How To Develop A Strategic Plan: On Best Practices In Strategy, Based Planning

Transcription

1 How To Develop A Strategic Plan: An OPEN MINDS Executive Seminar On Best Practices In Strategy, Portfolio Management, & Scenario- Based Planning T h e O P E N M I N D S E x e c u t i v e L e a d e r s h i p R e t r e a t F r i d a y, S e p t e m b e r 2 1, : 0 0 a m 1 2 : 0 0 p m J o s e p h P. N a u g h t o n - T r a v e r s, E d M, S e n i o r A s s o c i a t e, O P E N M I N D S 15 Lincoln Square, Gettysburg, Pennsylvania info@openminds.com

2 Agenda I. A Best Practice Approach To Strategic Planning II. Why Scenario-Based Planning May Be The Best Option In A Changing Market III. The OPEN MINDS Approach To Developing An Effective Strategic Plan IV. Strategic Planning Case Study #1 - #4 V. The OPEN MINDS Children & Family Center Case Model VI. Two Years Later: Update On The OPEN MINDS Children & Family Center VII. Questions & Discussion 2

3 I. A Best Practice Approach To Strategic Planning 3

4 Strategy In An Uncertain Landscape The strategic plan for the current market The strategic plan for the future market The transition plan to the future market Should focus on optimizing the performance of current operations (market positioning, market share, revenue, margins, etc.) Should have a vision for your organization in its next generation and determine the time and resource required to make that change The framework for moving from current market to future market A solid plan for the future frees the management team to focus on a plan to optimize the performance of current operations and build cash reserves to fund future development. 4

5 Value Of Strategic Planning For Your Organization Interprets the mission and vision, providing clear direction for the short-term and for the future Serves as a formal process to allocate limited resources Establishes strategic priorities Ensures organizational alignment Establishes the basis for on-going performance reporting on organizational status provided by the chief executive officer to the board 5

6 Value Of Planning For CEO & Management Team Provides clarity from the board regarding organizational priorities and performance expectations Serves as the basis for development of organizational infrastructure and operating plans Serves as the basis for departmental and program plans 6

7 Making New Models A Sustainable Reality Takes New Management Practices & Discipline 1. Develop vision of future competitive advantage and market positioning 2. Scenario-based strategic plan incorporating alternate future positioning options 3. Detailed plans marketing, financial, operational, capital, HR, etc. to implement strategy and future vision 4. Key performance metrics and metrics-based management to track strategy implementation (and allow mid-course adjustments) 5. Optimization of current operations to keep current programs as competitive (and profitable) as possible as long as possible 6. New service model development to support future vision 7. Collaborations as needed to facilitate new market vision 7

8 Assess The Realities Of Your Organization s Assets Available For Making The Changes Ahead Historical mission and vision organizational charter Regulatory limitations Competition in market Organizational culture Management team competencies and expertise C-suite leadership qualities Financial resources Time The same wind blows on us all, the difference is in the set of the sail. 8

9 II. Why Scenario-Based Planning May Be The Best Option In A Changing Market 9

10 Scenario-Based Planning Is A Tool For Planning In A Chaotic Market Most organizations need to move forward with implementation without final information Most practical option is concurrent scenario building and planning A Scenario Is An outline of an hypothesized chain of events Depictions of a future that are useful to clarify thinking not predictions or forecasts of what will happen; rather, a suggestion of what might happen Several (usually 3-5) descriptions of hypothetical situations interspersed with extrapolations of trends; more useful for understanding options and dealing with uncertainty than in predicting specific events 10

11 Scenario-Based Planning Process 1. Build scenarios of likely future situations and high-level implementation plans for each 2. Determine the common elements in the scenario implementation plans common organizational capabilities, resource investments, partnerships, etc. 3. Select the most likely scenario to occur as the basis for the strategic plan 4. When building the operational implementation plan, implement the common elements to all scenarios first 5. Monitor events to update scenarios and action plans 6. Continuously update both the scenarios and the implementation plans based on new developments 11

12 Strategy Development - Common Strategic Options For Consideration Closure of services/service lines that are not profitable and/or affordable and/or good fit Strategies to improve margins of existing service line Building value added products to increase margins Expansion of successful service lines (expansion of geography, new customer base, etc.) Diversification of revenue sources Reconfiguration of services within value chain Strategies to address shifting economy of scale issues 12

13 Factors Contributing To Failed Plan Implementation Poor preparation of line managers Inadequate linkage of strategic plan with other control systems Definitions of service lines and operating units not precise Badly handled reviews of business unit plans Vaguely formulated goals Inadequate information for action planning 13

14 III. The OPEN MINDS Approach To Developing An Effective Strategic Plan 14

15 Recommended Phased Business Strategy Development Process Phase One Scenario-based strategy development Phase Two Modification of business unit plans to support strategy implementation Phase Three Development of executive team performance dashboard 15

