Healthcare Scenarios in a Trump World

The Future of the Affordable Care Actand Its Impact on Business Strategy

Table of Contents

Introduction 01

ScenariosEisenhower Returns 06

The Winter of our Discontent 09 Tech Saves Healthcare 12 The Hunger Games 15

Conclusion 17

Appendix 19

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Principal AuthorsKenneth Sawka, Principal | ksawka@fuld.com | +1.857.202.5301 | Boston, MA

Tarun Mehra, Principal |tmehra@fuld.com | +1.857.202.5263 | Boston, MA Author and Editor

Robert Flynn, Principal | rflynn@fuld.com | +1.857.202.5308 | Boston, MA Designer, Production, and Editorial Assistance

Allison Hackel, Marketing Coordinator | +1.857.202.5306

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HEALTHCARE SCENARIOS IN A

TRUMP WORLD

While Donald Trump’s election victory in November surprised many, perhaps no sector of the U.S. economy is more ill-prepared for what comes next than the healthcare industry. After six years of building their businesses around the Affordable Care Act (ACA), health insurers and healthcare providers now face an extremely uncertain future in which the stability of markets, the nature of government intervention, costs, and consumer behavior are all up for grabs.

While there is a high degree of certainty that the ACA will be repealed – Congressional Republicans have already begun actions to repeal the act as one of their first tasks – there is far less certainty about what will replace it. In our conversations with healthcare and health insurance company executives, it is apparent that this uncertainty has the industry paralyzed.

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Two factors are contributing to this paralysis:1. When will the ACA actually no longer exist?

While Republicans appear steadfast to repeal the ACA, it is not clear when the law will no longer be in force as there is yet a defined, legislated plan to replace it. Republicans admit they are hesitant to strip insurance coverage from the approximately 20 million Americans who receive insurance under the ACA. The timing of action and the length of the delay before an alternative plan is in place makes it difficult, if not impossible, for healthcare companies to plan strategically for the long term.

2. Is the ACA in its entirety going away? President Trump has sent mixed messages about the extent of the abolishment of the ACA, at times calling for a complete replacement of Obamacare, and at other times expressing a desire to retain popular provisions of the law, such as ensuring that people with preexisting conditions can still get coverage and allowing young adults to remain on their parents’ health plans until age 26. Insurers and providers don’t know whether to plan for a future in which some aspects of Obamacare remain in place.

Complicating matters, Congressional plans for reforming the country’s healthcare system will not happen in a vacuum. Common drivers of uncertainty that muddle any organization’s efforts to plan for the long term will factor in, including:

• Broad economic conditions• Political circumstances following the 2018 mid-

term and 2020 presidential elections• The pace of technology advancement, and

International trade and security developments

Without a clear sense of future conditions, how can healthcare organizations plan strategically?

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SCENARIO PLANNING

Scenario planning is a highly effective methodology for long-range planning amid extreme uncertainty. Hundreds of leading organizations have used scenario planning to set resilient and robust strategies while facing increasingly complex business environments.

To plan in the midst of tremendous uncertainty, companies that employ scenario planning apply a disciplined and structured methodology to develop four or five descriptions of plausible, alternative future environments in which they may operate. The rules for scenario development ensure that these alternative “futures” can actually happen since they are built from drivers of current uncertainty. Properly constructed and analyzed, these scenarios ensure that the firm considers a broad range of future threats and opportunities.

The organization sets a business strategy for each scenario, and, through structured analysis, identifies commonalities across those strategies. These shared elements form a core strategy, resilient no matter what future actually emerges. Scenario-based strategies also deliver continuing strategic flexibility when tied to early warning programs that enable firms to anticipate the emergence of new industry developments more quickly, allowing more time to put contingency plans in effect. (See the Appendix for a fuller description of the scenario planning process).

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SCENARIO PLANNING

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To address the unprecedented degree of uncertainty that healthcare and health insurance companies are facing in the aftermath of the election of Donald Trump, Fuld + Company – a leader in developing scenario-based strategies for global organizations – developed four scenarios looking out to the year 2020. Careful choice of driving factors ensured that these scenarios capture a range of plausible future conditions in which healthcare and health insurance firms may find themselves.

