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Learning Objectives

Leadership is the capacity to translate vision into reality.

—Warren Bennis

Innovation distinguishes between a leader and a follower.

—Steve Jobs

After you have studied this chapter, you should be able to

➤➤ develop➤an➤understanding➤of➤the➤healthcare➤system➤and➤its➤organizational➤complexity,➤

including➤the➤role➤of➤healthcare➤leaders➤as➤they➤make➤decisions➤and➤formulate➤strategy;

➤➤ understand➤the➤importance➤of➤board➤and➤medical➤staff➤leadership;

➤➤ understand➤the➤role➤and➤importance➤of➤organizational➤structure➤and➤governance;

➤➤ discuss➤complex➤issues➤in➤the➤healthcare➤industry➤from➤the➤perspective➤of➤previous➤

leadership➤literature;

➤➤ apply➤leadership➤and➤managerial➤principles➤to➤organizational➤and➤systemwide➤problems➤in➤

healthcare;

C H A P T E R 1

LEADERSHIP, MISSION, VISION, AND CULTURE: THE FOUNDATION FOR STRATEGIC PLANNING

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EBSCO : eBook Collection (EBSCOhost) - printed on 4/30/2019 4:21 PM via WESTERN KENTUCKY UNIV AN: 1843079 ; Harrison, Jeffrey P..; Essentials of Strategic Planning in Healthcare Account: s8993066.main.ehost

E s s e n t i a l s ➤ o f ➤ S t r a t e g i c ➤ P l a n n i n g ➤ i n ➤ H e a l t h c a r e3 0

➤➤ understand➤the➤importance➤of➤an➤organization’s➤mission,➤vision,➤and➤values➤in➤

healthcare➤strategic➤planning;

➤➤ discuss➤leadership’s➤role➤in➤developing➤an➤organizational➤culture➤of➤ethics➤and➤

professionalism;➤and➤

➤➤ compare➤systems➤and➤techniques➤to➤measure➤an➤organization’s➤own➤performance➤

and➤the➤performance➤of➤other➤organizations.➤

Key terms and concepts

➤➤ Board➤of➤directors

➤➤ Chief➤executive➤officer

➤➤ Chief➤financial➤officer

➤➤ Chief➤information➤officer

➤➤ Chief➤medical➤officer

➤➤ Chief➤nursing➤officer

➤➤ Credentialing

➤➤ Culture

➤➤ Fiduciary

➤➤ For-profit➤hospital

➤➤ Goals

➤➤ Health➤information➤technology

➤➤ Incentive

➤➤ Infrastructure

➤➤ Internal➤data

➤➤ Joint➤venture

➤➤ Leadership

➤➤ Magnet➤hospital➤designation

➤➤ Medical➤staff

➤➤ Mission➤

➤➤ Not-for-profit➤hospital

➤➤ Organizational➤culture

➤➤ Senior➤marketing➤executive

➤➤ Servant➤leadership

➤➤ Stakeholder

➤➤ Systems➤approach

➤➤ Values

➤➤ Vision

IntroductIon Healthcare spending in the United States reached $2.9 trillion in 2013 (CMS 2014). This figure was up from $2.1 trillion in 2006—a 38 percent increase (Catlin et al. 2008). It represents an expenditure of $7,026 per person in 2006, climbing to $9,255 per person in 2013. As a percentage of the US economy, healthcare spending was 16 percent of the gross domestic product (GDP) in 2006 and 17.4 percent of the GDP in 2013. During 2013, the largest component of healthcare expenditures was hospital care, which increased 4.3 percent from the prior year, to $936.9 billion. The second largest component was

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physician services, which in 2013 increased 3.8 percent to $586.7 billion. The third largest component was prescription drugs—$271.1 billion in 2013. Nursing care facilities ranked fourth at $155.8 billion.

