When hot and cold collide: riding the spirals of emotion and logic - Conflict and Cooperation

Physician Executive, Nov-Dec, 2002 by Edward J. O'Connor, C. Marlene Fiol

IN THIS ARTICLE...

Understand how emotional reactions and logical reactions can lead to very different outcomes when considering a new business venture.

A Story of Two Surgery Centers

Surgery Center 1:

Dr. Jick had all he was going to take. Hospital administrators, from his perspective, were uncooperative and needed to be replaced.

As a senior physician leader in his community, Jick had approached his local hospital executives with a reasonable proposition from his group practice. Together they could build and benefit from a new ambulatory surgery center. Each would contribute and each would share equally in the profitable results.

After many meetings, long delays and time-consuming negotiations, the hospital executives finally got to the bottom line: being the business people, they would control the operations of the proposed ambulatory care center.

Given current problems in the surgery suites at the hospital, turning over control was totally unacceptable to Jick and his colleagues. As a result, they successfully sought outside investment capital, built the ambulatory surgery center themselves and began to profit from its successful operations.

In response, hospital leaders refused to grant privileges to any new members of their group and brought in two competitors as employees in their specialty area.

Currently, neither of those new competitors is doing well and Jick's group brought legal action against the hospital regarding the withholding of privileges. Emotions are running high.

Surgery Center 2:

Dr. Schwartz's situation is quite different. She is the senior leader of a successful practice that is aggressively building outpatient service capabilities.

When she approached her local hospital senior administrators with a proposal similar to that put forward by Jick in his community, hospital executives recognized the situation as an opportunity rather than a threat.

They logically knew that if they did not work together with Schwartz's group in making the ambulatory center a success, it would be built anyway, threatening their bottom line and restricting their ability to provide a range of services the community expected.

Knowing that Schwartz's group largely controlled where patients had health care delivered, hospital leaders knew that they could either have half of the business or none at all.

In fact, the new ambulatory surgery center became quite profitable given that it doesn't carry the large overhead expenses of the hospital and brings economic benefit to both venture partners. This success allowed hospital executives to engage in a new version of their game of medical Robin Hood, "robbing" from the well-reimbursed services at the ambulatory surgery center to fund other vital services that simply cannot be covered by the margins they provide.

Both venture partners are generally satisfied and are considering investing together again.

New business ventures

As costs continue to increase and revenues decline, new business venture models are clearly important to hospitals and physician practices.

Under today's conditions, the stories presented here are not unfamiliar. Yet the two stories have very different endings, suggesting that leaders can do much to influence outcomes.

In the first case, the hospital executives' understanding of who they are, their role in the community and what behaviors are appropriate to that role appears to have been seriously threatened, resulting in emotionally-heated reactions to defend their traditional territory.

Although Jick and his colleagues were coolly logical in their proposal at first, the push back from hospital leaders led to heated emotional reactions on their part, further fostering a downward spiral of economic outcomes, collaborative relationships and benefits for the community.

Superficial advice might suggest that it is important for leaders to remain coldly logical in assessing the opportunities before them and making choices that are in their best interests. However, evidence suggests that "hot interpretive processes" (1) and deep-seated drives for self-preservation (2) are likely to occur during times of radical change. And change is the order of the day in health care.

Rather than suggesting that leaders remain coldly logical, it may be far more valuable to understand what research uncovered about the source of these reactions and methods for managing them effectively.

Emotions as barriers to change

Taking advantage of new opportunities in health care often involves reaching agreements among people who do not have direct authority over each other.

People within groups have a way of understanding who they are (e.g., we are physicians who provide high-quality care), how we should behave (e.g., as physicians we must protect our relationships with our patients) and how others should behave when interacting with us (e.g., they should recognize that we are the people who know how to deliver quality care).

When these understandings are threatened, heated emotional reactions typically result that seriously constrain a group's willingness to change or even perceive the need for change. (3)