I’ve found that many healthcare organizations focus their strategy on their goals or mission, but this often does little to distinguish them from their competitors. In fact, some organizations lack a distinct strategy altogether and instead rely on a strategic plan filled with operational initiatives aimed at achieving sustainability in a stable market.
We define strategy as a means of sustainable differentiation. I’m a purest on the topic, meaning I don’t use the word ‘strategy’ to describe an approach for how to fulfill a goal. And while there are many wildly forward-thinking, imaginative, and business savvy healthcare organizations out there with distinct, differentiating strategies, there are many others that lack a strategy all together.
Because healthcare is inherently mission-driven, the murky definition of strategy in the healthcare industry is often rooted in an organization’s original purpose. Many payers and providers were founded to serve specific communities or populations long before the competitive dynamics of today’s landscape. These companies and organizations have historically enjoyed protection through geographic boundaries, regulation, and local relationships. However, as the boundaries between healthcare sectors—and even between healthcare and other industries—continue to blur, and greater uncertainty in the landscape, future sustainability will depend on a more distinct and defensible value proposition.
Unfortunately, the forces of change that healthcare has long been insulated from are now breaking through, making it impossible for the industry to remain untouched.
A strategic plan anchored by improving quality and operational performance will struggle to remain viable in the next era of healthcare. That said, strategic niches grounded in mission and supported by bold, differentiating choices have the potential to create a competitive edge that drives both financial sustainability and also transformational change.
Below, I’ve outlined six key tests of a good strategy. Does your organization pass this test?
Those of you who have talked with me about strategy know that I’m mildly obsessed with these questions. I’d love to hear your answers and thoughts on them. Here are mine:
1. Does your strategy fulfill a need for your target consumer, customer, or community?
The unfortunate truth is that the current U.S. healthcare system, even in its most mission-aligned and robust form, fails to address the comprehensive needs of individuals, families, and communities. This means that getting better and better at how healthcare has always been will continue to underaddress consumers’ needs and that these gaps will continue to disproportionately affect those who have been historically underserved.
The healthcare industry shouldn’t be expected to solve all of society’s issues, but whenever we consider the broader struggles in people’s lives, even beyond medical and social factors, we widen the potential sphere of connection and impact. As the demands of the healthcare sector change due to emerging technology, workforce challenges, demographic shifts, and a fluctuating political and regulatory landscape, new opportunities may arise to provide more accessible and meaningful care solutions.
If your organization were to cease existing, how would the lives of those you serve change? Would their needs be mostly met through another entity? If so, how would their value proposition differ? Now, consider this question within the future landscape, where competitors and new entrants adopt artificial intelligence (AI), strategic partnerships, and entirely new business models. How does your organization convey its unique value proposition in this environment?
These essential questions have not been required in recent decades. However, they are essential for the road ahead.
2. Could your strategy also describe others in your market?
Even if your strategy feels meaningful and unique to your work, if it can describe other competitors, it’s less a strategy and has become more like table stakes. This means it remains important and even essential, but it’s not a differentiator. While many companies share their mission, vision, and values, many do not disclose their distinctive approach to achieving their goals or creating unique value in the market, keeping this confidential to maintain a competitive edge.
An important distinction here is not only what you think about your competitors but also how they present themselves and their services. It’s not uncommon for me to hear a regional organization refer to its competitors as having different values or priorities, which may be true when considering aspects of the work. However, when these competitors communicate their value proposition to legislators and regulators in marketing materials and while competing for contracts, they are telling a story that is equally values-driven.
A good strategy involves making clear, bold choices that distinguish you from others. For instance, if you assert that you provide “high-quality, patient-centered care,” consider: What does that mean in practice? How do we define quality and patient-centeredness in a way that is uniquely ours? If you claim to be more connected to the community, how does this provide sustainable and distinctive value that people can both experience and express?
If your strategy can describe others in the market, it is more of an aspirational statement than a strategy.
3. Does your strategy help you make trade-offs?
All healthcare companies face resource limitations and, therefore, need to focus on how to make decisions among various essential initiatives. A strategy assists executives in determining what to continue or expand upon, and what to discontinue. Trade-offs are the essence of strategy. An effective strategy should not only guide how your company prioritizes its portfolio of strategic initiatives, but the initiatives themselves should be intentionally designed and selected to fulfill the strategy. This could be a significant leap for some organizations, but it doesn’t have to occur overnight.
A strategy can empower leaders to align on how to pursue a vision and business model that provides unique benefits in a changing landscape.
4. Does the strategy help you fulfill your mission and vision?
For many healthcare organizations, the mission and vision are sacred. A strong strategy links daily activities and long-term planning to these guiding principles. It should serve as a bridge, offering direction on how your organization will achieve this vision.
Does your strategy keep your mission alive in a tangible way?
5. Does the strategy provide guidance through future changes and evolving market conditions?
Healthcare is a dynamic industry with constant regulatory change, technological advancement, and market disruption. A good strategy isn’t just a snapshot of the present—it’s a compass for navigating future uncertainty. It should position your organization to thrive no matter what challenges or changes arise. For instance, if your strategy focuses on ensuring that the benefits of emerging technology reach those who have been historically underserved, this provides guidance on how to prioritize resources as the healthcare landscape evolves.
A strong strategy can alleviate the stress of uncertainty for executives, staff, partners, and constituents by offering a clearer understanding of your organization’s role in new territory.
6. Is this strategy simple to say, remember, and act upon?
Can everyone in the executive and leadership teams clearly articulate the company’s strategy? Can they readily restate it in their own words and use it to prioritize their work? Sometimes, strategies turn into aspirational tongue twisters, attempting to encompass all the ways healthcare should change. For a mission-driven organization, this can help focus and align activities to fulfill the mission. However, if your team isn't regularly discussing and using the strategy statement, it isn't actually guiding your work.
A strategy must be known to be applied.
The Case for Better Strategy
Even though the healthcare industry has been in constant motion, its structure has been stable for decades. There have been clear swim lanes for payers, providers, pharmaceuticals, and supporting organizations. We generally share an understanding of what to expect from each lane and have come to accept that much of healthcare is left under-addressed. With healthcare representing close to 20% of the US economy and also being a deeply personal priority for all of us working in it, it is unlikely that these swim lanes will remain sacrosanct into the future.
It's hard to step back and address strategy while an organization still has so many critical operational challenges and competitive threats. The good news is that these can be addressed in parallel, creating a path toward greater energy, purpose, and sustainability. Is updating your strategy on this year’s portfolio of initiatives?
Our world is changing quickly, and we can use strategy to lead into the future with purpose and intention.
With you in goodness,
NW