It is hard to disagree that if the healthcare organization wants to be successful, it needs to have a good strategy and plan. However, it is not very easy to make a plan that will lead a company to its bright future. There are several types of planning and many steps that a person needs to follow in order to make a proper plan. The purpose of this paper is to discuss the planning function and its importance as a primary management tool in healthcare and write about the types of planning. Also, I will list and explain each step in the planning process and compare and contrast strategic and operational planning.
Types of Planning
There are several types of planning, and they are usually classified by the planning horizon, management approach, and design characteristics.
While preparing a strategic plan, it is important to take into account how long this plan will probably work. So, the planning horizon is the amount of time the company will look into the future; it is how much time the organization will plan ahead. The usual planning horizon is around one year. However, many commercial companies have a five-year planning horizon because they want to be surer about their future.
Management Approach: Top-Down and Bottom-Up Planning
One more classification of planning is the management approach or top-down and bottom-up planning. According to Nowicki (2015), “in top-down planning, senior management, which includes the division heads or vice presidents, develops the plan with little or no input from subordinates.” The major advantage of this planning is that top management may be in a better position for an objective look into the future. “The disadvantage of the top-down design is that plan implementation may be difficult if subordinates have little or no input” (Nowicki, 2015). As for bottom-up planning, subordinates develop a plan, and the senior management needs to approve it. Its advantage is that those people who develop the plan follow it strictly.
Design Characteristics: Incremental and Zero-Base Planning
It is also possible to classify planning by design characteristics, and there are incremental and zero-base types. The incremental one is about planning just for changes like new positions, programs, and equipment. According to incremental planning, all current operations are crucial to the organization’s mission. “The advantages are the ease of incremental planning, the minimal time commitment required to plan, and the support of a bigger organizational culture” (Nowicki, 2015). The disadvantage is the suggestion that all current operations are important in the healthcare environment that is actually changing so fast.
Zero-base planning requires that all existing programs, positions, and equipment should be reconsidered, while the new positions, equipment, and programs are to be justified. So, the advantage of this planning is that, in the rapidly changing environment, everything in the company is being reconsidered and changed. As for the disadvantages, the large amount of time is required, employees are anxious, and significant administrative and communication requirements are needed.
Strategic and Operational Planning
Strategic planning makes the managers imagine where they want the healthcare organization to be in three to ten years. The purpose is to identify the necessary resources that will help to get there and to predict the healthcare services provision at the end of the planning horizon. Strategic planning is like the starting point for the budget and operating plan. Operational planning is about translating the strategic one into small steps to be taken during the next year. It may not be evident for some organizations to determine where strategic planning ends and the operational one begins.
There are three characteristics that may help to distinguish strategic planning from operational one. The first is the planning horizon: the strategic planning is for the next three to ten years, and the operational planning is just for the following year. The second is about the principal participants: the strategic plan is developed by the executive management and the governing body, and the operational plan is developed by the department managers. The last difference is that strategic planning lists primary objectives common to the whole organization while the operating plan lists secondary objectives by the department.
The Planning Process Steps
The first step in the planning process is to validate the mission and strategic interpretations. It is important as they anticipate where the organization will be in three to ten years. Mission statements do not necessarily correspond with the company’s actual purposes, while the strategic interpretations need to reflect the actual purposes of the company. The second step is to assess the external environment, especially the factors that may affect the company’s present and future. The first part of the assessment is to determine the direction of the industry’s development by studying national trends. The second part is to determine the direction of the local market and investigate some elements like “key economic and employment indicators and their effect on present and future utilization patterns” (Nowicki, 2015). The third step is to assess the internal environment, and the first part is to determine the company’s direction by investigating organizational trends. Then, the assessment reviews the community’s benefits and explains why the health needs of a certain community are not being met.
The fourth step is to formulate the vision of the company’s future that should be bright and accomplish the mission of the organization. The fifth step is to establish strategic thrusts that represent the significant results that the company wants to achieve. It is required that the strategic goals should be enduring, limited in number, and stable. The sixth step is to identify critical success factors that measure the company’s progress toward achieving the plan. The seventh step is to develop core objectives that support the strategic goals. According to Vraciu (1979), “the budget represents the best plan for allocating resources to achieve the objectives and implement the programs approved in the programming phase” (p. 126). Next, it is necessary to develop a strategic financial plan that is like the link between the strategic and the operating plan.
The ninth step, which is also the first step in the operational planning process, is to develop secondary, or department, objectivities to support the organization’s strategic plan. The key idea is that the objectives cannot be easily attainable because then the department will not make any progress. Also, the objectives cannot be too difficult as the department will not be able to attain them. The step number ten is to develop policies that provide subordinates with general guidelines for making decisions. The eleventh step is to develop procedures that are like the guides to actions. Procedures are more specific than policies, and they identify how to achieve them. The step number twelve is to develop methods that will help to accomplish the procedures. And, finally, the thirteenth step is to develop rules that may either allow or forbid an action.
To draw a conclusion, I would say that planning is a challenging but, at the same time, a necessary process. It helps healthcare organizations to understand how to work over the next few years and to realize and achieve their goals and. I believe that it is really good that there are some types of planning and many steps that are not hard to make and that lead to the healthcare organization’s success.
Nowicki, M. (2015). Introduction to the financial management of healthcare organizations. Chicago, IL: Health Administration Press.
Vraciu, R. A. (1979). Programming, budgeting, and control in health care organization: The state of the art. Health Services Research, 14(2), 126–149.