Due to the technological, economic and social changes that are fast taking place all around, the environment within which the hospitals must operate is becoming increasingly turbulent.
The approach to meet these changes effectively has been termed as “strategic planning”. In the context of the free market economy strategic planning has been defined by management guru Peter Drucker as, “The continuous process of making present entrepreneurial (risk-taking) decisions systematically and with the greatest knowledge of their futurity, organising systematically the efforts needed to carry out these decisions, and measuring the results of these decisions against the expectations through organised, systematic feedback”.
Three important features of effective strategic planning (as compared to master planning) are as follows.
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1. A shift in orientation from producing services. Instead of asking what services does the hospital want to deliver, it needs to be asked as to “what services are needed”, and “who will purchase them”? A consumer marketing approach identifies customer constituencies and their needs.
2. A statement of purpose is not the starting point of planning. Assumptions can lead to planning for inappropriate roles in a context of unrealistic expectations.
In strategic planning, the goal and role elements of a strategic plan are derived only after external assessments are completed, and the associated assumptions are fully tested.
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As opposed to general planning, creative strategic planning process chooses decisions from among realistic options based on quantitative judgments.
3. Understanding that planning and management are concurrent. Strategic planning is integrated within the hospital’s day-to-day management concerns.
Therefore, unless representatives of all hospital constituents are involved in resources allocation decisions, strategic planning cannot become an integral dimension of management.
Strategic planning requires a refocusing of the planning activity, and a shift from the service-oriented (or facility oriented) master planning to market-oriented planning.
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By being market oriented, the hospital will be obliged to develop programmes responsive to peoples’ needs, thereby, promoting and improving the hospital’s ability to be economically survivable.
One of the important reasons for strategic planning is shortage of capital, wherein investors perceive higher levels of business risks in health care field as compared to other industries.
Shortage of funds necessitates that if funds have to be borrowed, then funds be invested to maximise returns on investment, keeping in mind the hospital’s liquidity requirement, risk preferences and investment expertise. Strategic planning is also necessitated by:
i. The need for achieving economies of scale, increased access to capital markets (if the projects are judged as worthwhile by investors), or more efficient management of capital resources, and
ii. Need to create an ability to generate cash flows and redistribute it to high growth programmes and services.