Health System strategic planning requires a new approach for today’s healthcare environment. The rapid, industry-wide changes brought on by demographic, regulatory, entrepreneurs, technology, emerging pandemics and changing population expectations are upsetting the age-old rules.

The role of health system, purchaser, insurer, provider, and customer are all changing, and the clean distinctions of yesterday are blurred today. Health systems clinging to the traditional models of success are experiencing increasing challenge while others and new entrants adapt to the new industry rules and gain market position. As a result, health systems’ strategic focus and planning approaches must also change.

Driving the strategy changes are a confluence of patient service, convenience and delivery model demands and entrepreneur and other non-traditional competitor entrant to the provider industry. Increased pricing pressures and reimbursement shifts towards longitudinal quality metrics are accelerating the dissonance between the old and new rules for success leaving some caught in the middle. However, successful health systems are changing their strategic focus to reclaim the health systems’ industry position and customers. While maintaining geographic position and market share efforts, the most advanced health systems are focusing creating new capabilities, forming non-traditional partnerships and shifting delivery models towards access and convenience to drive their success in the new environment.

The approach and tools used to craft successful health system strategic plans are also changing. Current planning processes make use of the rapidly changing industry dynamics and the increased data availability. New approaches emphasize the external view and embrace partnerships from outside the industry. Moreover, with increasing levels of data available, predictive and graphical viewing tools are being used to collect and view big data. The availability big data sets are allowing more accurate scenario boundary formation and outcome probabilities thereby allowing pilots to move ahead where historically more projection accuracy was needed.

Health system strategy and planning process are changing. The “5-year plan” with detailed strategies and tactics is less relevant today than an agile planning approach focused on the emerging success metrics and themes. Successful health systems will adapt to the changes and use their leadership positions to appropriately guide the industry transformation.

The new trends in health systems strategy and Planning will bring in new Themes such as

a) Redefining the customer as Patient, Consumer and payer with each requiring definate strategic plan

b) Industry positioning through vertical intergration and non traditional partnerships addressing the blurred distintion between payer, provider and purchaser

c)Market positioning to ensure scale economics and network adequacy needed to manage populations

d) Creating market relevance and organisational essentiality as alternative proliferate

e) Building capability to meet customer demand forconvenient ambulatory and care management solutions delivering longitudinal quality outcomes

Should Health Care Providers Downsize their Operations by closure of satellite clinics in the wake of Covid-19 Pandemic?

I reacted with surprise the other day when Nairobi Hospital, one of the largest Multi-specialty practice organization in Kenya, announced closure of satellite clinics  and recalled all staff to be based at the main facility  in a bid to consolidate resources to fight Covid-19. Is it really downsizing or temporary restructuring? Is closure of satellite clinics a panacea to financial and operation challenges of the main Hospitals in the wake of Covid-19?

Organizational downsizing is a proven technique for restructuring a hospital’s organization in response to a severe decline in occupancy. This process involves the traditional microanalysis of staffing used in productivity studies, with a macroanalysis of the hospital’s organization and operation (Van,1986). Organizational downsizing is designed to assist hospitals to identify and achieve substantial reductions in staffing. Therefore, it is most appropriate for hospitals that have experienced such severe occupancy declines that traditional productivity methods are not sufficient for achieving necessary staffing reductions.

How could it be for healthcare organization to close satellite Clinics during the worst public-health crisis since 1918? I believe that the answer can be found in the complicated, dysfunctional way we pay for health care services in this country. The health care system, and hospitals, underwent considerable restructuring and downsizing in the early to mid-1900s in several countries as governments cut costs to reduce their budget deficits. Studies of the effects of these efforts on nursing staff and hospital functioning in various countries generally reported negative impacts. Health care restructuring and hospital downsizing was again being implemented in North America in 2009/2010 as governments struggled to once again reduce deficits at a time of worldwide economic recession. From a public health ( Population health) perspective, cutbacks and disruptions  seems to occur at precisely the wrong time.

From my experience in healthcare operations, I know  that only a small portion of the healthcare revenues come from a traditional fee for service (FFS) reimbursement system. Fully 80 percent of Healthcare organization’s  revenue comes from insurers and government payer, NHIF, who provide a fixed payment per capita (or for a particular patient population, and patient condition) for a given period. This capitation approach (a type of risk-bearing contract) would seemingly ensure that a health care organization would not run short of cash during a crisis, at least in the short term. So why?  I wondered; would health organizations be facing a cash-flow crunch in the early stages of the Covid-19 epidemic?

I posed this question to a colleague in the office  and  in response, was told; “Right now the issue is cash flow because revenue is paid on  FFS (Fee-for-service) model which  covers the volume of patients, severity of illness or number of diagnostic and treatment visits. With Covid-19 being declared a pandemic by WHO, the fear that other illnesses associated or attributed to Covid -19 might not be honored for payment by insurers hence a caution trigger. Again, it is too hard to predict what total medical expenses will look like through the peak and recovery of Covid-19 patients. The costs, after all, are lower than usual because most hospitals  essentially have eliminated elective surgeries.  Even those ICU cases related to the virus are lower cost than much ICU care. Plus, many routine specialty consultants’ visits have been postponed or replaced by telehealth. Could we then say that the benefit of satellite clinics is outweighed by cost of infection control and supply of PPEs to frontline staff? Could Satellites clinics still breakeven in the era of curfews and movement cessations?

Kenya’s Private hospital’s dilemma is just one piece of a much larger problem, of course. In a recent HBR article Sean Nicholson and David Asch noted the inadequacy of the current health care insurance framework in a situation like the Covid-19 epidemic, when overall health care revenues plummet. Arguing that health insurers should also direct excess revenues to the front lines of private healthcare organizations to ameliorate this health crisis.

How much more so in this case? Who ends up being at risk in this form of risk-bearing contract when we consider a private healthcare organizations’ restructuring approaches ? As we now see, it is the doctors and nurses and allied health professionals. Among all the things that Covid-19 has taught is that the current risk-sharing arrangement is a perversion of finance and purpose, simply a way for payers to shift financial responsibility to those who can least afford it. Closure of Satellite clinics is not a panacea to the financial and operational challenges of the main hospitals.

Aquinius Mung’atia, former Head of Facilities & Support Services at Aga Khan Hospital Mombasa in Kenya, is Currently Head of Projects & Security, and a strategy enthusiast.