Healthcare costs are increasing at a significant rate, and the industry needs leaders who can allocate resources more efficiently. Research shows that, taken as a group, hospitals are one of the largest employers in the country, and they are critical to attracting new business to a geographic area. Healthcare also contributes to the United States’ economic and social well-being; 18.5 million Americans were employed in healthcare in 2015 (BLS 2015). The US hospital industry comprises a wide range of hospitals of varying size (see Exhibits 1.1 and 1.2).

Organizations, like people, have personalities. This personality develops over time and is shaped by the organization’s history, the environment in which it operates, and the beliefs of its key individuals. These factors are reflected in the organization’s mission, vision, and culture.

The healthcare field changes constantly. As a result, healthcare organizations, like individuals, must continually adapt to survive and prosper. They must develop a culture that supports change and periodically evaluate their mission, vision, and values to make sure they are relevant in the current environment. This evaluation provides a foundation for the strategic planning process.

Growth is important to an organization’s future success. It helps the organization recruit physicians and provides greater economies of scale (see Highlight 1.1), which can result in increased profitability. To grow, organizations need effective infrastructures, high- performance work processes, and skilled personnel, and they must provide their employees with appropriate incentives. Most important to growth is good strategy development, which is a product of excellent leadership and diversity of individuals and expertise. Stra- tegic planning is an effective way for organizations to improve their allocation of resources (see Highlight 1.2). Resources need to be allocated in a way that allows organizations to provide healthcare services as efficiently as possible. Research has shown that the efficient allocation of healthcare resources in the production process is linked to improved quality (Vigen, Duncan, and Coughlin 2013). The following section discusses the role of hospital leaders, particularly their function in strategic planning.

Infrastructure

Underlying➤foundation➤

or➤basic➤framework.

Incentive

Reward➤that➤motivates➤

someone➤to➤take➤action➤

or➤perform,➤such➤as➤

a➤bonus➤payment➤

awarded➤for➤achieving➤

a➤goal.

exHIbIt 1.1 US Hospitals by Category, 2005 to 2014Government, federal

Not-for-profit

For-profit

Government, nonfederal

229

2005Type 2014 Change (no.) Change (%)

3,204 3,118 –86 –2.7

12.21811,6611,480

1,435 1,294 –141 –9.8

210 –19 –8

Total –1–656,2836,348

Source:➤Data➤from➤AHA➤(2005,➤2014).

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defInItIon of leadersHIp At the most basic level, leadership is the ability to guide, influence, and inspire individuals to meet goals (for the purposes of this book, organizational goals). Competency models that focus on leadership in the healthcare environment have been developed by many organizations, including the Healthcare Leadership Alliance (HLA) and the National Center for Healthcare Leadership (NCHL; see Highlight 1.3). Based on the most current research, these models identify behav- iors and technical skills (competencies) that characterize outstanding leadership performance.

Leadership

Ability➤to➤guide,➤

influence,➤and➤inspire➤

individuals➤to➤meet➤

organizational➤goals.

exHIbIt 1.2 US Hospitals by Bed Size,

Category, and Year Bed size 0–99 Government, federal 100 94 –6 –6

Government, nonfederal 879 832 –47 –5

Not-for-profit 1,393 1,429 36 2.5

For-profit 948 1,040 92 9.7

Bed size 100–199

Government, federal 45 45 0 0

Government, nonfederal 256 181 –75 –29

Not-for-profit 743 655 –88 –12

For-profit 340 335 –5 –1.5

Bed size 200–299

Government, federal 31 33 2 6.4

Government, nonfederal 117 110 –7 –6

Not-for-profit 456 405 –51 –11

For-profit 119 120 1 0.8

Bed size 300–399

Government, federal 20 17 –3 –15

Government, nonfederal 74 54 –20 –27

Not-for-profit 279 245 –34 –12

For-profit 45 56 11 24.4

Bed size 400+

Government, federal 33 21 –12 –36

Government, nonfederal 109 117 8 7.3

Not-for-profit 333 384 51 15

For-profit 28 110 82 293

Total

Government, federal 229 210 –19 –8

Government, nonfederal 1,435 1,294 –141 –9.8

Not-for-profit 3,204 3,118 –86 –2.7

For-profit 1,480 1,661 181 12.2

Overall total 6,328 6,283 45 –0.7

2005 2014 Change (no.) Change (%)

Source:➤Data➤from➤AHA➤(2005,➤2014).

