Module 2 Teamwork Discussion: Strategic Planning Process
Module 2 Teamwork Discussion: Strategic Planning Process The Strategic Planning Process In Module 2, your team and you will use the term paper project template to begin doing your project topic research and writing for your team strategic plan document. You will begin by reviewing the template outline and read the example strategic plan provided below. The example plan will help guide you with developing your own unique plan process and outline with your team for your ACO Risk Plan. It is important to note that whether a health care organization is purchasing an expensive piece of capital equipment ( 1,000 to 5,000 or more), implementing a new computer system, performing an acquisition and/or merger, or doing a new startup business, there is a best practice that should be followed, e.g., the strategic planning process and pro forma. The strategic plan is meant to be a living and breathing document that is an ongoing “work in progress.” The plan documents specific steps required to evaluate the business need, cost/benefits analysis, and financial feasibility of a business venture. The pro forma helps to forecast the return on investment (ROI). We will discuss the key steps using an example project. The project is a Radiology Picture Archiving Communication System (PACS) project and purchase. Based on the steps of the example RIS/PACS project below, your team research, readings, and collaboration, your team and you will define the contents needed to complete the course term project, Strategic Plan. EXAMPLE: (Illustrative Only) Strategic Plan for Radiology Picture Archiving Communication System (PACS) Key 1: The Needs Assessment: PACS The very first thing you have to do, before even considering developing a strategic plan, is to find a need. This is often referred to as the needs assessment. An assessment of the medical service area or community should be done before adding a service, a new business, another department, or new products. After the needs assessment is completed, and the gap in the market identified, the organization must put together a multidisciplinary team of professionals that have the skill sets required to do the planning, purchasing, financing, training, and implementation required for the strategic plan. All of the processes mentioned are documented within the strategic plan. Each plan is different, depending on its purpose. For the purpose of this example plan, we have identified a need for a radiology department Picture Archiving Communication System (PACS). During the needs assessment, the hospital has also found that in order to implement PACS, they must update its entire radiology information systems (RIS). Key 2: Strategic Plan Purpose What is the primary purpose of your new business, department, service, product, or computer system and so on? Example Purpose: The purpose of this plan is to update our radiology department's systems so that we will be able to utilize digital technology, teleradiology, and PACS for a filmless, more efficient, costeffective system and department. Strategic Plan 2013. Saint Leo University Page 1
Key 3: Vision What vision or directional change will occur with the implementation of a new system(s)? Example Vision: To bring the hospital radiology department into the 21st century through current technologies that will improve department operations and allow us to compete with other community hospitals in clinical services and in business by providing diversification through improved and new services. Key 4: Mission Statement This is a simple statement which describes what you wish to achieve through the plan, from improving customer services to bigger and better business capabilities and/or increased marketability. Example Mission Statement: The XYZ Hospital Radiology Department shall provide the highest quality services to our patients through implementing and maintaining advanced radiology technology and computerized systems, which include digital imaging (the ability to view computerized images), teleradiology (the ability to transmit computerized images), and PACS (picture archival computerized systems, the ability to store, retrieve, transmit, and print to film digitized images). We also strive to meet the service needs of our health care community and maintain high satisfaction ratios from our patients, physicians, and community. Key 5: SWOT Analysis These are the strengths (S), weaknesses (W), opportunities (O), and threats (T) of your plan. These require research in regard to the resources and internal and external environments that may impact your plan. Often, professional planners will list the top 10, 15, or even 25 areas that impact the strategic plan. We will do three for each area as an illustration. According to Chan, et al (2002), “A SWOT analysis forces the strategist to make assessments about the inherent strengths and weaknesses of the organization, as well as the opportunities and threats facing it.” Example: S W O T 1. 2. 3. 1. 2. 3. 1. 2. 3. 1. 2. 3. Support from Contract Radiologists. Hospital in a strong capital position. Increase throughput (volume) and Decrease costs (filmless). Physicians and Staff require training on PC-based systems. Some senior staff may retire or leave vs. learn new systems. Downtime during transition and loss of revenue. Recruiting advantage to attract new radiologists. Marketing opportunity of new equipment and services. Team and morale building due to improved equipment and training opportunities. Change in hospital capital position. Competing hospitals purchasing PACS and acquiring marketshare. Increase government regulations, particularly impacting radiology reimbursement. Strategic Plan 2013. Saint Leo University Page 2
