EXECUTIVE SUMMARY Management approaches used by healthcare organizations have often lagged behind other businesses in more competitive industries. Companies operating in such dynamic environments have found that to cope with the rapid pace of change they must have an articulated understanding of their organization's capabilities and consensus on where the organization is headed based on predictions about the future operating environment. This statement of identity and strategic direction takes the form of a vision statement that serves as the compass for the organization's decisions for a five- to ten-year period. This article discusses the importance of vision statements in tomorrow's healthcare organizations, presents an overview of future scenarios that may provide context for organizational visions, and suggests a process for developing a vision statement. A case study is presented to illustrate how a vision statement is created. Following the guidelines presented in this article and reviewing the case study should assist healthcare executives and their boards in crafting better visions of their organizations' futures, developing more effective strategies to realize these visions, and adapting to more frequent and more significant change. Over the past 30 years healthcare delivery has evolved from a highly regulated, fairly predictable business provided by small, local organizations into a competitive, dynamic business with large, complex, regional, and in some cases national companies, along with many small- and mid-sized organizations. With this more fluid situation, greater risks and opportunities that demand ongoing anticipation and aggressive management have emerged. Yet healthcare providers are for the most part still novices at working within the highly volatile and competitive markets that other industries have faced for years. Industries that are ahead of healthcare in deregulating, notably airlines and banking, have been forced to adapt sooner to a more dynamic, unpredictable marketplace. Outside of healthcare the information explosion and globalization of markets have incited a revolution in planning approaches and operations in the past decade. Many companies have found that to cope with the rapid pace of change they must have an articulated understanding of their organization's capabilities and consensus on where the organization is headed based on predictions about the future operating environment. This statement of identity and strategic direction takes the form of a vision statement that serves as the compass for the organization's decisions for a five- to ten-year period. There are lessons to be learned from companies that have recognized the pivotal role vision statements fulfill in highly competitive markets. National Semiconductor has adopted an innovative approach to strategic planning that provides insight into how organizations successfully face highly dynamic business environments. A $2 billion company headquartered in Santa Clara, California, National Semiconductor works in the competitive “high-tech” industry that is driven by rapid developments in communications and computing (Camillus and Sessions 1998). To keep pace in this cutthroat market the company made a fundamental change in its strategic direction in 1996. The organization moved from a commodity chip supplier to a fast-cycle system-on-a-chip supplier (Camillus and Sessions 1998). This quantum shift in focus could not have occurred without an aggressive strategic planning process. Driving this process was a compelling, directive vision statement: “National will put systems-on-a-chip for our key trendsetting data highway partners, using our analog expertise as a starting point for forward integration” (Camillus and Sessions 1998). This statement identifies the firm's core capabilities, defines the domain in which it will operate, specifies its customer relationship, and details the strategic direction of the company. National's executives were enthusiastic about the statement because it provided explicit direction for them but left room for innovation and managerial initiatives (Camillus and Sessions 1998). Yet despite success stories like National's, many companies have failed at being forward thinking and visionary. Hamel and Prahalad (1994) cite Sears, General Motors, IBM, Westinghouse, and Volkswagen as examples of one-time industry leaders who have failed to ensure that their products and services kept pace with market dynamics. They note that restructuring and reengineering are preoccupying senior managers in American industry. In fact, their research indicated that on average senior managers spend less than three percent of their time building a shared perspective, including market forecasts and vision, about the future (Hamel and Prahalad 1994). Similarly, Porter (1996) argues that many senior managers have mistaken operational effectiveness for strategy and as a result have moved away from viable competitive positions: “A major challenge for leadership is developing or reestablishing a clear strategy, not just improving operational effectiveness and making deals” (Porter 1996). Collins and Porras (1996) believe that “leadership's ability to manage continuity and change…is closely linked to the ability to develop a vision.” Further, “[t]he basic dynamic of visionary companies is to preserve the core and stimulate progress. It is vision that provides the context” (Collins and Porras 1996). The same authors note that “[t]he few truly great companies have known for years—in some cases, for over a hundred years—the importance of having a vision” (Collins and Porras 1991). Historically healthcare delivery organizations have not been concerned about vision. In the more static environment of the not-too-distant past organizations evolved rather predictably. Growth was the norm as population increases, aging, and steadily rising use rates spurred expansion of nearly all delivery organizations. In many cases capacity, especially physical capacity (i.e., facilities), and to a lesser degree skilled personnel, particularly physicians, were limiting factors for organization development. Planning focused on how to resolve these capacity constraints. Strategic planning and its predecessor long-range planning were often precipitated by a need to address capacity issues and typically focused on the scope and extent of required capital expansion. More recently future financial viability has been an underlying theme in healthcare delivery organizations. This concern has been brought on by a more competitive environment, slowing growth, managed care and other reimbursement changes, and excess provider capacity. Immediate problems and longer-term survival issues preoccupy providers. The likely future state of an organization is much more variable and far less clear. Given the potential future scenarios, many providers—already overwhelmed by the massive changes transforming the healthcare industry in the last