A key requirement for these scenarios was plausibility – could this future world emerge? We stayed away from ascribing evaluations of likelihood to any of the scenarios, as doing so runs counter to the very underpinning of scenario planning: it is impossible to predict the future. We believe we have described four challenging alternative future worlds for the healthcare and health insurance industry, all very different from today and decidedly compelling given the transformation of the U.S. healthcare system that is about to occur.

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Fuld + Company leadership pulled together a team of scenario planning consultants with experience serving clients in the healthcare, pharmaceutical, technology, manufacturing, public sector, and consumer products segments. This team applied our scenario planning methodology to establish the framework for selecting and developing the four healthcare scenarios offered in this whitepaper. Specifically, this group:

• Applied structured brainstorming and divergent-convergent thinking to identify some 50 independent variables, or drivers, representing the points of industry volatility today that will define future industry conditions.

• Grouped these 50 drivers into three categories, or dimensions, to organize the industry’s volatility and set the boundaries of future industry conditions. For each dimension, we set dichotomous behaviors that depict in which direction each could behave. Those dimensions and their behaviors are:1. Political dynamic, which could trend toward gridlock or harmony2. U.S. economic conditions, which could trend toward recessionary or robust3. Healthcare industry structure, which could trend toward consolidated or fragmented

• Built a matrix illustrating all possible combinations of dimension behavior, thus offering a total of eight scenario possibilities.

• From the matrix, selected four scenarios for further development that we believe are mutually exclusive but collectively exhaustive. These four scenarios are representative of a broad range of future healthcare and health insurance industry challenges and opportunities. (See the Appendix for a fuller description of the scenario planning process).

How We Developed the Scenarios

Figure 1: Fuld + Company’s healthcare and health insurance industry scenario matrix. The highlighted scenarios were selected as the best collective representation of the future of the industry.

EISENHOWER RETURNS

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January 19, 2021 – America has truly been made great again. On the eve of President Donald Trump’s second inauguration, the U.S. economy is hitting on all cylinders. There is a widespread sense of security in the aftermath of the crushing defeat of the Islamic State, unemployment rates are at 50-year lows, and almost all Americans have health insurance thanks to President Trump’s most significant domestic achievement, the Empowering Patients First Act, passed in 2018.

When he entered office in 2017, skepticism abounded about the Trump agenda. The new president quickly made the “pivot” so many had been expecting and, with a Republican majority in Congress, moved quickly and rationally to shepherd in a small-government, low-regulation, market-based set of economic reforms that touched every corner of the U.S. economy, not the least of which was the healthcare and health insurance industry.

Knowing that the stakes were high, Congressional Republicans at the beginning of the 115th Congress, despite their pre-election rhetoric, took a measured and disciplined approach to repeal, and ultimately replace, the Affordable Care Act. Working closely with industry, and with blue dog Democrats that were facing steep 2018 re-election battles in states that Trump won in 2016, Congress passed a broad healthcare reform bill in early 2018 that dramatically transformed how Americans acquired health insurance.

Political Dynamic U.S. Economy Industry StructureHarmony Robust Consolidated

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Resisting the intense political pressure to quickly dump the ACA, and relying heavily on market-based levers, Congress crafted legislation that eliminated the individual mandate, did away with the state healthcare exchanges, and transformed Medicaid into state-run block grants to allow for more focused and efficient distribution of benefits. Also gone were many regulations on insurers, including the ability to deny coverage for pre-existing conditions. The new law relied heavily on market based incentives to compel broad participation in the individual markets: steep premium increases for people who canceled and then tried to re-acquire insurance, as well as a plethora of tax-based incentives to acquire coverage.

Accompanying the orderly transition away from Obamacare was a sweeping overhaul of the U.S. tax code passed by the 115th Congress in September 2017. The legislation drastically simplified tax rules and regulations, and today most U.S. tax filers can fill out a simple postcard, or go online and answer six questions, and file their taxes. The tax code reform reduced the number of tax brackets to just three – 12 percent, 25 percent and 33 percent -- and eliminated many popular business and personal deductions to achieve a revenue neutral reform, insisted upon by the Tea Party wing of the Republican party. Included in the tax reform were tax credits that low-income filers could use as subsidies to purchase health insurance.