Key 6: Plan Objectives Objectives are short term – tasks that need to be completed immediately, or in the first 3-6 months; intermediate – tasks that must be done within the first 7-24 months; or long term – tasks that may be achieved in 2-5 years. Setting objectives is the core of strategic planning. They guide you in the process. Objectives may be written out, graphically displayed in a Gantt chart, or both. We will utilize example objectives using the Gantt chart, which is a common tool in strategic planning. See example illustration below (Source: Smartdraw, Meyer, 2009). Gantt Objectives, Gantt Charts, and timelines will be discussed in more detail in Module 3. Objectives written out: (Example-only. Objectives will vary depending on the type of project, complexity of the project, and other factors affecting implementation schedules. Short Term (0-6 months) Intermediate (6-24 months) Long Term (2-5 years) Needs Assessment RFP and System Selection Strategic Plan Draft with roles assigned to Team Leads System Build Train the Trainers and then Staff Training System implementation (Go Live) System Updates Quality Assurance System Reevaluation Strategic Plan 2013. Saint Leo University Page 3
Key 7: The Systems RFP January 1, 2013 XYZ Hospital, Radiology Department 555 Hospital Lane, Citywalk, UT 55555 Phone: 555-555-5555, Fax: 555-555-5555, Email: rad@xyzhospital.com illustration only Radiology Software Vendor 555 Computerized Plaza Computerville, PA 55511 Re: Radiology Information Systems RFP Confidential Dear Sir/Madam We are in search of a new radiology information management system with picture archiving and communication systems (PACS). We have utilized our current system for over ten years, and it no longer meets our needs, and it is no longer being supported as of January 1, 2010. We wish to update to newer technology, which includes digitizing film, teleradiology and PACS. Facility Information: We are a 750 bed acute care facility. We have a level 1 trauma center, two urgent care centers, a large outpatient surgery center, and a freestanding radiology center located between our two hospital-owned clinics. We support approximately 5,000 medical providers in our medical service area. Radiology Modalities: Both our in-house radiology department and our freestanding radiology center run all of the core modalities, with the exception of nuclear medicine and interventional radiology, which are performed only in-house. XYZ Hospital Diagnostic Imaging Modalities In-house Freestanding Center Radiology Modalities: Radiology Modalities: Computed Tomography Computed Tomography Diagnostic Ultrasound Diagnostic Ultrasound Magnetic Resonance Imaging Magnetic Resonance Imaging Mammography Mammography Molecular Imaging Molecular Imaging Pre-Clinical Imaging Pre-Clinical Imaging Radiography and Fluoroscopy Radiography and Fluoroscopy Interventional & Surgery No applicable Interventional cardiology Surgery Mobile C-arms Interventional Radiology & Angiography Nuclear Medicine Not applicable PET & PET/CT Imaging PET Radiopharmacy We are requesting a proposal for the following specific areas of functionality, although we are seeking a comprehensive radiology software system solution that fits all of the needs of a facility of our size, complexity and equipment type. We are seeking a long-term technology partnership so that we may find the best long-term solutions between equipment, systems and staff. Some of the highlights we desire are: Comprehensive RIS workstations that will be able to integrate with our current equipment and hospital systems, which are all DICOM compatible; Converting from our current physical x-ray film, to performing all digital imagery for all of our modalities; Adding PACS and teleradiology systems; Comprehensive one stop equipment maintenance solutions, education and performance solutions, asset management and inventory tracking is required, as well as, 1 hour turn-around time on system failures and 24-48 hour turn-around time on system maintenance issues; Clinical systems integration, which will need to include patient monitoring and environment solutions by modality. To assist you with your detailed proposal, we have attached our department equipment inventory, our annual volumes per machine, and our goals. Please provide us with a system proposal, the cost for each component, as well as, references from healthcare facilities equal in our size and complexity that have used your system for 3-5 years or more. Sincerely, Jill Solution Chair, RIS Selection Committee Attachments Strategic Plan 2013. Saint Leo University Page 4
