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What Is Strategic Management in Health Care?

April 14, 2024

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Healthcare clinical staff and an administrator have a discussion in a hospital corridor

Hospital and healthcare facility managers’ jobs are unpredictable — no two days are the same. In the healthcare industry, a new policy or novel virus can challenge an organization’s operations, which is why strategic management in health care is so important.

Strategic planning entails asking where an organization wants to go and what it hopes to achieve, then charting a path to get there. By defining the goals, vision, and mission of a healthcare organization, a strategic plan helps to keep management’s responsibilities simple, measurable, and realistic. Moreover, effective strategic management in health care can keep healthcare staff on the same page, working toward shared goals.

Healthcare managers develop their organization’s strategy for the good of all. Individuals interested in an administrative career in health care should explore educational options that support this career path, such as earning a Master of Health Administration (MHA) degree.

The Goals and Benefits of Strategic Management in Health Care

In a broad sense, strategic management in health care can provide an organization with the guidance it requires to reach its desired future. Organizations need to develop objectives that define their short- and long-term success. A strategic plan aims to accomplish measurable improvement in one or more key areas, such as:

Risk management

Operational budgeting

Company culture

Cost accounting

Capital planning

Long-range forecasting

Services provided

Effective strategic management in health care enables an organization to identify its focus area, allowing it to determine what resources and tactics it needs to achieve improvements. The strategic planning process also helps:

Define the organization’s vision and mission

Identify which areas of the organization warrant additional investment

Prioritize the organization’s most critical issues

Position the organization to compete against other healthcare providers

Make the organization agile and adaptable to changing circumstances

Align organizational goals with stakeholder goals

Keep healthcare workers informed, on the same page, and motivated

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Strategic Management in Health Care: Strategy Types and Levels

An effective strategy applies the skills of an organization’s workforce and its available resources to its day-to-day operations. Strategies can be prospective or emergent.

A prospective strategy applies to future issues that will eventually affect the entire healthcare industry. These strategies focus on what will be needed rather than what is needed currently. Because prospective strategies focus on an unforeseeable future, they need to be adaptable and flexible.

An emergent strategy uses analysis of current and historical data to make informed choices for the future. This strategy type also considers competitors, changes in health care, and market volatility. For example, a new pandemic outbreak or healthcare policy can cause extreme market fluctuations. Public health leaders can leverage this knowledge to prepare for future scenarios in which that could happen.

Levels of Strategic Planning

Strategic management in health care can be applied to one of an organization’s three levels.

Corporate planning involves stakeholders, executives, and the board of directors. Strategies at the corporate level focus on defining the organization’s mission and vision and accomplishing its overall goals.

Business planning involves a healthcare organization’s management. It identifies how managers and employees can help realize corporate-level plans and goals.

Functional planning focuses on relationships between clinicians and patients. Functional level strategic planning covers production, marketing, research, and the distribution of services to patients and clients.

How Strategic Plans Are Created

Creating a strategic plan for a healthcare organization is a four-step process.

Step 1: Initial Planning

During the initial planning step, administrative leaders clearly define the plan’s scope, identify stakeholders and other critical individuals who need to be involved, then develop a planning process.

Step 2: Environmental Assessment

An environmental assessment determines how the organization stacks up against its competitors. It reviews the organization’s historical performance, the trends impacting the organization, potential opportunities, possible threats, and organizational strengths and weaknesses. Environmental assessments source data through surveys, focus groups, data analysis, and interviews.

Step 3: Defining the Future

In this step, senior leadership and stakeholders clearly define the direction they want their organization to go. This means developing clear and consistent mission statements, vision statements, and goals. This definition of the organization’s future should remain consistent. For example, a healthcare organization’s firm stance on ethics in public health should not waver.

Step 4: Finalizing and Implementing the Plan

At this final step, stakeholders and senior leadership implement the plan using metrics to ensure the organization stays on track to reach its goals. Documentation to track progress includes an evaluation schedule, a communications plan, and a scorecard that compares the plan’s performance to its targeted metrics.

Make an Impact in Health Care as an Administrative Professional

Strategic management in health care is critical for organizations to reach their long-term goals and gain a competitive edge. Through savvy strategic planning, hospitals and other healthcare facilities clearly define their vision, mission, and benchmarks with the ultimate goal of improving patient outcomes.

If you aspire to make a difference on the administrative side of health care, explore your educational options, such as enrolling in the Online Master of Health Administration degree program at Tulane University.