Tax reform, combined with an elimination of most Obama-era business regulations, caused corporate earnings to surge and the U.S. economy to enter a prolonged period of expansion. The Dow Jones Industrial Average broke the 24,000 mark on October 19, 2018 (ironically, exactly 31 years to the day of “Black

Monday” 1987, when the Dow declined by more than 22 percent) and the unemployment rate fell below 4 percent by the beginning of 2018. The U.S. trade deficit decreased by 12 percent in the first two years of Trump’s presidency, and U.S. GDP growth hit 4.2 percent in the second quarter of 2019. Not surprisingly, Republicans solidified their congressional majority in the 2018 mid-term elections, picking up three more Senate seats and an additional ten House seats.

Health insurance companies, buoyed by a strengthening economy and a surge in capital reserves, contributed to the smooth healthcare

reform transition by accelerating the shift away from fee-for-service payments and doubling down on legacy Obamacare risk-sharing and community health payment schemes with their provider networks. As a result, the pace of healthcare inflation continued to slow as healthcare providers, relying on economies

of scale from continued industry consolidation and advances in healthcare IT and data analytics, improved efficiencies and improved outcomes for patients.

Throughout 2018 and 2019, the surging economy created tight labor markets, and employers were pulling out all the stops to recruit and retain talent. Fears about Trump’s isolationist trade agenda failed to materialize, and the U.S. witnessed a modest manufacturing revival as the pace of offshore manufacturing slowed. As wages rose and prices for most consumer items increased, inflation fears were kept in check by an aggressive Federal Reserve monetary policy that modestly increased interest rates while controlling the money supply.

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Today, it has become the norm for employers to offer generous healthcare benefits to their employees, and fears of a spike in the rate of uninsured Americans after the repeal of Obamacare never materialized. More than 60 percent of Americans get health insurance from their employers; for those who do not, premiums are affordable thanks to tax credit subsidies for the poor, and a well-balanced risk pool from the group markets that enable insurers to manage risk broadly. Only 5 percent of Americans go without health insurance in 2020.

On the foreign policy front, the world is a calmer, more secure place thanks to the unprecedented partnership between the United States and Russia. Starting with an ambitious military partnership in Syria in 2017, the two nations have effectively joined forces to defeat ISIS in Syria and Iraq, keep Chinese hegemonic expansion in check in Asia, quell fears of Russian expansion in eastern Europe, and minimize Israeli-Palestinian tensions following the assassination of Benjamin Netanyahu in 2018. Global fears of ISIS-sponsored lone-wolf terrorist incidents have all but disappeared.

As President Donald Trump is set to embark on his second term the country rallies around his 2020 re-election theme, “Keep America Great.”

THE WINTEROF OUR

(DIS)CONTENT

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January 19, 2021 – On the eve of the inauguration of President Ted Cruz, Republicans are eager to erase any memory of the Donald Trump experiment. With the economy reeling from conditions resembling the stagflation of the 1970s – slow economic growth and high rates of inflation – and the United States entangled in foreign military conflicts in Syria, Venezuela, the South China Sea, and Crimea, cries of “make America great again” have turned into “make America function again.”

At the start, it all looked so promising. A unified Republican party fell in line with the Trump agenda and eagerly rolled back Obama-era policy touching every corner of the American economy. Trump’s America-First agenda saw the United States withdraw from NATO, put an end to NAFTA, and promise to invest in rehabilitating the American manufacturing economy. Republicans moved quickly to significantly increase military spending and passed an enormous infrastructure bill while also implementing massive tax cuts.

Living up to campaign promises, Republicans were quick to repeal what they believed to be the most egregious parts of the Affordable Care Act in 2017, eliminating the individual mandate, healthcare exchanges, and the requirement for larger employers to provide coverage to their employees. At the same time, to curry favor with voters, the 2017 Empowering Patients First Act did not eliminate the parts of the ACA that consumers liked: requiring that insurers cover pre-existing conditions, and allowing children to remain on their parents’ policies until age 26.

