Throughout the tenth edition of this casebook, we discuss management in

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1 OVERVIEW Why do we do what we do? How do we know it works? How can we do it better? John Bingham, Twin Falls, Idaho Throughout the tenth edition of this casebook, we discuss management in health services organizations. Yet the boundaries of management are not clear. As managers, we bring our full selves to work. We manage relationships with family, friends, and significant others as well as our feelings about subordinates, bosses, and peers. In this text, we view managers in four ways: (1) by the extent to which managers control their work; (2) by the processes by which managers make decisions; (3) by managerial performance relative to norms and positive outliers; and (4) by aspects of organizational performance to which managers make contributions, including financial performance. We focus on the work managers do and how they talk about management. Thinking about how managers function, what they want, and how they achieve their goals is critical to improving performance. A key to success at work is being able to think reflectively in the present. This does not mean that managers cannot learn from the past or from planning creatively for the future. Managers learn by doing, not by talking about what they are going to do. If managers reflect too long about what they are going to be doing, they will often be too late. People want answers. Reflecting before doing or saying something, to ask, Is what I am going to do or say going to be good for me? takes only a moment. We define good for me as the right action, which can mean something quite different with the benefit of hindsight. Managers do not always act based on what is good for them or for the organization, but they can often reflect in advance about how what they are going to do or say will affect themselves and others. Helping another person, not taking the credit, being charitable, or being grateful may or may not be the right action depending on the managerial context. The right action will involve achieving their own and organizational goals, subject to situational and other constraints. xxxv

2 xxxvi Overview The Healthcare Sector Healthcare is a unique sector of the American economy. Part of healthcare deals with life-or-death matters. Patients and their families have strong feelings about many of the services they receive. Many health services are not measureable in terms of their outcomes. Most Americans do not pay most health expenses themselves. Rather, these expenses are paid for by private and public insurance. The healthcare sector is large, one-sixth of the gross national product. The health sector has its own language, cultures, and history. The context of healthcare organizations (HCOs) is different from the context of banking, education, manufacturing, or farming enterprises. For example, central to healthcare are core services provided by independent physician contractors. The Institute for Healthcare Improvement (IHI) describes the Triple Aim of HCOs as providing the best care (improving the patient experience) for the whole population at the lowest cost (IHI 2010). Yet any one of these goals is controversial at the organizational level. What does improving the patient experience mean if somebody isn t going to pay for it? Why should we contain costs, if by increasing costs this enables us to increase profits and thereby retain earnings so we can then expand services and take care of more patients? Similarly, what does improve the health of the population mean, if this would involve penalizing people for bad health behavior, such as smoking, poor diet, lack of sleep and exercise, and so forth? These goals are not the job of managers in organizations. But these issues can be framed so that they represent more acceptable organizational aims for managers: to improve patient experiences that people are willing to pay for, only to increase costs where the organization is adequately paid, and to help people who wish to change their health behavior so that their health may be improved. There are numerous stakeholders in HCOs: owners, managers, clinicians, consumers and taxpayers, pharmaceutical and insurance companies, payers, and organizations that regulate or accredit organizations. Managers have to operate in contexts where powerful stakeholders do not agree with each other. In a sense, there is no such thing for the manager as the organization only powerful groups within and without whose leaders seek to control organizational decision making. Levels and Issues Prospective employers examine a manager s track record. What individuals have done in the past is the best guide to what they will do in the future. Assessing the skills that managers have is relevant to learning what skills manag-

3 Overview xxxvii ers need to carry out the demands of a new job. Each job has its demands, its constraints (what the job occupant cannot do), and a range of choices associated with the position. Managers generally have more choices in their work than other workers. We have organized this text into six parts that parallel the levels of work over which managers have influence. These six levels range from greater to lesser, as managers have the greatest influence over themselves and the least influence over the external environment. We describe the least controllable level as accountability, in which managers influence those who supply the organization with inputs to which the organization adds value and influences them and other organizations and people to buy back the value-added goods and services. Levels, issues, and the degree to which the manager can influence activities are shown in Exhibit 1. EXHIBIT 1 Examples of Issues and Problems Associated with Different Levels of the Organization E

