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7 Problem Solving and Decision Making in Health Organizations
Learning Objectives
After reading this chapter, you should be able to:
• Identify and develop strategies to overcome problem-solving barriers.
• Apply creative problem-solving techniques to problems facing managers in health organizations.
• Articulate steps in the analytical problem-solving model.
• Develop engagement strategies for collaboration with physicians.
• Distinguish between rational and reality-based decision-making models.
• Apply strategies for improving the decision-making process in health care organizations.
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Back to Basics: Patient Safety Begins With Clean Hands
A member of the Maryville Community Hospital board of directors circulated a newspaper article at a monthly board meeting referencing studies showing that hospital workers failed to wash or sani- tize their hands up to 70% of the time they treated patients (Hartocollis, 2013). He was horrified to think this might be the case at Maryville; he just assumed that in a hospital, everyone would follow this basic hygiene practice.
The chief of the medical staff expres- sed her concern about increasing out- breaks in hospitals throughout the nation of methicillin-resistant Staphylococcus aureus (MRSA), a bacterial infection highly resistant to many antibiotics, and specifically about the potential for a
MRSA outbreak at Maryville. The chief financial officer (CFO) informed the board that, in addi- tion to patient safety considerations, there were new financial penalties when Medicare patients developed preventable infections. The director of nursing noted that Maryville policies and proce- dures required all staff members, physicians, and volunteers to apply hand sanitizer from dispens- ers installed throughout the hospital (including wall dispensers outside each patient room) before entering and after leaving a patient’s room or to wash their hands within 10 seconds of entering and again before leaving a patient’s room. Some nursing unit supervisors regularly wrote up staff members who failed to comply with the policies, but others did not. The director of volunteers stated that visitors had complained to volunteers about nurses and physicians who failed to sanitize or wash their hands.
The board resolved to make hand sanitation a top priority at Maryville. They directed the CEO to study the situation and report back to them as soon as possible with a plan for ensuring that 99% of Maryville staff members, physicians, and volunteers follow the procedures.
Critical Thinking and Discussion Questions 1. Who should be involved in resolving this problem and why? 2. What are some of the possible causes for noncompliance? 3. What information is needed to determine the factors involved in the noncompliance? 4. Is this an individual behavior problem or an operational process problem?
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Health care workers should wash their hands before and after treating patients—but not all do.
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Section 7.2Problem Solving
7.1 Introduction to Problem Solving and Decision Making
This chapter delves into the process of solving problems and making decisions in health organizations. After an examination of problem-solving barriers, examples of creative problem-solving approaches and a discussion of problem-solving models provide a frame- work for health-care professionals to successfully resolve different types of problems they are likely to encounter in the workplace. A general discussion of decision models, decision support tools, and the decision-making process precedes a more industry-specific discus- sion of decision making in health organizations.
7.2 Problem Solving Administrative work is, to a great extent, solving problems. The ability to resolve prob- lems swiftly and effectively while still maintaining positive relationships is essential to success as a manager and leader. Managers in health organizations face many differ- ent types of problems related to patient care, community expectations, financial viabil- ity, employee relations, and regulatory compliance. Many of these problems are wicked problems: Complex, ambiguous, and difficult to analyze accurately, and the stakeholders involved hold differing but strong and highly emotion-based opinions on both the nature of the problem and how to solve it. Furthermore, these types of health-care organizational problems can rarely be solved by one individual or by groups representing one discipline (Buchbinder, 2009).
Problem-Solving Barriers
Health organization managers face a number of constraints on their ability to solve prob- lems. Among the most commonly cited are the volume and variety of problems, the differ- ing perspectives of stakeholders, the interdependency of organizational work units, and the diffusion of decision-making power (Whetten & Cameron, 2011; Buchbinder & Shanks, 2012). Health care organizations are also under increasing pressure to increase productiv- ity, with fewer people doing more work.
Conceptual Blocks Resulting primarily from the thinking processes that people use when faced with prob- lems to solve, conceptual blocks are mental obstacles that make it difficult to define problems clearly and develop a wide range of alternative solutions. They are largely unconscious, are developed from experience processing similar types of information to
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Section 7.2Problem Solving
filter out irrelevant data, and prevent the problem solver from recognizing and registering some types of infor- mation (Whetten & Cameron, 2011). In health care organizations a strong record of compliance with accredita- tion or licensing requirements may produce an attitude of complacency, which inhibits innovative thinking and creative problem solving.
Insularity According to a study that examined board compositions at 660 of the largest U.S. corporations (Murphy & Chasan, 2013), involvement in other companies’ governance offers execu- tives valuable experience that enhances performance at their own employing organiza- tions. While it is common practice for active or retired CEOs to serve on outside corporate boards, few other current or former C-level executives hold board seats; for example, in the companies studied, just 6% of all directors were active or retired CFOs. Yet companies whose CFOs served on other firms’ boards showed greater shareholder returns than com- panies whose CFOs did not hold outside board positions. Outside directorships provide the CFOs with exposure to other firms’ financial practices and the opportunity to learn new financial management techniques. The CFOs serving on outside boards broadened their perspectives on financial management and felt they became more confident and effective when working with their own boards. Insularity often results in complacency. Exposure to other organizational and industry problems and problem-solving practices offers opportunities for health-care professionals to enhance their problem-solving skills.
Complexity Many problems derive from the discrepancy between what people observe and what they believe they should see or the way things should be. The traditional managerial approach when confronted with such a situation is to identify the cause of the discrepancy and set about fixing it. However, different organizational stakeholders may have a different perspective of the problem—if they even perceive a problem—and quite different points of view on other issues of more concern. Thus, health organization managers need to rec- ognize that there will be multiple interpretations of events that occur resulting from the various ways that others might perceive them. They also need to be prepared to deal with surprises and respond flexibly to unanticipated events. Effective managers use whatever resources and tools are available to achieve the goals of the organization, celebrating small wins and learning from small failures (Weick, 1984; McDaniel & Jordan, 2009).
Learning From Small Failures Sentinel events are major mistakes in health organizations that, when discovered, are likely to trigger formal investigations and result in large-scale corrective-action initiatives—
Comstock Images/Stockbyte/Thinkstock
Managers in health organizations face many obsta- cles to solving problems.
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Section 7.2Problem Solving
especially those that result in regulatory sanctions and garner media attention. Few health organizations seek to systematically track, analyze, and learn from small mistakes in busi- ness or care-delivery processes. Yet these small failures are “early warning signs which, if detected and addressed, may be the key to avoiding consequential failures in the future” (Edmondson, 2004, p. ii3).
To illustrate the benefits of organizational learning from small failures, a large multispe- cialty medical group experienced an error rate of 10% to 15% reading mammograms, a figure that was considered normal given some of the inherent difficulties in reading mam- mograms accurately. A new director of radiology considered this error rate unacceptably high. Challenging the organization’s complacency, he undertook a detailed analysis of longitudinal data to discern patterns of missed tumor diagnoses and determine the error rates for individual radiologists. He fired several physicians with disproportionately high error rates and reassigned several others who were not reading enough films and thus not accumulating enough data for their performance to be assessed. By this deliberate effort to learn from its mistakes, the medical group significantly reduced its error rate for mam- mogram readings (Moss, 2002; Edmonson, 2004).
