Business Capability Mapping for Hospitals

1. Capability Mapping Healthcare Excellence www.capstera.com 1

2. Transform Hospital Operations with Strategic Capability Mapping In the complex ecosystem of modern healthcare delivery, ▪ hospitals face unprecedented pressure to optimize resources, improve patient outcomes, and adapt to evolving payment models while maintaining financial sustainability. The foundation for this multifaceted transformation lies in a clear understanding of what the organization does, independent of how it's done or who does it. A Business Capability Map provides this critical foundation, ▪ offering hospital leadership a comprehensive view of the organization's abilities while establishing a stable reference point for strategic planning, technology investment, and operational improvement. Hospitals create an enduring framework that transcends organizational changes and technology evolution by modeling capabilities rather than departments or processes, enabling genuinely transformative initiatives. www.capstera.com 2 2

3. The Strategic Value of Business Capability Mapping 1 Business Capability Mapping elevates strategic planning from departmental silos to an enterprise view, enabling hospital leadership to make coherent, value-driven decisions. This approach creates a shared understanding of organizational abilities that transcends traditional boundaries. • Strategic alignment acceleration. Capability mapping creates clear visibility between strategic objectives and the operational capabilities required to achieve them, ensuring investments deliver meaningful outcomes. • Transformation foundation. A well-structured capability map provides the stable reference architecture needed to guide complex, multi-year transformation initiatives across clinical and operational domains. • Investment prioritization framework. Capability heat mapping enables leadership to prioritize investments based on strategic importance, performance gaps, and competitive differentiation potential. • Cross-functional visibility. Capability models break down departmental silos by creating a shared visualization of how different organizational units contribute to core hospital functions. • Future-state visioning. Capability mapping facilitates collaborative development of target-state models that guide the organization's evolution toward strategic goals. www.capstera.com 3

4. Capability Mapping Fundamentals for Healthcare 2 A Business Capability Map represents what a hospital does to fulfill its mission, independent of how these functions are performed. This abstraction creates a stable foundation for transformation that remains relevant despite organizational or technological changes. • Capability definition clarity. A capability represents a discrete "what" the organization does—like "Patient Scheduling" or "Clinical Documentation"—rather than how it's done or the technologies that enable it. • Hierarchical structuring. Effective capability maps organize functions hierarchically, typically using Level 1 (enterprise), Level 2 (functional areas), and Level 3 (specific capabilities) to provide both strategic overview and operational detail. • Outcome orientation. Each capability should be defined by the business outcome it delivers rather than the activities performed, creating a results-focused view of the organization. • Comprehensive coverage. A complete capability map encompasses everything the hospital does—from patient care and clinical operations to administrative functions, support services, and strategic management. • Organizational neutrality. Capability maps are intentionally separated from organizational structure, allowing capabilities to transcend reporting structures and departmental boundaries. www.capstera.com 4

5. Starting Your Capability Mapping Journey 3 Beginning a capability mapping initiative requires careful planning, stakeholder engagement, and a clear understanding of scope and objectives. This foundation ensures the resulting model delivers meaningful strategic value. • Executive sponsorship establishment. Secure active support from executive leadership who understand the strategic value of capability mapping and will champion its adoption across the organization. • Scope definition. Determine whether to begin with an enterprise-wide map or focus on specific domains such as clinical operations, revenue cycle, or patient engagement based on strategic priorities. • Team composition. Assemble a cross-functional team that combines business architecture expertise with deep domain knowledge across clinical, operational, and technical dimensions of hospital operations. • Methodology selection. Choose appropriate frameworks and approaches, considering healthcare-specific methodologies or adapting general business architecture standards to the hospital context. • Outcome definition. Clearly articulate the specific business questions the capability map will address, from technology investment prioritization to merger integration planning or process standardization. www.capstera.com 5

