Forget Predictive Modeling, Try Leadership Forecasting

Philip Betbeze, for HealthLeaders Media , January 3, 2014

'Don't Give Me Numbers'
Boiled down to its basics, Bauer's focus on forecasting over prediction means that CEOs should "quit assuming numbers will tell you anything," Bauer says.

Operationally, they should ask their other chiefs for the probabilities of success given several directions the organization could go to better achieve vertical integration. They should assign a likelihood of success to each of those options, and try to think of solutions to reduce the undesirable probabilities and increase the desirable ones.

Leaders need to develop scenarios to get the organization where it wants to be broadly. Defining that is the CEOs job. It's also the CEO's job to order his or her lieutenants to quit spending so much time analyzing numbers that are misleading.

"Don't give me numbers and spreadsheets," Bauer says, describing what he would like CEOs to tell their deputies. "I want thought, focus on the realm of possibilities, and how we can work with partners to come up with different and better outcomes. You won't get that through extrapolation of old data."

While adhering strictly to his reliance on forecasting versus predicting as a better tool for hospital and health system leaders, pressed for a prediction of his own should they not embrace the principles of forecasting, Bauer relents, a little.

"My current prediction for the future of healthcare is pretty dismal," he says. "I predict 35% of the organizations in healthcare today will not be in business two to five years from now because they want to hold on to a totally irrelevant 20th century health system."

Philip Betbeze is senior leadership editor with HealthLeaders Media.
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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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