The Role and Impact of Formal Strategic Planning in Public Hospitals

Abstract

In recent years, formal strategic planning methods originally developed for private business have been increasingly adopted by health care institutions, including publicly funded hospitals. Yet, as a technocratic management process, formal planning may seem at first sight to run counter to the natural mode of strategy formation in these organizations where negotiation and mutual adjustment between powerful groups of professionals, managers and government agencies traditionally control decision-making. This article describes an exploratory study aimed at understanding how formal strategic planning has become integrated and adapted into the management practices of a group of 23 Canadian hospitals. The context, processes and impact of planning are first examined over the entire sample of hospitals (descriptive analysis), and an attempt is then made to explain different planning outcomes in terms of a variety of contextual and process design characteristics (comparative analysis). The descriptive analysis shows that in practice formal strategic planning is easily absorbed into the political process: political and symbolic motives often drive the initiation of planning, the processes themselves are highly participative and the resulting plans often reflect the difficulties of obtaining consensus on goals in these complex organizations. The comparative analysis suggests that in general, contextual factors (eg, stimuli behind planning) appear to be more significant than process design factors (eg, extent of participation) in determining outcomes. In conclusion, it is noted that the confrontation between technocratic rationality and professional bureaucracy gives rise to a number of paradoxes that make both the use and the subsequent evaluation of formal strategic planning a difficult task in these organizations.