m groups have evolved from planning bodies to structures that direct operations. This W;;aS achieved through a program-based organizational structure for the hospital involving physician directors in each core clinical program. Our transition to program-based management built upon the strong interdisciplinary relationships that the planning process fostered. Our move to this non-traditional organizational model was implemented with significant support across the entire organization. A continuous quality improvement program has been implemented which followed from program management. External funding was secured through 36
Volume 7, No. 1
a proposal developed by one of our clinical program planning groups that has now been ”rolled out” across the organization. Physicians have become active members of the program and management structure of the hospital. They have greater input into shaping the hospital’s clinical priorities and its annual operational plans. The net effect is that the hospital is controlling its resources by managing its case mix and not vice versa. Board, departmental and program goals and objectives are established and distributed annually and form the basis of annual operating plans. There is congruency among and between programs and support services as the concepts of customer service have crossed the organization. A 10-year capital financial plan is in place that enables the hospital to monitor annual program priorities against the long-term financial health of the organization. The hospital foundation conducted a very successful ”Share the Vision” capital campaign to secure the resources necessary to support the strategic plan of the hospital. The foundation was able to involve the same stakeholders that developed the vision for the hospital. A regional planning process has begun in Brant County that will enable the direction established for St. Joseph’s to be examined critically in detail with other providers. The basic planning process used by St. Joseph’shas been modified to address regional planning needs for the county. By 1992, there were a variety of other consequences within the organization, including an elected employee on the board of trustees; regular general staff (town hall) meetings with all staff; and greater voluntary participation on various staff committees such as Fiscal Advisory, Nursing Practice and Continuous Quality Improvement (CQI)implementation teams. For example, employees assembled internal and external stakeholders to plan and implement a recycling program for the hospital. We believe that these and other spontaneous initiatives are in marked contrast to the organization as it existed in 1986. In addition, there have been several examples where financial or other barriers, which would have normally impeded innovation, created incentives for new approaches to old problems.
Lessons learned from our experience The hospital continues to use the renewal and planning processes initiated in 1986-87.Most importantly, the process strengthened and validated the mission, values and philosophy of the hospital and provided a forum to operationalize these into day-to-day activities. By encouraging extensive stakeholder involvement and focusing on the needs of its community, we Healthcare Management FORUM
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believe that cohesiveness between members of the community and the hospital has been enhanced. Similarly, commitment to the process has been extended beyond the organization, evidenced by the active participation of most internal and many external stakeholders at the board’s annual planning retreat. Our process has also fostered support for the development of a continuum of care within the community and various outreach activities. New programs have been implemented by reallocating internal resources. Throughout these years, the hospital has weathered numerous financial pressures while advancing new initiatives identified in the strategic plan. This has been achievable because most stakeholders have been able to be part of both the visioning and operational goalsetting for the organization. Decisions that might have been avoided because of fear of change or potential conflict are now related directly to the measures necessary to implement the objectives of the strategic plan of the organization. Our ”renewal approach” also facilitated decisionmaking within the organization. The time invested by managers and other staff in the process strengthened their commitment to develop departmental and program plans which were consistent with the strategic plan of the hospital. Our management style and program structure for the organization were strengthened to focus on patient and customer needs rather than traditional interdepartmental competition and incongruent priorities. Several managers have mirrored the hospital’s renewal process in their relationships with other health and social service agencies. A limitation of our participative approach is the time needed to ensure communication among participants. The approach tends to produce an information explosion, requiring groups to synthesize vast amounts of information before decision-makingcan occur. The involvement of many varied groups requires great coordination by the management of the hospital. However, this ”up-front” investment produces significant dividends. It is essential that participants involved in the process foster a futuristic vision. There is a need to provide necessary educational and other opportunities to sup- port the various stakeholders and their contributions. In order to integrate the concepts of organizational renewal with strategic planning, the following should be considered: All participants must be provided with guidance and education regarding the goals and objectives of
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strategic planning and its relationship with other components of planning. Ongoing coaching must be available to staff, trustees and medical staff to ensure their comfort in participating in the process. Participation of all key internal and external groups is essential. There must be opportunities within the process for team-building, to deal with conflict and to build consensus among and within groups. The process must include tangible rewards and early wins. The process must be rigid, its content flexible. We believe that the processes and activities of corporate renewal can support and enhance the effectiveness of strategic planning. We believe our process has generated a renewed commitment to St. Josephs, its mission and values, beliefs and philosophies. Although time-consuming to undertake, we believe that the congruency and synergy created by combining organizational renewal and strategic planning are clearly worth the effort.