6. Constructing the Level 1 Capability Map 4 The highest level of the capability map divides hospital functions into major domains, creating an executive-friendly visualization of the organization's primary capability categories. This foundation guides further decomposition into more detailed capabilities. • Enterprise capability domains. Define 8-12 major capability domains that comprehensively represent the hospital's functions, typically including Clinical Care Delivery, Patient Access, Revenue Management, Supply Chain, Human Capital, and others. • Strategic alignment. Ensure Level 1 domains reflect strategic priorities and mission-critical functions, creating immediate relevance for executive stakeholders. •Boundary definition. Clearly delineate boundaries between domains to minimize overlap and create distinct capability groupings that facilitate ownership and governance. • Common language establishment. Develop and document precise definitions for each domain to ensure consistent understanding across diverse stakeholder groups. • Visual representation. Create a simple, compelling visualization of Level 1 domains that effectively communicates the hospital's functional composition to executive leadership. www.capstera.com 6

7. Did You Know Did You Know? According to a Gartner study, organizations ▪ that use capability mapping as a foundation for transformation achieve 35% higher success rates for major change initiatives compared to those using traditional project-based approaches. www.capstera.com 7

8. Developing Level 2 and 3 Capabilities 5 Decomposing Level 1 domains into progressively more detailed capabilities creates the hierarchical structure that makes the map valuable for both strategic and operational purposes. This decomposition reveals the specific functions that drive organizational performance. • Hierarchical decomposition approach. Break each Level 1 domain into 5-9 Level 2 capabilities, then further decompose into Level 3 capabilities where additional detail adds value for analysis and planning. • Clinical capability specialization. Ensure clinical domains reflect the hospital's specialized capabilities in areas like emergency medicine, surgical services, and diagnostic services with appropriate depth. • Operational capability visibility. Clearly articulate operational capabilities that enable clinical excellence, including patient flow management, care coordination, and clinical support services. • Administrative capability inclusion. Develop comprehensive models of critical administrative capabilities like revenue cycle, supply chain, and human capital management that support the hospital's clinical mission. • Granularity calibration. Balance the need for detail with usability, ensuring the capability hierarchy provides sufficient precision for decision-making without becoming overwhelming. www.capstera.com 8

9. Assessing Capability Performance and Importance 6 Capability assessment transforms the map from a static model to a dynamic decision-making tool by evaluating performance, strategic importance, and other dimensions that inform investment priorities and improvement initiatives. • Assessment dimension definition. Select relevant evaluation dimensions, typically including strategic importance, current performance, risk exposure, and competitive positioning. • Evaluation methodology development. Establish clear criteria and rating scales for each assessment dimension to ensure consistent evaluation across capabilities. • Stakeholder input collection. Gather perspectives from diverse stakeholders including clinical leaders, operations managers, and technology teams to ensure balanced assessment. • Heat map visualization. Create visual representations that highlight capability gaps and opportunities, making assessment results immediately actionable for decision-makers. • Prioritization framework application. Develop a structured approach to translate assessment results into investment priorities and improvement initiatives. www.capstera.com 9

10. Connecting Capabilities to Hospital Strategy 7 Mapping capabilities to strategic objectives transforms strategic plans from abstract aspirations to concrete operational requirements. This connection ensures improvement initiatives target capabilities with the greatest impact on strategic outcomes. • Strategy decomposition. Break down strategic objectives into the specific outcomes and performance improvements they require from the organization. • Capability impact analysis. Identify the capabilities that most directly influence each strategic objective, creating visibility into operational dependencies. • Gap assessment. Compare current capability performance with the levels required to achieve strategic objectives, revealing critical improvement needs. • Investment alignment. Ensure technology and process improvement investments target capabilities with the greatest strategic leverage. • Transformation roadmap development. Use capability-to- strategy mapping to sequence initiatives based on their contribution to strategic priorities and outcomes. www.capstera.com 10

11. Mapping Technology to Capabilities 8 Connecting applications and technology services to the capabilities they enable creates a powerful view of the IT landscape that supports rationalization, investment planning, and strategic technology management. • Application portfolio mapping. Document which applications support each business capability, revealing redundancies, gaps, and integration requirements across the technology landscape. • System criticality assessment. Identify which applications are most essential to enabling strategically important capabilities, informing risk management and investment priorities. • Technology debt visualization. Highlight capabilities supported by aging or fragmented technologies that represent investment requirements or consolidation opportunities. • Architectural pattern identification. Recognize common technology patterns across capabilities that can be standardized to improve efficiency and reduce complexity. • Investment planning support. Evaluate technology investments based on their impact across multiple capabilities rather than in isolation, ensuring holistic value assessment. www.capstera.com 11