Key 8: Necessary Procurement: The System Selection This key applies to this strategic plan. It won’t always be the same for every plan. For example, a new service added that may not require a purchase. In this case, the planning team should ask: What are the software application functionality requirements needed for our radiology system (Hardware, Software, aka, our internal Infrastructure)? Does the necessary infrastructure exist? If no, it’s time for a new needs assessment. If yes, the first task at hand is to identify what functions you need to perform when selecting the new application systems, in this case a RIS/PACS. In the plan, it was stated that planners wish to use digital film capabilities to virtually eliminate X-ray film, which is costly to produce, handle, store, and retrieve. Second, they wish to increase efficiency through improved systems and teleradiology, which will center on the PACS functionality. After looking at 3 or 4 of the major radiology vendors’ systems, the team chose GE Advanced Workstation and PACS system. This decision was made because most of the hospital’s radiology equipment is already made by GE and it is the most comprehensive and cost-effective way for the team to achieve all of the objectives based on cost and efficiency needs. Now that we have our new system selected and our objectives are listed, we may refine our tasks, timelines and assignments to the task leads. Key 9: Tasks & Timelines During this key component of the strategic planning process, roles are redefined or expanded, objectives are turned into tasks, and tasks are delegated to specific Task Leads. The names of the Task Leads are documented so that those responsible for the completion of the task are held accountable for the task outcome. In this step, we do our best to define all of the key tasks, and subtasks. These are often automated in a Gantt chart so the team may follow the process to completions. Example: Task Leaders (Roles) and Task list. John, Project Manager: Task: Oversees all teams as the project facilitator (big picture) Sub Task: Facilitates Meetings 1.0. Jane, Technical Hardware Architect (HW/SW, LAN/WAN, Telecommunications) 1.1. Sub Task: Purchase Hardware and ensure infrastructure support is in place 2.0. Harold, Data Process Modeler (database design, storages, retrieval) 2.1. Sub Task: Designs system architecture 3.0. Shelly, Application Developers (Generally the Software Vendor) 3.1. Works with vendors to ensure GUI interfaces work 4.0. Mark, Software Quality Assurance 4.1. Quality Assurance Documentation Reports weekly, quarterly monthly, annually 5.0. Missy, Information Security Officer 5.1. HITECH and HIPAA compliance by implementation date 6.0. System Representative (Super Users) 6.1. Trained trainers to train staff 1 month before GoLive Strategic Plan 2013. Saint Leo University Page 5
Key 10: Capital Budget Pro Forma A capital budget is a financial plan, generally in the form of a financial (profit/loss) statement that addresses investments – generally large, long-term outlays of cash or credit for purchasing fixed assets. Examples of capital budgeted items would be facilities, remodeling a facility, purchasing medical equipment, or, in this case, purchasing a new health radiology information system (RIS). Pro forma is how the capital investment will perform and forecast the breakeven point and/or profit/loss and the time it will take to get a return on investment (ROI). The pro forma is most often done once all of the financial performance data projections are collected to do the profit/loss and breakeven forecasting models. Therefore, pro formas are generally profit loss at 6 months or 1 year, 2 year out to 3-5 years unless they involve real estate or other large assets, which can extend it much further. Since we are purchasing large capital items (RIS/PACS hardware, software, telecommunication systems), there will be an amortization schedule for the newly purchased assets on the costs of systems. For computer systems, assets usually depreciate over a 3-5 year period. This is because technology changes so quickly. The lifetime of hardware may be five years, but software generally lasts no more than three years. The monthly depreciation cost of our new computer system will be put into our pro forma and financial statements. In our RIS example, we show an Amortization Schedule first. This schedule reflects the monthly payments, interest, and balance for paying off the RIS loan. See the illustration below. You may be familiar with this type of schedule, which is the same as if you were to purchase a home, a car, and so on. Example of an RIS Amortization Schedule and Budget Pro Forma: RIS/PACS Amortization Schedule for Radiology Information System (RIS) – Amortization Table for 1,050,000.00 borrowed on January 1, 2013 [NOTE: The Amortization Schedules and Pro formas will be provided to students for the strategic plans. It is up to the student to interpret and discuss them in their Team Strategic Plans documents.] Strategic Plan 2013. Saint Leo University Page 6