References and notes 1. Andrews, K.R. 1980. The Concept of Corporate Strategy, rev. ed., Homewood, Ill., R.D. Irwin Inc.
2. Barker, P. and Keegan, P. 1985. A medical department: strategic planning. Health Management Forum 6(4):9-10.
3. Clemenhagen, C. and Champagne, F. 1984.Medical staff involvement in strategic planning. Hospital and Health Services Administration 29(4): 79-94. 4. Bryson, J.M. 1991. Strategic Planningfor Public and Nonprofit Organizations, San Francisco, Jossey-Bass. 5. Peters, T. and Austin, N. A Passion for Excellence, New York, Random House. 6. Chenoy, N.C. 1984. Strategic planning: understanding and responding to a rapidly changing world. Health Management Forum 5(2):3-19.
R. Cercone, is President and Chief Executive Officer a t S t . Joseph’s Hospital, Brantford, Ontario. D . McDonald, MHSc, CHE, is a Principal a t Agnew Peckham b Associates, Toronto. L. Tarrant, M A (Reg Psy), is President of TOC Consulting Inc., Toronto. K . Tremblay, BSc, MHSc, CHE, is President and Chief Executive Officer, York Central Hospital, Richmond Hill, Ontario.
37
Volume 7, No. 1
Brief Report
Organizational Renewal and Strategic Planning: A Winning Combination b y R. Cercone, D . McDonald, CHE, L. Tarrant and K . Tremblay, CHE
Several approaches to organizational renewal have been described, but few are reported for health care institutions in Canada. In contrast, approaches to strategic planning in health care facilities have been well documented. From our experience over the past six years, the theory and practice of organizational renewal complement the focused activitiesof strategic planning. This combination can be an effectivemeans to enhance organizational performance, employee commitment and a shared vision among the various stakeholders within the hospital and community. This article outlines the process and benefits that can accrue through such efforts. It demonstrates how the investment of organizational renewal strategies can produce sustainable,operational and strategic planning benefits for community hospitals.
Si plusieurs dkrnarches reliks au renouvellernent organisationnel ont dkjh ktk dkcrites, peu d’entre elles concernent les ttablissements de santk au Canada. Par contre, les mkthodes de planification stratkgique utiliskes dans les installations de santk sont trks bien documentkes. L’expkrience que nous avons vkcue au cours des six dernikres annkes nous dkmontre que les aspects thkoriqueset pratiques du renouvellement organisationnel viennent complkter les activitks de la planification stratkgique. Cette combinaison peut se rkvkler tris efjicace pour accroitre le rendement de l’organisation, pour stimuler la participation du personnel et pour amener les diffkrents intervenants au sein de l’hdpital et de la communautk h partager une mCme vision. Cet article vient souligner le processus et les avantages qui peuvent dkcouler de tels efforts. I1 permet de dkmontrer comment le recours h des stratkgies de renouvellement organisationnel peut donner suite h des avantages durables en rnatikre de planification opkrationnelleet stratkgique pour les hdpitaux communautaires.