16 Phase One: Scenario-Based Strategy Development Confirm short-term and long-term organizational objectives Analyze external and internal factors that affect strategy Identify likely environmental scenarios and related strategic issues and priorities Develop strategic priorities and related tactics Develop a strategic action plan with a high-level implementation plan 16

17 Phase Two: Modification Of Business Unit Plans To Support Strategy Implementation Marketing and development plan Organizational and program budgets Financial management organizational strategies Technology and communications plan Financial management plan Recommendations regarding organizational structure Operations management plan Human resource and talent management plan 17

18 Phase Three: Development Of Executive Team Performance Dashboard Determine critical performance outcomes for success of strategy Identify leading indicators and metrics that track these performance outcomes Develop key performance indicator metrics and related specifications Create an executive team performance dashboard based on these strategy key performance indicators 18

19 Overview Of Strategic Planning Process Review/Establish Mission/Vision/Objectives Gather External Information/External Analysis Trends & Competitors Gather Internal Information/Internal Analysis Service Portfolio Analysis Identify Options for Achieving Objectives - Strategies, Tactics, Markets & Services Develop Operational Plans Marketing & Business Development, HR & IT Develop Budget & Financing Plan Develop Detailed Implementation Action Plan Develop Key Performance Indicators 19

20 Typical Strategic Plan Outline Executive Summary Statement of Annual Goals & Objectives (3 Year) Summary of Internal Organizational Analysis Summary of External Market Research Possible Environmental Market Scenarios Organizational Strategies & Tactics for the Most Likely Strategic Scenario Strategic Issues & Objectives Strategic Initiatives Key Tactical Elements of Each Strategic Initiative Implications of Proposed Strategy & Tactics on Operations Marketing & Development Implications of Organizational Strategies Operational & Technology Implications of Organizational Strategies Financial Management Implications of Organizational Strategies Strategic Action Plan: High-Level Implementation Plan for Each Strategic Initiative 20

21 Sample External Analysis Data 21

22 National Trends National Trend #1: Most health and human service public payer policy decisions across the nation are now driven by budget issues, given the Federal and state budget deficits and the current economy. National Trend #2: Payers, insurers, and managed care plans are all under price pressure, resulting in continued rate pressure on providers and the demand to increase efficiencies and demonstrate outcomes. 22

23 National Trends National Trend #3: Consumers are paying more out of pocket expenses in the form of deductibles and co-payments for many payers. National Trend #4: The per person cost of health care continues to rise due to an aging population, longer life expectancies, and the cost of new medical technologies. 23

24 National Trends National Trend #5: There continues to be a rising proportion of population that is uninsured, and the future of health care reform, with its planned expansion of health care coverage, is uncertain at this time. National Trend #6: Lastly, all of the easy health care cost savings have already been made in past decades. 24

25 New Jersey Trends New Jersey Trend #1 New Jersey is likely to move reimbursement for many of its public sector behavioral health services from a contract-based and cost-based financing to a fee-for-service for providers. New Jersey Trend #2 New Jersey s implementation of the Comprehensive Medicaid Waiver is likely to fundamentally change provider revenue streams; billing, reporting, and compliance requirements; and clinical operations. New Jersey Trend #3 New Jersey s deinstitutionalization movement, in compliance with the Supreme Court s Olmstead decision, will continue to drive the demand for specialized, communitybased, behavioral health services. 25

26 Massachusetts Environmental Trends Discussion Massachusetts Trend #1 Expansion of Services Community Justice, Addiction, Child and Family, Elder Services Massachusetts Trend #2 Family/Individual Empowerment/Self Directed Services Massachusetts Trend #3 Development of Managed Care for people with Medicaid/Medicare; expansion of Affordable Care Act (including expansion of Medicaid coverage); Development of Integrated Care Organizations/Accountable Care Organizations 26

27 Massachusetts Environmental Trends Discussion Massachusetts Trend #4 Political Changes in Massachusetts and Federal Governments Massachusetts Trend #5 Provider Consolidations/Mergers/Partnerships Massachusetts Trend #6 Workforce Development Employee recruitment and retention 27

