Strategic Planning and Execution Barry Arbuckle Ph D

Strategic Planning and Execution Barry Arbuckle, Ph. D President and Chief Executive Officer Memorial. Care Health System Becker’s Hospital Review May 16, 2014

“It’s interesting how many organizations do strategic planning and yet how little value is considered to be delivered as a result. ” – Does the process produce a plan that's "real? " – Does the plan really work for the organization? – How to know if the plan was deployed…well?

Automotive Industry Environment Effects on Sales • 2000 -10 Decade – Employee wages/benefits/pensions – Emission Standards • Oil Prices – 2006 - $62. 36 – 2008 - $91. 35 • Hummer Sales – 2006 - 71, 524 – 2008 - 9, 046

In Process UC Irvine Health Partnership

Seven Deadly Sins Lacks rigor, insight, vision, ambition or practicality People not sure how the strategy is to be implemented Strategy communicated on a “need to know” Some or all aspects lack a specific person in charge Strategic leaders send mixed signals by dropping out of sight Unforeseen obstacles occur, and not prepared to overcome them Strategy all-consuming, details of day-to-day are neglected Corboy, O’Corribui, 1999

Strategic Planning • Both inward and outward focused • Longer-term, then reel back in – 3 - 5 years ---> 1 • Involves evaluating and prioritizing among opportunities to: – Create superior value for customers – Differentiating the organization from competitors – Enhancing the organization’s ability to anticipate and proactively adapt to pending environmental change – Purposeful resource allocation

Memorial. Care’s Standard Work

Strategic Planning Cycle 1. Identify a Vision: Share It • Environmental Assessment Scenario Analysis • SWOT • Financial performance targets • Operational performance targets (quality, satisfaction, efficiency) • Facility, equipment, staffing needs 1 2 5. Update Strategies and Tactics as Necessary Mission Values Culture 5 Goals Objectives Strategies 2. Set a Course of Action • Leadership Retreat • Outcomes • Implementation Plan • • • Balanced Scorecard • Corrective action and contingency plans • Updated financial projections 4. Measure and Monitor Results Performance Reporting: • Financial • Operational (outcomes, quality, etc. ) • Organizational learning • External customers (satisfaction) 4 Financial projections Capital formation plan Medical staff plan Facility master plan update Foundation plan Resource Allocation 3 3. Implement • Operations Enhancement • Leadership Training • Physician Alignment • Accountability • Communication Plan

8 Keys to Success 1. Building a timeline that allows for advanced education and study 2. Creating a system-wide prioritization process 3. Developing cascading entity planning (Lean Management System) 4. Linking to the 10 -year Financial plan and budgeting process 5. Incorporation of Kata principles for detailed initiative planning 6. Use of “ 90 -day cycle thinking” to communicate system -wide on key progress and next steps 7. Deep Dives for “gnarly issues” and consensus building 8. Creating linkages into system-wide strategic marketing for our patients, physicians and staff

1. Building a Timeline • Standard Schedule – Published, no surprises • Example: Memorial. Care – MHS BOD Strategy Retreat - Nov – Sr. Executive Group Retreat -Jan – Strategy Committee - Jan • High level initiatives reviewed & endorsed • To full Board for approval in January – Feb-Mar • Staff development of initiative detail • Syncing to financial and capital plans • Campus retreats/development of aligned local plans – Apr • Final version/detail for full Board approval – Strategy Committee, MHS Board, campus Boards – May-Jun • Finance plan for full Board approval • Strategic Plan disseminated – Jul • Tracking initiated for each initiative • Quarterly Strategy Close

MHS Strategy Retreats History of Action Affiliations & Alliances • • (2012) 2013: UCI Health 2013: Ambulatory growth Population Health (2011 • 2013: Roadmap, Seaside • 2012: Explore Knox Keene -12) Debt Issuance • 2012: Refinanced debt (2010) • 2011: Researched options • 2011: Acquired CHLB 2010: Hospital evaluations 2009: Roadmap • 2012: Added IPA • 2011: Seeded MCMG • 2008 -10: Roadmap Mergers & • Acquisitions (2008 -9) • Medical Foundation (2007, 2009)

2. Creating System. Wide Prioritization • SWOT

2. Creating System. Wide Prioritization • SWOT • Retreat Flow/Culture – Learning/study/fun! – Starting Pyramid discussion – Clarifying and narrowing • • World Café Top 5 Multi-voting, debrief Red Dot discussion – Re-draft, review

The Rules of Dots • • Can’t get more No begging, borrowing or otherwise coercing Yours to use or not use Colors – Green – have to do in next year – Yellow – good to do but multi-year or later – Red – advise against (or don’t understand)

3. Developing the Cascading Plan • Standard Framework - Pyramids System. Wide Entity Key Processes • MHS system-wide plan • Owned by all • Medical Centers, Medical Foundation, Health Plan • Specific focus • Cascade • Departments, Key Teams

