Future in Flux: Intel for the Health & Human Services Executive

In brief:

• Through a survey of 50 Health & Human Services (HHS) leaders, we’ve identified the industry’s trends, challenges, and opportunities in 2022.
• Our research indicates that sourcing and retaining talent and enhancing transformation capability are primary focus areas for industry players.
• To capture these opportunities, HHS leaders should:
  1. Align and mobilize people in the context of enterprise strategy.
  2. Configure the organizational blueprint.
  3. Deliver transformation with an approach that strengthens the organization’s muscle for change.

In December 2021, North Highland surveyed more than 500 business leaders across industries, exploring their thoughts on the trends and challenges expected in 2022. While each industry had specific focuses, one takeaway was consistent across the board: The future is very much in flux, and business leaders must learn to be flexible. This blog series explores the insights from the study, offering the advice you need to capitalize on the trends and build agility for a fast-paced, quickly changing future. 

Pushing through a critical inflection point

The pace of change in Health & Human Services (HHS) is on the fast track, thanks in part to an influx in federal funding to state agencies: The U.S. Department of Health & Human Services’ fiscal year 2022 budget provisions $1.5 trillion in mandatory funding. Agencies must be prepared and equipped to put these funds toward their transformation aspirations. Whether that involves addressing complex system modularity, elevated constituent expectations, or the ability to minimize risk, HHS leaders face robust obstacles on the path to transformation.

Through a survey of 50 HHS leaders, we’ve identified the trends, challenges, and opportunities facing the industry in 2022. Our research suggests HHS leaders have several workforce and operational gaps to fill before they can truly capture the transformative opportunities that 2022 holds. These common challenges fall into two key themes: (1) sourcing and retaining talent and (2) enhancing transformation capability.

Finding the cure for workforce pressures

HHS leaders know their ability to deliver transformation hinges on recruiting, retaining, and developing the right talent. Whether it be a major procurement, multi-vendor management, complex program orchestration, or embedding agility, people are the most critical success factor. Now, however, the HHS world finds itself at a critical inflection point. The bulk of the HHS workforce is older, with many eligible to retire in the next five years. Industry leaders are finding it tough to nurture long-term thinking and establish continuity in institutional knowledge.

Nearly half of the leaders we surveyed (48 percent) reported that talent management and retention-related challenges are the top internal issue they’d like to address with their transformation strategies. HHS comes in 19 points above the all-industry average in this area, and roughly one quarter of leaders in this space are focused on talent shortages and demand for upskilling/reskilling respectively. Eighty-six percent of these leaders agree or strongly agree that talent and workforce skills will need to change through the course of their organization’s transformation. As a result, they are exploring hybrid work solutions (56 percent) and managed services (47 percent) to meet the demands of ever-evolving talent pressures.

HHS leaders are also committed to investing in current employees, keeping them engaged, and providing advancement opportunities. Thirty-eight percent of those surveyed cited improved employee experience and engagement as a main objective of their 2022 transformation strategy. This figure is seven points above the average of all industries we surveyed, reflecting the real challenge HHS leaders face in motivating workers in an operating environment that is regularly impacted by budget cuts, shifts in federal regulations, and changes in state administrations.

ACT ON THE TRENDS

Align and mobilize people in the context of your strategy

To tap into the transformational power that a thriving workforce brings, HHS leaders must set aside functional allegiances and evaluate their workforce through the lens of shared enterprise objectives. With additional federal funding comes new opportunities to overhaul systems, constituent experiences, and more. But first, leaders must align on how to best mobilize their people in that effort. Consider the following steps:

• Identify and align on potential workforce investments that will move the needle on your enterprise roadmap. Fifty-six percent of those we surveyed say that leadership alignment around intended outcomes is the top factor influencing successful transformation delivery. HHS leaders were 12 points more likely to have this opinion than our average across industries, pointing to alignment’s vital role in HHS strategic outcomes.
• Prioritize the investments that offer shared value for employees, constituents, and operations alike. For instance, you may opt to deploy a test-management upskilling program that reduces operating costs. Or you may make the case for an investment in employee engagement and training programs on the grounds that they will pay dividends toward an improved constituent experience and the ability to address current and future challenges.
• Rethink how you’re sourcing talent. Approach your workforce strategy as a modular set of components that you can flex to best meet organizational needs, cost pressures, and changing regulatory environments. It could include a mix of full-time, part-time, contract, or managed services options. As external conditions and business needs change, an adaptive portfolio of workforce constructs can help you flex to cultivate essential capabilities, optimize expenses, and minimize risk.