28 Population Population, Year 2011 (Most Recent July 1) 2,065,377 Population, Year ,042,027 % Change, July 1, 2010 to July 1, % % Change, Average Annual Sample Consumer Information Payer Coverage # of Population With Payer: Medicare 232,239 % of Population With Payer: Medicare 11.24% # of Population With Payer: Medicaid 567,601 % of Population With Payer: Medicaid 27.48% # of Population With Payer: Employer (Includes TRICARE) 213,240 % of Population With Payer: Employer (Includes TRICARE) 10.32% # of Population With Payer: Tricare/Military 49,946 % of Population With Payer: Tricare/Military 2.42% # of Population With Payer: Other Commercial 686,384 % of Population With Payer: Other Commercial 33.23% # of Population Uninsured 425,973 % of Population Uninsured 20.62% Population Demographics # Female 1,038,137 % Female 50.26% # Male 1,027,240 % Male 49.74% # Age Group ,590 % Age Group % # Age Group ,088 % Age Group % # Age Group ,123,275 % Age Group % # Age Group ,424 % Age Group % # White Alone 1,604,912 % White Alone 77.71% # Black or African American Alone 197,959 % Black or African American Alone 9.58% # American Indian and Alaska Native Alone 42,066 % American Indian and Alaska Native Alone 2.04% # Asian Alone 142,344 % Asian Alone 6.89% # Native Hawaiian and Other Pacific Islander Alone 9,381 % Native Hawaiian and Other Pacific Islander Alone 0.45% # Two or more races 68,715 % Two or more races 3.33% Largest Employers County of Riverside, Riverside 18,291 Stater Bros. Markets, San Bernardino 18,000 Arrowhead Regional Medical Center, Colton 18,000 County of San Bernardino, San Bernardino 17,395 National Training Center, Fort Irwin 13,805 U.S. Marine Corps Air, Twentynine Palms 12,486 Abbott Vascular, Temecula 12,000 March Air Reserve Base, Moreno Valley 8,750 San Bernardino City Unified School District, San Bernardino 8,574 Ontario International Airport, Ontario 7,510 28

29 Sample Payer Information 29

30 Sample Payer Information 30

31 Sample Competitor Information County Key Competitors Riverside Inland Psychiatric Medical Group Oasis Rehabilitation Center Loma Linda University Behavioral Medicine Center; Department Vista Pacifica Enterprises, Inc. Palomar Health West End Family Counseling Service Inland Psychiatric Medical Group Headquarters Street Address 1809 W Redlands Blvd. City Redlands State CA Zip Telephone Web Site # Of Service Locations 7 Adolescent and young adult psychiatry Adult psychiatry Behavioral Health Services Psychiatric Consultation Services Evaluation and Treatment Child, Adolescent and Adult Therapy Board Certified Psychiatrists Licensed Clinical Psychologists Marriage Family Therapists / Licensed Clinical Social Workers 24 Hour On Call Clinicians Bilingual Therapists Same Day Appointments (When available) Evening Appointments Emergency Consultations Lectures and Presentations Psychological Testing Eating and Sexual Problems Stress and Migraine Management Describe Service Locations/Delivery Sleeping and Mood Problems Estimated Service Revenue Estimated Service Volume, In Units CEO First Name Syam CEO Last Name Kunam, MD CEO Address kunam@inlandpsych.com Partnerships & Collaborations Insurance Accepted: Aetna HMO/PPO Blue Cross Blue Shield PPO Blue Cross Blue Shield United Health Care Cigna Payer Contracts & Relationships 31

32 32

33 Internal Analysis Revenue By service line Payer mix Profit and loss Number of consumers served by service line Unit cost data SWOT Analysis 33

34 Sample Internal Analysis Data 34

35 Revenue Mix, By Service Line 3% Specialized Residential - Public 30% 17% 50% Specialized Residential - Private Community & Home Based Education & Prevention 35

36 Revenue Mix, By Payer, By Fiscal Year Medicaid Other state funds or grants Other local funds or grants 73% 75% 79% 27% 25% 20% 0% 0% 1%

37 Revenue Mix By Payer, 2012 Other local funds or grants 1% Other funds (Nutritional Prog Fees) 0% Medicaid 20% Other state funds or grants 79% 37

38 Revenue Mix By Payer 4% 19% Medicaid 77% Private Payers Government Payers 38

39 39

40 Revenue Mix By Service Line Partial Care Services Other Services Adult Intensive Case Mangement Services Adult Residential Supported Housing Adult PACT PATH Adult Supported Employment 47% 46% 50% 28% 28% 28% 15% 15% 12% 4% 3% 3% 3% 3% 3% 2% 1% 2% 2% 2% 3%

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42 Profit & Loss By Service Line 42

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46 Unit Cost Data 46

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49 Strategic Planning Case Study #1 49

50 The Situation County-based provider in mid-atlantic region $50 million in annual revenues Key state trends: Privatization of the management of some of the behavioral health services One million more individuals expected to obtain coverage through the Medicaid expansion provisions of the health care reform legislation The state has added or restored funding to improve the system of care for individuals with intellectual and developmental disabilities due to assorted court decrees 50

51 51

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54 Strategic Objectives #1 Continue to develop the administrative systems and service array necessary to maintain and further ABC Organization s reputation as a premier service provider in the context of the changing state human service market. #2 Pursue further revenue diversification and expansion of services, supports, and prevention activities so that ABC Organization can expand its impact on individuals, families, and communities. #3 Celebrate and communicate ABC Organization s performance and reputation as a center of excellence, center of influence, and employer of choice. 54