decade—have simply not been forward thinking. Yet determining possible future states and potentially desirable and achievable future states, (that is, the vision), is increasingly vital not just to survival but to the ability to flourish in the next decade. THE NEXT CENTURY OF HEALTHCARE Multiple diverse predictions have already been made about the characteristics of healthcare early in the twenty-first century. In 1994 The Economist forecast a technologic revolution by 2010 that will use information networks, computer-assisted therapy, robotics, and new drugs to create a new world of healthcare. In this new world, consumers will receive treatment remotely with less need for patient-provider in-person contact. Surgery and other treatments will take place mostly in outpatient settings, and today's healthcare infrastructure will be dismantled. Cost reductions will occur because investment in new technology will be offset by savings from hospital closures and fewer healthcare staff. Beyond 2010 there is a strong possibility that gene drugs will combat most major serious diseases and life expectancy could improve dramatically (The Economist 1994). In November 1998 the Institute for the Future projected a fairly stable evolution of healthcare through 2005 and provided three scenarios for health and healthcare delivery after 2005 (Institute for the Future 1998): “Stormy Weather”: rising costs and the failure of managed care to deliver cost control, dissatisfied providers and patients, rampant profiteering, and repeated healthcare scandals, leading to the possibility of true healthcare reform after 2010; “The Long and Winding Road”: continued incrementalism, some cost control, and ongoing turbulent and disorganized change in the provider community, resulting in continued incrementalism after 2010; and “The Sunny Side of the Street”: competition eliminating excess capacity, effective medical management becoming prevalent, providers and patients collaborating to improve care, and information systems improving care processes and outcomes, so that the system is positioned to take on baby boomers after 2010. A special issue of Modern Healthcare (September 27, 1999) profiles the perspectives and insights of industry experts about developments in the next 20 years. Included in the forecasts are the following predictions: Information access will empower patients and makes providers' diagnosis and treatment more efficient and effective (Berwick 1999). DNA chips, cloning, new drugs, and bionics will dramatically improve care and the quality and length of life (Dwyer 1999). Hospital consolidation will result in vastly reduced numbers of beds and facilities, and the remaining hospitals will primarily serve patients with multisystem failure, major trauma, or those who have undergone complex surgery (Morrison 1999). Enormous growth will occur in the long-term care sector, especially in assisted living and home care; growth will include boutique services targeted at specific populations (Saphir 1999). Consumers rather than employers will make health insurance coverage decisions (Pallarito 1999). Government scrutiny of the healthcare industry will increase (Hallam 1999). Among the common themes in all of these forecasts are the increasing rate of change and growing uncertainty about future healthcare delivery. Because healthcare was a cottage industry until the enactment of Medicare and Medicaid in the late 1960s and was highly regulated from then until the early to mid-1990s in nearly all parts of the United States, healthcare providers have been relatively insulated from the change that has occurred in other industries. For the foreseeable future, however, the rapid pace of change and the sweeping transformations it brings demand that healthcare providers be more aggressive, thoughtful, and forward thinking. CREATING A COMPELLING, EFFECTIVE VISION STATEMENT The major elements of today's typical strategic plan for healthcare organizations are illustrated in Figure 1. The vision statement is the cornerstone of the strategic plan and it provides the reference point for strategy development (how to achieve the vision) and for goals, objectives, and actions that are components of the future vision. As a relatively underdeveloped concept in healthcare strategic planning, the process of developing a vision statement is often haphazard and leads to statements that are a morass of goals, purpose, strategy, and philosophy.FIGURE 1: Planning Terminology and DefinitionThe vision statement should project to a point in time far enough from the present so that the future for the organization is unpredictable. The time frame should encourage organization leaders to be imaginative in their views of the future characteristics of the organization while avoiding the urge to analyze their way into the future. The vision statement, usually a single sentence, should be easily understood and concise and should be specific enough to uniquely describe the organization. The statement should motivate key stakeholders to whatever end it advocates and serve as a catalyst for the entire organization by creating a unifying focal point of effort. While the vision should be a stretch for the organization, it must also be viewed as achievable, generate enthusiasm, and energize the staff, physicians, and board to seek innovative approaches for achieving the vision. Both mission and vision statements address the what of the future, but there are key differences between the two. The mission statement is timeless, whereas the vision statement is time bound, referring to a particular point in the future. The mission statement states the organization's broad purpose—why it exists—whereas the vision statement refers to key organization characteristics that will be accentuated by that purpose. Figure 2 illustrates these differences.FIGURE 2: Mission and Vision Statements: St. David's Health Care SystemExamples of recent well-constructed vision statements for healthcare delivery organizations are shown in Figure 3. These statements conform to the following desirable characteristics of a vision statement: (1) related to a point or period of time at least five, and preferably ten, years ahead; (2) clear and concise, preferably a single sentence; and (3) motivational and a stretch for the organization.FIGURE 3: Example Vision StatementsDEVELOPING THE VISION STATEMENT Healthcare organizations should seek broad-based input from many key constituencies within the organization during development of the vision statement. By soliciting perspectives from individuals who are open minded, optimistic, and well respected by their peers, organizations can tap into the future-oriented outlooks that energize the vision development process. Critical roles in this process are usually played by senior management, which takes the lead in developing the statement itself, and the board, which should consider the vision statement its most concrete expression of