T
he methods by which an organization relates to its changing environment will determine its likelihood for future viability. Strategic planning has been described as an effective instrument for designing and creating a desired future; in the minds of many, a strate& plan is an essential precursor to the way organizations relate to changing envir~nments.l-~ Across the country, we have recognized that the health care environment of the 1990s will be turbulent. Numerous variables that have and will continue to affect all players, as well as hospitals, include: In most provinces, health goals and priorities have been established by senior planning reports. They focus on a shift in emphasis from treatment to health promotion and disease prevention, alternative means of delivery, and so on. These shifts will have a major effect on the types of services hospitals provide and how they are provided. In some cases, 32
these shifts may change the very existence of hospitals as we have known them. There will be continued and escalated financialpressure on hospitals. With the increasing focus on quality, as measured by outcomes and pressures to reduce the cost of care, hospitals will need to ensure that all services operate as efficiently as possible. As future changes to funding become oriented toward case-costing systems, hospitals will need to ensure that all programs make the best use of available resources. Health-planning guidelines have been established in many provinces that identify utilization targets for hospital use and, ultimately, physicians. They have been developed with the goal to reduce hospital use; it is likely that approvals for new programs, services and capital resources will be linked directly to overall achievement of these utilization targets. Regional planning will be a major theme throughout the 1990s. This will necessitate that all providers and Healthcare Management FORUM
Volume 7,No. 1
consumers plan services together and search out new opportunities to rationalize service, reduce costs and make the best use of regional resources. In some provinces, such as Ontario, the system for providing long-term care and related support services is under review. In keeping with provincial health goals, the challenge will be to reduce the reliance on institutional services and improve local and regional co-ordination of services. In redesigning the system, facilities will have to satisfy consumer needs while ensuring effective use of resources. This will have a major impact on hospitals as they define their role within the continuum of care available in the community. The issues and processes of these ”social contracts” will create new dimensions to the traditional planning framework of hospitals and other providers. As contemporary management strategies and concepts, such as program-based management, interdisciplinary teamwork, employee empowerment and continuous quality improvement, challenge traditional approaches, the resultant culture clashes can destabilize an organization. Accordingly, there is a great need for congruency of vision, goals and shared commitment among the various players within the organization. Strategic planning is an essential activity for all organizations, including hospitals. It is a proactive process that enables the organization to adapt effectively and proactively to pressures imposed on it by its internal and external environments. Although a comprehensive strategic plan (the document) is fundamental to the effective management of a hospital, our experience indicates that the process by which a strategic plan is developed is as important as the plan itself. This premise was the essence of our organizational renewal program and the transition to strategic planning (the process).
In business, the term “organizationalrenewal” is used to describe a process that empowers all employees of an organization to work together to create a common vision about the organization’s purpose and how it will achieve success. Such proc,gssesprovide an opportunity to renew relationships, generate energy and build unity. Organizational<:gnewal strategies recognize that the employee has ”cwAership”responsibilities which affect the future viability of any successfulorganization.5 The impetus for renewal is usually a crisis of change, most notably financial, facilities, vision or quality. Renewal strategies commonly accept ”change” as an ally, a perspective to enhance organizational success over time. At St. Joseph’s Hospital in Brantford, Ontario, a 121bed community hospital, the principles of organizational renewal were used, and continue to be used, to guide its ongoing strategic planning and implementation processes.
