es have strategic plans
and whether the hospitals that do have them perform better than those
that do not. It is a mistake for hospital managers to accept on faith
alone the putative virtues of formal strategic planning.[10,11] In fact,
results of some empirical work in business organizations suggest that
strategic planning in hospitals may not be beneficial. Rue and
Fulmer[12] have found that service firms that implemented strategic
plans performed worse than those that did no planning. Similarly,
Robinson and Pearce[13] examined strategic planning in small banks and
found no differences in performance between formal planners and
nonplanners. These two studies indicate that formal strategic planning
may not be helpful in service industries. The quickly changing nature of
the environment of service firms requires firms to respond fast.
However, a formal strategic planning process may introduce bureaucracy
into the firm's decision making. Thus, the firm's flexibility and
ability to respond quickly may be inhibited by strategic planning.
Furthermore, Weick[14] believes that too much planning is harmful for an
organization since the organization may become more concerned with
planning than acting. If formal strategic planning does not lead to
superior performance, its expensive and time-consuming nature may result
in hospitals being hindered, not helped, by planning.
Obviously, counter-intuitive empirical results reveal the need for close
examination of the benefits and problems of strategic planning in
hospitals. This article considers these issues in four sections. First,
formal strategic planning will be defined and differentiated from
long-range planning in hospitals. This is important because most
hospitals are required by outside authorities to engage in various
long-range planning activities, but this mandated and regulated activity
is not of interes...