Political Dynamic U.S. Economy Industry StructureHarmony Recessionary Consolidated

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The combination of tax credits, allowing insurers to compete across state lines, and incentives for Americans to participate in health savings accounts, however, were not enough to encourage the millions of Americans that previously had purchased insurance on the exchanges to acquire coverage on the individual market. As a result, by the beginning of 2018, most insurers were left with risk pools over-weighted with older and sicker policyholders. While large players like Aetna-Humana and Cigna-Anthem were able to weather what they hoped was a temporary imbalance in the risk pool, smaller players could not, and many exited the business.

With the Democrats having to defend ten Senate seats in the 2018 midterm elections in states won by Donald Trump two years earlier, and having failed to put up any meaningful opposition to the Trump agenda, Republicans further consolidated their c o n g r e s s i o n a l majority, picking up five Senate and over a dozen House seats. The deaths of Supreme Court Justices Stephen Breyer and Ruth Bader Ginsburg in 2017, on top of the vacant seat caused by the death of Antonin Scalia in 2016, gave Trump a total of three Supreme Court nominations in his first term that he used to solidify a conservative Court for the next 20 years, making any challenges in the judiciary to his roll-back of business regulations a non-starter. The United States entered a recession in early 2019, with the recovery hindered by the massive budget deficits that had resulted from expanded government spending on infrastructure and the military, and tax cuts that had reduced government revenue intake by nearly 15%. With the United States largely absent from major global trading blocs, near-shore production of common consumer items such as wide screen televisions, furniture, and toys drove prices up and resulted in

a dramatic increase in the consumer price index and surging inflation rates. 1970s-style economic malaise returned with a vengeance.

Unable to accept blame for the nation’s economic woes, Trump attempted to divert the country’s attention away from its stagflation and gambled on several overseas military ventures. The president ordered the U.S. Carrier Strike Force 7th Fleet to the South China Sea to keep Chinese saber-rattling in check, leading to several skirmishes between U.S. and Chinese fighter aircraft in the summer of 2019. Trump also launched a naval blockade of Venezuela after the Madura government was implicated in running a drug smuggling operation that increased heroin

trafficking to the U.S. Things hit a new low, however, when Washington’s military partnership with Moscow in Syria quickly derailed after U.S. intelligence determined that Russia’s victory over the United States in the 2018 winter Olympic biathlon was due to use of performance enhancing drugs. Trump retaliated by launching a covert war in Crimea to end the Russian occupation.

These foreign adventures destabilized global oil markets and by the beginning of 2020, crude prices sat at over $120 per barrel.

Business failures rose significantly starting in 2019. By mid-2019 the unemployment rate stood at 8.6 percent and most individuals who had lost their health insurance when they lost their job could not afford to purchase individual or family policies. By the end of 2019, more small regional health insurance players exited the market, unable to eke out a profit with such unfavorable risk pools. Larger insurers filled the void, and with a relaxing of regulations that permitted them to compete across state lines, the industry consolidated into several major regional players that quickly and significantly raised premiums. By 2020, the rates of uninsured Americans well surpassed pre-ACA levels.

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Uncertainty prevailed among most healthcare industry players by late 2019 as few believed the state of the U.S. healthcare system was sustainable. To hedge their bets, large insurers drove another round of consolidation. UnitedHealth Group announced its intention to acquire Highmark in 2019, and, with a relaxing of regulations that allowed insurers to compete across state lines, many Blue Cross Blue Shield companies merged to create regional insurance powerhouses. At the same time, healthcare providers went on a buying spree, consolidating hospital systems and provider networks into massive delivery entities that can realize economies of scale as the rate of healthcare inflation continues to soar. Today, Partners Healthcare, which manages providers from Maine to Maryland, is the nation’s largest healthcare provider.