4 xxxviii Overview Part I, The Role of the Manager, is concerned with the immediate context within which managers work, how they spend their time, the importance of judgment, the kinds of problems managers face, and the opportunities and constraints managers respond to in implementing change and sustaining the organization. In Level I, managers have greater influence on whom they work with, on what activities they perform (and in what order), and on how they spend their time. In Parts II and III, Control and Organizational Design, managers rely on other managers to get things done, using formal rules and hierarchy, budgets, information systems, and other impersonal techniques of control and evaluation. Managers attempt to structure and monitor activities of others to varying extents to achieve organizational objectives. Managers are limited in these efforts by resource availability and political acceptability. Structural changes and control systems are not error-free, need to be changed over time, and can be expensive, both in money and in managerial time spent in implementation and system maintenance. Organizational stakeholders respond to managerial initiatives by independent action, resistance, or cooperation. A distinctive element in HCOs addressed in Part IV, Professional Integration, is the degree to which the activities of clinicians can be aligned with organizational goals. Clinicians and others are subject to varying degrees to external reference and representing bodies, such as professional associations and labor unions. Their buy-in is often essential to organizational goal achievement and managerial effectiveness. Managers must adapt to changes in the organization s internal circumstances and to the organization s specific external environment, as discussed in Part V, Adaptation. Finally, managers must be accountable to the communities or publics served, as discussed in Part VI, Accountability. The environments that organizations face are constantly changing, and the pace of change is increasing. Managers must adapt to change or their organizations will not survive at current levels of effectiveness. Managers may have modest influence on legislation, regulation, third-party financing, and community perceptions, particularly when they are constituents of effective lobbying and public relations organizations, such as trade associations. Many of the activities of external stakeholders cannot be effectively controlled by managers and health organizations and those representing them, nor should they be in a democratic society. Evidence-Based Management Evidence-based management aims to do the right things right. It has been defined by Blumenthal and Thier (2003) as systematic application of the

5 Overview xxxix best available evidence to the evaluation of management strategies for improving organizational performance. The evidence-based approach has six steps: framing a question that can be answered, obtaining the evidence, validating the evidence, adapting the evidence to local organizational circumstances, determining whether the organization can act based on the evidence, and determining whether the evidence is adequate to take appropriate action. For example, in attempting to reduce wait time in the emergency department (ED), managers have often intervened by increasing the size of the ED, which has led unexpectedly to increased waiting times, as patients are unable to be admitted into beds that are not available until the existing patients are first discharged. Rather than looking for evidence to justify action that the manager has already decided on, managers using evidence-based tactics take three approaches to discover evidence: searching the available literature, locating best managerial practice in similar organizations, and conducting their own local research (e.g., surveying night and day nurses separately if it is believed that the nurses who work different shifts stay and leave the organization for different reasons). Skills and Competencies During the past ten years, professional education has moved toward requiring students to demonstrate specific competencies rather than simply requiring them to learn about topics or areas. Programs in healthcare management are required to specify competencies and show how these competencies are met to be accredited. The process occurs whether the program is located in a school of business, public health or other school, and these other schools typically have their own accreditation requirements. Programs are required to cover the following content areas in healthcare management: population health, policy formulation, implementation and evaluation, organizational behavior, management, operations management, human resources management, information management, governance, leadership, communications skills, statistics, economics, marketing, financial management, ethics, strategy, quality improvement, and professional skills development. In addition, to become accredited, programs must specify competencies and how they will be met in the various courses offered. New York University s (NYU) program specifies five competencies for managers: leadership; process and quality management; health policy; critical decision making; and communication, networking and continuous learning. Competencies addressed in the basic management course at NYU include the following:

