STRATEGY
Could Scenario Planning Help Prepare You for the Next Phase of the Pandemic?
Projecting different scenarios has helped various industries, including healthcare, plan for the future.
As COVID-19 emerged as a pandemic in early 2020, hospitals and healthcare systems showed tremendous resilience and ingenuity in dealing with a rapidly unfolding crisis rife with uncertainty. Would scenario planning have mitigated some of the toll taken these last two years?
“If this scenario, a pandemic, had been presented and agreed upon, it might have put healthcare in a position to be better prepared,” said Neal Peyser, president of Healthcare Continuum Advisors in Oak Park, Illinois.
“Healthcare wasn’t the only major industry that failed to anticipate and plan for the possibility of a pandemic, but if we had really been doing good scenario planning, that should have been one of the scenarios considered,” said Peyser.
Scenario Planning: What It Is, What It Can Do
Scenario planning has been used since the 1970s as a tool of strategic planners to manage the uncertainty of the future, taking into account that trend analysis has its limitations: The path ahead doesn’t always stem from what makes sense at the moment.
“A lot of plans look at probabilities, such as bell curves—the median and a few standard deviations from the median. But we tend not to look at the tails. Scenario planning forces you to consider what might happen to the tails,” said Peyser.
“In our own definition, scenario planning is a form of a strategic long-term planning process that acknowledges and addresses ambiguity and uncertainty to prepare an organization for whatever future comes to pass.”
For example, before the energy crisis that hamstrung many Western countries in the 1970s, Shell Oil Co. had already seriously considered the scenario of an oil shortage; hence, it was prepared when it happened.
“They looked at the macroeconomics, the supply, who owned oil and how it was sold around the world, and created a scenario where a shortage could occur. So, they had some steps in place to follow when it actually came to pass,” said Peyser.
In contrast, in the mid- to late-1990s, many prominent and successful hospitals built their programs around open-heart surgery; they failed to consider disruptive developments such as less invasive angioplasty and stenting as well as completely noninvasive statins.
“They didn’t plan for those scenarios and became irrelevant almost overnight as the need for open-heart surgery fell dramatically,” said Peyser.
A more current example of successful scenario planning took place at Mass General Brigham (MGB) in Boston, which acquired a small health plan in 2013 and set to work plotting out scenario-based strategies for an integrated plan provider system.
With the help of a hired consultant and input from internal stakeholders and experts in a variety of areas, David McGuire, former vice president and current senior advisor of MGB, and his team came up with four potential scenarios of how the health care market might change over the next decade:
- The status quo would hold for the next decade, with a slow shift into population health.
- The cost of healthcare would escalate at two to three times the rate of inflation, and the government would step in with its own solution (e.g., Medicare for All).
- Accountable care organizations would evolve to where the provider community coalesces into large groups capable of managing populations and taking risks.
- The world would evolve to where payors drive the scenario, deciding what gets paid for and how much.
“As we discussed these scenarios with leadership, we had executives vote on which scenario they thought most likely. This created buy-in and a collective view on what they thought the future would be,” said McGuire, noting that the only thing everyone agreed on was that scenario number one—that the status quo would hold—would not pan out.
The planners also quantified the financial impact of each scenario, and pondered strategies that would position them well across a variety of scenarios, reporting back to leadership yearly with a list of developments. Ironically, the scenario that has evolved to date is closest to the one unanimously rejected: The status quo has more or less held.
“That doesn’t mean it will continue, but this has been an incremental process with costs being reasonably well-contained in our market,” said McGuire.
Should a Pandemic Prevail
A potential pandemic has been on the radar of scholars and scientists dating back decades. Laurie Garrett’s The Coming Plague published in 1994, was based on 10 years of research. More recently, in 2017, a group at Johns Hopkins developed a pandemic scenario.
“They were off by a couple of years, but it’s breathtaking how closely the details of their scenario matched the reality of COVID-19, including identifying the disease as a novel coronavirus that would erupt into a global pandemic and would spread by both symptomatic and asymptomatic carriers through respiratory droplets. They described who would be at risk; recommendations from the World Health Organization, such as need for social distancing and isolation of infected; the potential for a vaccine within a year accompanied by inefficiencies in distribution; political divide regarding the virus circulated on social media; and broad economic implications,” said Peyser.
Had healthcare systems and hospitals embraced the pandemic scenario, they could have taken lifesaving steps, starting with planning for potential supply chain shortages rather than relying on the “just-in-time” supply many industries embrace, keeping on hand only what’s needed to meet immediate demand.
“Let’s say we need X number of ventilators now and can project that out 20 years based on demographic information, but purchase a few more, or perhaps collaboratively with others a few hundred more. It’s going to be a cost for us, but it will save lives. Same thing with personal protective equipment,” said Peyser.
Scenario planning might also have helped healthcare organizations plan for increased workforce demands, figure out ways to reduce delays in care for non-pandemic patients and shore up financial reserves.
But this raises the question: If prominent organizations and individuals (e.g., Bill Gates in a 2015 TED talk) have been sharing pandemic scenarios for more than a quarter century, why weren’t healthcare organizations more prepared?
“Some institutions had plans in place in the event of a pandemic, and this kind of virus in particular was considered. But I don’t know if their scenario planning reached senior leadership. I suspect it did not,” said McGuire.
This, said Peyser, is where strategic planners really play a key role, “Particularly at an academic medical center affiliated with a university, you’re part of the health system’s management team—as opposed to the university or faculty—so it’s really in your purview to bring some of these ideas to the leadership of the organization.”
“When scenario planning is done well, it gets you out of your personal biases and forces you to look differently at the future. That’s what I hope people start to do more of.”
This article features interviews with:
Neal Peyser
President
Healthcare Continuum Advisors
Oak Park, Illinois
David McGuire
Senior Advisor
Mass General Brigham
Boston, Massachusetts