Creativity and Innovation
The ability to solve problems creatively is a valued skill for managers in health organi- zations: “Creative problem-solving ability often separates career successes from career failures, heroes from goats, and achievers from derailed executives. It can also produce a dra- matic effect on organizational effectiveness” (Whetten & Cameron, 2011, p. 174). To become a more creative problem solver involves developing multiple approaches to creativity.
Innovation and Flexibility When addressing a new problem, the normal tendency is to draw on precedent and experience to define and make sense of the situation. However, familiar ways of viewing
and interpreting things can be inad- equate for new and tough challenges. Leclerc and Moldoveanu (2013) pro- pose an approach using flexons, or problem-solving languages. Flexons originated from research on metal alloys that returned to their original shape after being bent or dented. Adapting this idea to business prob- lems, flexons facilitate the adapta- tion of lessons learned from diverse experts. Applying multiple flexons to the same problem generates richer insights and more innovative solu- tions for individuals, groups, and organizations attempting to solve very difficult problems.
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There are many different methods and activities involved in problem solving.
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Two flexons are particularly relevant for health organizations. The networks flexon is similar to social network analysis, a technique used by sociologists to map relationships between individuals and groups in order to identify patterns of communication and the most influential individuals. The networks flexon could be a useful technique in several types of health organizations because physician opinion leaders influence so many orga- nizational decisions, such as which drugs to prescribe or which medical devices to use. To identify the most influential physicians and reveal the relationships among them:
• A pharmaceutical or medical device manufacturer could create a network map of physicians who have coauthored articles in medical journals.
• A health plan could create a map of physicians in contracted medical networks that includes the hospitals where they had staff privileges and committee appointments, as well as any medical school appointments.
• A hospital could analyze the admitting patterns of medical staff specialists with the highest contributions to the hospital profit margin. It could then identify the primary care physicians who refer patients to them to develop a referring physi- cian marketing plan that would bolster referrals to these specialists and increase admissions of better paying patients to the hospital.
Delineating relationships among individuals and entities makes it possible to target clus- ters of physicians who share the same ideas as coauthors or who share different organiza- tional affiliations in community and educational institutions.
The evolutionary flexon involves the use of optimization algorithms to quickly filter out suboptimal solutions in situations where businesses have a large number of variables to consider and limited resources to calculate the effects of changing them. Use of the evolu- tionary flexon would help health organizations that were considering introducing a new product or service that has many choices to make about its features and modes of delivery. Developing a series of small-scale pilot projects to test and learn from patient and stake- holder reactions allows the organization to refine and improve the product or service and the delivery process in a cost-effective manner.
Web Field Trip: Tonic Health: A Stimulus for Patient Engagement
Tonic Health (https://www.tonicforhealth.com) offers a number of health applications that allow patients to communicate with their health care providers about their health and health care experiences through their computers, tablets, or smartphones—or provide this information on an electronic device supplied by the provider. Take a tour of the website, watch the video, download and test the free demo app, then answer the following questions.
1. What problem does Tonic Health address? 2. How serious a problem is it? 3. What is the impact of incomplete or inaccurate patient data? 4. How would you decide whether or not to purchase a Tonic Health solution for your
organization? Describe your decision-making process.
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Section 7.2Problem Solving
Incremental Creativity While most people think of creativity as generating entirely new ideas based on imagina- tion, there are several other ways to achieve it. Improving a product or service or a busi- ness function through incremental improvements on existing ideas is less dramatic than inventing something entirely new, but it is essential to organizational success. Applying organizational theorist Karl Weick’s (1984) small wins strategy, these modest improve- ments generate both momentum toward and confidence about achieving a larger desired goal. Kotter (1995) considers creating short-term wins as one of the essential steps in his organizational change model; recommending that aspiring change agents develop strate- gies to achieve small but visible performance improvements, while also recognizing and rewarding the employees responsible for achieving them.
Examples of this type of creativity in health care organizations include:
• Urgent care centers that allow people who need or want medical treatment right away for a condition that is not so serious that they need to go to a hospital emer- gency room. Originally disparaged as “doc-in-the-box” practices, today they are operated by hospitals and medical groups as a cost-effective alternative to crowded and expensive hospital emergency rooms.
• Hospitalists are physicians who oversee the care of patients while they are hospi- talized. Usually internal medicine or other primary care physicians, they coordi- nate with both the patient’s primary care physician and the different specialists who provide consultation or treatment, as well as with the nursing team, to ensure a smooth admission and discharge process and monitor follow-up care.
Theory in Action: Brilliant Health Ideas
Each year, Entrepreneur magazine publishes a list of 100 Brilliant Companies—10 businesses in 10 categories—that turn bright ideas into business solutions. Health was one of the 2012 categories in which many companies developed technology-fueled innovations. Topping the list was Tonic Health, a software company that devised a fun way for patients to provide their medical histories for an electronic medical record. Patients can complete the history using a computer, tablet, or smartphone—and are more likely to fully answer the questions than when using paper and pencil.
Other brilliant health companies and their products are listed in Table 7.1 (Wang, 2012). These companies and their products exemplify the principle of disruptive innovation, a theory developed by Harvard Business School professor Clayton Christensen and applied to health care with Harvard colleagues in the schools of medicine and government. Disruptive innovation is a term to describe how industries are transformed by companies that provide products and services that are dramatically more accessible, convenient, and affordable for customers. In the health care sector disruptive innovation primarily involves (a) transferring skills from highly trained, expensive clinicians to more affordable providers, including technology-based care; and (b) site shifts from hospitals to outpatient, home, and virtual settings (Townsend, 2013). The products and services listed in Table 7.1 are just a few examples of disruptive health care innovations.
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Section 7.2Problem Solving
Theory in Action: Brilliant Health Ideas (continued)
Table 7.1: Entrepreneur magazine’s 2012 innovative health care business solutions awards
Company Name Website Product/service description
Ringadoc http://www.ringadoc.com Telecommunications soft- ware that connects patients to their physicians 24 hours a day, 7 days a week; auto- mates after-hours answering service yet allows call triag- ing and personal response.
Foodzy https://foodzy.com Gamification for healthy eating. The app and website let users keep track of eating habits to reach a goal weight.
Lark Technologies http://www.lark.com Makers of a silent “un-alarm” clock, sold in Apple Stores, that uses a sleep sensor to monitor, analyze, and improve sleep habits.
Sickweather http://www.sickweather .com
Sifts through status updates on social media and posts illness trends to a map. Users can add symptoms to the site or search in their area for illnesses, down to the street level.
6dot Innovations http://www.6dot.com Portable device that makes embossed Braille adhesive labels to help the blind bet- ter maneuver in their own environments.
GTX Corp http://www.gtxcorp.com Shoe with a miniature GPS tracking device embedded in the heel for wandering Alzheimer’s patients.
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Section 7.3Problem-Solving Models
Company Name Website Product/service description
CareZone https://carezone.com Subscription service that provides caregivers with a secure online area to orga- nize information such as medical files and emergency contact information. A profile for each patient can be created and shared with relevant contacts.
Mobi http://www.mobilegs.com Mobilegs, ergonomic crutches designed for com- fort, greater stability and a reduced risk of secondary injuries.
