Integrating medical and operational management

Physician Executive, Oct, 1996 by James A. Pepicello, Emmett C. Murphy

Health care is unique among industries in that nowhere else do people's lives depend so closely on how work is performed. Yet in the face of cost containment challenges, many health care organizations are reducing costs using methods that fundamentally change the way care is delivered. Physician executives must ask: Are our health care organizations being restructured to improve quality of care in a fiscally-responsible manner? Or, in a rush to find a quick solution to economic challenges, are we simply following the latest trends in cost reduction - trends that were developed outside of the health care environment? Are staffing changes being made with sensible protocols that give due consideration to quality?

If some of us are uncomfortable with the answers to these questions, we must take action. Physician executives in senior leadership positions, who have decided (or been elected) to pilot a work redesign process, have a responsibility to choose a redesign protocol wisely and lead it well. Medical leaders who do not now have direct authority over their organizations, redesign processes should consider taking on greater involvement and leadership responsibilities. Many physician executives are reluctant to do so for many reasons, not the least of which is perceived lack of experience. However, you may have more experience with managing change than you think.

Being a change leader essentially means guiding a complex system through a difficult and emotionally-challenging process of transformation. This process entails recognizing a threatening situation, diagnosing the scope of the problem, and taking action that will help the system to a better state of being. Sound familiar? It should. In fact, any physician who has guided a patient through the healing process has been a change leader. So who better to lead health care organizations through a work redesign process than the physician executive? The medical leadership role demands an ability to balance dedication to clinical standards with fiscal responsibility and acumen. This skill set makes physician executives uniquely suited to manage work redesign in the clinical environment. Indeed, as managed care continues to force the close integration of the business and clinical aspects of health care, physician executives will have a greater duty to ensure that the work of health care is performed in a cost effective and clinically sound manner.

In our work with more than 400 health care organizations, we have collaborated with physician executives and other clinical leaders to develop protocols for change that marry the requirements for work redesign in the clinical environment with the operational management skills of clinical leaders. For physician executives who are considering a change process, the following are some strategies for successfully acting on the leadership opportunities provided by work redesign.

Evaluate the options and invest in

your organization

There is a dizzying array of consulting firms, processes, products, and technology, that claim to help you manage change. And if your organization is like most, you will need to create an action plan rapidly. Fortunately, physician executives have an advantage in this kind of situation. Not only do physician executives possess quick decision-making and critical-thinking skills, their experience has taught them the importance of self-driven and self-regulated change.

We know that no patient will change his or her behavior because of external influence - at least not for long. Like a patient, an organization must build a long-term, internally-driven capacity to manage its behavior. That is not to say that your organization won't need help, because it probably will. Therefore, seek out those options and partners in change that will strengthen and support your organization's own efforts.

Once you have narrowed your search, you will want to evaluate the benefits and limitations of various methods of change. If the goal of the change process is to provide excellent care in a fiscally-responsible manner, the criteria for selecting a work redesign protocol should be its effect on patient care and its ability to generate sustainable cost savings.

Across-the-board downsizing

Organizations facing declining reimbursement may be considering across-the-board downsizing, a baste and aggressive approach to cost reduction imperatives, in which a certain number of staff positions are eliminated to conform to internal budget forecasts or externally-imposed standards of "efficiency."

While a certain amount of workforce realignment is necessary for any change process, how that realignment is effected is of critical importance. The problem with across-the-board downsizing is that it focuses on the numbers of bodies doing the work and not on the work itself. Its aftermath is that 100 percent of the work is left for 97 percent or percent of the workers. Indiscriminate downsizing leaves fewer overburdened employees to deal with the same cumbersome system, reducing the net time available to care for the patient (with potentially dangerous results). Several years ago, we conducted a study on the effects of work force reductions on patient care. Specifically, we analyzed the relationship between various types of downsizing and the probability of increased mortality and morbidity. Hospitals that reduced their FTEs by as little as 4 percent through across-the-board layoffs saw a significant likelihood of increased mortality. Hospitals that undertook dramatic cost-cutting - more than 7.5 percent - were more than 400 percent more likely to see an increase in mortality.(1)