55 Objective One: Administrative Systems & Service Array Strategic Initiative #1A: Initiate a formal process for enhancing or developing relationships with MBHOs or other parties who are likely to win the contract for privatization Strategic Initiative #1B: Enhance the unit cost reporting and management and financial reporting systems to ensure the ability of the ABC Organization to set target costs and prices and manage them for all lines of service as well as provide all managers with up-to-date financial reports with analysis and trend reporting Strategic Initiative #1C: Implement a comprehensive technology infrastructure that: o Supports the organization s administrative, management, and compliance functions o Creates new revenue and market opportunities o Ensures successful implementation of electronic health records and meets all federal requirements of meaningful use 55

56 Objective One: Administrative Systems & Service Array Strategic Initiative #1D: Initiate formal process improvement initiatives to further optimize operations, performance, and consumer and community satisfaction Strategic Initiative #1E: Develop and implement a performance-based appraisal model for staff that utilizes strategic key indicators for improved performance and accountability Strategic Initiative #1F: Enhance ABC Organization s processes for admission and billing operations to be state-of-theindustry in terms of access to care and efficiency and effectiveness in maximizing the collection of revenues 56

57 Objective One: Administrative Systems & Service Array Strategic initiative #1G: Enhance ABC organization s formal compliance functions Strategic Initiative #1H: Develop or update ABC organization s various business plans to ensure the successful implementation of this strategic plan: o Marketing and business development plan o Technology and communications plan o Human resource and talent management plans o Clinical operations plan Organizational and program budgets 57

58 Objective Two: Diversification & Expansion Strategic Initiative #2A: Develop and expand the business development office to include marketing, public relations, grant writing, and advocacy functions at ABC Organization. o Marketing and business development o Referral generation and management o Grant and contract writing and management o Market research and service line development o Partner selection and management o Public relations o Advocacy and lobbying efforts with communities and government stakeholders 58

59 Objective Two: Diversification & Expansion Strategic initiative #2B: Identify key third-party payers, funders, and other potential purchasers and develop a plan for contracting and referral generation for a selected group to maximize new revenues. Strategic initiative #2C: Expand select profitable services to other markets. Strategic initiative #2D: Expand the services offered by ABC organization after a formal new service opportunity assessment and selection process. 59

60 Objective Two: Diversification & Expansion Strategic Initiative #2E: Develop a strategy for collaboration or integration of services with local or regional primary care systems. Strategic Initiative #2F: Explore opportunities for expanding the size and diversity of revenues at ABC organization through collaboration, merger, or acquisition. 60

61 Objective Three: Celebrate & Communicate Reputation As Center Of Excellence Strategic initiative #3A: Implement a formal balanced scorecard performance measurement system and performance dashboard at ABC organization. Strategic initiative #3B: Develop a key stakeholder reporting and communication system to communicate ABC organization s performance and reputation as a center of excellence, center of influence, and employer of choice. 61

62 Objective Three: Celebrate & Communicate Reputation As Center Of Excellence Strategic initiative #3C: Continue to invest in human capital resources to ensure that ABC organization retains its position as an employer of choice and center of excellence in providing behavioral healthcare services. Strategic Initiative #3D: Expand ABC Organization s outcomes research and best practice development initiatives to further its efforts to define the best value approaches to planning and delivering quality behavioral health care services. 62

63 Strategic Planning Case Study #2 63

64 The Situation Mental Health/IDD Authority in the State of Texas 600 employees $60 million operating budget 16 locations Key Issues: Clinician Shortage Lack of local contribution to service delivery system Low per capita income; provide services to some the poorest zip codes in the country Historical reliance on State contracting and general revenue 64

65 The Plan Before initiating the process, the organization had to ensure that both the organization and Trustees were ready to take ownership of a strategic plan and ensure implementation and follow through. Board training to reinforce appropriate advisory roles. Solidified appropriate board subcommittee structure Initiated divisional Reorganization for organizational efficiency. Installed internal controls in Finance, Clinical Operations and Human Resources. 65

66 Strategy Implementation Plan Based on the in-depth analysis of the agency s mission, values, financial outlook and key environmental factors, the Board of Trustees approved a three-year Strategy Implementation Plan. 66

67 Key Strategic Finding #1 The organization is financially stable and has been able to operate the organization at a positive operating margin for a number of years. This puts the organization in a strong position to weather the changes in the marketplace as well as to continue to make investments to assure that it continues to achieve its mission and expand its impact. 67

68 Key Strategic Finding #2 The State of Texas Medicaid Section 1115 Waiver programs and funding, representing roughly one-third of the organization s total revenue in 2016, are at risk for reduction or elimination as early as

69 Key Strategic Finding #3 The organization has human resources challenges to address in order to ensure it can hire and retain qualified staff to deliver services. 69

70 Key Strategic Finding #4 The organization has opportunities to increase its positive impact on individuals, communities and the overall region s heath care system by proactively communicating, collaborating and partnering with other community organizations. 70

71 Strategic Objective #1 Service Excellence To maintain and communicate the organization s position as a premier provider of behavioral health services in the local region that adapts to the changing landscape and community needs 71

