© 2014 Jeffrey C. Bauer

Upgrading Leadership’s Crystal BallJeffrey C. Bauer, Ph.D.

Health Futurist and Medical Economist

COCSA Dinner GalaNovember 7, 2013

Seattle, Washington

strategy - purposeful response to anticipated change, consistent with mission and values

The strategic time frame is the period in which all factors of production are variable; hard choices can be made and resources can be reallocated.

Strategy requires informed analysis of alternative actions within the realm of possibilities.

STRATEGY TACTICS

• All factors fixed

• Making decisions

• Doing things right

• All factors variable

• Making choices

• Doing the right things

How can chiropractic’s state leaders identify the realm of possibilities for doing the right things?

Reading health care journalsAttending professional meetingsCopying other professions’ responses Predicting based on trend analysisForecasting based on the realm of possibilities

Forecasting is about predicting the future as accurately as possible.Rob J. Hyndman; Business Forecasting Methods (2009)

Forecasting is a strategy used in different fields to predict the future based upon the past.Forecastingmethods.net (2013)

An economic forecast is a prediction of what future periods of economic activity will be in various categories.Investment Contrarians (2/26/2013)

Economists are forecasting the same steady, if unspectacular, growth this year they were expecting in 2012. Last year’s predictions proved too optimistic.Wall Street Journal (2/8/2013, p. A)

Are predicting and forecasting the same?

The Science of Predicting

A prediction is a specific estimate of the expected value of a key variable at a future point in time

The Science of PredictingHealth Care Example

• Assumes continuation of historic relationships

• Projects a single outcome at a level of confidence based on trend extrapolation

• Focuses action on preparing for the predicted outcome

• Generates a one-size-fits-all policy solution

The Science of Predicting

Useful predictions can be made when the quantifiable relationships that represented how things worked in the past will continue to work the same way in the future...

Predictions are perfectly appropriate for analyzing future states in historically stable systems that are expected to remain stable for the projected period of time, assuming good data and good methodological practices.

The Science of Predicting

“Surely, we will end up where we are headed if wedo not change direction.”

1. Discontinuities in system dynamics

2. Violations of model assumptions

3. Deficiencies of available data

4. Failures of previous predictions

5. Diversions from strategic innovation

Five fatal flaws of predicting when directions are changing...

The Art of Forecasting

A forecast is an estimate of the probabilities of possibilities for a key variable at a future point in time

Forecasting - estimating the probabilities of possibilities

• Assumes changes in causal relationships

• Projects multiple outcomes (more/same/less, worse/no change/better)

• Empowers strategy to influence different outcomes

• Enables custom solutions

• 35% will cease to exist as currently organized

• 40% will continue to exist as organized... precariously

• 25% will thrive by fixing the way care is delivered

Forecasting - Health Care

Bauer’s November, 2013 forecast for US health care businesses between 2015 and 2018

• Identify explanatory variables (water, temperature, pressure, wind)

• Specify the model

• Measure the explanatory variables

• Analyze variations over time

• Assemble the forecast

The Art of Forecasting

• Identify explanatory variables (water, temperature, pressure, wind)

• Specify the model

• Measure the explanatory variables

• Analyze variations over time

• Assemble the forecast

• Update model to incorporate climate change

The Art of Forecasting

The Art of Forecasting

Climate is the set of fixed factors that define interaction of the variables

The climate is changing dramatically in weather...and health care!

Health Care’s New Climate

• A revolution in biological sciences is shifting providers’ core function from acute care to disease management

• Information & communications technologies are transforming business models, production processes, and sites of care

• End of growth in health care spending is restructuring provider-patient relationships

• Problems with government-driven reform are compelling providers and their business partners to develop successful futures on their own

PoliticalReforms

New Climate(Realm of Possibilities)

Honoré Daumier (1858)

MARCH 29, 2009

I don’t think of myself predicting things. I’m expressing possibilities. Things that could happen. To a large extent it’s a question of how badly people want them to happen. The purpose of thinking about the future is not to predict it but to raise people’s hopes.

Eugene Richards for The New York TimesFreeman Dyson

-- Freeman Dyson

Jeffrey C. (Jeff) Bauer, Ph.D.

Health Futurist and Medical Economist636 West Schubert Avenue, #A

Chicago, IL 60614

Telephone: 773-477-9339Mobile: 970-396-3280

E-mail: jeffbauer@mindspring.comWeb: www.jeffbauerphd.com