FORUM Gestion des soins de sant6
Spring/Printemps 1994
The decision to undertake the renewal and strategic planning processes During the early 1980s, St. Joseph’s Hospital, one of three hospitals in Brant County and one of two acute care community hospitals in Brantford, underwent numerous organizational changes. In 1981-82,a rationalization process between the two hospitals in Brantford resulted in the transfer of some of St. Joseph’s major programs to the Brantford General Hospital. The process to reach this outcome was not well managed and resulted in a polarization of the community, including its medical population. Also, as a single event, it did not provide a mechanism for ongoing collaborativeplanning among the providers of care. As a result, relationships within the health service delivery system within the county continued to be weak and fragmented. Many programs and services provided at each hospital continued to reflect physician preferences, historical patterns of practice; in short, duplication of effort and services. Despite this vacuum, formalized long-term or strategic planning had not occurred at St. Joseph’s. Thus, the hospital had no clearly stated priorities upon which to focus plans or direct staff energy. Individual commitment to the organization was less than ideal and morale was poor. Communication or its absence was a recurring complaint among employees, managers and physicians. At the board level, “strategic” decisions were made based on the annual operating budgets rather than a strategic plan. Consequently, decisions were often reactive and focused more on the ”management” of the physical plant than the hospital’s programs and services (i.e., the core businesses of the organization). Although a Planning Committee of the board existed, it had not functioned at a strategic level; it had been more focused on ad hoc plans from staff and physicians. Issues such as human resource plans for medical staff, regional planning and program market share had not been discussed. Chenoy‘ noted that organizations tend to perpetuate themselves until some event or trend occurs that challenges organizational inertia and initiates change. Our research indicated that change in top management is the event most likely to spur action. At St. Joseph’s, the first lay chief executive officer was appointed in 1986. Until that time in the 30-year history of the hospital, this person had historically been a member of the sponsoring religious congregation, the Sisters of St. Joseph of Hamilton (i.e., an owner). Collectively, the chief executive officer, board, management and medical staff leaders recognized the need for an ongoing mechanism that would guide the hospital’s future. An executive planning retreat mandated a comprehensive plan that would: clarify direction and priorities; 33
Volume 7, No. 1
SpringFrintemps 1994
develop a defensible basis for decision-making; build teamwork; develop shared goals among players; improve organizational performance; provide an ongoing mechanism for operational and facilities planning; re-establish local and regional planning processes; and ensure high quality in programming and care. Although the need to develop a strategic plan was evident, the chief executive officer recognized that without renewed commitment to the organization at all levels, implementation of any plan could be in jeopardy. As such, the overriding priority for strategic planning was to ensure that the individuals (stakeholders) who would implement the new directions would be active participants in shaping them. Also, recognizing that ”change” is the only constant in health care planning, we wanted to ensure that our process produced the skills needed to address future planning challenges.
W h y use organizational renewal strategies? The appointment of a lay chief executive officer and the concern of declining participation by members of the congregation created anxiety about the preservation of the hospital’s mission and Catholic identity. The middle management ranks had weathered significant turnover through retirements and replacements; traditional working relationships had been interrupted. Medical staff leaders were somewhat critical of their limited access to participation in resource decision-making.The organizational structure was a traditional hospital hierarchy. Middle managers expressed concerns regarding centralized power and decision-making and communication. Some trustees had encroached into operational issues during management vacancies. These and a variety of other factors highlighted the need for the organization to become more cohesive and functional as a team with clear demarcation of roles and expectations. Thus, numerous management issues required solution. Most notable were improvement in communication, team-building, conflict resolution processes, delegation of authority and accountability, and participation in management processes. As well, the congreg$ion had made the mission of the hospital ”noh-negotiable”throughout the change process. To address these and related issues, renewed commitment and enthusiasm by all its participants was needed. As a first step, we facilitated the development of a management philosophy for the hospital. The entire organization, including the employees, medical staff, managers, trustees and the Sisters of St. Joseph, participated in a variety of workshops to model our management behaviours and expectations.This philosophy set the foundation for working relationships within and external to the organization and 34
guided our strategic planning processes (e.g., mission, role, strategic plan). Clearly, the relationships resulting from this activity facilitated the later planning process.