72 Strategic Objective #2 Advocacy To expand the organization s role and impact as a leader and advocate for consumercentered, quality health care services 72

73 Strategic Objective #3 Integration To enhance and implement existing and innovative clinical programs which integrate mental health, addiction, intellectual and developmental disability, and primary care services. 73

74 Strategic Objective #4 Human Resources To establish the organization as an employer of choice and to invest in its human capital resources to recruit, develop and retain a skilled, caring and diverse workforce committed to achieve its mission. 74

75 Strategic Objective #5 Financial Stability To pursue revenue diversification and right-sizing of services, supports and prevention activities to so that the organization maximizes its impact on individuals, families and the communities it serves. 75

76 Strategy Implementation Plan The three-phase plan will roll out over three fiscal years. A staff directed operational plan is being developed with detailed tasks and timelines that will be used to guide implementation. Board will receive quarterly updates. 76

77 Strategic Planning Case Study #3 77

78 The Situation Intellectual and Developmental Disabilities provider in New York State $45million in annual revenues 78

79 Identified New York Environmental Trends OPWDD Continues Its Transformation Into Managed Care OPWDD Has Set Goals To Ensure The HCBS Settings Rules Are In Compliance By March Of 2019 OPWDD Is Streamlining & Improving The Self- Direction Program The OLMSTEAD Decision & The Americans With Disabilities ACT Requires NYS To Achieve Full Community Integration OPWDD Will Complete Their Rate Rationalization Effective July 1, 2017 The Effects Of The New Minimum Wage Are In Full Effect New York State Department Of Labor Increased The Overtime Exempt Salary Threshold There Is An Increased Effort For Mergers, Acquisitions, Collaborations, Or Affiliations We Are Incorporated Under ABCDE, Inc. 79

80 Key Findings Of The Strategic Analysis The organization is financially stable, but does not have diverse revenue streams. The State of New York s transformation to managed care, and the creation of Care Coordination Organizations (CCOs) are critical changes in the structure and financing for the services that the organization delivers. The organization has some infrastructure and human resource issues to tackle in order to continue to thrive and achieve its mission. 80

81 Five Strategic Objectives Strategic Objective #1: To establish the organization as a Center of Excellence for providing individualized support and services to individuals with intellectual and developmental disabilities and their families. Strategic Objective #2: To invest in the organization s human capital resources to ensure that it recruits, develops, and retains the skilled and diverse workforce needed to achieve its mission. Strategic Objective #3: To continue to develop administrative systems and operations to ensure the long-term viability of the organization and its mission in both a fee-for-service reimbursement environment and the emerging managed care environment in the State of New York. Strategic Objective #4: To pursue revenue diversification and further expansion of services so that the organization expands its impact on individuals, families, and communities. Strategic Objective #5: To explore partnership opportunities with other provider organizations as a means to ensure the organization s long-term success in achieving its mission. 81

82 Strategic Planning Case Study #4 82

83 The Situation Intellectual and Developmental Disabilities provider in State of Ohio $27 million in annual revenues 83

84 Ohio State Trends The overall structure of employment services in the state of Ohio is difficult for providers to administer and operate with the available funding. Funding for nursing support for individuals in the Ohio Waiver program has ended, but there remains considerable need for nursing services. Key payers in the state of Ohio are moving towards value-base reimbursement models where outcomes measured will be used to track performance and be linked to payment for services. There is a lack of funding and support for the transportation services needed by individuals with intellectual and developmental disabilities in the State of Ohio. Human service providers in Ohio and around the country are facing enormous workforce challenges. This includes finding and being able to competitively compensate qualified staff at all levels of their organizations. Changing role of Intermediate Care Facilities (ICF) in the service system and corresponding challenges in ICF funding. 84

85 The Shifting IDD Market The I/DD market is evolving along with the health and human service market. There are four key trends that are shaping the future of IDD services: More managed care for long-term services and supports (LTSS) More community-based care More care coordination and integration of care management More self-directed services 85

86 Thought Leader Interviewees Maureen Corcoran: President, Vorys Health Care Advisors LLC Kelly Petty: Superintendent & Chief Executive Officer, Cuyahoga County Board Of Developmental Disabilities Mark Davis: President, Ohio Provider Resource Association Dyann Roth: Chief Executive Officer, Resources For Human Development Sara Murphy: Director Of WorkLink, TransCen, Inc. 86

87 Program Revenue By Payer, Fiscal Year (FY) 2016 Charitable Contributions Private Pay 0.2% 0.1% 4% 3% State or County Funds Medicaid Medicaid 25% Federal Funds (Social Security) Other Funds Charitable Contributions State or County Funds 1 68% 87

88 Profitability By Fiscal Year Category Revenues $ 25,014,202 $ 26,730,531 Expenses $ 23,723,276 $ 25,011,104 Allocated Overhead Expenses $ 972,766 $ 922,391 Profit/Loss $ 318,160 $ 797,036 Margin 1% 3% 88