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In the rapidly changing healthcare environment, strategic planning is becoming increasingly important to overall organizational success. Strategic planning involves the development of organizational objectives (i.e., what the organization wants to accomplish), the management of action plans, and the measurement of ongoing performance. An impor- tant part of strategic planning is the development of relationships with stakeholders, which include the board of directors, the leadership team, hospital staff, physicians, patients, local employers, insurers, community groups, and government agencies.

In healthcare organizations, the board of directors and the chief executive officer (CEO) are at the top of the leadership structure. The board of directors is the governing body appointed to hold fiduciary responsibility for the organization. (Piedmont Healthcare’s board of directors is illustrated in Exhibit 1.3. Piedmont Healthcare is a large, not-for- profit health system based in Atlanta, Georgia.) As part of this responsibility, the board makes policy decisions, which guide the future of the organization. An essential area of

Stakeholder

One➤who➤is➤involved➤

in➤or➤affected➤by➤an➤

organization’s➤actions.

Board of directors

Governing➤body➤

appointed➤to➤hold➤

fiduciary➤responsibility➤

for➤the➤organization.

Chief executive officer

(CEO)

Highest-ranking➤

executive➤in➤an➤

organization,➤

responsible➤for➤

strategic➤planning,➤

hiring➤senior➤

leadership,➤and➤

managing➤operations.

Fiduciary

An➤individual➤or➤a➤

group➤who➤acts➤for➤and➤

on➤behalf➤of➤another➤in➤

a➤relationship➤of➤trust➤

and➤confidence.

HIGHLIGHT 1.1 Economies of Scale

The➤principle➤of➤economies of scale is➤based➤on➤the➤premise➤that➤an➤organization➤will➤

be➤able➤to➤achieve➤greater➤savings➤if➤it➤is➤providing➤for➤a➤large➤number➤of➤patients➤(and➤

employing➤a➤large➤number➤of➤providers)➤rather➤than➤just➤a➤few.➤A➤larger➤number➤of➤pa-

tients➤creates➤a➤need➤for➤a➤higher➤volume➤of➤supplies.➤As➤the➤volume➤of➤supplies➤in➤an➤

organization➤increases,➤it➤becomes➤possible➤to➤buy➤those➤supplies➤in➤bulk➤instead➤of➤

individually.➤When➤an➤organization➤buys➤in➤bulk,➤the➤average➤cost➤it➤has➤to➤pay➤per➤unit➤

usually➤decreases.➤For➤an➤everyday➤example,➤you➤experience➤economies➤of➤scale➤if➤you➤

buy➤your➤soda➤in➤a➤12-pack➤rather➤than➤individually—you➤might➤spend➤$4.99➤for➤12➤cans➤

(or➤$0.42➤each)➤rather➤than➤$1➤for➤one➤can➤in➤a➤vending➤machine.

HIGHLIGHT 1.2 Allocation of Resources

Allocation of resources➤is➤how➤an➤organization➤plans➤to➤spend➤its➤money➤as➤well➤as➤how➤

it➤will➤focus➤the➤efforts➤of➤its➤employees➤and➤use➤its➤other➤resources.➤Because➤the➤re-

sources➤of➤every➤organization➤are➤limited,➤the➤leadership➤team➤must➤decide➤which➤proj-

ects➤are➤most➤important➤and➤which➤are➤not➤important➤enough➤to➤invest➤in.➤For➤example,➤

a➤hospital➤might➤have➤to➤choose➤between➤implementing➤an➤electronic➤health➤record➤

system➤(going➤paperless)➤and➤buying➤new➤equipment➤for➤the➤imaging➤department.

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the board of directors’ responsibility is the development of a strategic plan consistent with the organization’s mission and vision.