The 2020 presidential election season kicked off with the U.S. economy still struggling, the U.S. military mired in seemingly endless foreign interventions, and U.S. consumer confidence at an eight-year low. Sensing a massive electoral defeat in 2020, Congressional leaders unified and coalesced around Ted Cruz to mount an intra-party challenge to Donald Trump’s attempt to secure the Republican nomination. With the writing on the wall, and afraid of publicly losing the nomination campaign, Trump and Vice President Mike Pence pulled out of the nomination race in June 2020, clearing the path for Cruz’s nomination and eventual election victory over 78-year old Joe Biden.

TECH SAVES HEALTHCARE

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January 19, 2021 – The resilience of the technology-fueled growth in the U.S. economy is on everyone’s mind as President-elect Mark Zuckerberg prepares to take the oath of office. To be sure, the past four years saw a roller-coaster ride of hope, promise, and hard work, but ultimately disappointment as the hoped-for Trump revolution fell flat. However, a wave of innovation resulted in the most dynamic American economy since the 1920s, and today, consumers rely on technology for virtually all facets of commerce. With technology solutions creating entirely new industries by linking buyers and sellers of all sorts of goods and services, creative disruption is the name of the game as longstanding companies struggle to find relevance as new start-ups build revenue and brand loyalty in no time flat.

The inauguration of President Donald Trump in 2017 ushered in single party government in the U.S. for the first time since 2007, and expectations were high that political gridlock would finally come to an end. The Republican Congress acted quickly to repeal the Affordable Care Act as its first significant legislative achievement in 2017, much to the delight of the Republican base, as well as most of Donald Trump’s supporters.

However, the Republicans overplayed their hand and failed to appreciate the importance the electorate placed on having an ACA alternative at the ready. With all provisions of the ACA scheduled to expire at the end of fiscal year 2017, Republicans failed, due to intra-party divisions, to legislate a replacement in time. The death blow came when several establishment Senate Republicans, including Susan Collins of Maine and John McCain of Arizona, led an effort to delay voting on the Empowering Patients First act to deny giving Trump a legislative victory due to his refusal to pursue aggressive sanctions against Russia for Moscow’s role in meddling in the 2016 U.S. election and its escalation of the Syrian conflict and support of President Assad. As a result, on October 1, 2017, the U.S. healthcare system returned to its pre-2010 state.

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Republicans’ failure to manage the healthcare reform process, combined with other legislative disappointments – especially the 2017 Secure our Southern Border Act that legislated the construction of a wall on the Mexican border funded entirely with U.S. taxpayer dollars – caused Trump’s political base to disintegrate, and prompted an electoral defeat for Republicans in the 2018 midterm elections. The Democrats re-took the Senate after winning several contests in states won by Trump just two years ago. With the Republicans now the minority party in the Senate again, by a slim 49-51 margin, two-party government returned to Washington.

Despite – or maybe because of – the political gridlock, the U.S. economy entered a new era of innovation, and technology soon became the solution to many problems that government could not solve. The continued resilience of the U.S. economy fueled technological innovation, and nowhere was this more apparent than in the healthcare sector. Today, technology fuels increased collaboration, partnerships, and transparency across individuals, employers, care providers, payers, and pharmacies, supported by novel platforms and advanced algorithms that contribute to better risk management, cost efficiencies, and improved healthcare outcomes. Technology giants and innovative start-ups alike revolutionized the way Americans find, pay for, and use health insurance, and how they interact with their healthcare providers. The popularity of tech start-up InsureMe embodies the new healthcare world. Started by the founders of Lending Tree and Mint, the company allows consumers to enter their personal health actuarial score or PHAS. This score, similar to a credit score, is generated automatically by Apple, in partnership

with TransUnion, by mining personal health data maintained on Apple’s Health app. Consumers receive competing offers from health insurers for coverage based on their age, health status, residence, and other factors.

Meanwhile, many large employers have expanded the use and popularity of private health exchanges to provide their employees a competitive market to compare plans and rates. Combined with

a move toward a defined contribution model for health benefits, private exchanges fueled by Google and eBay are enabling employees to save money and plan their own healthcare expenditures more effectively. The two firms announced plans in 2019 to open private exchanges to anyone looking to purchase coverage, whether through an employer’s plan or on the individual market.

