All businesses have strategy...whether we do or don’t pursue them. Whether we make or postpone decisions, actively or by default, we are making choices all the time about our direction. Pursuing strategy and making difficult choices, even in the midst of tumultuous times, is vital to organizational success.

1. The Case for Strategy in the Midst of
Tumultuous Times
Angola Area Chamber of Commerce
13th Annual Luncheon and Expo
March 1, 2013

2. An Ominous Challenge!
The 13th Annual Luncheon and Expo
Held in 2013…Lucky or What?

3. A Lucky Catch!

5. The
Perfect
Diet!

6. “Strategy and the Uncertainty Excuse”
Blog Post by Roger Martin
Dean of the Rotman School of Management,
University of Toronto, Canada

7. The Issue
When Asked About Their Company’s Strategy-Or Lack Of…
Many Business Leaders Say They Can’t or Won’t Do Strategy
Because Their Operating Environment is Changing So Much…
• “There isn’t enough certainty to be able to do strategy
effectively.”
• “Our business runs at breakneck speed. There isn’t time to
stop & do strategy. It will evolve over time.”

8. The Argument & Logic
The Argument:
The Present is Too Uncertain to Make Any Strategic Decisions
About the Future
The Logic:
At Some Future Time, Things Will be Certain Enough to Make
Choices

9. Problems With the Logic
• Life Will Always Be Uncertain
• Why Will It Be Any Different Next Week, Next Month…Next
Year?
• If Things Are Too Uncertain & Fast Changing Today, What
Is It About The Future That Will Make Things More Certain?

10. Problems With the Logic
• At Some Point, Do We Declare Things Are Now Clear
Enough to Make Choices?
• How Will We Know It’s the Right Day, Month…Year?
• What Criteria Will We Use to Decide It’s Certain Enough?
• OR…Do We Put Off Choosing Forever?

11. The Danger
• While We’re Using Uncertainty As An Excuse To Put Off
Making Strategic Choices…
 The Competition May Be Doing Strategy & Making Choices…Our
Options May Narrow Or Disappear
 The External Environment May Change…We Miss an Opportunity
 Our Internal Environment May Change…We Miss an Opportunity
 Just Maybe…Things Become Even Less Certain!!

12. When That Happens—What Do We Say?
We Complain…
 ”We Were Blindsided!”
 “We Didn’t Have The Right Information!”
 “It Was Too Late To Do Anything About It!”
 “It Isn’t Our Fault…This Kind of Thing Just Happens!”

13. The Fact Is…
• All Of Our Businesses Have Strategy...
• Whether We Do or Don’t Pursue Strategies…
• Whether We Make or Postpone Decisions…
• Whether Actively or By Default…
• We Are Making Choices All The Time About Our Direction

14. “Would you tell me, please,
which way I ought to go from
here?”
“That depends a good deal on
where you want to get to.”
“I don’t much care where—”
“Then it doesn’t matter which
way you go.”
Lewis Carroll, Alice in Wonderland

15. The Reality Then…
 If We’re UNWILLING to Make Decisions Based Upon The
Best Information In Hand; or
 INCAPABLE of Making Strategic Choices In The Midst Of
Turbulent, Uncertain Times…
Then There Are A Couple Defaults That Work Equally Well…

16. “When you come to a fork
in the road, take it.”
Yogi Berra

17. “If you don’t know where you’re going,
you might end up some place else.” Yogi Berra

18. The Cameron Experience-Case Studies
 Physician Employment
 Building Project Financing
 Tagline and Guiding Statements

19. Physician Employment
Background:
 More than 50% of practicing U.S. physicians are employed by
hospitals and health systems
 Why?
 Declining Reimbursement
 Increasing Malpractice Costs
 Increasing Regulatory Burdens
 Increasing Expense & Complexity to Operate a Practice
 Increasing Expense & Complexity of Information Technology
 Uncertainty of Health Care Reform

20. Physician Employment
Background:
 Valuing Work-Life Balance & Given Burdens of Independent
Practice, Most Young Physicians Want Employment
 Hospitals Lose $150,000-$250,000 Each Year Over the 1st Three
Years of Employing a Physician
 Hospitals Are Assertively Hiring Physicians & Aggressively
Competing With Each Other

