Decision Making in High-Velocity Environments: Implications for Healthcare

Stepanovich, Paul L., Uhrig, Jennifer D., Journal of Healthcare Management

EXECUTIVE SUMMARY

Healthcare can be considered a high-velocity environment and, as such, can benefit from research conducted in other industries regarding strategic decision making. Strategic planning is not only relevant to firms in high-velocity environments, but is also important for high performance and survival. Specifically, decision-making speed seems to be instrumental in differentiating between high and low performers; fast decision makers outperform slow decision makers. This article outlines the differences between fast and slow decision makers, identifies five paralyses that can slow decision making in healthcare, and outlines the role of a planning department in circumventing these paralyses. Executives can use the proposed planning structure to improve both the speed and quality of strategic decisions. The structure uses planning facilitators to avoid the following five paralyses:

1. Analysis. Decision makers can no longer afford the luxury of lengthy, detailed analysis but must develop real-time systems that provide appropriate, timely information.

2. Alternatives. Many alternatives (beyond the traditional two or three) need to be considered and the alternatives must be evaluated simultaneously

3. Group Think. Decision makers must avoid limited mind-sets and autocratic leadership styles by seeking out independent, knowledgeable counselors.

4. Process. Decision makers need to resolve conflicts through "consensus with qualification," as opposed to waiting for everyone to come on board.

5. Separation. Successful implementation requires a structured process that cuts across disciplines and levels.

Healthcare is changing rapidly, not only with respect to the ways care is provided but also to the ways the healthcare system is managed. Changes in management, in turn, mean changes in the ways decisions are made. This article explores the nature of decision-making--specifically, strategic decision making--in a rapidly changing environment. We argue that healthcare can be classified as a high-velocity environment, and as a result may require a different approach to decision making in a strategic context. We define a high-velocity environment, justify its application to healthcare, and summarize the research regarding decision making in high-velocity environments. We also discuss the implications for decision making in healthcare organizations.

HEALTHCARE AS A HIGH-VELOCITY ENVIRONMENT

Most of the research in strategic planning and decision making has been conducted in relatively stable industries where, according to Bourgeois and Eisenhardt (1988), market data are available to process industry information as part of the strategic planning process. However, as these authors point out, many industries either lack this information or are changing so rapidly that market information is often inaccurate and quickly out-of-date. They have called these industries "high-velocity environments" and defined them as

   environments ... in which there is rapid and discontinuous change in
   demand, competitors, technology and/or regulation, such that information is
   often inaccurate, unavailable, or obsolete. (816)

It should be apparent that healthcare is a high-velocity environment. The nature of demand is changing, mergers and acquisitions are redefining the nature of competition, and both technology and regulation are changing rapidly.

   Health care is undergoing a revolution ... Health care reform is occurring
   as a market-driven, not policy-driven phenomenon ... the result has been a
   surge of healthcare facility and service mergers and acquisitions, new
   programs, new names, and new roles that signal the … 

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Publication information: Article title: Decision Making in High-Velocity Environments: Implications for Healthcare. Contributors: Stepanovich, Paul L. - Author, Uhrig, Jennifer D. - Author. Journal title: Journal of Healthcare Management. Volume: 44. Issue: 3 Publication date: May 1999. Page number: 197. © 1998 American College of Healthcare Executives. COPYRIGHT 1999 Gale Group.

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