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Strategic & Financial Planning Integration

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Strategic & Financial Planning Integration Donald Fears, Director of Strategic Planning Susan Sciullo, Chief Financial Officer September 5, 2003 – PowerPoint PPT presentation

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Title: Strategic & Financial Planning Integration


1
Strategic Financial Planning Integration
  • Donald Fears, Director of Strategic Planning
  • Susan Sciullo, Chief Financial Officer
  • September 5, 2003

2
DeKalb Regional Healthcare System
  • Located in DeKalb County on the eastern side of
    Atlanta, Georgia
  • DeKalb Medical Center (Acute Care) 525-Beds
  • Decatur Hospital (Long-Term Acute Care) 102-Beds
  • South DeKalb Medical Center (Acute Care) 100-Beds
    (To be opened in 2005)

3
Services
  • General Acute Care
  • Long-Term Acute Care
  • Second Largest Provider of OB Services in Georgia
  • Comprehensive Cancer Center (with heavy
    involvement in clinical trials)
  • Primary Care Practices (14)
  • Urgent Care Centers (2)
  • International Clinic
  • Hillandale Minor Emergency Center
  • Hillandale Outpatient Surgery Center
  • Home Health Agency
  • First Hospital-Based Wellness Center in Southeast

4
Need for Strategic Planning
5
No amount of planning will replace dumb
luck. Anonymous
6
The harder you work, the luckier you get.Gary
Player, Professional Golfer
7
Uncertainty is a RealitySources of Uncertainty
  • Economic Conditions
  • Actions by Competitors
  • Regulatory Changes
  • The Rise of Consumerism
  • Demographics
  • Emerging Technology
  • Staffing Shortages
  • Access to Capital
  • To infinity and beyond

8
Allocating Limited ResourcesTypes of Resources
  • Funds for Operations
  • Funds for Routine Capital
  • Funds for Strategic Initiatives
  • Funds for Mission-Based Allocations
  • Funds for Investment
  • Funds for Appropriate Levels of Staffing
  • Funds for Strategic Service Growth
  • Management Time to Devote

9
I am what I am and thats all that I
am. Popeye
10
Determining Future Direction
  • Present Situation
  • Mission
  • Vision
  • How do we get there?

11
Four Requirements for Effective
Planning(Jennings Ryan Kolb)
  • Pressure for Change
  • Capacity to Change
  • Clear Shared Vision
  • Actionable First Steps

12
ApproachSteering Committee
  • Senior Management
  • Board Members
  • Physician Leaders
  • Community Representatives

13
ApproachUse of Consultants
  • To provide expertise and resources
  • To prevent biased perspectives
  • To interface with stakeholders

14
Phases in ProcessAssessment
  • Project Initiation
  • Interviews
  • Competitor Assessment
  • External Assessment
  • Internal Assessment

15
Phases in ProcessVision and Strategy Development
  • Development of Vision, Goals and Strategies
  • Planning Assumptions
  • Baseline Utilization and Financial Projections

16
Phases in ProcessImplementation Planning
  • Strategic Financial Plan
  • Tactical Plans Action Items
  • Measures of Success

17
AssessmentPerspectives of Key Stakeholders
  • Steering Committee Members
  • Other Medical Staff Members
  • Department Managers
  • External Stakeholders

18
AssessmentInternal and External Environment
  • Industry Trends
  • Definition of Geographic Market
  • Competitor Analysis
  • External Assessment
  • Internal Assessment

19
Strategic Plan Components
DRHSs Vision for the Future
Where DRHS is Today
Goals, Strategies, Action Plans
DRHS Mission and Values
20
Vision Strategy Development
  • Vision Questionnaire
  • Mission and Vision
  • Planning Assumptions
  • Goals and Strategies
  • Baseline Financials

21
Mission Statement - DRHSThe mission of DeKalb
Regional Healthcare System is to improve lives
through the delivery of excellent health and
wellness services.
22
Vision Statement - DRHSDeKalb Regional
Healthcare System will be the recognized leader
in clinical and service excellence and employee
satisfaction.
23
Assumptions About DRHSs FutureDemographic/Use
of Health Care Services
  • Hospital lengths of stay are likely to remain
    relatively sable over the next five years.
  • The overall adult population and women of
    child-bearing age in the service area are
    projected to grow over the next five years.
  • Despite the aging population, the SA will remain
    younger than the State as a whole.
  • The ethnic diversity in the SA will continue to
    increase with the Hispanic population growing
    significantly.

24
Assumptions About DRHSs FuturePayments/Financial
Pressure
  • No improvement in Medicare payments is
    anticipated.
  • Medicaid payments may decrease due to State
    budget constraints.
  • Managed care penetration will not change
    significantly and MC will continue to be DRHSs
    largest payer.
  • Major reform to reduce hospitals economic burden
    of uninsured patients is not anticipated.

