New financing models (see VBR @ Scale—Changes Required), new larger competitors (see Don’t Let The Big Disruptors Out Of Your Sight and Will Health Plan Backward Integration ‘Remake’ Specialty Care?), new technology changing service delivery models (see Remaking Health Care With Wearable Technology & Digital Health-A View To The Future) — these realities are the “new normal” in the health care market, and they give larger organizations more opportunities. Larger organizations have more weight and consequence when negotiating contracts with health plans. Larger organizations have the resources to develop innovative services and programs to compete against new market disruptors. Larger organizations have economies of scale to invest in the technology they need to create efficiencies and increase access for consumers.
For many provider organizations, the answer to building a long-term strategy for sustainability comes down to the need for growth. But growth for growth’s sake isn’t a strategy for success. Last week at The 2019 OPEN MINDS Strategy & Innovation Institute, Brad Branham, Technical Assistant to the Chief Executive Officer and Chase Rowan, Special Assistant to the Chief Executive Officer for Credible Behavioral Health Software discussed how to build a strategy for organizational growth in their session, Identifying Strategic Opportunities: Cultivating, Negotiating, & Decisionmaking. I took away three key steps to help executive teams optimize growth opportunities and find a business model for long-term sustainability.
Cultivate a strategy for growth — It is the leader’s charge to establish a clear vision for the organization, a clear direction that vision will lead the organization to, and to support the leadership team as they execute that vision. When that vision involves growth, it’s essential to understand the market and its opportunities; the correct mix of push marketing for payers and health plans and pull marketing for consumers; and the viability of potential partnerships. This kind of strategy session should start with the question: “How do we grow?” the answer may be expanding into a new state or growing a specific program — or it may be merging with another organization, or even preparing your organization to be sold to another provider organization. There isn’t one right answer, but the first step is to consider what the best strategy is for your organization, in your market.
Negotiate strategic partnerships — Growth in any form is impossible without forming partnerships—whether you are finding the right organization to merge with, looking for referrals from a health system, exploring a contracting relationship with an accountable care organization, or considering a new value-based arrangement with a health plan. Before you walk down the path to partnership, there needs to be an evaluation process that looks at shared missions and problems, values, services performance, future strategies, financial health, and capabilities. With that information as the backdrop, executives of the two organizations need to understand their “BATNA”, or “best alternative to a negotiated agreement.” BATNA is the best you can do if the other organization refuses to negotiate and allows you to refuse any partnership that isn’t going to fit your long-term growth strategy.
Execute decisions with speed and deliberateness — In other words, when it comes to important decisions, its important to “fail fast” and then move onto your next strategic endeavor. For executives, making strategic decisions around growth comes down to three fundamentals: strategy (does this decision align with your long-term growth strategy?), operational issues (how will you execute this decision?), and finances (what are the short- and long-term implications of this decision on revenue and capital?). Whether you are looking at a merger, or deciding to expand into virtual care with a new technology, be deliberate and decisive in decisionmaking, so that you can consider your options and move onto the next opportunity.
My management takeaway: There are many pathways to potential growth—expanding services and programs to new geographic areas or new populations, building partnerships and affiliations with other organizations, pursuing traditional merger and acquisition opportunities. In this market, you shouldn’t pursue just one growth option at a time; there is potential in all areas if you build a deliberate strategy and stay focused on where your organization needs to be in the long-term.
For more on strategic planning, check out these resources from the OPEN MINDS Industry Library:
- The Strategic Planning Edition: Going From Strategy To Success
- Building & Executing Strategy In A Complex Market-A Three-Phase Best Practice Model For Success
- Jumping The ‘Strategy-To-Execution Gap’?
- ‘Hierarchy Of Purpose’ For Strategy Success
- Deliberate Incrementalism – The Key To Good Strategy Implementation
For more on mergers and acquisitions, check out these resources from the OPEN MINDS Industry Library:
- Planning To Buy Another Organization?
- When ‘Being Acquired’ Is The Best Financial Move
- The Strategic Advantages & Challenges Of Mergers & Acquisitions
- Unscrambling The Egg: A New Question For M&A
- How Do Meta-Leaders Create The Collaborations That Matter?
And, join us on August 15 in Long Beach, California for The 2019 OPEN MINDS Mergers, Acquisitions, & Affiliations Summit: Best Practices For Non-Profit Health & Human Service Organizations – A Centerstone & OPEN MINDS Collaboration, featuring: John F. Talbot, Ph.D., Vice President, Corporate Strategy, Jefferson Center for Mental Health, & Senior Associate, OPEN MINDS; Scott Hoffman, Chief Financial Officer, Mosaic; David C. Guth, Jr., Chief Executive Officer, Centerstone; Mike Lyons, Strategy & General Counsel, Mosaic; Patrick Maynard, Ph.D., Chief Executive Officer, I Am Boundless, Inc.; and Donald Parker, President & Chief Executive Officer, Carrier Clinic.