All posts by Nate Hagstrom

Chair of Pediatrics at Lehigh Valley Health Network and, Physician Executive for the Children's Hospital at Lehigh Valley Hospital

Strategic Planning and Hoshin Kanri

In health care we are facing a change in our collective theory of business. Peter Drucker wrote about the need for organizations to test and adjust their theory of business from time to time (HBR 1994). Checking three main assumptions needs to be a regular if not ongoing part of doing business: assumptions about the environment, about the mission of the organization, and about the core competencies needed to achieve success. Drucker suggests that the assumptions in all three areas must fit reality, fit each other, and be constantly tested.   An organization’s theory of business must receive preventive care using two interventions: abandoning parts of the business that are no longer needed for success and studying non-customers. There must also be early diagnosis of holes in the system. One of the early warning signs is unexpected failure. The other warning signs include unexpected success, rapid growth and attaining the current vision. In health care there is no shortage of unexpected failure. Time to check our assumptions.

The concept of strategic planning is well known to most leaders and managers. It’s a process whereby the organization aligns and coordinates its efforts towards the achievement of shared and cascading goals and objectives. This planning is formulated after careful consideration of shifts in the environment, namely competitive and consumer related, but also political and economical. Another important consideration is the gap between current performance and desired performance. And finally, given limited resources and seemingly unlimited possibilities, decisions based on business priorities and values are made, which typically requires guiding principles and a process for decision-making.

Across organizations approaches to planning differ and within organizations the approach may differ from one period to the next. Differences arise from a variety of factors including leader preference, recent events, culture, and whether the last strategic plan was considered a success or a failure. An organization could decide not to have a strategic plan, others might keep it very simple providing just a framework or keep it very focused on one decision, such as a merger or acquisition. Others may choose to get detailed and include tactics and describe specific projects. Regardless, all need to follow the hoshin kanri principles of direction management: 1) focus on shared goals, 2) communicate goals to all leaders, 3) involve all leaders in planning to achieve the goals and 4) hold participants accountable for achieving their part of the plan.  There are two fundamental tools used in the hoshin kanri approach: 1) hoshin tables, and 2) periodic reviews of progress.

The Baldrige Award is typically given to those organizations who are adept at horizontal and vertical deployment of their strategy (DA Garvin HBR 1991).  They have an element of hoshin kanri in their strategic planning and execution .


The enemies of transformation, the secret weapon and how to use it

Having been out of training and working in the real world of academic health care for only 16 years, I hesitate to make judgments or conclusions. Instead I make hypotheses or formulate theories. Having only 24 hours in a day, I can’t test every hypothesis. Thus, I have presuppositions.  My three presuppositions below describe the enemies of transformation, the secret weapon of trust and the means to acquire it

The first presupposition is that we have four enemies in health care: Hubris, Cacoethes Carpendi, Seorsum and Avaritia. Hubris speaks to the collective and individual excessive confidence and arrogance that is prevalent among health care professionals and organizations. Cacoethes Caprendi means compulsive habit for finding fault, which refers to the blaming culture that can be found in health care organizations with regularity. Seorsum means apart or not together, referring to the lack of alignment and the inability to integrate varied self-interests into shared goals and values, and (most importantly) shared expectations of behaviors and results. Avaritia is latin for greed. Greed is the elephant in the room no one seems to want to address (not addressing it may lead to it devouring us). Some don’t see these four as enemies, and some don’t see they exist in the first place.   There is variable penetration to be sure, but they are there.

The second presupposition is that trust is lacking in health care organizations today, which makes everything from timely decision-making to efficient and effective teamwork elusive. Have a vision? Great! Have a strategy? Good for you! Have an execution plan?   Wow, impressive! Have trust in your organization? No? Then forget it.  The lack of trust hypothesis is harder to test, because trust lies under the surface. I’m convinced it’s a real problem. Those organizations that work on building a trust culture will adapt to external forces of change faster and more successfully. Trust is the secret sauce or weapon (I prefer the weapon metaphor when it comes to fighting enemies).

The third presupposition is that leadership in health care is lacking capacity.  I attribute this to my Intelligence-Ego Ratio theory.  An individual’s leadership is more effective if their intelligence is greater than their ego.  The optimal ratio is 2-3 (2-3 times more intelligence than ego). It’s counter-productive in the long-run to be <2.   One with a ratio of <2 may get placed into a leadership position.  However,  the organization’s success will have a ceiling.   One with a ratio of >3 will find it hard to get recognized as a leader, but long-term success is more likely.   This theory essentially states that intelligence is incredibly important, but if you let your ego trump your intelligence, you’ll eventually look like an idiot.  Humility is key to being the best leader one can be.  It drives a desire to continuously improve every day.  It allows you to be more open to learning from mistakes or miscues.  It allows you to build trust.