25
Overview of DRHS Strategic Priorities
Community
Organizational Effectiveness
Market Leadership
Clinical Quality Customer Satisfaction
Physicians
Financial Strength
Community
26
Summary of Goals
  • Clinical Quality Customer Satisfaction
    Reinforce throughout DRHS a commitment to
    excellence in clinical quality and superior
    customer service.
  • Physicians Build a strong relationship between
    DRHS and its medical staff, enhance physician
    satisfaction and ensure the medical staff is of
    the appropriate size, diversity and mix to meet
    community needs.

27
Summary of Goals
  • Market Leadership Strengthen DRHS market
    position and image throughout the service area
    and develop recognized Centers of Excellence that
    draw patients from a broader region.
  • Organizational Effectiveness Enhance DRHS
    ability to make strategic decisions, respond
    quickly to environmental changes, and attract and
    retain an exceptional work force.

28
Summary of Goals
  • Community Expand DRHS community base, while
    building strong relationships with the diverse
    communities we serve.
  • Financial Strength Ensure that DRHS remains in a
    sound financial position and maintains operating
    and total margins to allow it to achieve its
    mission.

29
Samples of Strategies
  • Promulgate and reinforce Service Excellence
    initiatives throughout the organization.
  • Complete installation of the clinical technology
    platform.
  • Develop and implement business plans for Center
    of Excellence services.
  • Expand DRHS market presence and visibility in
    key geographic areas.
  • Continue revenue enhancement activities,
    including improving managed care contracts.

30
Development of Baseline Financials
  • Service Line Approach
  • Volume
  • Payor Mix
  • Reimbursement Rates
  • Inflation, etc. assumptions
  • Operational Initiatives
  • Routine Capital

31
Implementation Planning
  • Tactical Plans
  • Action Items
  • Strategic Financial Plan
  • Measures of Success

32
Tactical Plans and Action Items are the
transition from the strategic plan to operational
implementation - these are the levels that
address who, how, and when.
  • Tactical Plans
  • What short and long term tactics will management
    use to get there?
  • Action Plans
  • What needs to happen in the coming year a the
    department level to implement the strategies and
    tactical plans?

33
Measures of Success
  • Measures reside at the board level, the senior
    management level and the department leadership
    level.
  • Metrics should be appropriate for the different
    levels.
  • Each level should build on the prior level to
    ensure that the metrics are integrated.

34
Different Levels of Metrics
35
Effective Measures
  • Direct link back to vision and goals
  • Limit the number of measures (lt20)
  • Focus on the measures that will truly indicate if
    the goals have been achieved
  • Emphasize outcome measures over process measures
  • Use a balanced set of measures
  • Ensure that measures are clear and the data are
    available, objective, and not easily manipulated

36
The competitive healthcare market demands
leadership with a strategic plan that generates a
positive bottom line. Kenneth Kaufman
37
Integration of Strategic and Financial Planning
Strategic Planning Annual Update Process
Financial Planning Set Measurable Financial Goals
Monitor Measures of Success
Integrate Annual Budget to Financial Plan
Develop Tactical Plans Action Steps
38
A strategic plan is not valid if it is not
financially feasible.
39
A financial plan is of little value if it does
not reflect strategic direction.
40
Strategic Financial Plan
  • Linkage of strategy to measurable financial
    objectives
  • Answers the questions if strategies are
    financially possible
  • Enables the organization to react quickly
  • Describes future financial risk in quantitative
    terms
  • Considers alternative scenarios

41
The Strategic Financial Plan Addresses These
Critical Financial Concerns
  • Strategic Capital
  • Cash on Hand
  • Debt Capacity
  • Profitability Targets
  • Operational Impact

42
Development of Strategic Financial Plan
  • Baseline Financial starting point
  • Major Strategic Initiative Defined
  • Financial Estimations of Strategic
  • Capital and Related Operating
  • Resources/Investment
  • Assumptions of Market Share Impact
  • Development and Approval of 5 Year
  • Financial Ratios/Targets
  • Alternate Scenarios

43
DRHS Strategic Financial Plan Scenarios
  • Strategic plan
  • (without improvement initiatives)
  • Strategic plan
  • (with improvement initiatives)

44
Financial Planning Critical Success Factors
  • Credible, Achievable Plan (stretch goals)
  • Organizational Wide Input into its Development
  • Communication and Clear Understanding of Plans
    Goals
  • Everyone Participates Aligned Goals
  • Approved by Board
  • Integration of Financial Plan with Annual Budget
  • Update the Plan Annually

45

Financial planning process is now key to an
organizations survival and success.
46
In preparing for battle, I have always found
that plans are useless, but planning is
indispensable Dwight D. Eisenhower
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