WhichDoc http://www.crunchbase .com/company/whichdoc
This New York City start-up digitizes word-of-mouth rec- ommendations by tapping users’ social networks for doctor and dentist referrals.
Source: Wang, J. (2012, May 22). Tonic Health brings fun and games to boring health forms. Retrieved June 24, 2012, from Entrepreneur website: http://www.entrepreneur.com/article/223613
Reflection Questions: 1. What type of health organization would each of these new products or services affect? 2. Do any of these new companies represent a threat to existing health care organizations?
Explain your answer. 3. How might health organizations partner with these new companies to provide better
care to their patients? Give specific examples.
Theory in Action: Brilliant Health Ideas (continued)
Table 7.1: Entrepreneur magazine’s 2012 innovative health care business solutions awards (continued)
7.3 Problem-Solving Models Since so much of a manager’s job involves solving problems, managers need to use a vari- ety of problem-solving approaches to function effectively. At the executive level, health care organization leaders are faced with wicked problems that often require considerable time and resources to resolve; information may be ambiguous or limited, and alternative
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Section 7.3Problem-Solving Models
solutions are not readily apparent. At lower management levels, the problems are relatively straightforward, information is available or can be obtained (at least with some effort and internal resources), and there is a clear connection between the means to solve the problem and the reason to solve it. The major challenge for managers is to solve problems quickly yet rationally, so that solving one problem does not evolve into or create another.
Analytical Problem Solving
When faced with a number of problems at once or with what seems like a never-ending series of problems, the natural tendency is to select the first reasonable solution that comes to mind, or the one that seems the easiest to implement. As discussed in Chapter 1 (see discussion of bounded rationality and satisficing), busy managers and professionals have limited time and resources to obtain and process information and identify and objectively evaluate alternative courses of action. Pressured by time and with myriad problems to solve, they look for a solution that will be satisfactory rather than optimal—which, in most cases, is good enough for the firm to operate efficiently and achieve its objectives—a process described by an early management scholar as muddling through (Lindblom, 1959). In some cases, however, problem-solving shortcuts have had a negative effect on organizational suc- cess and, in extreme cases, on organizational survival (Goll & Rasheed, 1997).
The classic analytical problem-solving model, which forms the foundation of the quality- improvement process, has four distinct steps:
1. Define the problem. This step involves diagnosing a situation to discover the underlying causes as well as the symptoms of the problem. Thus, it often requires a wider search for information from data or human sources. It is also important to distinguish facts from opinion and focus on behavior rather than perceptions or interpretations. Another key element in this step is to determine whose prob- lem it is, how it affects other individual and groups, and whether it violated a standard or an expectation. If the latter, one must assess whether the expectation is reasonable and realistic.
2. Generate alternative solutions. This step requires waiting to select a solution until several are on the table, rather than agreeing to the first acceptable suggestion. Bet- ter ideas may be proposed as people spend more time thinking about alternatives and their longer range effects or as more people contribute their ideas.
3. Evaluate alternatives. This step involves careful consideration of the pros and cons of all proposed alternatives. The objective is to find the best alternative, not the most expedient one. It is often helpful to establish a standard and specify criteria for the “best” outcome, including weighting the criteria according to their importance.
4. Implement and follow up on the solution. Whichever strategy is selected will generate some resistance, because it will involve a change to resolve the problem. For this reason it is advisable to develop an implementation strategy for commu- nicating the solution to those affected by it and planning with those individuals or organizational units on how to put it into effect. When feasible, implementing
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Section 7.3Problem-Solving Models
a solution incrementally and beginning with the easiest parts defuses resistance and creates support through the achievement of small successes (Weick, 1984).
5. Obtain and evaluate feedback. Tracking and monitoring implementation of the strategy is important to document and celebrate progress as well as to make necessary modifications if problems arise. The feedback and evaluation can result in repeating the cycle.
Table 7.2 and Table 7.3 present a simple model for evaluating proposed alternative solutions to the problem presented by an organizational mandate to increase the proportion of women and minority managers. Each alternative is scored according to agreed-upon attributes and weighted according to importance. Multiplying the level measure by the attribute weight yields an attribute score for each item; the total score is the sum of the attribute scores. In the sample alternatives being evaluated, the organization is considering: alternative 1, a turnkey program from an external vendor that would cost $65,000, take 2 months to imple- ment, and consume an estimated 50 hours of human resources staff time; and alternative 2, having the human resources department develop a diversity recruitment initiative, which would involve no direct cost, take 6 to 12 months to develop and implement, and consume approximately 300 hours of human resources staff time.
Table 7.2: Model for evaluating alternative solutions: Alternative 1
Attribute Level measures Attribute weight
Level value Attribute score
Direct cost >$150,000 = 0
$100,001–$150,000 = 25
$50,001–$100,000 = 50
$25,001–$50,000 = 75
<$25,000 = 100
.50 50 25
Time to implement
>1 year = 0
6 months–1 year = 50
3–6 months = 75
<3 months = 100
.20 100 20
Estimated staff time to implement
>201 hours = 0
51–200 hours = 50
0–50 hours = 100
.20 100 20
Total score 1 (100%) 65
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Section 7.3Problem-Solving Models
Table 7.3: Model for evaluating alternative solutions: Alternative 2
Attribute Level measures Attribute weight
Level value Attribute score
Direct cost >$150,000 = 0
$100,001–$150,000 = 25
$50,001–$100,000 = 50
$25,001–$50,000 = 75
<$25,000 = 100
.50 100 50
Time to implement
>1 year = 0
6 months–1 year = 50
3–6 months = 75
<3 months = 100
.20 50 10
Estimated staff time to implement
>201 hours = 0
51–200 hours = 50
0–50 hours = 100
.20 0 0
Total score 1 (100%) 60
Comparison of the two alternatives using weighted attributes yields a slightly higher score for alternative 1. When faced with a selection decision in which there are multiple factors of varying degrees of importance to consider, this approach can be useful. The challenge is gaining agreement on the attributes and their weights.
Breakthrough Thinking
Leading strategists at the McKinsey & Company management consulting firm propose a new approach for developing breakthrough ideas: Instead of asking people to think out- side the box, they advocate presenting people a new box and asking them to think inside it. The key to improving a product or service is often to make it easier to obtain and use, especially for people who are older; disabled or in poor health; experiencing a physical or mental illness or a high degree of stress; have limited resources, literacy, or English profi- ciency; or any combination of these conditions. One set of questions particularly germane to health organizations is designed to examine what makes a product or service difficult to use, with questions that focus on how to improve the usability of a product and dis- cover underserved market segments (Coyne, Clifford, & Dye, 2007). Applying these ques- tions to the medical answering service industry, Ringadoc offers an illustrative example of thinking inside a new box, with answers in italics.
• What is the biggest hassle about using or buying our product or service that people unnecessarily tolerate without knowing it? Conventional “live” physician answering services are often expensive and staffed by incompetent operators, yet patients dislike auto- mated systems and express their dissatisfaction with them through complaints to their health plans and lower patient satisfaction ratings.
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Section 7.3Problem-Solving Models
• For which current customers is our product least suited? People with hearing or speech problems who are unable to use computers or the telephone.
• Which customers does the industry prefer not to serve and why? Physicians serv- ing ethnically diverse patients with limited English proficiency.