Many believe that an organizational culture that embraces continuous quality improvement (CQI; see Highlight 1.4) is necessary for long-term success and that the board of directors should focus on measuring performance to ensure healthcare quality. The Institute of Medicine (IOM; see Highlight 1.5) believes that improving healthcare will require changes to the structure and processes of the delivery system as well as a focus on coordination of care across all services. In addition, successful delivery of healthcare in the future will depend on the use of health information technology, such as electronic health records.

Health information

technology

Information➤and➤

communication➤

technology➤in➤

healthcare,➤such➤as➤

electronic➤health➤

records,➤clinical➤alerts➤

and➤reminders,➤and➤

decision➤support➤

systems.

HIGHLIGHT 1.3 The Healthcare Leadership Alliance and the National Center for Healthcare Leadership

The➤HLA➤is➤a➤consortium➤of➤the➤nation’s➤premier➤professional➤healthcare➤administration➤

associations,➤representing➤more➤than➤140,000➤healthcare➤management➤professionals.➤

The➤goal➤of➤the➤alliance➤is➤to➤pursue➤common➤interests➤and➤advance➤the➤healthcare➤man-

agement➤profession.➤It➤uses➤the➤combined➤knowledge➤and➤experience➤of➤its➤members➤to➤

improve➤the➤field➤of➤healthcare➤management.➤These➤organizations➤are

•➤ the➤American➤College➤of➤Healthcare➤Executives,

•➤ the➤American➤Organization➤of➤Nurse➤Executives,

•➤ the➤Healthcare➤Financial➤Management➤Association,

•➤ the➤Healthcare➤Information➤and➤Management➤Systems➤Society,➤and

•➤ the➤Medical➤Group➤Management➤Association.➤

The➤HLA➤(2013)➤categorizes➤key➤competencies➤under➤five➤domains:➤communication➤

and➤relationship➤management,➤leadership,➤professionalism,➤knowledge➤of➤the➤health-

care➤environment,➤and➤business➤knowledge.➤

The➤NCHL➤is➤a➤nonprofit➤organization➤dedicated➤to➤ensuring➤high-quality,➤relevant,➤

and➤accountable➤leadership➤for➤healthcare➤organizations➤in➤the➤twenty-first➤century.➤

This➤is➤accomplished➤by➤using➤competency-based➤leadership➤models,➤benchmarking➤

against➤best-in-class➤organizations,➤and➤establishing➤standards➤of➤best➤practice.➤It➤also➤

supports➤evidence-based➤research,➤ innovation,➤and➤quality➤ improvement.➤The➤NCHL➤

(2015)➤strives➤to➤improve➤the➤abilities➤of➤healthcare➤leaders➤to➤improve➤healthcare➤in➤

the➤United➤States➤through➤research,➤publications,➤benchmarking,➤and➤formation➤of➤lead-

ership➤networks.

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The CEO is the highest-ranking executive in an organization and is responsible for strategic planning, hiring senior leadership, and managing operations. The CEO is often a member of the board of directors and is an important interface between the board and operations. The CEO also represents the organization to key stakeholders, including regu- latory authorities and community groups. A competent CEO emphasizes organizational

exHIbIt 1.3 Sample Board of Directors (Piedmont Healthcare, Atlanta, Georgia)Chief executive officer

Community directors

Treasurer (chief financial officer), ex officio

Government, federal

Board of Directors Number

Physician directors

HIGHLIGHT 1.4 Continuous Quality Improvement

The➤idea➤behind➤CQI➤is➤that➤no➤process➤or➤service➤is➤perfect➤and➤that➤an➤organization➤

must➤continually➤strive➤to➤eliminate➤errors➤from➤its➤system➤to➤get➤closer➤and➤closer➤to➤

perfection.➤The➤study➤and➤championing➤of➤CQI➤have➤taken➤many➤forms➤in➤many➤indus-

tries➤and➤have➤become➤an➤important➤aspect➤of➤healthcare➤management.

