Smart Planning for Health Care Reform

By Jim Dean
Vice President

When it comes to health care reform, Washington is like a free-fire zone, with private trade-offs and deals being done in back rooms throughout Congress to get something passed as quickly as possible.

If you are in an industry that is directly affected by the reform and trying to develop a future business strategy, you can probably relate to this line from Bob Seger’s song Night Moves: “Working on mysteries without any clues.”

Monitoring the legislative process is both important and interesting, but committing time, money, or resources in developing or laying the groundwork for a future strategy now could be premature. As an example, some industry organizations that gave their full public support to reform early in the process are now rethinking that commitment based on unpredictable changes in what was originally cast as “reform.”

In contrast to early commitment, this is probably a better time to take a page from General Eisenhower’s strategy book. In fast-moving situations, wait until the last possible moment to make a decision so that you have the most information for a more informed decision.

Companies that can make fast strategic and operational decisions will no doubt have a first-mover competitive advantage over others who delay. Yes, speed is important, but that importance is tempered by a lack of solid information. Now is the time to develop the outline of a revised strategy to implement after reform passes; don’t try to address the outcomes of an unpredictable political process.

Our term for this approach is “rapid reform impact analysis.” The concept is to rapidly deploy a cross-functional team after reform passes to quickly define the impact, timing, and action steps to be taken. This will position you with a solid and actionable competitive advantage based on the facts of reform, not just the forecasts.

What are the steps needed to conduct this impact analysis?

1. Identification and timing of specific legislation impacting your current market. This legislation is complex and intermingled with previous and parallel legislation. It will be important to have access to legislative experts to identify which specific parts of the reform directly affect your business and the time frames in which it will occur. Insight into the regulatory process will also be important. This stage will create an inventory of legislation that must be followed and will set the targets and pace of action needed.

2. Determination of the impact to your industry. Taking the inventory just developed, the next step is to drive out specific potential impacts. Will it limit the market you now sell to? Does it open up other potential markets to take advantage of? Will the changes drive you to get out of this part of the business because of loss of profitability?

3. Competitive impact. Will these changes hurt or improve your competitors’ capability? Do their government relationships and size give them a competitive advantage, or do you have it? Are the changes so dramatic that you should sell or buy your way out or into the market?

4. Business model changes. How will the reform force changes to your business model? Will new regulations make it too expensive to run? Alternatively, could they increase your access to markets (through exchanges, for instance)? Will you need to reform the structure of the products you offer? Will pricing models need to change?

5. Action steps to take. By taking the timing of changes from the first step and combining them with findings from the next three steps above, a road map of action can be developed.

This may involve everything from plans to sell a portion of your business to acquiring new books of business. Other action steps might include attempting to influence the regulatory process or re-developing your distribution, structure of products, or pricing.
Adopting just-in-time planning can be the best course of action when the future, as it is now, is uncertain. When the fog clears, however, fast action will be imperative.

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