• Which customers could be major users if only we could remove one specific bar- rier we have never considered? Physicians with busy practices seeking an affordable, easy-to-use answering service with minimal switching costs.
Collaboration
Collaboration, or cooperation between agencies that are not formally connected, is increas- ingly important due to the complex interrelationships among organizations serving a com- munity. As the lines between individual and population-based health blur, private and public health care organizations rely on each other to develop comprehensive solutions to community problems and improve community health outcomes (Novosel & Sorensen, 2010).
Community Stakeholder Engagement Health care organizations are highly visible and valued institutions and play an integral role in the communities they serve. Many hospitals, for example, are among the largest employers in the cities where they are located. Most are not-for-profit organizations with an explicit community service mission, and the 2010 health reform legislation requires them to document their community benefit activities. However, regardless of whether their corporate status is for-profit or not-for-profit, health organizations engage in a wide variety of relationships with the external environment, including charity care, community educational and wellness programs, and political issue advocacy.
Although health organizations have a long-standing tradition and a strong record of corporate social responsibility, the expectations of both citizens and governments have increased, as has their power to scrutinize and talk about what the organization does. Since the advent of social media and electronic communications, patients and advocacy organi- zations are able to observe or gain access to most business activities and instantaneously talk about them positively or negatively at almost no cost. For this reason, health care organizations must develop more effective ways to engage with both individual and orga- nizational stakeholders. Effective external engagement not only helps build, strengthen, and protect an organization’s reputation, but it can also enhance efforts to attract new customers, motivate employees, and gain allies in government (Browne & Nuttall, 2013).
To effectively manage their relationships with external stakeholders, health organizations must consider and integrate external engagement into their top-level strategies and their routine business operations. Research with leaders of organizations that excel in exter- nal engagement and are highly regarded for their corporate social responsibility revealed four ways to incorporate external engagement into everyday business decisions through- out the organization (Browne & Nuttall, 2013):
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1. Define the contribution of the organization to the community. The Patient Protection and Affordable Care Act of 2010 requires all nonprofit hospitals to periodically conduct a community health–needs assessment and report and quantify the value of what they have done to meet those needs. This mandate for nonprofit hospitals to justify their exemption from corporate income and prop- erty taxes is a public relations opportunity in disguise, because it allows hospitals to be explicit about how fulfilling their mission benefits their communities.
2. Know your stakeholders. All businesses rigorously seek to know their custom- ers; health organizations need to devote equally intensive efforts to knowing their stakeholders, which include customers/patients and their families and a host of other groups and organizations. Effective external engagement demands a detailed knowledge of stakeholders’ preferences and resources: What they want, how and when they want to obtain or receive it, where they are willing to compromise if they cannot afford what they want, and what resources and influences they can draw on to get what they want. Unlike other sectors where economic resources are the key determinant of power and influence, in health organizations other types of power may be more important. For example, dis- ability advocacy organizations successfully lobbied for years to exempt disabled Medicaid beneficiaries from requirements for mandatory enrollment in managed care health plans.
3. Apply world-class management. External relationship development and man- agement skills are becoming a necessary skill for C-level executives, and at every level managers must consider the impact of their decisions on stakeholders and the implications of those impacts for the organization. Results of external engage- ment are hard to measure because the financial benefits of engagement activities are often indirect or oriented toward fulfilling long-term goals. Sometimes the closest proxy measure of the value external engagement adds is stakeholder satis- faction as measured by surveys, participation in activities, increased expressions of support or decreased complaints, scores on regulatory surveys, and the like.
4. Engage thoroughly. Successful external engagement is deliberate, thoughtful, and proactive—not a reaction to a decrease in market share, a drop in census, publicity about an adverse event, or a negative regulatory agency action. It takes a long time to gain stakeholder trust, yet it can be lost in an instant. It is also important to make strategic alliances with stakeholders—or to act alone when the occasion warrants.
For example, in 1994 California became the first state to pass a law mandating minimum nurse-to-patient ratios for hospitals. The California Hospital Association (the state chap- ter of the American Hospital Association) vigorously opposed the legislation because it would substantially increase labor costs, and the association delayed its implementation until 2004. The Kaiser Permanente Hospital Foundation weakened the industry trade association’s position with its decision early in the legislative debate to support the law, implementing (and in some cases exceeding) the proposed staffing ratios in its 19 hos- pitals throughout the state (Nelson, 2008). For this decision, Kaiser received severe criti- cism from the state hospital association but greatly strengthened its relationship with staff nurses and the unions representing them. Recognizing that it could not please everyone in this situation, Kaiser chose to stand alone and support its nurses and their union as stakeholders essential to the successful functioning of its hospitals and the Kaiser Perma- nente health system. An important consideration was that Kaiser Permanente health plan members belong to private and public sector unions.
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Collaboration With Physicians Physicians are unique and critical stakeholders in the health care system, yet it is often difficult for health care administrators to fully engage them for collaborative multidisci- plinary problem-solving activities. One explanation for this difficulty is that physicians are trained to value and promote autonomy as practitioners; only since the early 2000s has their medical training required specific competencies for working in teams (Dunnington & Reed, 2003). Another contributing factor is the complex structure for physician account- ability and governance that has evolved in health organizations to protect the sanctity of the patient-physician relationship. As a result, physicians have little training or opportu- nities to gain experience in collaborative problem solving (Spurlock, 2010).
Understanding physicians is key to involving them in collaborative problem-solving efforts. Physician resistance to collaborative efforts is often based on the perception that participation will increase their workload and reduce their incomes by taking time away from their practices. Having competent administrative team members to whom physi- cians can delegate tasks is essential to minimize demands on the physicians’ time and demonstrate that the organization values their time. Whenever possible, the organization should provide financial support to cover lost practice time costs for team meetings and work with physician peers to implement the project.
Identifying a physician champion for a particular problem-solving project is essential to successful physician collaboration—ideally one who possesses most of the following qualities:
• passionate about the project and a strong internal motivation to promote it over other competing projects;
• dissatisfied with the status quo, even if it is acceptable to many; • systematic rather than transactional view of the project; • clinically respected by peers; • pragmatic, with good judgment; and • courageous and willing to stand up for and defend his or her position (Spurlock,
2010).
Once the champion is identified and joins the team, it is incumbent on the project leader to support the physician by nurturing his or her communication skills and leadership abili- ties and to recognize and respect his or her contributions.
Collaborative Problem-Solving Process While the benefits of collaboration usually outweigh the disadvantages, not all problems can be solved by collaboration. An important initial step in a proposed collaborative effort is to assess the readiness of the organization, the collaboration team, and its participants by asking the following questions:
• Does the problem lend itself to a collaborative approach, requiring input and com- mitment from a diverse group of stakeholders?
• Are there clearly identifiable benefits of collaboration as a means of resolving this problem or completing this project? Will the collaborative process serve as a means for the collaborators to build or strengthen their working relationships?
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• Is everyone clear on the reasons for collaborating? • Is there a strong, knowledgeable, and engaged team leader? • Are the team members the right people, with sufficient authority to make deci-
sions for their organizations or organizational units? It is advisable to confirm rather than assume that they do have this authority.