Meanwhile, there has been a technology innovation explosion in healthcare delivery. That telehealth has transformed how physicians diagnose and treat common maladies is old news; today, the sharing economy has impacted how patients find and contract with physicians. Uber in 2019 launched

UberHealth, a platform on which individuals can locate a specialist to treat a variety of illnesses and conditions, and contract and pay for services securely online in partnership with their health insurance provider. Meanwhile, Amazon has launched EchoMD, an addition to its popular Alexa virtual personal assistant that can collect patient samples of blood and urine, conduct basic diagnostic tests and communicate the results securely to physicians and nurse practitioners, and order and have delivered prescription medications and other medical supplies.

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Amazon has also opened its retail platform to pharmacies, hospitals, out-patient centers, and other care providers to create a seamless e-commerce network that helps patients coordinate care more effectively. Not surprisingly, these healthcare technology innovations have dramatically slowed the rate of healthcare inflation, now at its lowest level in more than 30 years.“There has been a revolution in the consumer experience associated with healthcare” says Rick Pollack, President and CEO of the American Hospital Association. “Thanks to the innovation introduced by Uber, Apple, and start-ups like InsureMe, as well as the cost savings that have emerged, going to the doctor – whether in physician’s office or virtually – is actually something consumers look forward to.” Facebook, Google, and Cigna are reportedly discussing an alliance to provide innovative new health insurance plans to participants in the “gig economy”, and are in negotiations with Lyft, Airbnb and Task Rabbit to offer health insurance to their contractors. Cigna is particularly driven to find new partnerships after the Department of Justice ruled against its merger with Anthem in 2018.It didn’t take long for voters to acknowledge the role that technology played in transforming multiple segments of the U.S. economy. And it was no surprise that when Mark Zuckerberg in a Facebook post hinted at his interest in running for office, a coalition of centrist politicians, venture capitalists, and tech industry leaders launched a third-party effort to secure his nomination. He beat Democratic candidate Elizabeth Warren and the incumbent Donald Trump by more than 10 points, and won the Electoral College in a 320-146-72 landslide.

THE HUNGER GAMES

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January 19, 2021 – On the eve of the presidential inauguration, the story running incessantly on CNN was hard to miss. The United States now ranks below Argentina in a study of healthcare outcomes prepared by The Commonwealth Fund. According to Dr. Benjamin Chu, the Commonwealth Fund’s Chairman, “When measured against patient access, wait times, re-hospitalization rate, morality figures and other measures of quality and effectiveness, the United States’ healthcare system ranks just below Argentina. The Netherlands, once again, ranked best in terms of healthcare quality compared to per capita costs.”

It’s not hard to see how we got here. With the botched repeal of the Affordable Care Act in 2017, the U.S. healthcare system took several steps backward and today is a case study on soaring costs, inefficiencies, and poor patient access. President-elect Elizabeth Warren and all members of Congress agree something needs to be done, but there is no political consensus on what that should be.

Exuding overconfidence and misreading public sentiment, Congressional Republicans in 2017 could not have managed the repeal of the Affordable Care Act more poorly. With a majority of Trump voters claiming in polling that they wanted the ACA retained if no alternative was ready at the time of repeal, Congress pressed ahead with immediate repeal anyway. Intra-party factions came to the forefront when Congress attempted – without any help from Democrats – to draft a bill for an Obamacare replacement. As a result, the ACA was repealed effective October 1, 2017, but nothing was legislated in its place. Even though Congress set the deadlines for the major elements of the ACA – such as the individual mandate and the exchanges – to expire several years out, the uncertainty generated by the lack of an ACA replacement caused insurance markets to practically collapse.

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Insurers, spooked by not having a clear direction on regulations for health insurance provisions, raised premiums dramatically to hedge their bets against current and future losses. That caused fewer consumers in the 2018 open enrollment season to opt for insurance, except for older and sicker people who could not live without it, and who were offered some relief by state Medicaid block grants. Employer costs also skyrocketed, leading to a surge in the number of large companies that opted to self-insure, and in small companies that no longer provided coverage for their employees. Most employers also moved to a defined contribution model for health benefits, raising employee costs and risk.

