Wise Thoughts - Scenarios in the Policy Landscape

by Nancy Wise and John Rucker

Post-Budget Reconciliation Act

Many of you may have heard the saying that “if you want to go fast, go alone, but if you want to go far, go together.” When I founded Spring Street Exchange, almost 10 years ago,  it was with the belief that we were not simply an advisory firm, we were an exchange serving to germinate ideas, foster innovation and catalyze collaboration across the industry.  I’m co-writing this issue of Wise Thoughts with John Rucker, who has recently been joining me to engage in scenario planning with healthcare leaders around the country. And nothing has been more top-of-mind for the leaders we have worked with than the Budget Reconciliation Act signed on July 4th.

Even after months of exploring what the bill was likely to include, for many there has still been a feeling of surprise and a heightened sense of gravity since its passage. Neuroscientists say this gap between anticipation and readiness is an example of how our minds struggle to truly envision and plan for that which has not yet occurred.

The Landscape Just Shifted, Again

This legislation introduces a flood of both change and uncertainty. The complexity it brings to the healthcare industry will take years to fully unfold. Many publicly traded national insurers and providers saw immediate impacts in the markets, as sentiment about the future of health insurance and care delivery business models eroded. While UnitedHealth (UNH) and CVS Health (CVS) saw declines in the low teens in the weeks immediately following the bill’s passage, other national payers with larger concentrations of Medicaid and Individual business such as Centene (CNC) and Molina Healthcare (MOH) facing price drops over 40%.1

These movements show clearly that, even after the long-anticipated legislation passed, we have not been freed from uncertainty. We still face variables that could shift the future: efforts to pull back some of the provisions, subsequent legislation that could amplify it, and even wild cards that could take us in another direction completely. This degree of uncertainty makes it difficult to know where to start.

Nancy’s Thoughts:

For many, the instinct is to apply discipline to what we know how to do best, act incrementally, and wait to act until we know more. Given the environment, it’s important to be disciplined and strategic, close gaps, and move forward. So, yes, let’s do that. But in parallel, as leaders we should also be thinking through scenarios of what's coming so that we can keep moving forward proactively.

John’s Take:

Scenario planning can feel like a time-consuming exercise, but in our experience with boards and leadership teams, it reduces internal friction, accelerates improved decision-making, minimizes risk, and aligns stakeholders; these are all time-savers. With focus, we can use this approach to trigger a cultural shift that equips an organization to work through ongoing uncertainty rather than around it. This kind of agility becomes a lasting strategic advantage.

Potential Scenarios Related to the Budget Reconciliation Act

There are hundreds – thousands – of variables that could impact the future of the healthcare industry as this legislation is implemented.  Through scenario planning, however, we can simplify the landscape by summarizing these into trajectories, without having to debate the particular variables leading to each. We would suggest that, through exploring scenarios and what they could mean for your organization, you will find yourself more prepared and less anxious about the future. Related to the Budget Reconciliation Act, here are four scenarios worth exploring: 
 

Nancy’s Thoughts:

We often see organizations thinking early on about what I like to call “wildcards.” These are factors that are either low probably or unusual occurrences, but that we consider because if they come to pass they would have a big impact. Some examples include a global pandemic, a major climate event, or dramatic shifts in the political landscape, could shift our realities yet again. There are more and more wild cards in our increasingly dynamic world, sometimes leading us to think that everything is uncertain. By identifying wild cards, choosing which to address, and even lightly exploring their potential impacts, we become both more agile in our thinking and more prepared for any wild card, even those not anticipated.

John’s Take:

My late grandfather used to always say “don’t borrow trouble” when I would start to worry about the future. Back then, the future I was worried about was a bit simpler than some of the things we’re currently facing, but his point sticks with me today.  When scenario planning, we give the future a face and a name, and we give ourselves a way to address it rationally together. It becomes something we can analyze, align with peers on what scenarios could mean, and envision what responses could be required. This enables us to think about the future in a structured way rather than through the chaos of worry, and to be more confident in our ability to meet the challenges (and opportunities!) that could arise.   

Rehearsing the Future

This complexity is just beginning; we are facing rapid change and growing uncertainty across nearly every dimension of life. New twists and turns will continue to emerge, bringing uncertainties we haven’t yet anticipated. That, at least, is something we do know.

This is why we lean so hard into scenario planning at Spring Street Exchange. It helps our clients plan and lead into the unknown while staying grounded in today’s realities.
How is your organization processing and responding to the latest uncertainties in the healthcare landscape? How are you working with your leadership team to remain strategic and proactive amidst headwinds? I’d love to hear your approach and am happy to share what I’m hearing across the industry.

With you in goodness,
Nancy and John