• Do the team members understand what collaboration means? • Do all team members understand their roles and responsibilities? • How strongly are the team members and their organizations committed to the
collaboration? • Do the team members’ organizations value collaboration and support the work
of the team? • Are the participants willing and able to devote sufficient time to the
collaboration? • Do the team members have experience working together? What have been the
results of prior collaborations? • How will the results of the collaboration be measured? • Is there a clear end point to the collaboration (Novosel & Sorensen, 2010)?
If the readiness assessment indicates that a collaborative approach to resolving a problem is best and feasible, the next steps are to
1. recruit the right people; effective collaborations consist of people who are com- mitted to the collaboration, able to make decisions on behalf of their organiza- tions, able to devote sufficient time to the work of the collaboration, and able to resolve problems in a timely manner;
2. establish preliminary outcome objectives and identify major activities; 3. convene the collaboration in an organized fashion, with an agenda that includes
recommendations for its structure, goals, and activities; 4. identify and secure necessary resources for accomplishing the collaborative
goals—the most important of these will usually be team members’ staff time and access to data;
5. establish ground rules and expectations for members such as membership cri- teria, participation obligations (e.g., designation of an alternate representative when a member cannot attend a meeting), the decision-making process, commu- nication protocols, and work to be completed between meetings;
6. maintain vitality by recruiting and involving new or replacement members, sharing and synthesizing information (such as best practices by organizations involved in similar collaborations), celebrating and sharing news of successes, and recognizing individual and organizational contributions; and
7. obtain feedback and use it to improve the collaboration in terms of both process and outcomes (Novosel & Sorensen, 2010).
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Section 7.4Decision Making
7.4 Decision Making Health-care professionals go through much of their daily work without making wicked decisions, but as their level of responsibility increases, more of their work involves mak- ing difficult decisions rather than just completing tasks or following a routine. Alemi and Gustafson (2007) identify five components of a decision:
1. Multiple alternatives are available. 2. Each alternative leads to a series of consequences. 3. The decision maker is uncertain about what might happen. 4. The decision maker has different preferences about outcomes associated with
various consequences. 5. A decision involves choosing among uncertain outcomes with different values.
(p. 3)
It should also be noted that there may be more than one decision maker, which is often the case in large organizations where decisions are ostensibly made by senior manage- ment teams.
Decision Models
Organizational theorists have identified two primary types of decision making, both of which occur in health organizations: Willful choice and “garbage can” models. These models are based on fundamentally different assumptions about how people behave in organizations.
Willful Choice The willful choice, or rational, model assumes that people in organizations make deci- sions based on reason, in an intentional manner, through a thoughtful and deliberate pro- cess that results in an optimal decision. It involves six sequential steps:
1. Identify the problem. 2. Collect data. 3. List all possible solutions. 4. Test possible solutions. 5. Select the best course of action. 6. Implement the solution based on the decision made. (Ledlow & Coppola, 2014,
pp. 139–140)
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Section 7.4Decision Making
Garbage Can The garbage can, or reality-based, theory assumes that decisions are made on a sloppy and haphazard basis, similar to satisficing or “muddling through” as discussed in the “Analytical Problem Solving” section. It evolved from the recognition that organizational decision making is seldom as logical and orderly as the willful choice model suggests. In health care organizations participants in the decision-making process often have con- flicting views of the problem, possess limited time and resources to collect data, and are constrained considering all possible solutions by regulatory compliance requirements. As well, time and financial resource limits make it unreasonable to test possible solutions.
The garbage can is a metaphor for the way that many business decis- ions are actually made. As depicted in Figure 7.1, problems, solutions, energy, and participants are dumped into the can; when the can is full, a decision is made. Problems, solutions, and decision makers vary according to the mix of recognized problems, the choices available, the solutions available for solving the problems, and external influences on the deci- sion makers. Problems are identified and resolved based on shifting com- binations of problems, solutions, and decision makers. In this sense deci- sion making appears random, arbi- trary, political, or capricious instead of rational. The garbage can theory allows problems to be addressed and choices to be made, but poorly under-
stood and addressed problems can drift into and out of the garbage can process, depending on the situation and factors (Cohen, March, & Olsen, 1972).
Decision Support Tools
A wide variety of tools and techniques for making and analyzing business decisions are available, ranging from simple to extremely complex. They are most commonly used by analysts rather than executives. In many health organizations executives increasingly call on analysts who are proficient in using highly sophisticated quantitative methods for decision support and use the analysts’ findings to make and justify decisions. Wise lead- ers appreciate the need for sophisticated analytical methods to support difficult decision processes, as well as the benefits of using them (Caldwell, 2006).
Figure 7.1: The garbage can decision process
The garbage can theory proposes that decisions result from a random mix of people, problems, solutions, and choices.
Solution s
Participants
Problems
Choice Opportunities
The Decision
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Section 7.4Decision Making
Six Sigma and Lean Originally developed at Motorola in the 1980s to improve product and service quality, Six Sigma focuses on defects per million opportunities and aims for a performance level of 3.4/1,000,000—which equates to almost zero defects. Highly data driven, Six Sigma emphasizes defect prevention over detection through reducing variation and waste. In health and other service organizations, a defect is anything that results in customer dissat- isfaction. As with other analytical approaches, Six Sigma is driven by measurement. The primary metrics used by health organizations, individually or in varying combinations, are service level, service cost, customer satisfaction, and clinical excellence. While these metrics are extremely important and relevant in health organizations, they are difficult to apply (Bandyopadhyay & Coppens, 2005).
Health organizations are increasingly using Six Sigma in combination with Lean management, a complementary approach designed to identify dysfunctional systems and processes that inhibit clinician effectiveness, such as onerous documentation require- ments, and empower employees at all levels of the organization to suggest ways to sim- plify and synchronize processes and thus save time. Typically, to undertake a Six Sigma or Lean initiative, staff must undergo a comprehensive training program by certified pro- fessional Six Sigma/Lean trainers. To effectively implement Lean and Six Sigma, health organizations should invest in training managers not only in the theory and techniques of these approaches, but also in their practical approaches (Caldwell, 2006).
Decision Trees Decision trees provide a means to consider both value (often expressed as cost) and uncer- tainty by graphing the possible consequences of alternative courses of action and their estimated impact (Alemi & Gustafson, 2007). For example, many hospitals are struggling to close budget gaps, especially those that serve a high proportion of Medicaid and unin- sured patients. To remain fiscally viable they must increase revenue, reduce spending, or both. There are a number of alternative courses of action to achieve either or both objectives, as displayed in Figure 7.2. An unknown factor that will influence the course of action is the estimated impact of the Patient Protection and Affordable Care Act of 2010, now commonly called the ACA as noted in the diagram in Figure 7.2. The Disproportion- ate Share Hospital subsidies for hospitals serving a high proportion of poor and unin- sured patients will be gradually phased out beginning in 2014. However, these hospitals can anticipate substantial new revenues since many previously uninsured low-income patients will be eligible for subsidized health insurance coverage through Medicaid eli- gibility expansions and health benefit-exchange programs authorized and funded by the ACA. To complete this decision tree, the analyst would develop probability and value estimates of the alternatives under consideration and the impact of the ACA.
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Section 7.4Decision Making
Figure 7.2: Decision tree
A decision tree depicts alternative ways to reduce a budget deficit.
