Healthcare Strategy
Orlando Alvarez joins the podcast to discuss his work in healthcare strategy. In the ever-evolving healthcare industry, strategic agenda management (SAM) can create a framework to measure the success of specific strategies. Orlando explains the benefits and functions of SAM, along with his insights from two decades of healthcare experience.
TRANSCRIPT
S1 00:07 [music] Welcome to BRG's ThinkSet podcast. I'm your host, Eddie Newland. BRG is a global consulting firm that helps leading organizations advance in three key areas: disputes and investigations, corporate finance, and strategy and operations. Headquartered in California with offices around the world, we are an integrated group of experts, industry leaders, academics, data scientists, and professionals working beyond borders and disciplines. We harness our collective expertise to deliver the inspired insights and practical strategies our clients need to stay ahead of what's next. For more information, please visit thinkbrg.com.
On today's episode of the ThinkSet podcast, we'll be speaking with BRG Managing Director Orlando Alvarez Jr. Orlando is part of BRG's Healthcare Performance Improvement practice and has twenty-seven years of experience in the industry. Orlando is a recognized thought leader and innovator in the field of healthcare strategy and business development. Prior to joining BRG, Orlando served as the chief strategy officer for Cleveland Clinic Florida.
On today's episode we'll be speaking with Orlando about strategic agenda management, or SAM. SAM is a tool to help healthcare and other organizations overcome the traditional pitfalls of strategic initiative implementation. We cover the adoption of strategy at a high level and what he has found most challenging in his career. And with that, let's get started.
Orlando, thank you so much for joining us on the ThinkSet podcast today.
S2 01:48 Thank you. How are you today?
S1 01:49 I'm doing really well, and I want to jump right into it. To start with, give us a little bit of background on how you ended up here at BRG.
S2 01:56 Sure. I've been working in healthcare strategy for about twenty-eight years now. And I have been working mostly for investor-owned and not-for-profit hospitals across the country. For the past ten years, I really focused on strategy development and deployment and transaction work, really, in the M&A space. I frankly wanted to kind of leverage all that experience and really use that to help other folks. And so I thought going into consulting was probably the best way to do that. And I've been with BRG going on two years.
S1 02:28 And one of the things I know you work on here at BRG has been strategic agenda management, or SAM. Can you tell us more about this approach and how you went about developing it?
S2 02:38 Sure. So, while the approach to this work that I have developed here at BRG is certainly unique, the idea of focus, prioritize, strategy, objectives has been around for decades. Most notably in the post-World War II period, when the concept was first adopted in the United States, and it was borrowed from Japanese manufacturing in the 1950s, and first adopted by Procter and Gamble. And at that time it was known as OGSM, which stands for objectives, goals, strategies, and measures.
In the 1980s, Andy Grove, one of the founders of Intel, updated the concept to OKRs, which stands for objectives and key results. The point is that organizations struggle with strategy execution.
Harvard Business Review did a study in late 2017 that cites that CEOs acknowledged the fact that 40 percent of their strategies' potential is often lost through breakdowns in execution.
So while the monikers have changed—OGSM, OKRs, and now SAM, which stands for strategic agenda management—the idea of a framework for prioritizing and measuring the success of implementing a strategy is essential for an organization in order to grow and thrive. In the case of SAM, it was really born out of the work that I led at Cleveland Clinic Florida, where, using the elements of OGSM and OKR, we developed our healthcare relevant iterator of this framework. And the framework is really about declaring, managing, and measuring strategic initiatives. And since joining BRG, I have further refined the work that I did at the Cleveland Clinic and developed some really great tools and processes to assist organizations in implementing SAM.
S1 04:16 So you touched on it. Why is SAM particularly important for healthcare providers right now?
S2 04:22 Yeah. It's almost a—well, it is a cliché that healthcare is in a constant state of change. But the reality is that there is a heightened, never-ending sense of disruption in healthcare. There's a military term that applies to the healthcare industry, and that is that healthcare exists in a VUCA environment, which stands for Volatile, Uncertain, Complex, and Ambiguous, mostly driven by economics.
Healthcare GDP is projected to balloon to 19.4 by 2027. That's close to $6 trillion annually. And while the spend per capita on healthcare in the United States is more than many industrialized nations, our outcomes don't reflect that spend. As a consequence, the government has taken a more draconian tact in terms of mandating reductions and cost, improving quality. These factors require organizations to be laser focused, with the highest degree of success probability, deploying their strategic initiatives with less resources in a very highly competitive environment.
S1 05:25 Well, that's a lot of potential for loss. It makes sense why SAM is so helpful for healthcare providers. It betters their chances in implementing whatever strategies they've got going on.
S2 05:34 That's correct. And it's really interesting, because [in] healthcare you have a lot of clinical folks, physicians, researchers, and all of them have myriad number of initiatives that need to be funded, that need resources; and the economic pressures on healthcare systems continue to be very volatile. And so the resources that they have and the ability to fund projects is very limited. So it really requires a very disciplined, laser-focused approach on making sure that the investments are made not only in alignment with the overarching strategic imperatives for the organization, but it also requires them to be very disciplined in terms of how they prioritize and identify those.