Other legislative failures, including the inability of Congress to raise the federal debt ceiling in March 2017 that led to a U.S. default on its credit obligations, and a dramatic increase in the federal budget deficit due to the costs of the U.S. invasion of Syria in June 2017 precipitated the recession that began in September 2017. The lackluster economy depressed corporate earnings, and many high-profile healthcare mergers – including Anthem-Cigna and Aetna-Humana – were called off, even though the Department of Justice dropped its antitrust actions against both.

Obamacare features such as risk-sharing agreements between payers and providers and public investments in healthcare technology were also abandoned as payers again relied heavily on fee-for-service payments with providers, while

cutting back on technology implementation costs. Progress made over the past ten years to improve patient access and to improve care continuity quickly dissipated. Today, navigating the U.S. healthcare system is an exercise in frustration.

For most consumers, this means being stuck with a barebones health insurance policy offered either by employers or on the exchanges – both

complete with high deductibles and co-pays and limited provider networks. Incentives,

including the financial benefits that come with coordination, are

largely gone for providers to synchronize care with an

eye toward better patient outcomes. As a result, inefficiencies in the system are pervasive. As the income disparity between rich and poor continues to widen, wealthy consumers can pay professional healthcare navigators

to help coordinate care while middle income

and poor consumers face countless hours

visiting providers, filling out forms, and essentially

managing their own care plans.

Now, four years after the advent of the Trump administration, most sectors of the U.S. economy are lagging, not the least of which is healthcare. Manufacturing jobs continue to leave for Mexico, China and other low-cost offshore locations, and the nation’s unemployment rate hovers at 9 percent. Senator Elizabeth Warren’s populist message railing against corporate executives and billionaires resonates, and she defeated Donald Trump in an electoral college landslide resembling Ronald Reagan’s 49-state win over Walter Mondale in 1984.

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CONCLUSION

The particular conclusions to be derived from the scenarios presented above ultimately depend upon the organization as each will have its own set of goals and market realities. The benefits to be derived from scenario planning are found not in the scenarios themselves, but in their analysis and in the development of strategic plans that incorporate the critical learnings. Upon reviewing and scrutinizing these scenarios, a technology company, for instance, will gain insight and develop strategic plans that are vastly different from a healthcare or health insurance provider. A political leader will find as much value, albeit develop vastly different action plans.

Scenario planning is a highly effective approach that an executive can use to capture and analyze the relevant factors of uncertainty and forge a robust, flexible strategy for the future. In the case of the U.S. healthcare and health insurance industry in a Trump world, one can understand the role of key elements that will drive an organization’s future: the Trump Administration’s agenda, extent of Congressional support, consumer demand, world events, industry consolidation or fragmentation, to name a few. To forecast only one or two of these dimensions risks over-simplification as future industry conditions will depend on the interrelationship of all of these trends. The scenarios presented above illustrate how three major dimensions – Political Dynamic, U.S. Economy, and Industry Structure – could interact and serve as fodder for strategic analysis and discussion among executives, and political leaders, for that matter, as they consider their strategies and actions moving forward.

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Of course, scenarios, while compelling, are a means to an end and not the solution themselves. Any scenario planning effort must be focused on identifying actionable outcomes in the form of a range of strategic options that conform to the opportunities and constraints faced by any business. To achieve this goal, business and political leaders need to debate and articulate the rationale and detailed explanations as to why one set of options may be more effective than another across scenario conditions. These explanations can then be tied to a set of early warning indicators, markers that antedate trends and market movement and that can guide executives as they continuously modify their actions. These early warning indicators can be tracked and reported through a strategic program so that leadership has the best and most incessant picture of the relevant factors impacting their organization.