89 Key Findings Finding #1: The organization has a strong brand reputation and critical core competencies in managing the care and cost of services for individuals with cognitive and developmental disabilities, and other complex conditions. This represents a significant market opportunity for expansion of services and the organization s impact on individuals, families, and communities. Finding #4: The organization needs to grow significantly larger in terms of its size and scope of services so that it can continue to make the major investments in infrastructure and operations it needs in today s health care market. Finding #2: The organization is a financially stable organization, but operates with very small profit margins, making it difficult to make investments in staff and infrastructure. Finding #3: The organization, like most health care providers, has workforce challenges that must be addressed in order for it to continue to thrive in its mission. 89

90 Strategic Objective #1 To establish the organization as a premier provider of services to people with cognitive, developmental disabilities, or other complex conditions. 90

91 Strategic Objective #2 To diversify and significantly grow revenues and services while ensuring the financial performance at the organization for the longterm financial sustainability of the organization. 91

92 Strategic Objective #3 To position the organization as an Employer of Choice by continuing to invest in its human capital resources to recruit, develop, and retain the qualified workforce it needs to achieve its mission. 92

93 Strategic Objective #4 To enhance both clinical and administrative systems and operations so that the organization will remain competitive and continue to thrive in managed care and value-based purchasing reimbursement environments. 93

94 Next Steps Complete detailed list of initiatives to accomplish the four objectives. Implement an enhanced performance measure system to monitor organizational success. Both tasks to be completed by October 31,

95 Part Two: The OPEN MINDS Children & Family Center Case Model 95

96 Overview 96

97 The OPEN MINDS Children & Family Center: Company Overview & Strategic Analysis Data The OPEN MINDS Family & Children s Center has five key service lines: 1. Long-term residential services for juvenile justice referred male youth 2. Long-term residential services for severely mentally ill (SMI) male youth 3. Long-term specialty residential services for male youth with autism spectrum disorder 4. Outpatient mental health services for children, youth, and families 5. School-based day treatment services for SMI youth (males and females) 97

98 OPEN MINDS Family & Children s Center Three Key Executive Positions Chief Executive Officer The CEO has been in place for 23 years. She is a licensed clinical social worker who ran the Harrisburg residential campus programs for 9 years before moving into the CEO position. Chief Financial Officer The CFO has been in place for 17 years. Vice President, Programs This Vice President has been in place for 12 years, also previously running the residential program on the Harrisburg campus. The Board of Directors is comprised of 13 individuals, nine of which have been on the board for 15 years or more. 98

99 Survey & SWOT Analysis Senior Management Board & ELT Strengths Reputation for high quality services Strong leadership that supports staff Clear organizational vision and mission Strong leaders Reputation in the industry Weaknesses Internal communication Lack of data and outcomes reporting Holding all staff accountable in a consistent and fair manner Need a better plan and more marketing for fundraising Outcomes measures and weaknesses in data collection and analysis Slow to implement and use new technology Opportunities Increased opportunities for school-based and autism programs Look for opportunity to grow through merger/partnerships Technology enhanced or delivered services Services for individuals with autism Geographic expansion Threats Keeping the focus on employment and recruitment of quality diverse staff Managed care Loss of residential referrals Competitors who do a better job, have more marketing resources, and are able to move and grow more effectively Financial stability 99

100 Revenue Mix By Service Line, % 13% 9% 15% 46% Residential - JJ Residential - SMI Residential - Autism Outpatient School-Based Day Treatment 100

101 Revenue Mix By Payer, % 2% 7% 12% 20% 50% County Juvenile Justice Medicaid County Child Welfare Private Insurance Schools Private Pay 101

102 Profit & Loss By Service Line, (includes management and administration) Service Line Revenue Expenses Profit/Loss Profit/Loss Percentage of Revenue Residential - JJ $9,300,000 $11,700,000 ($2,400,000) 26% Residential - SMI $2,900,000 $3,400,000 ($500,000) 17% Residential - Autism $2,600,000 $2,400,000 $200,000 8% Outpatient $3,400,000 $3,500,000 ($100,000) 3% School-Based Day Treatment 1,700,000 1,400,000 $300,000 18% Total for Service Lines $19,900,000 $22,400,000 ($2,500,000) 13% 102

103 Strategic Objectives The Center engaged an outside consultant (at the recommendation of the Board Chair) to facilitate the strategic planning process. After a three-month process of analysis and meetings, the Center identified five strategic objectives for the next three years: Strategic Objective #1: To operate all residential programs at a positive margin. Strategic Objective #2: To expand non-residential program revenues to be at least 50% of total revenues. Strategic Objective #3: To brand the Center a center of excellence for both in-school day treatment services and specialty residential services for boys and girls with autism spectrum disorder. Strategic Objective #4: To report and communicate the Center s quality outcomes. Strategic Objective #5: To grow and diversify revenue streams. 103