12. Did You Know Industry Insight: HIMSS Analytics research indicates that ▪ hospitals with mature capability modeling practices identify 42% more opportunities for application consolidation during technology rationalization efforts, leading to average annual savings of $3.2 million in a 500-bed hospital. www.capstera.com 12

13. Capability-Based Process Optimization 9 Linking business processes to the capabilities they implement creates a powerful framework for process standardization, optimization, and automation. This connection ensures process improvement initiatives deliver meaningful capability enhancement. • Process-to-capability alignment. Map key processes to the capabilities they enable, creating visibility into how operational workflows support organizational abilities. • Standardization opportunity identification. Identify capabilities supported by multiple variant processes across departments or locations, revealing standardization opportunities. • Automation candidate selection. Recognize routine, high- volume processes supporting critical capabilities as prime candidates for automation and digital enhancement. • Performance measurement framework. Develop capability- aligned metrics that measure process efficiency and effectiveness in terms of business outcomes rather than activity measures. • Improvement prioritization. Focus process excellence initiatives on workflows that support strategically important 13 capabilities with significant performance gaps. www.capstera.com 13

14. Using Capability Maps for Organizational Design 10 Capability maps provide a business-focused foundation for organizational design, ensuring structure aligns with strategic priorities rather than perpetuating historical arrangements. This approach optimizes resources around the hospital's most critical functions. • Capability-based reorganization. Use capability importance and interdependencies to inform organizational structure, ensuring critical capabilities have appropriate leadership focus. • Resource alignment analysis. Compare resource allocation across capabilities with strategic importance, identifying areas of misalignment between priorities and investments. • Accountability clarification. Designate clear ownership for each capability, resolving overlapping responsibilities that create inefficiency and decision paralysis. • Skill requirement definition. Identify the expertise needed to excel in strategically important capabilities, informing talent acquisition and development priorities. • Matrix management enablement. Support effective matrix management by creating clarity about capability ownership across process and functional boundaries. www.capstera.com 14

15. Leveraging Capability Maps for Merger Integration 11 Capability mapping provides an invaluable framework for hospital merger integration, enabling objective comparison of organizational strengths and systematic planning of integration activities. This approach accelerates value realization while minimizing disruption. • Capability comparison analysis. Assess capability maturity across merging organizations to identify relative strengths, best practices, and consolidation opportunities. • Integration prioritization. Sequence integration activities based on capability strategic importance and performance gaps, focusing first on high-impact areas. • Target operating model development. Use combined capability assessment to design the optimal future-state capability model for the integrated organization. • Technology rationalization planning. Compare applications supporting the same capabilities across organizations to inform system consolidation decisions. • Cultural integration support. Identify capabilities with significant performance or approach differences that may require focused change management during integration. www.capstera.com 15

16. Accelerating Value with Pre-Built Capability Maps 12 Purchasing a pre-built, healthcare-specific capability map dramatically accelerates time-to-value while reducing resource requirements and ensuring industry best practices. This approach provides a proven foundation that can be tailored to hospital-specific needs. • Development timeline compression. Pre-built maps reduce implementation time from months to weeks by providing a comprehensive starting point that requires only customization rather than creation from scratch. • Industry best practice incorporation. Healthcare-specific capability maps embed industry knowledge and best practices developed across multiple hospital environments, elevating the quality of the final model. • Resource requirement reduction. Starting with a pre-built foundation significantly reduces the internal resources required for capability model development, enabling smaller teams to deliver robust results. • Implementation risk mitigation. Pre-built maps minimize the risk of critical capability omissions or structural flaws that can compromise the model's value and adoption. • Customization efficiency. Industry-specific starting points streamline the tailoring process by requiring only hospital-specific adjustments rather than fundamental framework development. www.capstera.com 16

17. Did You Know Implementation Reality: While developing a comprehensive ▪ healthcare capability map from scratch typically requires 4- 6 months and significant resource commitment, organizations using pre-built healthcare capability maps reduce this timeline by 65% on average. www.capstera.com 17