21. Physician Employment
The Local Scene:
 2009—Among 15 Community-Based Physicians, Only 1 Was
Employed…BUT…
 Given Burdens of Independent Practice & Uncertainty of Health
Care Reform, Many Ready to Consider
 CMCH Was Requested to Begin Employing Physicians

22. Physician Employment
Strategy Uncertainties:
 With no experience & no expertise in employing physicians…Could
CMCH be successful?
 With Lutheran and Parkview assertively hiring & aggressively competing
with each other…Could CMCH effectively compete?
 Cost—Both of initial acquisition & ongoing expense…Could CMCH afford
and still have adequate financial resources for other strategies?
 Timing—Could CMCH implement the strategy effectively & quickly
enough to successfully compete?
Weighing the Many Uncertainties—CMCH Decided NOT
to Employ Physicians

23. Physician Employment
Right or Wrong Decision?
 Compelling argument can be made for both positions
 The decision did, and continues to provide strategic direction for CMCH
High Probability That CMCH Employment of Physicians
Will Be Re-Visited
The Next Chapter: How Will We Respond to Emerging
Events & Uncertainty?

24. Building Project Financing
Background:
 Access to Capital a Major Concern & Priority for Hospitals of All
Sizes
 To Fund Program Development, Including Hiring & Retaining Talented
Staff
 For Clinical Equipment
 For Information Technology
 For Facility Improvements & Replacement

25. Building Project Financing
Background:
 Financial Crisis of 2008 Changed Landscape for Traditional
Commercial Financing
 Many Traditional Commercial Lenders Severely Tightened Credit
Requirements, Limiting Risk Exposure to Large Hospitals & Health
Systems
 Limited Financing Options Available to Independent & Small
Hospitals—When You’re Both the Challenges Even Greater!

26. Building Project Financing
Uncertainties for CMCH in Approaching Building Project
Financing:
 Traditional Commercial Lenders Took a Pass on the CMCH Project
 What Unique Financing Methods Might Be Available?
 Would CMCH’s Debt Capacity be Sufficient for Project Financing?
 Might CMCH, Like Many Independent & Small Hospitals, Need to
Consider Alignment With a Health System to Gain Access to Capital for
the Project?

27. Building Project Financing
CMCH’s Strategic Decisions:
1) Acquiring Financing Ourselves Vital to CMCH’s Continued
Success as an Independent Hospital
2) Apply for Financing Through USDA Rural Development
Community Facilities Program
 Central to USDA’s Program—Promoting success & vitality of rural
communities—including rural hospitals—exactly like Cameron

28. Building Project Financing
However…Many Uncertainties With Decision:
 Would the USDA Program be adequately funded via the Federal
Budget?
 How would the CMCH application stack up vs. other projects
competing for USDA dollars?
 How long would the USDA application process take?
 If USDA financing fell through, what would be the back up option?

29. Building Project Financing
The USDA Application Process…A Long & Torturous Path
 12/2010—USDA Financing Application Submitted
 4/2011—With Uncertainty of USDA Financing, 1st Step of Back Up Plan
Pursued—Alternate Funding Available from HUD FHA 242 Program—With
It’s Own Set of Unknowns:
 Would they be interested in the CMCH project?
 What scope, cost & other project controls would they impose?
 USDA Review—From Start to Finish, A Road With Many Detours
 Need for response to many, many USDA information requests
 Advocacy from Congressman Marlin Stutzman of great assistance

30. Building Project Financing
Additional Uncertainties as USDA Approval Process
Dragged On:
 Would interest rates rise, adding significant cost to project?
 Would the favorable environment for competitive bids from
subcontractors disappear?
 Given the delay, would CMCH be able to retain the participation of
key members of the construction team?
 Would the delay negatively impact the MOB development?

31. Building Project Financing
Some Began to Question if CMCH Could Get the Project Done—
“Just let one of the health systems build the new hospital for you.”
Yet…With determined effort…patient perseverance & unflagging
optimism…CMCH Remained Committed to the USDA Financing
Strategy
July 10, 2012—Almost 18 Months after Submitting the
Application—CMCH Received USDA Financing Commitment

32. Building Project Financing
Financing Structure:
 $37 Million Direct USDA Loan From USDA Community Facilities
Program With Fixed Interest Rate of 3.375% for 40 Years
 $10 Million USDA Guaranteed Loan With Market-Based Interest
Rate & 25 Year Term
• Full $10 Million financed by The Farmers & Merchants State
Bank
As of February 6th…All Financing Details Completed!

