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Organizational development

By Denis J. Lucey 3rd, M.D. & Jay H. Lucas

Numerous changes in the health care industry are creating challenges for clinicians who are trying to decide how to operate effectively within new organizational structures. These changes are producing the need to take a creative look at the resulting human capital issues—for example, the creation of new teams, new cross-functional interactions and relationships, the need to encourage new leadership styles and the need to develop new leaders to fill previously non-existent roles. These are the types of issues that have been addressed by organizational development (OD) work in many industries, but haven’t been fully embraced in many health care organizations.

As an example of the positive impact OD activities can have on a health care organization undergoing rapid change, consider the challenges of a management services organization developed by, say, an academic medical center. This MSO provides management services to physician practices that are primarily independent but have some kind of relationship to the medical center—such as referrals, sharing covered lives, or as a revenue source for the institution. The management services provided include a variety of activities, such as information systems and billing systems support, human resources management and facilities management, that relieve the physicians of administrative tasks so they can do clinical work.

Organizational Tensions

Consider some typical organizational tensions that the development of this new entity can create:

The organization needs to reconfirm one vision and mission; the staff has very different work histories and an incomplete commitment to the mission of the new MSO. Two of the six vice presidents have been with the executive director since the inception of the organization; two were recent hires. Some staff came from new organizations in the for-profit sector; others were transfers from the traditionally structured academic medical center. Two, by way of roles as in-house counsel and human resources coordinator, tended to serve initially as staff rather than line managers.

The MSO needs to be a flat, entrepreneurial organization to parallel the physician client base. The MSO is an organization serving primarily physician entrepreneurs, and this requires a risk-taking mindset and the ability to solve problems and make decisions rapidly. Given the rapid pace of technological and organizational changes and heightened competition in the primary care marketplace, problem solving and decision making can no longer be lengthy processes of memoranda and committee meetings, up the chain to a final decision and then back down the chain at a similar pace for directed implementation on the front line. Each of the vice presidents needs to share sufficient cross training and confidence to speak for each other. Vice presidents need to rely on field staff for on-site problem definition and for solutions recommended from the field not imposed on the field.

The MSO has a mixed culture where some people are comfortable with conflict, while others are conflict avoiders. The organizational changes make conflict a fact of life in the new organization, and successful resolution of conflict a necessity. By personality type and communication style, two vice presidents enjoy the free exchange of criticism modifying their approaches to situations through vigorous debate. They tend to “shoot from the hip” as issues emerge. Two others prefer to gather facts, weigh the pros and cons reflectively, seek out the executive director for his preference, and then express their direction as a more finished product.

Each of the managers in the MSO has a new role. Only one has the same job held at their last organization. For many staff, there are no role models for their new positions. For example, one has been a CEO and now is part of a peer manager group reporting to a CEO. One has been in a primarily internal human resources function, but is now developing and selling HR services to outside clients as well as continuing in-house HR functions.

The MSO is organized as a proprietary venture but is part of a very traditional major not-for-profit academic medical center. Successes and rewards in the latter organization are historically related to development of new knowledge, expertise in securing grants, excellence in teaching and reputation in patient care. The nature of this culture with emphasis upon lengthy due diligence, peer review and hierarchical decision making is in sharp contrast to the for-profit MSO emphasis upon rapid market responsiveness, change management and independent action. The executive director’s behavior has to be acceptable to the academic medical center, yet effective in the MSO and in the marketplace under transformation. The managers need to rely on certain academic medical centers’ support functions, e.g., purchasing and vendor selection, and cannot be delayed by purchasing processes designed for a hospital nor delayed still more by developing conflict with hospital-oriented middle managers elsewhere in the academic medical center.

OD Intervention

The OD intervention can be initiated through a series of structured one-on-one diagnostic interviews to refine definition of the problem or concerns confronting managers in the organization. Among important problem areas identified are these:

• Inadequate commitment to the new organizational model and inadequate understanding of the new organizational mission.

• Incomplete cohesiveness of the team, some lack of trust and clearly observable differences in styles of decision making, communication and conflict resolution.

• Leadership at several levels beset by market forces encouraging a more experimental structure and rapid response in contrast to an academic base advising caution and conservatism in both type and pace of response.

The OD “prescription” includes retreats, workshops and counseling focusing on several key areas:

• Retreats with the MSO managers (especially the V.P.s) to contribute to, buy into and develop the vision of the organization and a clear view of the cultural change that is needed. These workshops place a strong emphasis on problem solving skills and techniques, especially conflict resolution, to reduce the tensions created by bring together different types of individuals and different organizational cultures.

• Consultant work with teams (especially the cross functional teams) in team building activity to enable different segments of the organization to maintain an entrepreneurial style and rapid, one-voice response to client needs. This includes cross training activities among managers of different professional capabilities in which each becomes more familiar with his/her own role and the demands and requirements of each others jobs.

• In addition to group and team activities, individual executive interviewing and counseling is used as necessary. Because of the multiple differences in style, pace and communication patterns that became apparent, conflict resolution skills turn out to be a key focus for successful interaction.

The fourfold intervention of diagnosis, retreats and workshops, team building and executive counseling create a better grounding in vision and mission, and more consistency of activities undertaken. At the end of retreats is greater tolerance and flexibility for different approaches to achieve a common vision. Teams and individuals feel they could function more effectively in the less hierarchical organization and, therefore, more quickly and thoroughly respond to the entrepreneurial physician client. Conflict resolution skills enable the client service teams in the MSO to make HR and other service delivery decisions more effectively. The ongoing exposure to each others’ new roles, concerns and needs in the supportive collegial environment of the workshops and one-on-one in the executive counseling sessions creates a comfort level among the managers which allows them to explore roles and develop relationships that would prove valuable to the smooth functioning of the organization.

Most important, the client physician groups have to adopt new strategies to cope with market changes, including shared decision making, team building, ongoing self-assessment, continuing education, etc. While this is happening, it is valuable for them to see the same changes in the MSO, particularly as the MSO becomes more customer focused as the result of these changes. Because physicians are closer to the market, a responsive MSO means the entire organization is more responsive to the market. It makes sense that an MSO embodying these skills would have a greater value to physician groups and be a more critical part of a successful integrated health system.

These types of OD interventions have become commonplace, useful, effective and sometimes essential for survival in many corporations and industries. As health care systems face some of the same changes and challenges these other organizations have, they too are recognizing and introducing appropriate OD interventions. The MSO example above is simply one illustration of how such interventions can assist organizations designed to serve physicians and their patients.

Denis J. Lucey 3rd, M.D. and Jay H. Lucas are principals in Organizational Transformation Partners, a consulting firm specializing in dealing with the dynamics of change in the health care industry.

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