18. Capability Map Governance and Evolution 13 Establishing effective governance ensures the capability map remains accurate, relevant, and valuable as the organization evolves. This ongoing stewardship transforms the map from a project deliverable to a living strategic asset. • Ownership designation. Assign clear responsibility for map maintenance to a specific role or team, typically within enterprise architecture or strategic planning functions. • Update process establishment. Define structured processes for reviewing and revising the capability map to reflect organizational changes and strategic shifts. • Integration with strategic planning. Embed capability map review and assessment in annual strategic planning cycles to ensure ongoing alignment with organizational direction. • Stakeholder engagement maintenance. Develop mechanisms to sustain cross-functional engagement with the capability model as a strategic reference point. • Value measurement. Implement metrics to track the capability map's utilization and impact on strategic decision- making and operational improvement. www.capstera.com 18

19. Capability-Based Investment Planning 14 Capability-based investment planning transforms technology and process improvement funding from project-centric to capability-centric, ensuring resources target the organizational abilities with greatest strategic impact. • Portfolio alignment analysis. Evaluate the existing project portfolio against capability priorities to identify misalignments between investment and strategic importance. • Investment rebalancing. Adjust resource allocation to ensure strategically critical capabilities receive appropriate investment, even if they cross traditional budget boundaries. • Business case enhancement. Strengthen investment proposals by articulating their impact on strategic capabilities rather than departmental metrics alone. • Benefit realization tracking. Measure investment outcomes in terms of capability performance improvement rather than project completion milestones. • Long-term investment planning. Develop multi-year investment roadmaps that systematically build targeted capability excellence aligned with strategic priorities. www.capstera.com 19

20. From Capability Mapping to Transformation 15 Capability maps provide the foundation for sustainable healthcare transformation by connecting strategic vision to operational reality. This systematic approach ensures transformation initiatives deliver meaningful improvements in the capabilities that matter most. • Transformation scope clarification. Use capability assessment to define precise transformation boundaries, focusing efforts on capabilities with the greatest impact on strategic outcomes. • Initiative portfolio development. Build a coherent set of improvement initiatives that collectively enhance target capabilities, ensuring comprehensive rather than fragmented transformation. • Interdependency management. Identify and manage dependencies between capabilities to sequence transformation activities for maximum effectiveness and minimum disruption. • Change impact visualization. Use capability models to communicate transformation impact across organizational boundaries, building understanding and alignment. • Progress measurement framework. Establish capability- based metrics that demonstrate transformation progress in terms of improved organizational abilities and outcomes rather than project milestones. www.capstera.com 20

21. Takeaway Business Capability Mapping provides hospitals with an invaluable foundation for strategic planning, technology investment, organizational design, and transformation initiatives. By creating a comprehensive view of what the organization does—independent of how it operates or who performs the work—capability maps establish a stable reference architecture that transcends organizational changes and technology evolution. This business-focused lens enables hospital leadership to align resources with strategic priorities, identify performance gaps, optimize technology investments, and drive meaningful transformation initiatives that enhance patient outcomes while improving operational efficiency. 21 www.capstera.com 21

22. Next Steps 1. Assess your capability modeling maturity. Evaluate your organization's current approach to capability modeling and identify opportunities for enhancement or formalization. 2. Define your capability mapping objectives. Clarify the specific strategic and operational questions your capability map will address to ensure appropriate scope and approach. 3. Explore pre-built healthcare capability maps. Investigate industry-specific capability models that can accelerate implementation while incorporating healthcare best practices. 4. Identify executive sponsors. Secure leadership commitment from executives who understand the strategic value of capability mapping and will champion its adoption. 5. Assemble a cross-functional team. Bring together business architecture expertise with clinical, operational, and technical knowledge to develop a comprehensive capability view. 6. Develop an implementation roadmap. Create a structured approach to capability map development, assessment, and integration with strategic planning and investment processes. 22 www.capstera.com 22

23. Capstera is a treasure trove for Business and Enterprise Architects. ▪ Capability Maps for Various Functions and Sectors. ▪ Value Streams ▪ Business Data Models ▪ Insights ▪ Tools, Templates, and Tutorials Stay in touch with Capstera. www.Capstera.com https://www.linkedin.com/company/capstera https://www.X.com/Capstera https://www.facebook.com/capstera Note: Capstera’s products and their contents may differ from the general information offered in these guides.) 23 www.capstera.com 23

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