Leadership and cost control in hospital management reform

Health Care Facility

Managing a Health Care Facility

To some degree, leadership's thinking in health care has been in torpor. Rather than rigorously rethinking, health care management has been asleep at the wheel. In the midst of a battlefield, too many leaders have been settling for survival over winning. One sees it in some hospital mergers. The weak join the weak but succeed only in becoming a big, weak organization, not a strong one. They retain a vain hope that slight adjustments, rather than carving out a new vision, will transform them. Mergers and acquisitions are successful less than half of the time in terms of improving organizational performance (Sachdeva 189). It is clearly time to rethink the health care organizations' mission, culture, procedures, goals, measures; everything. What is needed now are bold new initiatives for daring new heights of achievement. Shaking people up with the excitement of stretch goal challenges and making them realize that what is most to be feared is not changing, is a far better approach than hunkering down in a foxhole (Reitemeier 70).

The Enemies Within

Failing organizations often fail their people or are failed by them. A sour working climate is a response to management inattentiveness. Among the staff this often is expressed by hostile workers or labor conflict, or by the presence of a substantial number of problem employees. The failed strategy of layoffs, and then more layoffs, creates an insecure, demoralized, and increasingly resistant workforce. There is also the problem of the unqualified. Foreign-trained staff are often both competent and caring; some are not. Skilled people are hard to find and hospitals often hire "warm bodies" because they think "you have to take what you can get" (Reitemeier 74). Temporary and part-time workers are often not oriented, have lapsed licenses, or no one checks out their skills. In one very grinding expose, the Austin American-Statesman News asserted that military doctors represented a lesser standard. In a long series of articles they alleged that the military system lacked safeguards, that certain physicians were named repeatedly in malpractice suits, that military malpractice cases go unreported to the National Practitioner Data Bank (over 900 incidents were reported in the two-year period 1994 -- 1995), and that the military was letting staff members without medical degrees practice medicine as a way to handle doctor shortages (Green et. al 158). The private sector is not immune to such charges either, and the question of how to police all professions in health care is proper and critical. The ranks of management are not immune as the toxic poisons of discontent feed into managerial hypocrisy; leaders who "talk the talk, but don't walk the walk" (Short 14). Managerial flame-out occurs when careers are stultified and aggressive thinking is unrewarded.

Prescription. Remedies include removing unsalvageable performers and working hard at retaining people you don't want to lose (Arana, 2). While we are at it, a little job security, job training, and recognition wouldn't hurt. Effective managements know that an unhappy army wins no wars. Many health care organizations are currently experiencing an identity crisis. When businesses in any industry are undergoing a thorough redefinition demanded by external market forces, leaders often experience a period when they simply don't understand the business. In this rocky phase when the plane spins out of control, executives frantically search for answers, trying various approaches. This problem is now manifesting itself in health care (Short 13). In its worst manifestation, management often succumbs to a succession of fads, installing a long succession of "programs of the month," and creating change fatigue in the workforce (Sachdeva 189). In your own organization, do managers know what the organization is trying to accomplish? Is there a consistent direction?

Because the leaders set the standards, it is essential that we understand the nature of this failure. The search for new and better ways of leading our health care organizations requires confronting the elements of leadership thinking that are not working, so we can replace them, and amplify factors that are effective. It will also help if we think of this failure as less a failure of dedicated people and, as we will learn, more a failure of a management approach. It is not blame but understanding that we seek (Reitemeier 75). There is reason to believe that the management approach that worked in the past is largely useless and inapplicable now. A totally changed set of operating needs now requires us to totally rethink the work of management.