6 xl Overview The ability to examine and synthesize data used in information systems and apply evidence-based management principles for use in organizational analysis, problem solving, and strategic decision making The ability to measure, monitor, and improve safety, quality, access, and system and care delivery processes in HCOs Scientific data that relate how students demonstrate competencies to success on the job are lacking, and vast differences exist in competency sets required for different management jobs in HCOs. Jobs range from managing community advocacy to managing information systems to managing operations and quality improvement. Competencies can also be used to analyze organizations as well as managers. Management theory has shown that having a distinctive competency pays off for organizations more than trying to be all things to all people. Ways that organizations are shown to be distinctive include providing the lowest cost service, providing the most comprehensive services, and providing niche services (e.g., Our hospital provides the highest-quality eye care on the Eastern Seaboard ). Performance Requirements Organizations can also be viewed in terms of performance requirements (Mouzelis 1971). Organizations have to attain goals to receive resources from the environment. They have to maintain themselves as systems to achieve the goals. They have to change and adapt to new circumstances. And they have to align or integrate the values of those who work in the organization to achieve goals, maintain systems, and adapt to change. Kaplan and Norton (1992) use a similar scheme, examining organizational performance from different perspectives: financial and customer (goals in Mouzelis s terms), internal operations (system maintenance and values integration), and learning and growth (adaptation). Kaplan and Norton argue that to sustain themselves and grow, organizations must operate profitably, satisfy customers, run internal operations smoothly, and adapt to change by learning and growing. The value of this perspective is in the importance of looking beyond financial success to other important aspects of performance, which affect financial performance as well as market share and growth or stagnation.

7 Overview xli Conclusion This overview classifies organizations and their management in several ways. The first is by degree of influence of the manager over a level of operations (from greater to lesser influence): the role of the manager, control (of operations), organizational design, professional integration, adaptation, and accountability. Of these, professional integration is a key concern for healthcare managers because of the prominent, semiautonomous nature of the many highly skilled professionals who play important roles in care. Another way of looking at managers in organizations is the extent to which managers make critical decisions using an evidence-based management approach. This means making management interventions based on higher-quality evidence than would likely be otherwise obtained using traditional approaches. A third way to view organizations and their managers is to evaluate how their performance compares with industry norms and benchmark performance of similar organizations and their managers. A fourth way of looking at organizations and managers focuses on aspects of performance in terms of goal attainment, system maintenance, adaptive capability, and values integration (or finance, customer perception, internal operations, and learning and growth). This overview has introduced four ways of looking at HCOs and managers and linked them to the various parts of our text. Using these perspectives, the reader is more ready to form his or her own views on the readings, cases, and commentaries that follow. References Blumenthal, D., and S. O. Thier Improving the Generation, Dissemination, and Use of Management Research. Health Care Management Review 28 (4): Institute for Healthcare Improvement (IHI) IHI Triple Aim Initiative. Accessed June 28, default.aspx. Kaplan, R. S., and D. P. Norton The Balanced Scorecard Measures That Drive Performance. Harvard Business Review, January February 1992, Mouzelis, N Organization and Bureaucracy. Chicago: Aldine.

8 xlii Overview Selected Bibliography Berry, L. L. and K. D. Seltman Management Lessons from the Mayo Clinic. New York: McGraw-Hill. Bohmer, R. M. J Designing Care. Boston: Harvard Business Press. Boyatzis, R. E., S. S. Cowen, D. A. Kolb, and Associates Innovation in Professional Education. San Francisco: Jossey-Bass. Institute of Medicine (IOM) Crossing the Quality Chasm. Washington, DC: National Academies Press. Lee, T. H., and J. J. Mongan Chaos and Organization in Health Care. Cambridge, MA: MIT Press. Reid, T. R The Healing of America: A Global Search for Better, Cheaper, and Fairer Health Care. New York: The Penguin Press. White, K. R., and J. R. Griffith The Well-Managed Healthcare Organization, 7th ed. Chicago: Health Administration Press.