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The second illustration shows how that financed payments are incorporated into the pro forma (radiology department financial statement) to create the profit/loss statement that forecasts the breakeven point and ROI. Every capital purchase must produce an ROI, whether that return increases productivity, generates more revenue, or provides cost savings, since business is bottom-line driven (and health care is a business). This RIS/PACS strategic plan requires a “Capital Budget Pro Forma”: A capital budget is a financial plan, generally in the form of a financial (profit/loss) statement that addresses investments – generally large, long-term outlays of cash or credit for purchasing fixed assets. Examples of capital budgeted items would be facilities, remodeling a facility, purchasing medical equipment, or, in this case, purchasing a new health radiology information system (RIS). Pro forma is how the capital investment will perform and forecast the breakeven point and/or profit/loss and the time it will take to get a return on investment (ROI). Therefore, pro formas are generally 3-5 years unless they involve real estate or other large assets, which can extend it much further. Since we are purchasing large capital items (RIS hardware, software, telecommunication systems), there will be an amortization schedule for the newly purchased assets. For computer systems, the assets usually depreciate over a 3-5 year period. This is because technology changes so quickly. The lifetime of hardware may be five years, but software generally lasts no more than three years. The monthly depreciation cost of our new computer system will be put into our pro forma and financial statements. In our RIS example, we show an Amortization Schedule first. This schedule reflects the monthly payments, interest, and balance for paying off the RIS loan. See the illustration below. You may be familiar with this type of schedule, which is the same as if you were to purchase a home, a car, and so on. The second illustration shows how that payment is incorporated into the pro forma (radiology department financial statement) to create the profit/loss statement that forecasts the breakeven point and ROI. Every capital purchase must produce an ROI, whether that return increases productivity, generates more revenue, or provides cost savings, since business is bottomline driven (and health care is a business). Example of an RIS Amortization Schedule and Budget Pro Forma: RIS Pro Forma, forecast financial statement for RIS over three years with system amortization Strategic Plan 2013. Saint Leo University Page 8
Radiology Department-RIS/PAC Pro forma 2013-2018 Estimated Productivity Increases 1st Qtr 497,640 27% 2nd Qtr 633,360 14% 3rd Qtr 723,840 13% 4th Qtr 814,320 40,000 4,399 2,507 46,906 40,000 4,399 2,507 46,906 40,000 4,399 2,507 46,906 40,000 4,399 2,507 46,906 160,000 17,596 10,027 187,624 200,000 21,995 12,534 234,530 210,000 23,095 13,161 246,256 225,000 24,745 14,101 263,846 250,000 27,494 15,668 293,162 34,320 8,580 6,864 49,764 43,680 10,920 8,736 63,336 49,920 12,480 9,984 72,384 56,160 14,040 11,232 81,432 184,080 46,020 36,816 266,916 228,800 57,200 45,760 331,760 228,800 57,200 48,506 334,506 228,800 57,200 51,416 337,416 228,800 57,200 54,501 340,501 15,000 15,000 15,000 15,000 60,000 19,906 25,000 25,000 25,334 15,000 25,000 28,954 15,000 25,000 32,573 15,000 25,000 122,781 70,000 100,000 60,000 80,000 132,704 60,000 100,000 63,000 80,000 132,704 60,000 105,000 66,150 80,000 132,704 60,000 110,250 69,458 80,000 132,704 60,000 115,763 161,670 165,242 174,290 183,338 684,540 866,290 888,762 917,662 958,883 Capital Expenses ( 1,050,000 Loan) Depreciation Interest Total Capital Expenses 52,500 9,824 62,324 52,500 9,367 61,867 52,500 9,754 62,254 52,500 8,906 61,406 210,000 37,851 247,851 210,000 28,968 238,968 210,000 21,215 231,215 210,000 13,106 223,106 210,000 4,684 214,684 Physician Expenses (Reading Fees) 72,930 98,280 112,320 126,360 476,307 514,800 514,800 514,800 514,800 Total Expenses 296,924 325,389 348,864 371,104 1,408,698 1,620,057 1,634,776 1,655,568 1,688,366 Net Income (Profit/Loss) 200,716 307,971 374,976 443,216 1,660,836 1,697,543 1,682,824 1,662,032 1,629,234 Add back depreciation 52,500 52,500 52,500 52,500 Net Cash Flow 253,216 360,471 427,476 495,716 Accounts Receivable 497,640 633,360 723,840 814,320 Projected Related Revenues Operating Expenses Salaries Payroll Taxes Benefits Salaries, Taxes and Benefits RIS/PAC Maintainence System Maintenance System Updates System Training Total Supplies System Rent (Add'l Sq. Ft.) Maintenance (Contracts) Billing (PACS) Marketing (PACS) Other Operating Total Operating Expenses 15% 8% 0% 0% Year 1 Year 2 Year 3 Year 4 3,069,534 3,317,600 3,317,600 3,317,600 210,000 210,000 210,000 1,870,836 1,907,543 1,892,824 1,872,032 1,839,234 814,320 210,000 829,400 210,000 829,400 829,400 Illustration only: Demonstrates New RIS/PAC Revenue Impact from Increase Automation (Efficiency) and Throughput (Productivity.) Meyer, 2013 Strategic Plan 2013. Saint Leo University 0% Year 5 3,317,600 Page 9 829,400