104 Case Model Discussion 104

105 Two Years Later: Update On The OPEN MINDS Children & Family Center 105

106 Two Years Later: Update On The OPEN MINDS Children & Family Center Two years later, the executive team at the Center remains the same. The board has reconvened to review the agency s financial situation and to revisit the strategic plan. Key updates include the following: The agency has financed its losses over the past five years with unrestricted funds from its endowment. At current rates, these available funds will be exhausted in months. Demand for the Center s residential services for youth in the juvenile justice system continues to decline and the overhead costs of maintaining the campuses contributes to significant losses for the residential service lines. Demand for outpatient and school-based programs continues to grow, but the agency lacks the financial resources to continue to expand these services to new geographic areas. 106

107 Profit & Loss By Service Line, (includes management and administration) Service Line Revenue Expenses Profit/Loss Profit/Loss Percentage of Revenue Residential - JJ $5,400,000 $7,490,000 ($2,090,000) 39% Residential - SMI $4,200,000 $4,700,000 ($500,000) 12% Residential - Autism $3,700,000 $3,400,000 $300,000 8% Outpatient $6,800,000 $6,500,000 $300,000 4% School-Based Day Treatment 3,200,000 2,700,000 $500,000 16% Total for Service Lines $23,300,000 $24,790,000 ($1,490,000) 6% 107

108 Case Model Discussion 108

109 Case Model Discussion Questions Organizational Situation What is your assessment of the Center s current situation? What questions would you want to ask the CEO? Developing A Plan What options do you see as available to the Center at this point? What are the advantages and disadvantages of pursuing each of them? If you were to replace the current CEO, what tactics would you include in your plan for the next 90 days? 109

110 Review Of Strategic Planning Process Review/Establish Mission/Vision/Objectives Gather External Information/External Analysis Trends & Competitors Gather Internal Information/Internal Analysis Service Portfolio Analysis Identify Options for Achieving Objectives - Strategies, Tactics, Markets & Services Develop Operational Plans Marketing & Business Development, HR & IT Develop Budget & Financing Plan Develop Detailed Implementation Action Plan Develop Key Performance Indicators 110

111 "Finally, strategy must have continuity. It can't be constantly reinvented. -Michael Porter 111

112 Questions & Discussion 112

113 Turning Market Intelligence Into Business Advantage OPEN MINDS market intelligence and technical assistance helps over 550,000+ industry executives tackle business challenges, improve decision-making, and maximize organizational performance every day 15 Lincoln Square, Gettysburg, Pennsylvania

114 Additional Strategic Planning Case Studies 114

115 Strategic Planning Case Study #5 115

116 The Situation County-based provider in mid-atlantic region $50 million in annual revenues Key state trends: Privatization of the management of some of the behavioral health services One million more individuals expected to obtain coverage through the Medicaid expansion provisions of the health care reform legislation The state has added or restored funding to improve the system of care for individuals with intellectual and developmental disabilities due to assorted court decrees 116

117 117

118 118

119 119

120 Strategic Objectives #1 Continue to develop the administrative systems and service array necessary to maintain and further ABC Organization s reputation as a premier service provider in the context of the changing state human service market. #2 Pursue further revenue diversification and expansion of services, supports, and prevention activities so that ABC Organization can expand its impact on individuals, families, and communities. #3 Celebrate and communicate ABC Organization s performance and reputation as a center of excellence, center of influence, and employer of choice. 120

121 Objective One: Administrative Systems & Service Array Strategic Initiative #1A: Initiate a formal process for enhancing or developing relationships with MBHOs or other parties who are likely to win the contract for privatization Strategic Initiative #1B: Enhance the unit cost reporting and management and financial reporting systems to ensure the ability of the ABC Organization to set target costs and prices and manage them for all lines of service as well as provide all managers with up-to-date financial reports with analysis and trend reporting Strategic Initiative #1C: Implement a comprehensive technology infrastructure that: o Supports the organization s administrative, management, and compliance functions o Creates new revenue and market opportunities o Ensures successful implementation of electronic health records and meets all federal requirements of meaningful use 121

122 Objective One: Administrative Systems & Service Array Strategic Initiative #1D: Initiate formal process improvement initiatives to further optimize operations, performance, and consumer and community satisfaction Strategic Initiative #1E: Develop and implement a performance-based appraisal model for staff that utilizes strategic key indicators for improved performance and accountability Strategic Initiative #1F: Enhance ABC Organization s processes for admission and billing operations to be state-of-theindustry in terms of access to care and efficiency and effectiveness in maximizing the collection of revenues 122

123 Objective One: Administrative Systems & Service Array Strategic initiative #1G: Enhance ABC organization s formal compliance functions Strategic Initiative #1H: Develop or update ABC organization s various business plans to ensure the successful implementation of this strategic plan: o Marketing and business development plan o Technology and communications plan o Human resource and talent management plans o Clinical operations plan Organizational and program budgets 123

