I did not choose to write some witty year end posting that wrapped up the major ideas of 2010, assuming that you did not need my HITECH commentary set to the beat and meter of Jingle Bells. 

The other gadget used by folks who write from time to time would be to make some exciting predictions for 2011. Looking at the grocery store tabloids that specialize in this fare, I have learned that the secret, apparently, is to simply make so many predictions that one of them is bound to come true.  That one, then, is all the writer ever recalls making.  I could do that, but my research in the checkout aisle suggested I would have to predict which celebrity would have a baby fathered by a space alien, and is a bit off from our focus here.

After watching too much football over the past month and chuckling at how many of the so-called expert predictors have a .500 record or worse, I realized that maybe the entire prediction angle was not the right approach. 

If I had attempted to make predictions for 2011, there would have been much in there about ‘strategy’ and the big decisions healthcare organizations will be making.  As a recovering consultant, strategy is one of my hobbies. As a CEO, strategy is not only a passion, but one of the bullet points on my job description.  You really cannot escape making predictions if your job requires that you lead or participate in the strategy setting process.   Those who set strategies must make fundamental assumptions, predictions if you will, about the future.

Besides my personal interest in all things strategic, it would have been a fairly safe bet to predict that we’d see a lot of strategic moves in healthcare during this coming year.  The entire industry is roiling from government actions, market forces, technological innovations, demographic changes, and the lingering sluggishness in the economy.  But something that generic would not have been very brilliant, would it?

What, then, do you do if you are a practice owner or a healthcare executive at the beginning of 2011 and you have to make some strategic decisions this year about the future of your business? 

Do you assume the repeal of, or major changes to, ObamaCare?  How about incremental delays due to the ongoing political wrangling?  Do you move forward assuming the HITECH money will really be there?  Will payouts resemble the cash for clunkers program, or will the checks actually clear? Will ACOs really happen, and more important, will anyone ever actually define what the heck an ACO is?  Will clinical integration move from a few pilot projects to the mainstream?  Will new reform-minded governors fundamentally change Medicaid in their states?  If so, what does that mean?  And what about the overall economy?  Where is that headed?

I’m just getting started and my head already hurts.

If you are thinking hard about your strategy (and if you are not, you are either a little slow on the uptake, about 12 months from retirement, or enjoying a nice, long post-holiday nap), what in the world do you do?  What do you predict will happen so you know how you should respond?

With this number of really, really large macro issues in flux, the probability that you could get them all right is about as low as a misspelling on the product in an M&M factory.

Unfortunately, many people stare hard into this level of environmental uncertainty and decide to punt on thinking about strategy at all. 

Late last year, I had a 45 minute conversation with a physician about the strategy for his practice.  The conversation started well and he was a smart guy, engaged in the discussion. But I could see him starting to melt.  The number of things that could obliterate his practice, all of which were out of his control, was just overwhelming.  Finally he said, ‘Thanks for coming.  I enjoyed the discussion. Now I’ve got to go see some patients.’  That was it.  He was done.  He decided, unconsciously, that his strategy would be to just see some more patients.  He’ll wake up the next day, and the day after that, no closer to taking the kind of action that could change the glide path of his future. 

I understand the sentiment, especially for physicians.  If you can’t seem to make sense of the world around you, much less influence it or control it, then just losing yourself in patient care seems like the best thing to do.  It is what you do well, it is your passion, and after all, this strategy stuff is supposedly about helping us better care for patients, right?

Rather than think about merging your practice with others, or pressing to get to clinical integration to get some market leverage and a seat at the table; or making a big investment in EHR and using technology to fundamentally change how you operate; or even selling your practice to the hospital, just go see some more patients.

Is that the smartest approach?  Probably not, but what else are you going to do?

Here is a thought and a way to navigate the dangers of this whole prediction thing.

In a recent article, some smart guys at McKinsey talked about a framework for making strategic choices and outlined three types of decisions that can be taken.

• ‘Big Bets’ are those really significant decisions that are going to change the course of your business and redefine your future.  These are accompanied by large investments of time, money and energy.  You don’t make many of these over time, but they are decisions that you are ready to make, in spite of the market uncertainty. 
• 'No Regrets’ are those decisions that require a lot of commitment and investment, but make sense in any likely future scenario for your business.  The reason there is not a lot of risk is because you’d do these things, regardless of which way things break.
• ‘Options’ are decisions made now that require some minor investment today, but keep open your choices for the future. They position to you for maximum flexibility.  It is not the same as doing nothing, but rather doing a little, but doing it strategically so you have more alternatives later.