The planning framework A planning framework was developed which was based on the renewal strategies already described in our management philosophy. This framework was augmented by our collective expectations for the organization: The organization would solidify its commitment to the individuals it served, both those who receive service as well as those who provide service. Rewards for commitment would be built into the planning process as well as day-to-day operations. Creativity and excitement would be encouraged. Decision-making would be pushed down to the lowest possible level and employees would be openly encouraged to embrace this responsibility. Change would be recognized to be the only constant of the process at both the structural and program level. Change would be accepted to be an expected outcome by the board, medical staff leaders, administration and direct service providers. Our process would take several years to achieve. Our research confirmed that where individuals perceive control over their jobs, performance improves drastically. Our participative approach, characteristic of our organizational renewal process, gave those with the expertise to carry out tasks the opportunity to determine the most appropriate and effective manner in which to do so. We believe that by involving everyone in the direction and operation of the organization, each person’s personal investment of time, expertise and willingness to accept change (regardless of their level in the organization) would contribute directly to the goals and performance of the hospital. To combine strategic planning and organizational renewal processes effectively, the hospital subsequently developed a detailed ”plan to plan”: an essential precursor to a planning process. The plan was presented to and endorsed by all internal stakeholders and approved by the board. It was noteworthy that while the outcome of the planning process was not certain, everyone was aware that once it commenced, the planning process would result in its logical conclusion, whatever that might be. From our experience, when organizations find that the results of a planning process are actually or potentially difficult to accept, they are abandoned. This “phenomenon” of the shelved consultant’s planning report was a feature we wished to avoid. Our process was characterized by the following elements: development of a management philosophy; Healthcare Management FORUM
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revision of the organization’s mission; analysis of the internal and external environment; definition of the organization’s role; development of strategic directions; development of clinical program plans to reflect the strategic directions, including scope of services, gaps and barriers to services and utilization targets; identification of resources (business plan) in terms of operational and capital needs through development of a master program and plan; establishment of implementation (operating plan) strategies; development of an organization structure to implement the plan; evaluation of the process; and revision of the planning process. Although the steps to develop the plan were not unique to St. Joseph’s, the approach reflected the organization’s new culture and priority for full staff and community involvement. It focused on renewing commitment, generating opportunities to link the mission and role of the hospital with day-to-day operations and ensuring that participants had ownership of the outcomes. This was achieved through the following activities: Development of a management philosophy which focused on and encouraged employee participation. The philosophy was incorporated into the mission statement. Both the mission statement and management philosophy accepted and expected that ”change” would be embraced as an opportunity rather than a barrier to progress. Analysis of stakeholder satisfaction with current service. The analysis included the identification of primary and secondary stakeholders and methodologies to assess their satisfaction with the hospital and to identify future perceived needs. Methodologies included focus groups, individual questionnaires and interviews, and round tables at various luncheons. Extensive participation of various stakeholders through a series of staff and community forums. Opportunities were avdable for various stakeholders to have direct input into the hospital’s future direction. From ses_ions with the police chief, to school trustees, indiuidbals came together to review the issues and pressures facing the hospital and the range of options and possible solutions that the hospital could develop. Specific focus group meetings were tailored to various community agencies and interest groups. Hosted by the Planning Committee of the board, community health agencies (e.g., public health, Victorian Order of Nurses), social agencies (e.g., women’s shelters, Children’s Aid Society),other services (e.g., education, police, fire, ambulance) and other self-help/consumer groups (e.g., Alcoholics
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Anonymous, Lung Association, cancer associations) were organized in groups of eight to twelve representatives to discuss directions for the hospital in relation to the hospital’s mission, the changing role of hospitals, and delivery systems, among others. Community questionnaires were randomly conducted in shopping malls, through local newspaper inserts and through the mail. Telemarketing was considered but not used because of the high number of community responses obtained from earlier strategies. Clinical program planning was achieved by the development of multidisciplinary groups that focused on consumer health needs in relation to role opportunities for the hospital. The groups consisted of management and employee representatives from the hospital, as well as community, medical staff, board and consumers. Services provided within the hospital were critically reviewed with respect to gaps, duplication of service in the county and opportunities for and barriers to change. Following analysis and consensusbuilding sessions, future directions were developed in the form of clinical program plans and included the potential scope of services, utilization objectives and resource requirements for each program. Decisions were also made about services that the hospital should not provide. Consultants were used to facilitate the process, obtain feedback from key leaders in other agencies, analyze data and evaluate options as they took shape. Our clinical program groups recommended amendments to the hospital’s master program which included a detailed assessment of the hospital’s physical plant and its ability to accommodate future program changes. At each major decision-makingpoint of the process (and there were several), planning retreats were held with representation from all stakeholder groups, including line staff and medical staff. Although the actual membership has been variable, most stakeholders were common to all sessions. More than 100 participants have been selected to represent respective internal interest groups and the clinical programs. The retreats provided excellent opportunities to reward commitment and encourage positive team-building among all levels of people within the organization, from the Sisters to the part-time service workers. Following each retreat, staff and other groups received a communiquk about the outcome of the session and next steps. Each year, the board hosts a planning retreat with internal and selected external representatives to evaluate progress on the previous year’s strategic directions and approve new ones developed for the coming year. These directional statements form the basis for board committee goals, those of management and the medical staff. 35
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In turn, the clinical programs outline their goals and resource requirements which complement the budgeting process. In some instances, program groups have been given the mandate to develop strategies for acquiring new or enhanced operational resources. This whole process culminates in the annual operating plan approved by the board for district health council and government submissions.
