With so much change afoot, how can your executive team prepare for the future? What I hear frequently from CEOs is, “I can’t plan because….” And, the conclusion to that sentence usually involves some pending change in the market. I’m the first one to say that the current health and human service market is full of disruptive change – in policy, in technology, and in competition. My colleague, Athena Mandros, who is the analyst responsible for our market intelligence series, has recently covered two examples of disruptive policy changes – one in Pennsylvania and one in Illinois.
After only spending about a month implementing a non-traditional Medicaid expansion under former Republican Governor Tom Corbett, new Democratic Governor Tom Wolf has scrapped the previous plans and is moving forward with a traditional Medicaid expansion.
Governor Corbett’s non-traditional expansion plan, Healthy PA, was approved by the Centers for Medicaid and Medicare Services (CMS) through a 1115 waiver in August 2014. The plan used commercial-like benefit plans and required cost-sharing for the Medicaid expansion population (see CMS Approves Healthy Pennsylvania 1115 Medicaid Waiver For Redesign & Medicaid Expansion and What Is The Difference Between Traditional & Non-Traditional Medicaid Expansion?).
Shortly after his inauguration, Governor Wolf made news by announcing his plans to do away with Healthy PA and enroll the entire Medicaid expansion population in HealthChoices, the state’s existing Medicaid managed care program (Wolf: Will expand Medicaid if elected governor). As of February 2015, there were 191,211 individuals enrolled in the Healthy PA private coverage option (PCO); under Governor Wolf’s revised expansion plan, all of these individuals must be moved to HealthChoices by September 2015 (see Medical Assistance Advisory Committee Meeting – 02/26/15 and HealthChoices Key Events and Milestones). In addition, Governor Wolf has also announced significant changes to the state’s HCSB plan – see Pennsylvania To Phase In Medicaid Managed Long-Term Care.
The Illinois’ Budget Roller Coaster
Illinois, although not making a 180 degree switch in policy like Pennsylvania, is seeing drastic changes to their current delivery system after a history of budget cuts and reversals. Here’s a quick snapshot of the state’s budget “roller coaster.” In 2012 under Democratic Governor Pat Quinn, Illinois was facing a budget deficit of $2.7 billion and an additional $1.9 billion in back Medicaid payments (see Final Legislative Package to Save Medicaid). As a result, the state legislature passed the SMART Act composed of four bills, which resulted in a $1.6 billion cut in Medicaid funding. The cuts included the elimination of optional Medicaid services such as dental care, chiropractic and podiatry; terminated the Illinois Care Rx program; made eligibility standards more stringent; and authorized the state to contract with a broker (Maximus) to make eligibility redeterminations (see Final Legislative Package to Save Medicaid). In 2014, the state restored many of the cuts made to optional services, increased rates for different providers, and authorized hospital assessment funding until 2018 through Senate Bill 741 (see Omnibus Medicaid Bill Senate Bill 741, as Amended by House Amendment #1).
Now, a year later, the state’s newly elected Republican Governor Bruce Rauner is once again proposing major cuts to Medicaid – to the tune of $1.3 billion ($1.47 billion if projected growth spending is included). These cuts include reversing all the new services and rate increases that were restored as part of the 2014 Senate Bill; eliminating services, such as podiatry and dental services, as well as others not yet announced; reexamining Medicaid eligibility determination process; and others (see Illinois State Budget Fiscal Year 2016 and Critics: Medicaid Services Ill. Gov. Rauner Would Cut Save Illinois Money).
But do these turbulent environments mean there is too much change to plan around? I would argue – like former Apple CEO John Sculley, that “The future belongs to those who see possibilities before they become obvious.” And in my book, this is only possible with scenario-based planning.
Scenario-based planning is a process that provides leaders with a better understanding of the world and the macro drivers of change that are at work – which helps them to drill down to decision making at the operational level. The key is to identify and analyze business and economic environments that are highly-likely or highly-problematic scenarios, and that affect an organization’s strategy and operations. The outcome of the scenario-based planning process is to establish alternative plans – from business paradigm shifts for permanent changes in the business environment, to tactical contingency planning for shorter-term developments. The value of this planning tool is to connect the world of the “possible” to down-to-earth decision-making processes.
This may sound complicated, but it is not. I find this a very useful “add” to the traditional planning process. The executive team exercise of identifying the market scenarios that would have the most dramatic effects on organizational sustainability is a useful exercise, in and of itself. But scenario-based planning also forces the discussion of what the executive team needs to do if the “unthinkable” becomes a reality – and provides a great view of the organizational investments that are required across most scenarios.
For more, we have great resources in the OPEN MINDS Industry Library on scenario-based planning:
- The Futurists View of Health & Human Services: A Briefing & Executive Exercise in Strategic Scenario Planning
- How Can You Lead, When You’re Not Sure Where We’re Going?
- What Does it Take to Lead? Developing Organizational Strategies to Address Disruptive Innovation in The Market
- The CEO Role: Clairvoyant?
- In Planning, ‘Keep Your Powder Dry’
- Strategic Planning – Just As Critical As Ever
- The Evolution of the Strategic Plan
- Eight Steps to a Successful Strategic Plan
- Does Your Strategic Plan Answer the Question: What Do We Do Now?
And, for more, don’t miss the session, The OPEN MINDS Guide To Strategic Planning: How To Find The Right Path For Your Organization In A Turbulent Market, by OPEN MINDS Senior Associate, Joseph P. Naughton-Travers and Vice President of Integration Development, Jefferson Center for Mental Health, John F. Talbot, Ph.D., at the 2015 OPEN MINDS Strategy & Innovation Institute on June 16. In any event, keep in mind the words of scientist Louis Pasteur, “Fortune favors the prepared mind.”