124 Objective Two: Diversification & Expansion Strategic Initiative #2A: Develop and expand the business development office to include marketing, public relations, grant writing, and advocacy functions at ABC Organization. o Marketing and business development o Referral generation and management o Grant and contract writing and management o Market research and service line development o Partner selection and management o Public relations o Advocacy and lobbying efforts with communities and government stakeholders 124

125 Objective Two: Diversification & Expansion Strategic initiative #2B: Identify key third-party payers, funders, and other potential purchasers and develop a plan for contracting and referral generation for a selected group to maximize new revenues. Strategic initiative #2C: Expand select profitable services to other markets. Strategic initiative #2D: Expand the services offered by ABC organization after a formal new service opportunity assessment and selection process. 125

126 Objective Two: Diversification & Expansion Strategic Initiative #2E: Develop a strategy for collaboration or integration of services with local or regional primary care systems. Strategic Initiative #2F: Explore opportunities for expanding the size and diversity of revenues at ABC organization through collaboration, merger, or acquisition. 126

127 Objective Three: Celebrate & Communicate Reputation As Center Of Excellence Strategic initiative #3A: Implement a formal balanced scorecard performance measurement system and performance dashboard at ABC organization. Strategic initiative #3B: Develop a key stakeholder reporting and communication system to communicate ABC organization s performance and reputation as a center of excellence, center of influence, and employer of choice. 127

128 Objective Three: Celebrate & Communicate Reputation As Center Of Excellence Strategic initiative #3C: Continue to invest in human capital resources to ensure that ABC organization retains its position as an employer of choice and center of excellence in providing behavioral healthcare services. Strategic Initiative #3D: Expand ABC Organization s outcomes research and best practice development initiatives to further its efforts to define the best value approaches to planning and delivering quality behavioral health care services. 128

129 129

130 Strategic Planning Case Study #4 130

131 The Situation Behavioral health provider in operating in fourteen states $260 million in annual revenues; 6,000 employees Primary service lines: Residential and Day/Employment Services for individuals with IDD Residential, Field-based and Outpatient Services for individuals (adults and children) with Behavioral Health issues and Addictions Federally Qualified Integrated Health Clinic 131

132 Strategic Planning Process and Timeline CEO transition from founder September 2013 CEO/Management Team determined need for Strategic Plan Fall 2014 Engaged Open Minds February 2015 Strategic Planning Kick-off Meeting March 2015 Internal Analysis: internal stakeholder surveys and focus groups, service line portfolio analysis (profit and payer mix by service line and by region/state), SWOT analysis -- March June 2015 External Analysis: national and state environmental trends research, external customer interviews -- March June 2015 Plan Development July August 2015 Presentation of Plan to Board/Full Corporation September

133 Key Findings Of The Strategic Analysis 1. The organization has a reputation and history of service excellence, in particular for consumers with complex behavioral health and intellectual and developmental disabilities. 2. The current structure of administrative operations and program oversight is not as efficient, effective, and values enhancing as it should be. 3. The organization has major workforce issues to address. 4. The organization is financially stable, but it operates with slim margins and a service line portfolio that is highly dependent on residential services. 5. The organization has little brand recognition at a national level, and communication of its brand and service excellence is critical as the organization moves forward. 133

134 Four Strategic Objectives Strategic Objective #1: To establish the organization as a Center of Excellence for providing creative, person-centered, trauma-informed, integrated health care services and supports to underserved communities and individuals with serious behavioral health and/or intellectual and developmental disabilities. Strategic Objective #2: To establish the organization as an employer of choice and invest in our staff to ensure that we recruit, support, develop, and retain a skilled, caring, creative, healthy and diverse workforce committed to achieving our mission. Strategic Objective #3: To develop and implement an organizational structure (operations and governance) that best meets the needs of program participants and staff, remains responsive to the marketplace, and promotes and enhances our values while remaining financially responsible. Strategic Objective #4: To diversify revenue sources to ensure the organization s financial sustainability and improved financial performance. 134

135 25 Specific Initiatives To Achieve Four Strategic Objectives 3 Overarching Initiatives: Implement a formal key performance measurement system and performance dashboard. Develop a key stakeholder reporting and communication system to communicate RHD s performance and reputation as a Center of Excellence and Employer of Choice. Develop, communicate, and implement a comprehensive communication plan between leadership, management, and all other staff. Remaining 22 Initiatives relate specifically to the individual objectives. 135

136 High Level Implementation Timeline Phase one: September 2015-December 2015 Primary Focus: Restructure into 8 divisions, select leadership and redesign shared services teams Phase two: January 2016-June 2016 Primary Focus: Complete staffing redesign and implementation of new structure and build new Executive Team Phase three: July December 2016 Primary Focus: Stabilize financial picture in each division; diversify funding and service lines; develop EHR, KPI tools and outcomes measures Phase four: January June 2017 Primary Focus: Continued development and implement EHR and KPI tools; continue to stabilize and build margin in divisions Overarching Focus: Center of Excellence and Employer of Choice 136