Use of external consultants External consultants were used sparingly and only at key points throughout the process. Specifically, they were retained for two: - as facilitators of change and consensus-building at the various retreats and decision-makingsessions; and - as technical planning specialists to provide expert analysis. The roles of the technical specialists were to: facilitate the analysis of clinical data beyond Brant County experience and identify opportunities for realistic clinical improvements; - provide objectivity to the process and co-ordinate specific utilization, demographic data analysis; and - provide specific technical expertise where objective assessment of personnel and facility requirements were potentially controversial.
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None of the consultants was involved in every aspect of the strategic planning process. This was a conscious decision made by the chief executive officer and board to protect the ownership of the process and the eventual content by the hospital and community participants. We believe that this ownership has been key to our success.
Outcomes of the approach The success of a hospital’s strategic plan can be measured by the degree to which positive change has occurred within the organization and its community. At St. Joseph’s, since the inception of its ongoing strategic planning process in late 1986, the following have resulted: Clinical prog&m groups have evolved from planning bodies to structures that direct operations. This W;;aS achieved through a program-based organizational structure for the hospital involving physician directors in each core clinical program. Our transition to program-based management built upon the strong interdisciplinary relationships that the planning process fostered. Our move to this non-traditional organizational model was implemented with significant support across the entire organization. A continuous quality improvement program has been implemented which followed from program management. External funding was secured through 36
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a proposal developed by one of our clinical program planning groups that has now been ”rolled out” across the organization. Physicians have become active members of the program and management structure of the hospital. They have greater input into shaping the hospital’s clinical priorities and its annual operational plans. The net effect is that the hospital is controlling its resources by managing its case mix and not vice versa. Board, departmental and program goals and objectives are established and distributed annually and form the basis of annual operating plans. There is congruency among and between programs and support services as the concepts of customer service have crossed the organization. A 10-year capital financial plan is in place that enables the hospital to monitor annual program priorities against the long-term financial health of the organization. The hospital foundation conducted a very successful ”Share the Vision” capital campaign to secure the resources necessary to support the strategic plan of the hospital. The foundation was able to involve the same stakeholders that developed the vision for the hospital. A regional planning process has begun in Brant County that will enable the direction established for St. Joseph’s to be examined critically in detail with other providers. The basic planning process used by St. Joseph’shas been modified to address regional planning needs for the county. By 1992, there were a variety of other consequences within the organization, including an elected employee on the board of trustees; regular general staff (town hall) meetings with all staff; and greater voluntary participation on various staff committees such as Fiscal Advisory, Nursing Practice and Continuous Quality Improvement (CQI)implementation teams. For example, employees assembled internal and external stakeholders to plan and implement a recycling program for the hospital. We believe that these and other spontaneous initiatives are in marked contrast to the organization as it existed in 1986. In addition, there have been several examples where financial or other barriers, which would have normally impeded innovation, created incentives for new approaches to old problems.