Definition of Our Terms • Strategic 5 -Year Vision – A vivid mental image of our future state (years out) • 3 -Year Strategy – A systematic plan of action that will result in steady movement toward our desired future state • Fiscal Year (FY) Initiative – An act which originates or begins movement toward the desired future state • FY Activity – A very specific action aimed at achieving specific and measurable “what by when” goals and defining related capital and operating requirements • System-Wide – Initiative that is intended to be deployed across the system, generally initiated by distributed function leader / executive • Entity – Initiative that is intended to be deployed at a campus or other entity according to their own specific needs

Result

Cascade Example

Putting In the Detail Focus Area Vision FY Initiative What Success Looks Like Accountable Planned Activities to Meet Initiative Target by (incremental deadline Qtr) Goal / Measure Financial Plan Linkage

4. Linking to 10 -Year Finance Plan • 10 -Year Plan & Budgeting Process – Bounding Measures (EBIDA, Operating Margin, cash) – Detailed Strategic Plan Tracker, answers: • • What Success looks like? Who is Accountable? Which are the key supporting Activities What is the Timeline, Measure, Financial Plan linkage?

5. Incorporating Kata • Coaching Kata – behavior or pattern 1. What is the target condition? 2. What is the actual condition now? 3. What obstacles are preventing you from reaching the target condition? • And which are you addressing now? 4. What is your next step? 5. When can we go and see what we have learned from taking that step?

Making Sure We Stay on Track • Monitoring – Ongoing assessment – status, on-track or address • Bi-weekly Strategy Cabinet (Council), monthly Exec • Quarterly system-wide roll-up, campus also • Quarterly – Deep Dives (topical) – Board receives semi-annual report at mid-year, end of year, as well as key reports on initiatives and tactics • Our Strategy Committee of the Board reviews quarterly – Their charter calls for anything > $5 M, strategic risk vs benefit, or “just cause we want their input” – Visibility Board

6. Use of 90 -Day Cycles Tactic implemented, work completed, no further action required (some multi-year, incorporated in to next FY) Tactic initiated, work in progress, status on track for expected timeframe or target goal as of this report Tactic initiated, work in progress, status not on track for expected timeframe or target goal as of this report Tactic not initiated per expected timeframe Tactic evaluated, determined not to pursue Tactic initiation deferred, not yet due as of this report

Sample Report

Ex: FY’ 14 2 FQ Close Review Market Diff and Growth Initiative (PG) Status / Key Updates 2 FQ Next 3 FQ Focus Achieve same store growth and membership acquisition (TB, CC, MS) • Onboarded new VP Clinical Integration & Business Development (Capaldi) MHVI clinical integration team launched (report to S. Close) Pursue direct to employer (DTE) opportunities- targets identified, outreach begun • Ensure MHVI work group targets are met according to timeline/plan. Determine approach/timeline for next one • Sales team training approach developed, training held Dec for 90 staff across the system, opportunity to cross-sell Open enrollment plan & strategy group implemented Wave Imaging centers deal closed for 5 centers with Simon. Med, reporting to MCMF, integration with Next Gen EMR Lab Outreach evaluation completed, Deep Dive held, workstreams launched • Host Deep Dive for DTE, continue to pursue, continue dialogue with additional targeted employers Advance sales team strategy and measurement tools Tracking impact of enrollment campaign Monitor impact of Simon. Med Evaluate further SCA-Surgery Center opportunities Activating Lab Outreach recommendations Advance vertical integration plan – update analysis, activate prioritized plans for vertical services (buy/partner) BD VAT re-initiated, meetings scheduled for the rest of the FY to ensure progress • • •

7. Deep Dives, Gnarly Issues • Consideration of strategic need • Taking a time out - shorter retreat – Focused topic – ex. Population Health roadmap, shared PHO contracting strategy, employing specialists, Proton Beam… – Focused invitees – Focused agenda • Report out linked back in to overarching plan

8. Linking to the Plan • Communicating 7 times, 7 ways – – – System-wide webcasts, videos and publications Manager and staff evaluations Long term comp objectives Staff User-Friendly plan Available on intranet

Designing a Strategic Planning Framework + • What makes this work? – Plans key implementation steps – Accountability clear – Monitoring progress – It’s… Standard Work

8 Keys to Success 1. Building a timeline that allows for advanced education and study 2. Creating a system-wide prioritization process 3. Developing cascading entity planning (Lean Management System) 4. Linking to the 10 -year Financial plan and budgeting process 5. Incorporation of Kata principles for detailed initiative planning 6. Use of “ 90 -day cycle thinking” to communicate system-wide on key progress and next steps 7. Deep Dives for “gnarly issues” and consensus building 8. Creating linkages into system-wide strategic marketing for our patients, physicians and staff

Encouraging Creativity Innovation is a GOOD thing!