Making Better Decisions
Many discussions of organizational decision making incorrectly imply that only senior-level executives make decisions or that their decisions are the only ones that matter. Decision- making effectiveness is a critical success factor for health professionals at every organiza- tional level; even apparently low-level decisions by individual professionals and first-line supervisors are important in knowledge-based organizations. Two critical success factors for effective decision making are improving the decision-making process and assessing decision results.
Improving the Decision-Making Process Business decisions are frequently flawed. When 2,207 executives were asked to evaluate decisions in their organizations, 60% reported that bad decisions were about as frequent as good ones (Heath & Heath, 2013). Researchers Dan Lovallo, a professor of manage- ment at the University of Sydney, and Olivier Sibony, a director at McKinsey & Company
Add New Service
Raise Prices
Increase Revenue
YesNo
YesNoYesNo
Cut Spending
Reduce Budget Deficit
Across the Board
YesNo
Eliminate Units
Outsource
Targeted
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Section 7.4Decision Making
management consultancy, analyzed both the process and the outcomes of more than 1,000 business decisions over a 5-year period. The outcomes were relatively straightforward, as measured by revenues, profits, and market share. The decision process analysis was more qualitative, exploring whether the team explicitly acknowledged what was uncer- tain about the decision and if the decision team participants included those whose views differed from or contradicted senior executives’ perspectives.
Lovallo and Sibony (2013) found that process was 6 times more important than analysis in producing decisions that increased revenues, profits, and market share. And while a good process often led to better analysis, the reverse did not occur: Without a good deci- sion process, superb analysis did not receive a fair hearing. To make better decisions, they recommend four ways to improve the decision-making process, summarized in the acronym WRAP:
1. Widen the options. Research shows that when leaders considered at least two alternatives, the results were 6 times as likely to be better than when they consid- ered only one option, and better yet when they considered multiple alternatives simultaneously. Lovallo and Sibony recommend asking each member of a deci- sion team to present their second-best choice as well as their first preference.
2. Reality-test assumptions by looking at companies in similar situations. Health organizations often do this by examining the best practices of peer organizations.
3. Attain some distance, such as by considering the effects of the proposed decision in 10 minutes, 10 months, and 10 years.
4. Prepare to be wrong. Lovallo and Sibony recommend scheduling a spe- cific time to evaluate the decision against the anticipated results (as cited in Knowledge,Wharton, 2013).
Case Study: Bright Valley Health Center Thrift Store
Bright Valley Health Center (BVHC) is a community health center serving low-income Medicaid and uninsured patients in a large metropolitan area that needs additional funds to fulfill its mission, since many uninsured patients pay no or very nominal fees. One of the board members, and the clinic’s major private contributor, proposed that BVHC operate a thrift store and offered to donate up to $75,000 to pay the first year’s rent and purchase necessary equipment. He also offered to ask some of his family members and business associates to support the venture financially.
A task force composed of three board members and three BVHC executives (the CEO, CFO, and development director) was appointed to consider this proposal. At its first meeting, the task force identified the following pros and cons and developed a list of key questions to be determined about the proposed new venture.
Pros • If profitable, a thrift store would produce earned income to support organization’s
charity mission. • A thrift store would provide employment for community residents in an area with high
unemployment.
(continued)
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Section 7.4Decision Making
Case Study: Bright Valley Health Center Thrift Store (continued)
• Operating a thrift store would support fund development by 1. demonstrating business initiative, which would help broaden the business and
private sector contributor base; and 2. providing matching funds from earned income required for some government and
foundation grants. • A thrift store, as a local business, would increase the clinic’s visibility in the community.
Cons • Operating a thrift store could lead to a loss of strategic focus for BVHC as a community
health center. 1. It is not a core clinic business function. 2. It would require a heavy staff time commitment or hiring new staff.
• As a new business venture, a thrift store would require substantial resources that could place BVHC at financial risk.
• A new thrift store would face strong competition from established stores such as Goodwill and local pawn shops.
Reflection Questions: 1. Who will financially support start-up and ongoing operating cost? 2. Who will manage ongoing operations of the thrift store? 3. What is the basic business model?
a. acquisition options—fresh start-up or buy an existing thrift store? b. supply of products and demand for products c. operating and staffing model d. high-level revenue and expense estimates
4. What are the legal and corporate structure considerations for a community health cen- ter to operate a thrift store business?
5. Should Bright Valley proceed with thrift store planning and implementation?
Resolution The BVHC task force was excited about the prospects for generating ongoing earned income through a business that, like the clinic, would benefit the community. At the same time, they were concerned about the financial risk and staff time commitment and about alienating the board member who was the organization’s major private donor by not accepting his generous offer. The task force decided to engage a respected business-development consultant to conduct a feasibility study, at a cost of $15,000. The consultant had previously worked with BVHC for strategic planning and had extensive experience with other community health centers assessing and implementing a variety of business-development initiatives. The initiative would proceed in two phases.
PHASE 1—EXPLORE VALUE AND RISK Step 1—Marketing and business model assessment
1. Meet with CEO and other designated staff to determine thrift store issues and background.
2. Research thrift store industry and promising practices. 3. Interview five to six external key thrift store informants. 4. Meet with funding sponsor(s) to assess opinions of acceptable geographic locations for
store, value of store, estimated range of financial support available, potential operating and legal relationship to BVHC and synergism with its mission, and to determine if acquisition of an existing thrift store is an option with sponsor(s). If so, visit site(s) for sale.
(continued)
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Section 7.4Decision Making
Case Study: Bright Valley Health Center Thrift Store (continued)
5. Conduct high-level assessment of regulatory and legal requirements impacting BVHC. 6. Develop basic business and financial model (financials based on comparative budgets
and high-level cost estimates). 7. Prepare business case PowerPoint: Outline key findings and value and risk
propositions; identify next steps and decisions to be made.
Step 2—”Go/No Go” check in meetings
1. Conduct three meetings: CEO and BVHC designated staff—potential thrift store sponsors—board and/or committee-level decision makers.
2. At each meeting: Review business case; analysis, determine barriers or opportunities, determine responsibility of the parties, value and risk propositions to BVHC and sponsors(s).
3. Make a “go” or ““no go” decision. a. Go: Develop full business plan. b. No go: Stop planning effort.
PHASE 2—DEVELOP DETAILED BUSINESS PLAN (COST: $25,000)
1. Research and select site location for store. 2. Detail business plan model; for example, competitive analysis, leases, licenses, type of
inventory and inventory acquisition, accounting/bookkeeping, point-of-sale systems, marketing, business structure (nonprofit, LLC, etc.), legal relationship to BVHC, and review of federal laws regarding used goods sales.
3. Prepare a 3- to 5-year pro forma. 4. Develop detailed implementation plan for start-up. 5. Prepare content points for attorney to develop memorandum of understanding
between BVHC and subsidiary thrift store business unit.
Reflection Questions: 1. Why hire a business-development consultant? 2. If you were the CEO/CFO/development director of BVHC, what would be your initial
reaction to this proposal and why?
Evaluating Decision Results Management guru Peter Drucker studied and wrote about executive decision making extensively throughout his long career. He broke down the decision-making process into a series of steps that emphasize the executives’ responsibility as high-level decision makers to consider fully the importance and implications of their decisions. Drucker (2004) called his last step systematic decision review and recommended scheduling a time for such a review when the decision is made.
