Montefiore Medical Center Reasons for Developing New

Montefiore Medical Center

Reasons for Developing New Strategy

Designing the new strategy involved several meetings by the Medical Center's employees to assist in the development of a balanced scorecard and initiating nation-level measures. In this regard, the firm developed a new strategy to represent the cause-and-effect linkages among the environment, strategy, and operating plan that could deliver the required financial results. The new system proposed by the strategy was initiated to ensure that financials made up a 10-percent of the measures on the balanced scoreboard. Montefiore additionally, developed the new strategy to measure patient satisfaction, the cost, health care quality as well as cycle times of clinical and administrative processes. It was realized by the institution that the strategic measures were essential in positioning Montefiore for future innovation while encouraging organizational growth. The GRIP strategy was initiated by the medical provider to help in increasing market penetration while assisting in attracting potential clients from the surrounding neighboring areas.

Additionally, Montefiore developed the new strategy was initiated due to the fact that reporting and conducting financial procedures by a single individual was a little bit risky for the medical firm. This ensured that reporting was done by care center leaders; the leaders as highlighted in the new strategy were to conduct their own financial forecasts with the revenues and expenses assigned to them by the executive director of business services. This was a deviation from the past financial activities which required the executive director of business services to outline the financial forecasts for the medical center with revenues measured only at the medical center level and expenses at the patient unit level. According to this perspective, all the hospital's health care centers admissions had to be reported by admitting category since it was impossible to share admission across the care centers.

Moreover, the new strategy was developed to ensure the medical center's revenues were entirely based on contact with individual patients and costs estimated by evaluating the services offered. In line with this, the top management was to conduct transfer pricing for revenues because the flow of patients from one healthcare unit to another was easily followed. However, the major problem faced with this strategy on how it was possible for the medical center to support the cardiology unit while ensuring a steady in-flow of patients. In line with this, the care center leaders trained their staff mates to create local scorecards. Training was approved since the use of the scoreboard would be if the employees could not understand how to use it.

In addition, Montefiore Medical Center initiated the new strategy; balanced scoreboard in order to assist the hospital measure equipment's average life. This strategy was essential for the hospital since a market survey they conducted highlighted that installation of state-of-the-art medical equipment coupled with creativity and innovation is a vital factor which influences referrals to a physician's hospital choice. Therefore, the development of the new strategy would increase creativity in the workplace and increase patient referrals to the hospital once the new strategy had been implemented. According to the firm, the degree to which annual revenues from newly established ventures as well as the number of referrals by physicians increased following the implementation of the new strategy would be essential in measuring whether the strategy was vital in increasing the hospital's market penetration, clientele base, as well as new service lines.

Strategic Decision Chosen by Montefiore Medical Center

Following the initiation of the strategy and meetings for its implementation, the hospital's care centers finally developed their individual value maps and measures which were aligned to the nation level strategy. The strategic direction taken by the medical center was essential in ensuring the objectives of the strategy were met as required. As an example, for the surgery care center, the project team initiated weekly meetings to refine the measures. According to this unit, the team unveiled value maps essential in highlighting ways to produce enough margin to keep the care center functional. In this regard, the map was initiated to assist the centers identify drivers-improved access, service delivery to patient groupings, physician and patient satisfaction that was vital for the hospital. Thereafter, this helped the company assign measures to financial drivers while helping in the development of data and proxies.

Before the strategy was initiated, the company had previously focused on cost reduction target but with the new measures, the medical center was able to invest in growth opportunities. Thus, the strategic direction was taken by the medical center to assist in providing a common language across different care centers, and making the need to collaborate among different partners and other disciplines essential.

For developing and implementing the new strategy, the hospital's department heads learnt the balanced sheet; thereafter educated their staff then they eventually developed their own scoreboards. In addition, each department was required to initiate weekly meetings where they discussed major issues, developed objectives, and eventually developed measures to monitor their progress in comparison with the objectives. Afterwards, all the hospital's departmental heads held meeting to debate on each other's scorecards which proved to be a beneficial exercise for the departments and hospital as a whole. This was initiated to ensure the employees from different departments and units worked together to ensure the success of the hospital as opposed to individual departments.

In addition, the strategies initiated by the hospital was to bring about a balanced performance measures for all the seven departments though having different measures for each department but, all linked to the GRIP strategy. In this regard, the strategies employed by any department are reviewed monthly to assist in determining salary raises by performance against the targets while awarding bonuses for excellent performance. However, physicians were not part of the strategic design since they wanted to react to the measures not help create them.

On the contrary, the scoreboard did not auger well with some departments. According to Dr. Ravikumar, his scoreboard idea was ignored by his faculty since most individuals viewed the scoreboard as jeopardizing their jobs while others viewed the scoreboard as exams; just like students they refused the exams due to fear of failure. On the same note, Dr. Brown, director of Cardiology, who was indirectly involved in developing the scoreboard for his unit was unaware of his input in the process. He argues that instruments such as scoreboards imply there is possibility of improvement thus threatening people's egos rather than their sense of being stripped of power. Additionally, Dr. Semczuk argues that the scorecard helps in integrating managers with chairpersons though differences such as performance models for clinical care and academic medicine are ever present.