Lessons learned from our experience The hospital continues to use the renewal and planning processes initiated in 1986-87.Most importantly, the process strengthened and validated the mission, values and philosophy of the hospital and provided a forum to operationalize these into day-to-day activities. By encouraging extensive stakeholder involvement and focusing on the needs of its community, we Healthcare Management FORUM
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believe that cohesiveness between members of the community and the hospital has been enhanced. Similarly, commitment to the process has been extended beyond the organization, evidenced by the active participation of most internal and many external stakeholders at the board’s annual planning retreat. Our process has also fostered support for the development of a continuum of care within the community and various outreach activities. New programs have been implemented by reallocating internal resources. Throughout these years, the hospital has weathered numerous financial pressures while advancing new initiatives identified in the strategic plan. This has been achievable because most stakeholders have been able to be part of both the visioning and operational goalsetting for the organization. Decisions that might have been avoided because of fear of change or potential conflict are now related directly to the measures necessary to implement the objectives of the strategic plan of the organization. Our ”renewal approach” also facilitated decisionmaking within the organization. The time invested by managers and other staff in the process strengthened their commitment to develop departmental and program plans which were consistent with the strategic plan of the hospital. Our management style and program structure for the organization were strengthened to focus on patient and customer needs rather than traditional interdepartmental competition and incongruent priorities. Several managers have mirrored the hospital’s renewal process in their relationships with other health and social service agencies. A limitation of our participative approach is the time needed to ensure communication among participants. The approach tends to produce an information explosion, requiring groups to synthesize vast amounts of information before decision-makingcan occur. The involvement of many varied groups requires great coordination by the management of the hospital. However, this ”up-front” investment produces significant dividends. It is essential that participants involved in the process foster a futuristic vision. There is a need to provide necessary educational and other opportunities to sup- port the various stakeholders and their contributions. In order to integrate the concepts of organizational renewal with strategic planning, the following should be considered: All participants must be provided with guidance and education regarding the goals and objectives of
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strategic planning and its relationship with other components of planning. Ongoing coaching must be available to staff, trustees and medical staff to ensure their comfort in participating in the process. Participation of all key internal and external groups is essential. There must be opportunities within the process for team-building, to deal with conflict and to build consensus among and within groups. The process must include tangible rewards and early wins. The process must be rigid, its content flexible. We believe that the processes and activities of corporate renewal can support and enhance the effectiveness of strategic planning. We believe our process has generated a renewed commitment to St. Josephs, its mission and values, beliefs and philosophies. Although time-consuming to undertake, we believe that the congruency and synergy created by combining organizational renewal and strategic planning are clearly worth the effort.
References and notes 1. Andrews, K.R. 1980. The Concept of Corporate Strategy, rev. ed., Homewood, Ill., R.D. Irwin Inc.
2. Barker, P. and Keegan, P. 1985. A medical department: strategic planning. Health Management Forum 6(4):9-10.
3. Clemenhagen, C. and Champagne, F. 1984.Medical staff involvement in strategic planning. Hospital and Health Services Administration 29(4): 79-94. 4. Bryson, J.M. 1991. Strategic Planningfor Public and Nonprofit Organizations, San Francisco, Jossey-Bass. 5. Peters, T. and Austin, N. A Passion for Excellence, New York, Random House. 6. Chenoy, N.C. 1984. Strategic planning: understanding and responding to a rapidly changing world. Health Management Forum 5(2):3-19.
R. Cercone, is President and Chief Executive Officer a t S t . Joseph’s Hospital, Brantford, Ontario. D . McDonald, MHSc, CHE, is a Principal a t Agnew Peckham b Associates, Toronto. L. Tarrant, M A (Reg Psy), is President of TOC Consulting Inc., Toronto. K . Tremblay, BSc, MHSc, CHE, is President and Chief Executive Officer, York Central Hospital, Richmond Hill, Ontario.
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