Early warning programs empower business executives to anticipate external threats and opportunities. Systematic monitoring through a continuous framework enables swift decision-making when, and even before, the competitive landscape shifts. But building an early warning program is not easy. It’s one thing to define a competitor set or to rank specific growth opportunities, but designing, funding, resourcing, and implementing an early warning program for all potential eventualities can seem amorphous, nebulous, and overwhelming to the point of paralysis. In fact, the Fuld Institute for Competitive Strategy found that even after successfully charting their market position and identifying strategic risks, a majority of firms fail to incorporate monitoring programs into their strategic plans. The danger of such a gap is a lack of foreknowledge and diminished decision-making power.

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APPENDIX

Scenario planning provides a structured framework to develop flexible and robust strategies that are tested against a broad range of future industry conditions, and to build and implement a strategic early warning system. By shaping today’s variables and points of uncertainty into divergent but plausible scenarios, executives and political leaders can link strategic imperatives to on-going market monitoring for risk/opportunity identification. Fuld + Company has worked with clients across numerous industries and government sectors, using a proven four-step approach to developing scenarios and establishing successful early warning processes. The benefit: monitor the market more effectively.

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1. DRIVERS & SCENARIO DIMENSIONSa. Brainstorm a complete set of current industry variables b. Group the drivers into three, four or five high level dimensions – broad categories of related driversc. Assign dichotomous behaviors to each dimensiond. Create a scenario matrix depicting all possible dimension behavior combinations. Give each scenario possibility a descriptive name

2. SCENARIO BUILDINGa. Select four or five scenarios from the matrix that together capture the full range of future threats and opportunities your organization may faceb. Write rich, descriptive narratives for each chosen scenarioc. Describe the behavior of key drivers in each scenario

3. CRITICAL SUCCESS FACTORS & STRATEGY FORMULATIONa. Determine critical success factors for your organization within each of the selected scenariosb. Describe a strategy that will enable your organization to meet the critical success factors in each scenarioc. Identify common strategy themes across the scenarios; this is your “core” strategy likely to be resilient no matter what actual future evolvesd. Tie scenario-unique strategies to the various dimensions identified above to form contingency strategies

4. EARLY WARNING PROGRAMa. Determine observable and reportable indicators for each dimension behaviorb. Determine keywords and data sources based on key indicatorsc. Configure monitoring platform(s)d. Establish reporting vehicle(s) and organizational responsibilitiese. Evaluate which dimension behavior is occurring based on your analysis of the indicators, and revisit relevant contingent strategies for possible deployment

Learn more about Scenario Planning from the Fuld Institute for Competitive Strategy Early Warning Toolkit

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FOOTNOTES

Photo of Donald Trump by Gage Skidmore used with permission under CC BY-SA 2.0 license

Photo of Donald Trump sign by Gage Skidmore used with permission under CC BY-SA 2.0 license

Protest march against Donald Trump by Fibonacci Blue used with permission under CC BY 2.0 license

Photo of Mark Zuckerberg by TechCrunch used with permission under CC BY 2.0 license

Contributing to the Fuld + Company Healthcare Scenarios in a Trump World were scenario planning

consultants Barbara Reismann, Ben Price, Karl Varkey, Malini Solanki, Nathaniel Emmons, Vineet

Vallam, and Varun Naik.

ABOUT FULDFuld + Company is a leading competitive strategy consultancy that helps clients anticipate competitive activity, see beyond market disruptions, and develop or refine robust business strategies. Through research, analysis, and strategic consulting we work with the Global 1000 to identify and solve tactical and strategic challenges.

With over 35 years of experience, and offices on three continents, Fuld + Company developed many of the competitive intelligence and strategic analysis techniques used today. Having completed thousands of projects, we are recognized as an organization of thought leaders by publications such as Fortune, Fast Company, The Financial Times, The Economist and Time Magazine.

US GLOBAL HEADQUARTERS131 Oliver Street, 3rd Floor, Boston, MA 02110, United States+1 617 492 5900

EUROPE 20 Conduit Street, London W1S 2XW, United Kingdom+44 (0) 20 7659 6999

ASIA-PACIFIC 3402 One Corporate Centre, Julia Vargas cor. Meralco Ave., Ortigas Center, Pasig, Philippines+63 2 706 3292

www.fuld.com