New and Old Organizational Structure

The new organizational structures proposed by the management team of the hospital has increased cooperation responsiveness as opposed to the previous strategy outlined by the hospital. In the past, the hospital had no cost reduction targets but with the new measures, the company has greatly reduced costs and is capable of investing in imminent growth opportunities in the surrounding areas and growth opportunities. According to the previous model, the hospital controlled a small market but following the development of the new strategy, clients have been streaming in requiring medical services which has brought about unprecedented income and reduced expenses for all the hospital's departments. According to a nursing VP, the system was beneficial since it outlined essential activities the organization was required to undertake to while focusing and setting priorities on particular activities that were essential in ensuring business success for the hospital. The scorecard provided a common language across different care centers, and made clearer the need to collaborate with different partners and other disciplines.

In addition, following the institution of the new strategy, communication between care center heads and physicians has greatly improved; communication and buy-in process with the health centers physicians currently follows a sequential strategy as opposed to the previous model used by the hospital. In line with this, previously, chairpersons of hospital academic departments were completely independent and unaccountable for hospital operations but since the initiation of the new strategy, they have become an integral part of administration and operations, by participating in reducing hospital length of stay and generating new business ideas. For example, under the new strategy, the chairpersons control the physicians who directly affect volume and clinical programs. However, the problem with this idea is that it makes the physicians feel their independency is curtailed and are likely to resent from some hospital operations and duties assigned to them. This may bring about unprecedented wrangles in the workplace which ultimately affects productivity and efficiency thus lowering staff morale; the end result being reduced profit margins and losses to the organization.

According to Semczuk, he upholds that the balanced scorecard is essential in integrating managers with chairpersons and he comments that the chair of OB/GYN requested to be his clinical partner though they have different performance models for clinical care and academic medicine. Such initiatives are likely to bolster performance as well as positive integration and workplace attitudes leading to increased productivity and efficiency (Barney, Organizational Culture: Can It be a Source of Sustained Competitive Advantage?, 1986). Besides, by working together towards common goals, the hospital has seen increased patient volumes, improved efficiency, diminishing adverse outcomes decreasing and length of stay; factors which have led to business growth for the hospital. Moreover, the system has encouraged the issuance of financial incentives in the form of a bonus system annually based on physicians' performance as a group not as individuals. This strategy has led to growth and high levels of respect among the hospital staff but the only problem present is that some physicians are likely to depend on the group's performance for their own benefits and this is likely to bring several unrelated issues such as workplace politics and gossip which may lead to the crumbling of the groups.

Nonetheless, based on the issue of rewarding bonuses to employees, the hospital was faced with a dilemma since the clinical departments had objectives to lower budget deficits by 50% in July 2000 and 100% by Ju1y 2001. This was not possible since by issuing benefits to the employees, the deficit was not going to be met. The other problem also existed at the middle management since the hospital was frequently downsizing and placing a freeze on their merit increases. Finally, having a link between the balanced scorecards and the annual capital allocation process was impossible and could have led to managerial accounting issues.

Casual Ambiguity

Casual ambiguity is an economic tool useful in determining strategic resources a company has available to meet its needs. It is essential in discovering whether organizations resources are valuable, rare, inimitable, and non-substitutable (Ryall, 2009). In addition, casual ambiguity upholds that learning-by-doing and learning-by-observing are complementary strategic activities, not substitutes and in most cases, a firm is expected to seek performance enhancement using efforts of both types. In this regard, inter-firm causal ambiguity often results in sustainable competitive advantage since it is a continuum describing the degree to which decision makers understand the relationship between organizational inputs and outputs (Reed & Defillippi, 1990). According to this perspective, the hospital's competitors are unable to understand what bring about its superior performance a factor that helps Montefiore achieve sustainable competitive advantage. Moreover, the health center's value map acts as an element essential in creating isolating mechanisms via skill-based resources acquired through learning by doing, large number of inter-related resources being used and dedication of certain resources to specific activities which ultimately result in a competitive barrier initiated by the firm.

Moreover, the depth to which the hospital understands its competitors regarding resources underlying superior performance is essential; this will help the hospital determine the sustainability strength of a competitive advantage. However, if the hospital is unable to overcome inter-firm causal ambiguity, it should not imitate the competitor's resources (Collis & Montgomery, 1995). Besides, even after becoming conscious of the competitors' valuable resources, the hospital is curtailed from imitating due to the social context of the resources and the availability of more pursuing alternatives. As an example, resources such as company reputation are accumulated over time thus; a competitor is unable to perfectly imitate such resources. In this regard, the hospital is highly regarded in the United States of America by citizens due to the work culture and physicians attitudes towards their patients, a factors that most competitors are unable to copy; imitations would result in disastrous results for the company and Montefiore medical center is likely to sue for infringement of copyrights by the imitating hospital.

Based on the strategy introduced by the hospital; the balanced scorecard, it is essential since is provided the hospital with discipline and focus. Additionally, the strategy gave the firm the notion of balanced which ensured complete focus on the drivers essential for financial success. In this regard, the firm now entirely focuses on patients and services offered which has enabled the hospital gain credibility via unveiling measures which makes the management accountable for their services and activities. This has ensured competitive advantage for the hospital as witnessed by an 8% growth in their inpatient market share. The hospital's employees discipline and focus cannot be easily copied by other firms. However, some employees do not positively think of the new value map arguing that strategy is intuitive and is informed through experience, wisdom and data.

The major problem imminent with the value map is that it is unlikely the employees will experience double loop learning and when presented with the map, containing various delay times and process times, they will use their current mental models and look to blame the workers or blame their managers. In addition, issuance of orders, memos by the top management is insufficient to change employees' behavior often leading to organizational malaise resulting in blaming, and rivalry. As a result, the double-loop learning techniques used in value map can help the hospital's employees learn together and encourage organizational change. To do this, they should reveal the working of the current strategy, the rationale behind the current work design to bring about positive interactions in the workplace.