Healthcare➤organizations➤often➤use➤CQI➤to➤measure➤their➤performance.➤A➤hospi-

tal➤may➤collect➤data➤about➤one➤of➤its➤processes➤and➤compare➤these➤data➤to➤the➤data➤

of➤other➤hospitals➤ in➤the➤area➤and➤around➤the➤country.➤For➤example,➤a➤hospital➤may➤

keep➤track➤of➤how➤often➤its➤patients➤are➤given➤the➤wrong➤medicine➤or➤the➤wrong➤dose➤

of➤a➤medicine➤and➤then➤compare➤its➤results➤to➤national➤standards.➤If➤the➤hospital➤has➤a➤

higher➤frequency➤of➤errors➤than➤the➤national➤standard,➤the➤hospital➤might➤implement➤

a➤CQI➤program➤to➤try➤to➤improve➤the➤statistic.➤Such➤a➤program➤would➤involve➤studying➤

the➤processes➤that➤lead➤to➤errors,➤recommending➤changes➤to➤improve➤the➤processes,➤

implementing➤the➤changes,➤and➤then➤collecting➤the➤data➤once➤again➤for➤measurement➤

against➤the➤national➤standards➤to➤see➤if➤the➤improvement➤has➤been➤achieved.➤The➤main➤

principle➤behind➤CQI➤is➤that➤quality➤should➤be➤constantly➤under➤investigation➤and,➤thus,➤

that➤the➤organization➤is➤always➤working➤to➤improve.

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transformation by envisioning, energizing, and fostering change. Analytical and innovative thinking, a community orientation, and strategic planning are essential to this focus. At the execution level, CEOs must demonstrate an ability to communicate, manage change, influence staff, and measure performance. They also need to possess excellent people skills; they must build relationships, uphold professional ethics, develop talent, and lead teams. Most impor- tant, CEOs should focus on organizational values, direction, and performance expectations.

tHe board of dIrectors’ role In strategIc plannIng

Hospitals with a high-functioning board of directors perform better and are more profitable (Collum et al. 2014). In particular, outstanding hospital boards are composed of external members who are committed to the strategic planning process. Also important is the board’s relationship to the community. A collaborative, community-oriented board stays in touch with the needs of the local population and develops new services to meet those needs. Such services can improve the health and well-being of the community as well as enhance the reputation of the healthcare organization.

Board participation in the strategic planning process helps build consensus among senior leadership and staff about the organization’s future direction. Board members’

HIGHLIGHT 1.5 Institute of Medicine

The➤IOM➤was➤founded➤in➤1970➤as➤a➤nongovernmental,➤nonprofit➤organization➤that➤would➤

provide➤impartial➤information➤and➤advice➤about➤healthcare➤in➤the➤United➤States.➤It➤is➤

part➤of➤the➤National➤Academies.➤The➤IOM’s➤aim➤is➤to➤help➤those➤in➤government➤and➤the➤

private➤sector➤make➤informed➤health➤decisions➤by➤providing➤reliable➤information.➤Many➤

of➤the➤studies➤that➤the➤IOM➤undertakes➤begin➤as➤specific➤mandates➤from➤Congress;➤oth-

ers➤are➤requested➤by➤federal➤agencies➤and➤independent➤organizations.➤The➤IOM➤(2015)➤

also➤convenes➤a➤series➤of➤forums,➤roundtables,➤and➤standing➤committees,➤as➤well➤as➤

other➤activities,➤to➤facilitate➤discussion,➤discovery,➤and➤critical➤thinking.➤

The➤IOM➤has➤published➤studies➤on➤the➤state➤of➤healthcare➤that➤have➤drawn➤a➤lot➤of➤

attention;➤for➤example,➤in➤2000➤it➤disclosed➤the➤high➤number➤of➤medical➤errors➤occurring➤

in➤hospitals➤in➤its➤report➤To Err Is Human,➤and➤in➤subsequent➤reports➤it➤continued➤to➤iden-

tify➤the➤health➤field’s➤progress➤on➤quality.➤More➤recently,➤the➤IOM➤issued➤publications➤

such➤as➤Future Directions of Credentialing Research in Nursing,➤Research Priorities to

Inform Public Health and Medical Practice for Ebola Virus Disease,➤and➤Investing in the

Health and Well-Being of Young Adults.