Reigniting transformation capability

As we continue into the third year of the COVID-19 pandemic, HHS leaders know continued operational challenges are on the horizon. The U.S. Department of Health & Human Services’ annual budget underscores the operational headwinds behind the industry’s transformation agenda:

“This pandemic amplified the critical role of response functions across HHS agencies ranging from development of medical countermeasures, ensuring an effective supply of products and effective regulatory capacity, to effectively working with state and local governments to support local response activities...”

This outlook highlights an important truth that HHS leaders must confront: Transformation is not a once-a-decade effort, it is a continuous journey. Employees across state HHS agencies play an integral role in helping their organizations respond more readily to internal and external changes. To be successful, they’ll need the right operational support and capabilities. Unfortunately, 46 percent of the HHS leaders surveyed perceive their operating model as a barrier to becoming more adaptive today. The good news? Our research also highlights several opportunities across the operating model that, when addressed, can make HHS agencies more transformation-ready:

• Ways of working: Improved ways of working are a key objective for 38 percent of our respondents, with 30 percent relying on agile planning processes in the design and delivery of their transformations. Nearly half cite a need to move faster and be more responsive to prompt transformation strategies. Many HHS enterprises pursuing large IT transformations are looking toward continuous testing strategies to accelerate delivery while ensuring quality is embedded throughout, from strategy-setting to day-to-day processes.
• Structures: Modernizing operations and infrastructure is an objective for 36 percent of our survey respondents. A need for greater integration of systems and infrastructure is the second-highest internal factor HHS leaders are seeking to address through their transformation strategy (30 percent of respondents).
• Tech and analytics: As HHS leaders look to improve their systems, work in more adaptive and agile ways, and drive productivity, they recognize the importance of data and technology. Data and analytics capabilities and technology capabilities are the top two factors enabling HHS organizations to be more flexible, according to those we surveyed.

ACT ON THE TRENDS

To lay a strong organizational foundation for transformation capability, we recommend acting on these trends in two ways:

• Configure your organizational blueprint. Pulling off a complex system integration, reimagining the constituent experience, or realizing any other transformative objective cannot be addressed in IT, finance, or HR’s silo. For instance, when implementing a modular Medicaid Enterprise System—one that runs efficiently, effectively, and improves the constituent experience—every organizational element must be in sync. Evaluate your operating model and organizational strategy, including people, processes, governance structures, data, and technology. Next, be ready to answer questions that are complex and multi-disciplinary in nature:
  • How will employees communicate with constituents and providers, including the channels and language they use? 
  • Do you have an enterprise test management strategy that embeds quality and assures constituent value across the end-to-end transformation journey?
  • How will data (demographic, engagement, and operational) be used to make constituent interactions more seamless and personal? 
  • How will you configure and share timely and high-quality data in a way that facilitates interoperability and improves the health and well-being of constituents?
• Deliver on your plan with an approach that strengthens your muscle for change. While our research indicates that 94 percent of HHS organizations have dedicated structures to govern their transformation today, supplementing them with an emphasis on internal capability will sustain change acumen for the long haul. To support and enable your efforts, a Transformation Value Office (TVO) can provide the bridge between transformation vision and the people and processes that drive that transformation. It serves as an engine to orchestrate and drive complex initiatives forward with an emphasis on building long-term capability.

The HHS world is primed to move ahead at a break-neck pace in 2022, which will mean pushing through many unknowns. Investing in your talent management strategy and people will pay dividends, as will lighting a fire under your transformation capabilities. With the right tools in place, HHS agencies can adapt on the fly and speed toward transformation goals, no matter what pivots are required along the way.