All leaders can fail; all leaders can improve. And health care leadership approaches badly need improvement. None want to fail, none set out to fail, but fail they do. When failure involves health care delivery, the results can be tragic for the community, for the jobs lost, for the patients injured or dead, and for reputations lost. The good news is that the idea of continuous improvement applies to what people do as well. What can we do to get on to new and better approaches in the job at hand? If standards are to be raised in health care generally, they will need to be raised first among the leaders of the industry. No leader asks others to do what she isn't willing to do herself. Current management standards and practices in the industry are too low; in some cases they are unethically low. A related problem is that management practice standards are often unknown or non-uniform within individual organizations, much less in multiunit systems, thus resulting in lower profitability, efficiency, and Customer satisfaction. Make no mistake, our organizations' futures rest in large part on improving management practice standards (Arana, 5).

Standards in American health care organizations and delivery will rise in direct proportion to the increased quality of health care leaders' performance. (Yedidia 635) The men and women who lead the hospital industry deserve our highest regard (Senge 23). With few exceptions they are people of intellect, courage, and character. But organizational failure and disruption must always be placed at the door of leadership. That's where the buck stops (Ridenour 99). When results are not the best, hard questions have to be asked. To begin working our way out of the forest we don't need criticism, but a critique. Failures, where they have occurred, may be failures of a system of managing rather than those of individual people as leaders. Whatever the causes, we need to understand them if we are to move forward.

Conclusion & Findings

In a study by Deloitte & Touche, as reported in Arana, (12) it was found that only 7% of respondents had cut or eliminated patient services when merging or joining larger organizations, thus losing the opportunity to combine services and achieve substantial efficiencies (Short 18). It is interesting that the administrative side was where service consolidations had occurred (31% combined accounting and finance, 28% combined billing and collections); perhaps because it was easier to do or politically more acceptable (Cohen 44).

What emerges from these efforts are two essential understandings. First, in spite of whatever evidence may exist to the contrary, system building will continue apace in the hospital industry. Whether the battlefield is risky is immaterial, for the battle is joined. Some individual hospitals may decide to remain solo or stay in modest-sized systems where problems are more manageable, at least until some future time when some of the cloud over the battlefield has dissipated. But for most, the name of the game is "go system" (Daugherty 649). The second understanding is the need to get under control the elements of change management that can reduce risk and maximize chances for success. Like surgeons dealing with high-risk surgery, we need to control as many factors as possible surrounding this operation if we are to increase chances for success. Current experience suggests that hospital chains are putting their first standardization efforts into clinical protocols where potentially huge gains can be made in both quality and cost), finance get common financial reports for apples-to-apples measurement and consolidated reporting, information systems a common basis for communications and a key foundational element for future standardization work, and purchasing initially for substantial cost reduction, with future cost reductions coming from reducing the number of suppliers and supply variations (Green et. al 155).

These are commonsense approaches that should produce substantial benefits. However, this primarily economic and data-driven thrust is a flawed strategy that may prove inadequate for long-term results. The risk is that while standardizing these limited areas, the rest of the organization's functioning will remain widely variant (Cohen 560). Unless clinical care protocols are really driven home, and unless support services procedures, human resource practices, and the culture itself become more standardized, the economic initiatives will provide only short-term balance-sheet improvement (Sachdeva 190). Systems in their current state of evolution face a number of other risks:

Failure to build a business. Already we have seen the Illusory System, in which managers construct an organization rather than building a business (562). The assemblage of ill-fitting units makes it appear that there is a cohesive regional or national organization, rather than the uncomfortable grouping that is more often the case. Consolidation is insufficient and represents failure if there is no subsequent evolution into excellence (Daugherty 650).

Too much autonomy. Some chains, in their discomfort over the control issue that is part of standardization, will fail to address it. The phrase "local control" seems to be the buzzword for this avoidance (Yedidia 634). In some instances, wise managements are allowing each operating unit to pursue its own course. Local control definitely has some value when a best practice approach has not been determined (Wellington 38). However, once it is shown that one approach or another has proven itself, can top executives continue to allow lower performance results in approaches that have not produced? To some degree local control may be a luxury, particularly after better approaches are known, for it multiplies work and prolongs the time until all units are functioning at better levels. Local control assumes the specious argument that talent levels are the same in all units that each has the ability and time to do the work, and that each can achieve better performance.