Forget Predictive Modeling, Try Leadership Forecasting

Philip Betbeze, for HealthLeaders Media , January 3, 2014

For instance, says Bauer, "we can look not more than a decade ahead and see a far more cost effective way to provide healthcare one-third less expensively. That leads us to consider alternative ways to provide it."

Ambiguity exists, so effective executives need ways to assign probabilities. That way, executives can seek out strategies to increase the probabilities they desire and decrease the ones they don't.

Fine, so leaders should think differently about how they gauge strategic initiatives in order to better predict how they will affect the organization, or indeed, whether to do them at all. But how does this philosophy translate into the real world of deciding where to invest your precious capital and labor?

Bauer says that in conversations with health system CEOs following his speeches, they do recognize the need to evaluate the future better. They want to target initiatives that will likely be successful under a new payment and quality dynamic in healthcare, but they aren't sure how to begin to evaluate things differently because their lieutenants are used to predictive modeling.

Courage to Change
Few CEOs have the courage to change for a variety of reasons, he says. There are rigidities in practices that are tough to break, there's an unwillingness to take on the medical staff, there's a familiarity to doing battle with insurance companies rather seeing those negotiations as an opportunity to do business, and a substantial percentage of top leaders are "just cruising toward retirement," he says.

But breaking down those walls is exactly where the opportunity exists, Bauer argues.

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4 comments on "Forget Predictive Modeling, Try Leadership Forecasting"

Jeffrey C. Bauer, Ph.D. (1/14/2014 at 4:53 PM)
While I appreciate Dr. Fischer's interest in my book, I respectfully disagree with his observations. He could not have made several of his comments if he had read the book first. For example, Upgrading Leadership's Crystal Ball clearly differentiates forecasting from scenario planning. Forecasting is a specific tool for estimating the realm of future possibilities; scenario planning focuses effort on preparing for a limited number of possible outcomes generally based on predictions, not forecasts. The last chapter provides considerable information about the strategic implications of this difference. Contrary to Dr. Fischer's assumption, my book also addresses the different circumstances under which predicting and forecasting are relevant in health care today. Mr. Betbeze's interview accurately captures my view that health care leaders are more likely to steer their organizations in better directions when they use possibility-driven forecasts [INVALID] not data-driven predictions [INVALID] to envision opportunities like vertically integrated, multi-stakeholder partnerships rather than predictable, horizontal networks of physicians and hospitals that have generally failed to solve the problems of cost and quality. Upon reading the book, Dr. Fischer will find extensive discussions of the modeling methodologies he suggests I should "learn about." I've been teaching and applying them for 40+ years and come to the conclusion that forecasting best fits the new and unprecedented realities of the 21st century.

Wayne G. Fischer, PhD (1/6/2014 at 12:36 PM)
What the quoted "expert" is describing is called scenario planning - it is a well-known and well-documented methodology. A classic case was Royal Dutch Shell's use of it to capitalize on the major disruption of crude oil prices back in the 1970s by OPEC. Either the author or the quoted expert misuse / confuse precision and accuracy, causing this reader to wonder if they really have any meaningful grasp of the subject matter. And the fact that if a system fundamentally changes, a model based on data before that change is no longer valid is a first principal of which anyone who has done any modeling is well aware. "Prediction," contrary to the quoted expert's implication, has a very important role to play in healthcare - operationally, tactically and strategically...because there are *many* types of modeling and prediction methodologies. I suggest the author and quoted expert learn about a few of them.

Frank Poggio (1/6/2014 at 11:11 AM)
Great piece, excellent points. Particularly liked his comment; "If the underlying circumstances that created that data have changed, then extrapolating from that data gives you stupid answers". In medicine the baseline and historical data are changing all the time. Medical protocols can get 'outdated' in a matter of months. Many of Mr. Bauer's points predict, as I do, that Big Data and Analytics will be the next HIT sink hole. Big Data and Analytics – The Next HIT Boondoggle! See: Frank Poggio The Kelzon Group




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