S1 06:20 So describe to me then how SAM works and maybe some of the pain points that it helps eliminate or [how it helps] alleviate some of that potential loss when it comes to strategy implementation.
S2 06:30 Yeah. It's really interesting in the context of healthcare in particular when you think about organizations. What SAM does is really create a framework where an organization could be very declarative about the agenda and priorities. And just as important as being declarative about what the priorities are, it's also making a statement about what's not a priority.
And so it really facilitates and focuses the organization by stating the things that they're going to do and, just as important, as really articulating what is not going to be the focus in the short term, because a lot of times organizations are trying to accomplish so much. And in the world that we live in, where data and information, big data—how changes in healthcare are almost on a daily basis occurring—it really is important that organization understands, "These are the areas we're going to focus on, and we're not going to really focus on these other areas."
It doesn't mean that they're not a great idea. It doesn't mean that they are not worthy of attention and focus, but they might not be in direct alignment with the objectives of the organization.
SAM, in kind of the most broad definition, is really setting that agenda for an organization and setting a prioritization of those initiatives. It includes multiple stakeholders, and the little S—strategy—around SAM is that it really creates a context for collaboration across the enterprise. Healthcare tends to be siloed. You have clinicians, you have operators, you have finance people, you have strategists, and they typically work in silos. And so having people collaborate around deploying this initiative is really a very fundamental outcome of this process.
And the idea is that you have people sitting around the table, whether it's financial folks, clinicians, front-line caregivers, administrative and operational types, really thinking about, "Where it is that we need to focus and prioritize our growth initiatives? And how do we build a plan for measuring the success?"
And the other important component of SAM is that you're not only declaring what your initiatives are, but you're also holding yourself accountable, because every initiative has a key performance indicator—KPI—as a metric, has a way of defining milestones so that you can measure where you are with those initiatives.
So it starts by declaring the overarching prioritization of the organization, what they want to achieve, and it could be something like reducing length of stay or improving a quality metric or growing market share. They could be that diverse.
And what SAM does is, it provides the tools for developing those initiatives and those plans in the context of executing on the process. So it uses elements of Lean. It's a cascading plan that really touches all the caregivers within an organization. It gets people to collaborate and sit around the table and agree to these projects and how these projects are going to be deployed and how they align to the overall strategy of the organization.
A lot of times, what you find in healthcare organizations is that you have different departments, different clinical areas working on their own projects and their own initiatives. And they really don't connect to the broader organization. So it's important that given finite resources, given the changes in the way that the economics and healthcare are working, having the entire organization understand what everyone's working on is really important, and SAM helps deliver that.
S1 09:53 Now I know you've been involved in a number of healthcare engagements, and I assume each one is different and unique in its own way. When you're looking to implement SAM, or you want a provider or an organization to adopt SAM to help them implement their strategy, who is your ideal collaborator from within the organization? Is it in the finance or strategy department?
S2 10:11 Yeah. That's a great question, and this is something that is really important to emphasize. SAM is not a substitute for your daily typical operational metrics, the things that you use to make sure that your organization is functioning efficiently. This is really around growth strategy initiatives or things that they want to make investments in that tie to the strategic plan. This has to have buy-in within the entire organization. And so executive leadership endorsement and sponsorship is really key to the success of SAM.
A lot of times, I come in, usually it's the CEO that is kind of the leader, working closely also with chief strategy officers and heads of strategy or focus to strategy-like work within smaller organizations. It needs to be that kind of leadership and sponsorship, because it's important that system-wide or organization-wide it's very clear that this is a kind of endorsed process. It really helps with breaking down the silos. It forces groups to be thoughtful in details about their strategies.
Clinical folks a lot of times are not financially minded. Sometimes not aware of kind of lean processes or how they can do things develop a business plan for instance. And what SAM does, as part of its kind of rollout, it teaches some of these clinical folks that don't have the financial acumen or the understanding around Lean and really helps them and to coach them on developing their initiatives. All initiatives within SAM are in a term that's from Lean that's called an A3, and using smart goals, which are all organizational development frameworks for really declaring and stating your goals in a way that can be actionable and measured.
A lot of what happens through the process of deploying SAM is to teach front-line leaders, directors how to really go through this process and develop these goals and initiatives that are in a context that can be measured. It's not just about prioritizing objectives. It's not just about measuring what you're doing, which obviously is very important, but it also creates a context where you can develop the skills of some of your leadership to be able to work in an environment where you have less resources, where you need to prioritize and to really think about objectives and goals that tie to the overarching strategies for an organization.