Checking the results of a decision against its expectations shows executives what their strengths are, where they need to improve, and where they lack knowledge or information . . . [and] the areas in which they are simply incompetent. In these areas, smart executives don’t make decisions or take actions. They delegate. (Drucker, 2004, p. 61)
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Section 7.5Decision Making in Health Organizations
Such a review has two principal benefits. First, it provides an opportunity to correct a poor decision before it does serious damage. Equally important is the opportunity it offers for individual development. Drucker (1966, 2004) also emphasized the importance of taking responsibility for decisions by clearly establishing an action plan and accountability for their implementation. In addition to setting an implementation and completion deadline, the responsible manager needs to know which people in the organization will be affected by the decision and who must be informed about it.
7.5 Decision Making in Health Organizations Two related factors distinguish decision making in health organizations from other types of organizations: regulatory influence and ethical considerations. Government regulation is designed to prevent fraud and abuse, protect patients and providers, promote access to care, contain costs, and improve the quality of health care services. Many of these regula- tions have been adopted to protect patients based on ethical concerns and concepts.
Regulatory Influence
The health care industry is highly regulated by myriad governmental organizations, each with different players, rules and procedures, and jurisdiction over different types of health organizations. In addition, health organizations voluntarily seek accreditation from independent, privately operated accrediting bodies such as the Joint Commission (formerly the Joint Commission on the Accreditation of Health Organizations) and the National Committee for Quality Assurance in order to demonstrate that they provide high-quality care and conform to professional standards. Many go even further by pur- suing highly competitive designations such as:
• American Nurses Credentialing Center’s magnet recognition program that recog- nizes health care organizations, primary magnet hospitals for quality patient care, nursing excellence and innovations in professional nursing practice (American Nurses Credentialing Center, 2014).
• Malcolm Baldrige National Quality Award, given by the president of the United States, recognizing health care organizations that have achieved a near-benchmark performance on criteria for leadership, strategy, customer service, workforce effec- tiveness, and operations (Baldrige Performance Excellence, 2013).
• The Centers for Medicare and Medicaid Services (CMS) Five-Star Medicare rating for Medicare Advantage managed care plans and Medicare Part D prescription drug plans (CMS, 2013).
• The annual list of Leapfrog Group Top Hospitals. In 2013, 90 of the 1,324 hospitals that voluntarily participated in the Leapfrog hospital survey made this list. They also earned an A on Leapfrog’s Hospital Safety Score, graded by expert analysis of infections, injuries, and medical errors. The Leapfrog Group is an employer coali- tion dedicated to improving hospital transparency, quality, and safety (Leapfrog Group, 2013).
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Section 7.5Decision Making in Health Organizations
Fraud and Abuse Government regulation of health care providers may be traced back to the Civil War, when the False Claims Act of 1863 established penalties for filing fraudulent claims with the federal government for health services rendered to military combatants. Whistle-blower amendments of 1986 allow individuals to file false claims actions against fraudulent gov- ernment contractor providers on behalf of the federal government and receive a portion (typically 15% to 25%) of recovered damages. The Operation Restore Trust program, begun in 1995, investigates fraud and also provides advisory guidance to state and federal agencies and provider organizations to prevent violations (Buchbinder & Shanks, 2012). In 2009 the CMS began to use private Recovery Audit Contractors (RACs), organizations that analyze Medicare and Medicaid claims data to discover fraud. The RACs operate on a contingency basis, so they are paid only if they are able to provide information that leads to recovery of an overpayment; if a provider successfully appeals the RAC findings, the RAC must return its fee (CMS, 2013).
Accreditation and Awards While accreditation is ostensibly voluntary, for most health care organizations it is impos- sible to do business without it. Medicare, Medicaid, and nearly all private insurers will not pay for care in hospitals or nursing homes unless they are accredited by the Joint Commis- sion; most public and large employers and the new state and federal health exchanges will only contract with health plans accredited by the National Committee for Quality Assur- ance or URAC (formerly known as Utilization Review Accreditation Commission). The Centers for Medicare and Medicaid Services allows Five-Star Medicare Advantage health plans and prescription drug plans to recruit and enroll members throughout the year, while plans with lower ratings may only recruit and enroll new members during the October to December open enrollment period (CMS, 2013). While up to three organizations in an industry sector may receive the Baldrige award each year, only 11 health organizations have earned the award since health was added as an industry sector in 2012 (Agency for Health- care Research and Quality, 2013). Accreditation and exceptional performance designations carry tremendous financial consequences for health organizations, both positive and nega- tive. Exceptional high-quality performance ratings confer a great competitive advantage. However, the loss of accreditation is a huge threat to the organization’s survival.
Compliance Because of the high level of risk involved when a health organization fails to meet regu- latory requirements, most have adopted compliance programs with a formal plan and a designated compliance officer. An effective program can minimize the company’s risk exposure by providing employees guidelines for following the applicable laws and regu- lations and by providing the organization’s governing body and leadership a systematic way to ensure that the laws are being followed. However, how to interpret and follow the rules is not always clear-cut, and it requires careful consideration at the operational level in order to comply with the regulations in a satisfactory manner.
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Section 7.5Decision Making in Health Organizations
Case Study: To Report or Not to Report? That Is the Question
Andrew Signey recently became the Standards and Compliance Director of a large state psychiatric hospital. Soon after taking this position, he learned that the licensing agency did not appreciate his department’s efforts to scrupulously comply with licensing agency regulations.
With over 600 severely mentally ill patients, there are frequent incidents involv- ing staff and patients. As a state licensed facility and as an accredited Joint Commission hospital, it is our duty to report incidents that may be judged to be out of the ordinary. However, what’s “out of the ordinary” in a state mental hospital is far different than what is unusual in a community acute care facility. It is not uncommon for patients to hit other patients or staff, or to exhibit behav- iors like swallowing screws, eye glass arms, plastic caps, and the like. Staff try to prevent, diminish, or stop these behaviors, but they will always occur in institutions serving extremely ill psychiatric patients.
The codes and regulations are not truly specific and leave considerable room for interpretation about what should be reported. There are some obvious ones . . . death, fires, and the like, but that’s about it in terms of guidance.
When I arrived, the person responsible for incident reporting was reporting everything that could be considered an incident. The local licensing body direc- tor, while polite, let me know that we reported two and a half times as many incidents as our peer hospitals—over 500 incidents in the previous 12 months. Each reported incident needs to be investigated by the licensing division. Our effort to let our licensing partners know what was occurring in the facility was a bit extreme.
Then we faced the challenge of changing the way that staff would evaluate what to report and working with licensing to ensure that we report the right things rather than everything. If you under report and licensing discovers an incident that they believe should have been reported, you may incur fines and citations and put the hospital’s license at risk. You may not have a compliance problem if you over report, but you certainly don’t garner any good will from your licensing partners.
Resolution The remedy was to work with the regulations that guide the process. I created a PowerPoint and convened the staff to discuss how we wanted to change our system. Staff was very concerned about what would happen if we didn’t report enough. We looked at the language carefully and spent several hours discuss- ing the various items and examples of incidents. We agreed that we could reduce the volume of reportable incidents to our licensing partners.