33. Building Project Financing
What Securing the Financing Means for Future CMCH
Strategic Direction:
 Biggest Capital Expenditure for the Next 20+ Years Achieved With
Exceptional Term and Rates!
 Accomplishing Financing On Our Own Makes CMCH Stronger & An
Even More Attractive Partner to Others
 Offers CMCH Flexibility to Pursue Collaborative Strategies
Unrelated to the Need for New Hospital Facility

34. Tagline & Guiding Statements
2010—CMCH Considered Development of New Tagline
What’s a Tagline?
 A short, memorable statement that captures the essence of what the
organization is all about

35. Tagline & Guiding Statements
Uncertainties With Implementing A New Tagline
 The Mission Statement and Values of CMCH Also Needed Revision
or Replacement…
 Should that strategy be pursued first?
 But, with many competing priorities when would we commit the
time to the necessary work?
 If the tagline was implemented first, would it complement new
values and other guiding statements developed later?

36. Tagline & Guiding Statements
July 2010—CMCH’s New Tagline—
Well into the FUTURE

37. Well into the FUTURE
What Does it Mean?
…A statement of what we strive for as an outcome for all our customers. We
want them to be “well”—to have their best possible health status—“into the
future”—for an extended period of time
...A statement of CMCH’s commitment to be a champion of wellness for all
associated with CMCH & in the communities we serve
…Also a statement of our organizational direction & culture—creative,
innovative, forward thinking & proactively preparing for the future

38. Tagline & Guiding Statements
February 26th—CMCH Board Approved New Values and
Guiding Principle
 Board approval was culmination of lengthy development process
that included opportunity for input & feedback from all CMCH
stakeholders…employees, medical staff, auxiliary & board
 On-line survey—152 respondents
 Focus groups –25 employees
 Feedback resulted in revision of definition of EVERY Value & the
Guiding Principle
 Development process a successful & positive experience for CMCH

39. Tagline & Guiding Statements
Key Survey Question:
“How well do the proposed Values, Guiding Principle and Tagline
Complement & Support One Another?”
 80% of survey participants responded “Very Well and Well”
 Only 2 participants responded “Not Very Well or Not Well at All”
Affirmed the risk taken in pursuing the Tagline strategy first!

40. CMCH’s New Guiding Principle
Guiding Principle: Defines the purpose of Cameron Hospital—why we
exist & states what Cameron Hospital intends to achieve & to become
in the future
“Our team commits to exceptional service and the
highest quality, safest care—every patient, every time”

41. CMCH’s New Values
Values: Core beliefs that establish expectations for our individual &
organizational actions. They represent the soul of Cameron Hospital &
provide foundation for the Cameron Guiding Principle
Safety Safety—first and always
Compassion Demonstrating care and kindness through our actions
Integrity We embrace strong moral and ethical principles

42. CMCH’s New Values
Teamwork Together we’re stronger
Stewardship Responsibly using the resources entrusted to us
Excellence Committed to excellence
Respect We honor the dignity of each individual
Wellness Promoting overall health—mind, body and spirit

43. Values & Guiding Principle
Values & Guiding Principle Vitally Important:
 Provide foundation for everything that we are
 Direct our actions
 Provide a means for evaluating our success
 Serve as a guide in testing the appropriateness of pursuing specific
strategies—
• ”Is _____ consistent with our Values?”
• “Will it help us achieve our Guiding Principle?”
• “Is it responsive to the needs of the patients, families and communities
we serve?”

44. In Closing:
 Life will always be uncertain
 It’s not going to be different next week, next month…next
year
 There frequently doesn’t seem to be enough time to stop &
do strategy—but it’s not going to naturally develop on its
own over time!
• And…The rate of change will never again be as slow as it is
today!

45. Often…The Best Advice About Strategy Is…
Because…

46. “The future ain’t what it use to be.”
Yogi Berra

47. Best Wishes In Pursuing Strategy &
Making Choices…EVEN in the Midst of
Tumultuous Times!