organization direction. From a policy perspective the vision statement is second only to the mission statement as the expression of the board's view of what the organization stands for. The role of various groups within the organization in vision development is described below. Board of directors. The board must ultimately approve the strategic plan and its critical subcomponents. Board leadership, often through a strategic planning committee and board retreats, usually reacts to vision statement drafts. Using a task force or the entire strategic planning committee, board members may also help to establish key elements of the vision before a complete statement is drafted. Senior management. A representative of senior management, often the vice president for planning, takes principal responsibility for drafting the vision statement. Staff may present alternative concepts for future development and, later, alternative statements of the vision itself. Senior management usually provides input into vision elements and statements before other groups, as well as during retreats and at the strategic planning committee meetings. Physicians. The physician leaderhip's role in vision development depends on the nature of the organization. Physicians will participate extensively in vision development for medical groups and in sole community hospitals, but generally have minimal input into vision at large, multi-entity integrated delivery organizations and in competitive organizations in urban areas. Physician participation may occur through retreats, strategic planning committee membership, focus groups, and individual meetings or interviews. Other management and other clinicians. Here, too, participation varies considerably and is often a function of the size and scope of the organization. Participation vehicles are normally group structures, including focus groups and regular meetings of constituency groups. While every organization follows a somewhat different path in vision development, a fairly typical approach is outlined below. Planning staff gathers input about the vision from key stakeholders in interviews and focus groups. Planning staff drafts a few alternative visions (or at least key elements of these future states). Senior management reviews the alternatives and selects a preferred alternative or identifies a composite of the various alternatives. Strategic planning committee reviews first draft of vision and recommends modifications. Planning staff makes changes and redrafts. A board retreat is held and additional review and comment are obtained (often from medical staff leadership and senior management also attending the retreat). Planning staff redrafts the vision statement. Strategic planning committee reviews vision statement one final time. Planning staff makes final revisions. The board reevaluates the vision statement as part of its review and approval of the strategic plan. CASE STUDY: HIGH POINT REGIONAL HEALTH SYSTEM High Point Regional Health System (HPRHS) is a large community hospital and associated enterprises serving both an urban and rural market in the southern end of the Greensboro–High Point–Winston-Salem, North Carolina, metropolitan area. In 1997 HPRHS's annual revenue was approximately $140 million, with over 90 percent of that coming from the hospital and the remainder from various ambulatory ventures. The hospital offers a few tertiary including a surgery and a and a fairly area. is in a growing with a and has continued growth as an organization for many particularly over the past decade. the leadership of has been concerned about the in the and the of recent and changes on the organization. In the that development of the strategic plan in early major HPRHS's Health System was one of large hospitals in with Hospital in and with a of other hospitals including one in HPRHS's core area. Hospital and Long the only care hospitals in care in the metropolitan Health by Health was a major The physician community in High Point into large groups with a of truly and single groups A major issue at the end of 1997 was it could or should of the new large systems or of the physician groups. this the board of the strategic planning committee of the system to a of the environment and make a to the and with and what the committee was with developing a strategic plan that a viable for future development. The of the that a was not at that time and the for development of the strategic with the mission and vision statements that in Figure While the strategic planning committee was to the mission statement as an statement of for the future, the vision statement to the future market as the organization understood Mission and Vision of High Point Regional Health new vision statement a but major from the statement in that it makes development of an integrated delivery system the of the vision of the future. This a significant shift in perspective by senior management and the While the system to a broad of services as indicated in the new vision statement, it that there are some services that it or should not In the vision statement the that it may be to insurance products on major It also new thinking to with physician and a shift away from the perspective that significant in medical is desirable and likely for To the of the new vision statement the key in the statement was and were The board found this in their understanding of the new vision statement as well as in it to other key The process of developing the statement was somewhat less than the process described a new vision statement based from the board during review of the Senior management and then the strategic planning committee this draft and modifications. The new draft was presented to at a retreat of the board, which also medical leadership and senior management. The statement was and one final time by the strategic planning changes were The statement was and as part of the strategic plan by the This process was with the of this organization in that on the of senior management. The been in for over a and successfully the system this period. The board a of in and input from board leadership and used it to create the new vision statement. their input in the vision statement, the board leadership was with the direction and not need or to the statement. the vision in and without board members been with the vision because they not what an integrated delivery system is and were of the vision this a the of the new vision was in place and the of the strategy was to it rather than and and the plan itself. and effective vision statements are organizations are to the about who they what they are of and what future they are to for. Given the uncertainty in the healthcare industry as it is by of it is to these that approach the vision development process with the care and it will be with a to strategy and making well into the next century.
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Alan M Zuckerman (2000) studied this question.