Intelligence doesn’t just mean mental capacity or complex problem-solving abilities. It also means the insatiable desire to learn and continuously fill the head with data, information and experiences (not just your own).  It also refers to emotional intelligence, the capacity to understand where you are and where others are with regards to relationships; relationships with self, others, the organization and society.  Intelligence essentially refers to the capacity to expand your awareness and perspective larger than anyone else around you.

So, what do we do about these presuppositions?  Take the following steps: 1) Increase awareness regarding the enemies, the secret weapon of trust, and the importance of the right leadership, 2) Embrace humility as organizations and as leaders, 3) Be resolved to succeed, persevere and do the right things, 4) Accept the need to change, 5) Drive change through continuous improvement, 6) Have relentless focus on mission, vision, values and principles, and  7) Get results on the most important shared goals.  If you aren’t getting the right results, then go back to 1 and start over.

Physicians as Leaders

The ACPE has just published a white paper on the value of physician leadership by Peter Angood and Susan Birk (may-june-white-paper-(small)) . I would encourage leaders from all disciplines in health care to read it. In addition to nicely illustrating the value of physicians participating as leaders, it provides insights as to how physicians  can be better leaders, and suggests the journey that they must go through to get there. For non-physicians to understand the journey could be valuable as well.

Physicians are typically intelligent quick learners who are outcomes-driven and often innovative problem-solvers. However, their training and the skills that often make them great physicians can get in the way of their ability to lead. The white paper shows a table from an October 2012 issue of Trustee magazine. The table compares the nature of medicine to the nature of leadership. For non-physicians to understand where physicians are coming from during those crucial dialogues could help turn those discussions into collaborative learning. Physicians who want to be better leaders ought to study this table as well. It points out that to go from practicing physician to physician executive, one must give up autonomy and isolated problem-solving for collaboration and narrow scope and predictability for broad perspective and ambiguity.


Children’s hospitals are blessed with committed and compassionate physicians (many of whom were also likely to be in the top 10 of their graduating medical school classes). These physicians often have great ideas and are often very engaged. They have a strong desire to help their institution solve problems. These same physicians are also used to dealing with relatively well-defined problems (and if they’re not, making them so before tackling them). They are also used to receiving lots of thanks and praise from others (or at least a sustaining dose of it). As a physician makes the transition to leadership, they will find themselves dealing with messy problems that are ill defined and have no simple easy clear answer. They will meet resistance to change, complaints about all sorts of things and very little thanks.

We need physicians to be leaders at all levels. For some they will struggle to make these shifts, but they’re input and participation is still valuable. For others it will take them time, but their other strengths make the waiting worthwhile. And then for some, the transition will be successful enough to allow them to be great leaders at a time when we need great leaders. The challenge for those physicians will be to stay connected with their clinical past in order to maintain their credibility with those physicians who continue doing the great work of delivering and continuously improving health care.

A few physician leaders will need to be more transformational leaders than transactional leaders.  The best leaders will recognize the value of both approaches and be adept at both.  Yet, they will tend to the transformational.  These leaders will meet more resistance, perhaps to the brink of rejection, and less thanks, even in the face of success.

A leader who has a transformational North Star with a principle-centered approach grounded in the power of relationships and collaboration is what is needed in today’s dynamic and uncertain health care environment.  To persevere s/he will need to embrace humility and servant leadership.

-Thanks for reading, Nate



A Note on Health Care Reform and Children’s Health Care

The affordable care act was designed in part to reduce health care costs.   A principal strategy is to bring the issue of cost per “unit” of care to the table of decision-making in a much more transparent way, while shifting the burden of costs more directly to those receiving the care (the patients) and to those delivering the care (the providers). The presupposition is that if the patients share more of the cost they will utilize fewer health care resources and if the providers share risk they will make health care delivery more efficient and safe, with less overuse and waste.  With price as a more prominent driver of consumer choice, prices will drop in a competitive market place.  Disruptive innovations will be encouraged.

So, what does this mean for us involved in delivering children’s health care?  It means that in addition to improving health increasingly more effectively and on a larger scale, we must also lower the cost per unit of care.   Preventive care, subspecialty care, treatment of acute and chronic illness, procedures, and many of the things we do to help our patients, we must do at a lower cost. Preventable harm and complications, reworks and duplications of care, and inefficient use of people and resources must be minimized.

We have been rewarded on volume (fee-for-service) for a very long time. Our systems, processes, and the way we think are all geared towards producing high volumes.  Many physicians’ compensation is largely dependent on this one measure of work. This has created a way of doing things that will make it difficult for many health care organizations to do well in the new order of health care, whenever that might arrive.

And therein lies the conundrum, when will value based purchasing truly arrive?  Some are thinking it will be years and its best to not change things until it arrives.  What do you think Children’s Hospitals ought to do to position themselves for the future?

I for one think children’s hospitals need to lead the way.