Key 11: Preparation Planning and Implementation During preparation planning and implementation, the Team Leads and their team may have a series of planning sessions. These sessions need to result in action oriented tasks that achieve implementation for the software application functionality requirements. This includes software specification verification, system build and deployment, training the trainers (super-users) and then training the staff (end-users). Key 12: System Build (Infrastructure) Hardware is put into place, networking and connectivity is completed, applications are installed, and production environments are made ready for end-user training. Software is installed. Data tables are built with the required data elements. Computer conversions are completed with necessary data file transfers. Quality assurance testing is done to ensure systems are functioning as they should. Key 13: System Deployment The key to a successful deployment is to have a good deployment plan. This is when systems design is 100% completed, executed, and validated (tested) to ensure functionality (it works). System Transition (Data Conversion) is the tricky part, which takes expert programmers and database administrators to transfer converted data from one system into the other. This is most difficult when data from the old system (or multiple old systems) must be abstracted, downloaded, manipulated, and then uploaded into the new system. Timing is everything - all data should be captured and uploaded through the very last data transaction event on the very last day of the conversion abstraction. If timing is off or data abstraction, upload, or downloads are incomplete, then there could be holes (missing data) from the conversion in the new database. Additionally, if data elements (field items) that the programmers didn't want to bring over into the new database (because they were junk data, or simply not needed) transfer over, they may corrupt the new database; hence, this is a critical step in implementing new systems. Key 14: User Training and Follow-up Evaluations New and revised training materials must be addressed here. Some systems come with complete, accurate manuals for computer system training and maintenance. If, however, the new system has customized programming or is a hybrid of old and new, then customized computer manuals and training may be required. Either way, internal policies and procedure manuals will need to be written for the technical assistance (IS/IT staff) and for the end users. When implementing any new system, key staff that are chosen to learn everything they need to maintain systems and train the department end users. These Super Users often help to maintain the new systems. During this process, the IS/IT staff and all of the super users identify any quality issues, mapping them out and solving problems in order to optimize the new system! Strategic Plan 2013. Saint Leo University Page 10
References: Bankrate.com (2013). Loan calculator and Amortization. Accessed, January 15, 2013. -calculator.aspx Buchbinder, RN, PhD, Sharon B. Shanks, PhD, Nancy H. (2012). Introduction to Health Care Management (2nd ed.). Jones and Bartlett Learning, LLC. Chapter 5. Chan, MD, MBA, MPH, Stephen. (2002). The importance of strategy for the evolving field of radiology. September 2002. Radiology, 224, 639-648. Retrieved January 15, 2013 from: ec-4 Cohen, MB, ChB, MD, Mervyn D., Lori L. Rumreich, MBA, Lori L., Garriot, Kimberley M., Jennings, MD, S. Gregory. (2005) Planning for PACS: A comprehensive guide to nontechnical considerations. Journal of the American College of Radiology. 2005;2:327-337. Retrieved January 15, 2013 from: http://www.acr.org/ ss/Telemedici ne%20Teleradiology/Planning%20for%20PACS.PDF Meyer, M. (2013). Strategic Plan for Radiology Picture Archiving Communication System (PACS). Finalized May 20, 2013. Saint Leo University. Kaplan, Robert S., Norton, David P. (2008) Mastering the management system. Harvard Business Review. January 2008. Retrieved January 19, 2013 from: http://www.sap.com/community/webcast/2008 03 27 fnb/2008 03 27 fnb.pdf Shim, Jae K. (2000). Strategic Business Forecasting: The Complete Guide to Forecasting Real World Company Performance. [eBook]. Boca Raton, FL: CRC Press, LLC. http://books.google.com/books?hl en&lr &id tVtdbIHTyQC&oi fnd&pg PA1&dq Strategic plan pro forma &ots a-mYxdp5h&sig sEL1G2GKgGpin6xUD VKZ5QuLvY#v onepage&q Strategic%20plan%20pro%20forma&f false Strategic Plan 2013. Saint Leo University Page 11
Strategic Planning Process The Strategic Planning Process In Module 2, your team and you will use the term paper project template to begin doing your project topic research and writing for your team strategic plan document. You will begin by reviewing the template outline and read the example strategic plan provided below.
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