We also recognized that we needed to redistribute the work so that more staff were informed about and could report incidents. We created a daily meeting for all staff involved in incident management to discuss every incident that occurred the previous day. This interdisciplinary body includes RNs, social workers and analysts who discuss the importance of each possibly reportable incident. This process improved staff communication and allows us to better identify trends that can lead to performance improvement projects. It also ensures that the dif- ferent disciplinary perspectives inform our decision to report.
(continued)
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Section 7.5Decision Making in Health Organizations
Ethical Considerations
In his description of the elements of decision making, Drucker (1966) recognized that nearly all decisions involve some sort of compromise, and he devotes considerable atten- tion to the importance of starting out with what is right in order to make the right com- promise. Starting out by looking for what is acceptable is the wrong approach, because it limits the search for an effective solution by focusing on what course of action is likely to cause the least resistance within the organization or with stakeholders rather than what is the right thing to do. “Executives are not paid for doing things they like to do. They are paid for getting the right things done—most of all in their specific task, the making of effective decisions” (Drucker, 1966, p. 158).
When confronted with making decisions that could impact their organizations and employees, managers in health organizations often find that the right thing to do is not clear. The complex nature of health organizational relationships with internal and external stakeholder groups makes decision making complicated, too. Decision makers must con- sider not only the facts of a given situation, but also organizational policies, professional ethics, regulatory rules, accrediting agency criteria, legal mandates, and litigation risks. These factors further exacerbate the challenge for health administrators to make decisions that are both sound and ethical (Freshman, 2009).
Case Study: To Report or Not to Report? That Is the Question (continued)
After defining our strategy, we invited the local state licensing division to dis- cuss it, and were surprised by their reticence. While they indicated their sup- port throughout the presentation, they could not verbalize it—because they could not put themselves in the position of telling us what to report or not. But the meeting made our new approach transparent, and reassured us that the licensing agency representatives understood and supported it.
While we have decreased our number of reported incidents by over 75% in the past twelve months, we have continued to report corrective actions for deficient practices discovered by licensing in their investigations. This demonstrates that reporting what is truly identified as important enables us to focus on system improvement. You also have time to improve your staff level of knowledge about incidents.
Reflection Questions: 1. What is the key piece of information about the problem described in this case study? 2. Why was it important, and how did Signey improve the decision-making process about
reportable incidents?
Source: Personal communication, Andrew Signey, director of Standards and Compliance, Norwalk State Hospital, July 23, 2013.
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Section 7.6Summary and Resources
7.6 Summary and Resources
Chapter Summary Much of the work involved in managing health organizations revolves around solv- ing problems. These problems are many and varied. They include but are not limited to patient care and safety, community expectations, the organization’s financial viability, employee relations, regulatory compliance, and ethical considerations.
Creative problem solving is a valuable and valued skill for health leaders and managers, but there are a number of organizational factors that limit them in this regard, such as the variety of problems and differing stakeholder perspectives on what constitutes a problem as well as what to do about it. There are also personal constraints such as a mind-set that limits one’s ability to clearly define the problem and develop a broad range of potential alternative solutions.
Both analytical and creative approaches to problem solving are essential elements for suc- cess in health care management, as is the ability to collaborate with internal and external stakeholders, both individuals and groups. Not all problems can be solved collaboratively, however.
Health organization managers employ various decision models and tools in their work. While the ideal decision-making process is proactive, thoughtful, and rational, in reality decisions are often made on the basis of expediency. Popular tools derived or adapted from other industries include Six Sigma and Lean approaches to quality management, which focus on preventing mistakes by reducing process variation and eliminating redundancy and waste. A growing number of hospitals are adopting and adapting these quality-management approaches to improve patient safety and improve clinical performance measures.
Critical Thinking and Discussion Questions 1. What are the major problem-solving barriers that you have observed in your
workplace or other organizational settings? 2. What types of problem-solving skills and approaches are most likely to facilitate
the success of health administrators at various organizational levels—top execu- tive, division director, department head, unit manager, project manager, and analyst?
3. Compare and contrast the problem-solving skills and approaches of the most effective and the least effective managers you have known. To what extent were they competent creative managers? To what extent were they analytical and sys- tematic problem solvers?
4. Why is it important to consider several alternative means to solve a problem? 5. How does one know whether a business-process problem requires incremental
modifications or major changes? 6. Why is decision making in health organizations challenging? Give an example to
support your argument.
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Section 7.6Summary and Resources
Key Terms
conceptual blocks Mental barriers that impede one’s ability to define problems and consider a variety of alternative solutions.
disruptive innovation (Christensen) A dramatic change in an industry caused by a new product or process that is radi- cally different and better (cheaper, faster, smaller, nimbler, or easier to use) than what is currently offered or used.
evolutionary flexon The process of learn- ing from experience, such as through small-scale pilot projects, about customer and stakeholder reactions to a product or service.
Five-Star Medicare rating The rating awarded to Medicare health and prescrip- tion drug plans with the highest scores for quality of care and patient satisfaction; it allows them to recruit and enroll new members throughout the year instead of only during the Medicare annual autumn open enrollment period.
flexons (Leclerc and Moldoveanu) Problem-solving languages used to under- stand human behavior and solve difficult problems.
garbage can A reality-based decision- making model that describes organiza- tional decision making as a haphazard mix of problems and solutions with a varying mix of participants.
Joint Commission An independent non- profit organization that sets standards and conducts on-site surveys of hospitals and other health organizations to assess their compliance with the standards.
Lean management An approach to qual- ity improvement that emphasizes simplify- ing and synchronizing business processes for greater efficiencies and reduced costs.
Leapfrog Group Top Hospitals An annual list of hospitals with the highest scores on measures of transparency, qual- ity, efficiency, and patient safety by the employer health coalition.
magnet hospital A designation given by the American Nurses Credentialing Center as a hospital that supports nursing excel- lence and innovative professional nursing practices.
Malcolm Baldrige National Quality Award An award in recognition of per- formance excellence conferred on no more than three organizations in an industry each year by the U.S. Department of Commerce.
muddling through (Lindblom) A solution that is not ideal but is good enough to get the job done.
National Committee for Quality Assurance An independent nonprofit organization that sets standards and evalu- ates health plans and other health organi- zations for quality of care and service.
networks flexon A method of delineating and analyzing relationships among indi- viduals and entities.
Recovery Audit Contractors (RACs) Private organizations that analyze Medicare and Medicaid claims to discover fraud; they receive a portion of the recovered overpay- ments as their sole compensation.
Restore Trust A CMS program to investi- gate fraud by federally contracted health service providers in the Medicare and Medicaid programs.
sentinel events Adverse clinical incidents that must be reported to regulatory or accrediting agencies.
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Section 7.6Summary and Resources
Six Sigma A quality-management approach focused on eliminating varia- tion and waste in business operational processes.
systematic decision review (Drucker) Scheduled evaluation of the results of a decision.
URAC An independent nonprofit organi- zation that sets standards for and evaluates health plans, medical groups, and hospi- tals for adherence to utilization guidelines and patient care–management standards.
wicked problems (Buchbinder) Problems that are ambiguous, complex, and generate high levels of emotion among those whom they affect.
willful choice Rational decision-making model that describes organizational deci- sion making as thoughtful, deliberate, and objective.
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