S1 12:25 Now—and working with the CEO—do you typically come in after—say we're sitting here in 2020, systems developed a strategic 2030 or 2040 plan, and then we bring SAM in to help execute? Or is it something where in a perfect world you would come in and help develop that long-term strategic plan with SAM in mind so that it can fit in? I imagine it goes both ways. But what is most typical when you're working out an engagement?
S2 12:52 If an organization already has a strategic plan, and they're getting ready to deploy it and they really want assistance around deployment, SAM can be a standalone offering, and it's really kind of agnostic to what the strategy is. It's really the framework and really implementing that framework.
But to your point, the ideal situation is where you are building the strategy and the strategy focus with the idea that you will implement in a SAM-like framework. In the best of worlds, you would have the opportunity to impact the way that the strategy is being developed. Because a lot of these ideas around prioritization of objectives that align to the overall strategy of the organization can really be accomplished in the planning process, where you want to be able to have longer-term vision and to be able to be aspirational in some of the strategy that you develop.
You also have to be very practical at the same time in terms of what the resources and capabilities of an organization are to be able to execute. So having that point of view as the plan is being put together is really helpful and accelerates the ability to implement it in a SAM framework. In an ideal world, you would have that ability to influence the way that the strategy is being developed, but you don't need both. This framework can be used for a single project, or it could be used for an entire healthcare enterprise.
S1 14:14 As you talked about earlier, in healthcare in particular there are a lot of silos—whether it's clinical, finance, strategy—a lot of people operating kind of on their own. And when you've got the responsibilities that comes with healthcare providers, it makes a little sense why they might be more siloed than your traditional organization. In your experience, what has been the most challenging thing for healthcare programs when implementing SAM?
S2 14:36 Well, obviously if you don't have buy-in from the leadership, it becomes very, very challenging to implement this. So that's almost a must-have. The organization needs to be very clear about their short-term initiatives. And sometimes you find there's disconnect between financial folks and operational folks and the leadership of the organization.
And so a lot of what I do in the beginning is really spend time with the key stakeholders, the leadership—whether it be the C-suite or some of the service line clinical leads—to make sure that there is alignment across the management structure around what really the priorities are for the organization. Being very clear about those and articulating those is really a critical factor to being successful in SAM.
And then, like I mentioned before, other challenges are varying acumen among the next level of leadership down to your department directors, your vice presidents, and some of the clinical folks implement this. That could be a challenge, and then obviously we accommodate for that as we think about how we deploy and, frankly, the overall success.
S1 15:36 Are these challenges different in the US compared to the rest of the world when it comes to the healthcare system? Could this be used to address other countries in different systems?
S2 15:45 I've been having some conversations with folks in the United Kingdom. BRG has this healthcare presence in the United Kingdom. And I've been talking to potential clients, folks who are interested in SAM.
To answer your question, this is not limited to the US. I mean, when you look at, for example, the UK and the National Health Service, they're having to do more with less and have to be very focused about what resources they use.
So a SAM framework is something that would be very appropriate and be on healthcare in general. This is born out of manufacturing. This idea of strategic prioritization and metrics. It really applies to any organization, and I think that as we move more into a digital world, as we move more into kind of ever-changing economics of business and discipline, it's very valuable. Now for some reason, healthcare tends to be a lagging industry in adopting this change.
S1 16:35 We like to close our podcast with a prediction or look forward. As the healthcare landscape continues to evolve and exist within an always-changing and, as you termed it earlier, VUCA environment, can you make a prediction about the way SAM might be used in the future—particularly how it could work alongside the digitization of the industry?
S2 16:51 I think the elements of SAM, which are basically steadfast in the idea that an organization has a finite number of resources and that the deployment of strategy and initiatives for growth need to be laser focused, that need to be well thought out and utilizing resources and having a high confidence level in terms of success. I can see in healthcare in particular, as the reimbursement continues to decline, where there's more of an emphasis around outcomes and more of an emphasis around the value of healthcare; and as the economics continue to shift, having a framework that will allow people to really focus in and be very smart and have a process by which you weed out those things that might not necessarily be priority objectives at the time, I think will be invaluable.
And I think it's only going to be more of an acute issue moving forward. The government is going to continue to reduce costs. There's a term called plan or be planned for. So the idea is either you can plan and make change and adapt or someone is going to plan for you. And so the idea being that the government will plan for you unless healthcare providers start to be more forward thinking and thinking about how they can put their arms around this new paradigm.
S1 18:07 Hey. Well, Orlando, thank you so much for joining us today on the ThinkSet podcast. We look forward to catching up with you soon.
S2 18:13 Great. Thanks for your time.
S1 18:15 This ThinkSet podcast is brought to you by BRG. You can subscribe to the podcast and access other content from ThinkSet magazine by going to thinksetmag.com. Don't forget to rate and review on iTunes as well. I'm Eddie Newland, and thanks for listening.
The views and opinions expressed in this podcast are those of the participants and do not necessarily reflect the opinions, position or policy of Berkeley Research Group or its other employees and affiliates.