Thinking about your strategic decisions as Big Bets, No Regrets and Options changes how you have to approach the ‘predicting amidst uncertainty’ risk.

There are Big Bets that need to be made and many physician organizations will be ready to make them in 2011.  For these organizations, the landscape, while not perfectly clear, has emerged enough that ‘bet the farm’ decisions can be made and must be made.

Just in our little corner of the world, we know of an IPA at an impasse with a major payer and the Big Bet decision point has come. The group will either become more tightly aligned to be able to push back, or they will elect to play ball on the payer’s terms, securing patient volume, but at a much lower price.  

Another group splits between two competing health systems and the time is right to cash in toward one side or the other with a redefined relationship that will secure their future.

Another loosely aligned group has seen an erosion of leverage over the past few years and better throw a Hail Mary in 2011 or they’ll recede into total irrelevance.  

Yet another is sitting on some cash that is normally distributed to the physicians and must decide if they do that again or invest big in technology to try and create a virtual integration model that gives them legs for the future.

Big Bets change the game.  Sometimes for good and sometimes for bad, but by definition, these strategic decisions alter the set of futures that are available.

One interesting thing about Big Bets is that the ‘when’ sometimes matters as much as the ‘what.’  Generally, the window for these opportunities is open only for a small time. 

With all that is going on around the physician world, it is a safe prediction that 2011 will be the right time for a Big Bet by many practices.  It would not be so safe to predict which will get the Big Bet right and which will blow it, though we can predict with a high degree of certainty that there will be some of both.  That is why they are bets.

Our counsel would be that if there are Big Bet opportunities on the table for you this year, don’t try to run from them by pretending you really care deeply about Mrs. Jones who is waiting in exam room 4.  We’re living in a heightened Big Bet time.  If it is there, dig hard into it and make a decision.  Ignoring it, remember, is a decision as well, just not a very smart one.

One way to address Big Bets is to see if they can be converted to Options, with choices kept alive for down the road when you know more and can reduce the risk of a bad decision.

Options thinking takes real creativity and is generally harder than simply saying, ‘We’ll take curtain 2’ in a Big Bet.  You really have to work to find a way to take a little step today in order to keep two or more major options open for the future.  It could be worth it because of that little prediction problem we discussed earlier, but you could also let all options slip away.

I’ll predict that many smart leaders will put some Options in place in 2011 rather than making Big Bets.  See, this predicting thing is not so hard.

A final reason that 2011 can be a year of good strategic progress is because of the final category of decisions – No Regrets.  In many ways, the ideal place to focus your energies when the external world is swirling is on No Regret decisions and investments.

What are the things that would strengthen your organization, that would create an asset that would give you leverage, regardless of how the world around you unfolds?

Do that.

No real prediction is necessary if the commitment, the investment, makes sense in every conceivable scenario. For those who are paralyzed by strategic uncertainty, this is the answer.  You can still be advancing your strategic cause.

How do you do that?

Step back from all of the healthcare news that you read and think about it.  Instead of trying to predict what will or will not happen, ask yourself if there is anything that would be really good to have in every scenario.  If something emerges, that is a No Regret bet.

Here is a quick example to close.

We are working with a group of independent physicians.  Their market is really up in the air.  There are several big players, who more often than not talk out of both sides of their mouths and generally seem to be practicing ‘strategic schizophrenia.’  The odds are high that the right answer for this group is to align with one of the big players.  Who is not clear, how that alignment looks is not clear, and when to pull the trigger so they get the best deal is not clear.  Not a good time to make a Big ‘No-Looking-Back’ Bet. 

The best ‘Option’ thinking is to make the group as desirable as possible to all of the big players.  OK, that is a bit obvious.  But how do you do that?

Turns out, it all leads to a No Regret bet.  In every conceivable scenario, the more tightly integrated this group is, the more leverage they have at the table.  But the members have rejected full asset mergers and other ideas that sacrifice their independence.  Virtual clinical integration is the right bet for them in every conceivable situation.  That means doing all of the stuff you need to do with clinical data so the group of independents can function as one when it comes to clinical practice, quality and cost management, and different reimbursement models.

Once you see that as the right No Regret bet, you can go forward hard and fast to that end, knowing that you are getting better positioned for the Big Bet moment that is coming soon.

I can predict with almost absolute certainty that many practices and groups that are not ready for the Big Bet can find their way to a No Regret play this year that justifies their time, money and energy investment if they wish to control their future.

Look for my final 2011 post next December when I resurrect that paragraph, claim victory as a prognosticator, and leave ALN for a new job at a supermarket tabloid.