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involvement in subcommittees, board meetings, and strategic planning retreats can all increase the board’s participation in strategic planning.

CEO succession is one of the board’s most important responsibilities (Bowen 2014). Leadership development should be based on future needs of the organization as identified through the strategic planning process. Because the board plays an integral part in the strategic planning process and in defining the organization’s mission, logic dictates that it be involved in leadership development to ensure future success. Additionally, the board should evaluate leadership’s recommendations for new service lines (see Highlight 1.6) and monitor the quality of care provided by the organization.

tHe ceo’s role In strategIc plannIng

A senior leadership team is an important asset to an organization and can give it a competi- tive advantage in the marketplace. High-performing senior leadership teams use formal management processes to improve efficiency and enhance quality. Research has found that these high-performance work processes result in better value in healthcare services (Har- rison and Meyer 2014).

In 2006, the CEO turnover rate among US hospitals was 16 percent, resulting in approximately 700 CEO transitions annually (Cirillo 2006). However, the rate of hospi- tal CEO turnover increased to 20 percent in 2013, which represented the highest rate of hospital CEO turnover since 1981 (Bowen 2014).

A competent CEO is critical to the future success of the organization, so the board should help a new CEO develop team-building skills and the financial knowledge neces- sary to support the strategic planning process. In addition to maximizing performance, effective team building ensures that everyone in the organization is on the same page and that transitions to new leadership are smooth. In 2015, the median compensation for a

HIGHLIGHT 1.6 Service Lines

Service➤lines➤are➤specialty➤areas➤of➤care➤provided➤by➤a➤healthcare➤organization—for➤

example,➤cardiology,➤oncology,➤orthopedics,➤or➤transplantation➤services.➤Organizations➤

may➤provide➤full-service➤care,➤or➤they➤may➤specialize➤in➤ just➤a➤few➤service➤lines➤and➤

strive➤to➤excel➤in➤those➤areas.➤In➤general,➤some➤service➤lines—such➤as➤cardiology—are➤

lucrative;➤other➤service➤lines—such➤as➤emergency➤departments➤in➤areas➤with➤a➤high➤

uninsured➤population—may➤be➤unprofitable.

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CEO in a freestanding hospital with total net revenue less than $250 million was $456,000 (ACHE 2015).

The CEO, in consultation with the board, is ultimately responsible for creating and implementing the strategic plan. The strategic planning process should also include physicians and other staff in the organization.

otHer Key leadersHIp roles tHe cHIef fInancIal offIcer

The chief financial officer (CFO) is responsible for planning, organizing, and directing all financial activities, including budgeting, cost accounting, patient accounting, payer rela- tions (see Highlight 1.7), and investing. The CFO normally reports directly to the CEO. In 2015, the median compensation for a CFO in a freestanding hospital with total net revenue less than $250 million was $309,000 (ACHE 2015).

The CFO is critical to the development of the strategic plan because of his responsibil- ity for projecting workload and providing financial data. Key data include growth projections, market share, departmental budgets, and performance measures. Thus, the CFO needs to understand financial modeling (see Highlight 1.8). Gathering and providing accurate and timely information are often the most difficult parts of the strategic planning process. In a small hospital, the CFO also often functions as the project manager for strategic planning.

tHe cHIef nursIng offIcer

The chief nursing officer (CNO) is responsible for planning, organizing, and directing all nursing activities, including policy development, implementation of nurse staffing models

Chief financial officer

(CFO)

Executive➤responsible➤

for➤planning,➤

organizing,➤and➤

directing➤all➤financial➤

activities.

Chief nursing officer

(CNO)

Nurse➤executive➤

responsible➤for➤

planning,➤organizing,➤

and➤directing➤all➤

nursing➤activities.

HIGHLIGHT 1.7 Payer Relations

Healthcare➤in➤the➤United➤States➤is➤an➤unusual➤service➤industry➤in➤that➤a➤single➤trans-

action➤of➤care➤usually➤involves➤three➤parties:➤the➤person➤receiving➤the➤care➤(i.e.,➤the➤

patient),➤the➤person➤or➤the➤organization➤providing➤the➤care➤(i.e.,➤the➤physician➤or➤nurse,➤

or➤the➤hospital➤or➤physician➤practice),➤and➤the➤party➤paying➤for➤the➤care➤(i.e.,➤the➤payer).➤

The➤payer➤may➤be➤an➤insurance➤company,➤a➤health➤plan,➤or➤even➤the➤government➤(e.g.,➤

Medicare,➤Medicaid).

Payer relations is➤the➤term➤used➤to➤describe➤the➤interactions➤of➤the➤healthcare➤pro-

vider➤with➤the➤payer.➤The➤provider’s➤activity➤can➤include➤negotiating➤contracts➤regarding➤

the➤amounts➤to➤be➤paid➤for➤specific➤procedures,➤educating➤payers➤about➤new➤proce-

dures,➤and➤building➤and➤maintaining➤good➤relationships➤with➤payers.

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(see Highlight 1.9), and ongoing quality improvement efforts. The CNO normally reports to the CEO. In 2015, the median compensation for a CNO in a hospital with total net revenue less than $250 million was $200,000 (ACHE 2015).

Nursing leaders are important participants in the organization’s decision-making processes and should be involved in strategic planning. They can provide a valuable per- spective on resource allocation, the marketing of new services, and quality enhancement. In 2011, the American Hospital Association (AHA) surveyed more than 1,000 hospital boards and found that 6 percent of board members were nurses; 20 percent were physicians (Hassmiller and Combes 2012). According to the IOM (2011) Future of Nursing report, “Public, private, and governmental health care decision makers at every level should include representation from nursing on boards, on executive management teams, and in other key leadership positions.” To achieve Magnet hospital designation, hospitals must document the nurse executive’s role in the senior leadership decision-making process.

tHe cHIef InformatIon offIcer

The chief information officer (CIO) is responsible for planning, organizing, and directing all of the organization’s information systems (e.g., enterprise information systems, clinical information systems, electronic health records) and often manages the organization’s telecom- munication systems. From a strategic planning perspective, the CIO has an important role in systems design and analysis. In some cases, the CIO reports to the CFO; however, the CIO may more appropriately report to the CEO. In 2015, the median compensation for a CIO in a hospital with total net revenue less than $250 million was $210,000 (ACHE 2015).

Magnet hospital

designation

Status➤awarded➤by➤

the➤American➤Nurses➤

Credentialing➤Center➤

to➤hospitals➤whose➤

nursing➤staff➤meets➤

certain➤criteria➤

based➤on➤quality➤and➤

professional➤practice.

Chief information

officer (CIO)

Executive➤responsible➤

for➤planning,➤

organizing,➤and➤

directing➤all➤

information➤systems➤in➤

the➤organization.

HIGHLIGHT 1.8 Financial Modeling

Financial modeling is➤the➤construction➤of➤a➤formula➤or➤program,➤either➤by➤computer➤or➤

on➤paper,➤to➤predict➤what➤might➤happen➤if➤certain➤financial➤decisions➤are➤made.➤By➤plug-

ging➤different➤numbers➤into➤the➤formula➤to➤see➤how➤they➤change➤the➤results,➤a➤financial➤

modeler➤can➤better➤decide➤the➤best➤course➤of➤action➤for➤an➤organization.

For➤example,➤say➤the➤CFO➤of➤a➤hospital➤wants➤to➤know➤what➤the➤financial➤impact➤

would➤be➤if➤the➤facility’s➤surgical➤staff➤increased➤the➤number➤of➤operations➤it➤performed➤

per➤week.➤The➤CFO➤would➤construct➤a➤financial➤model➤that➤takes➤into➤account➤the➤ad-

ditional➤costs➤(more➤staff,➤more➤supplies,➤more➤wear➤and➤tear➤on➤the➤equipment,➤more➤

patients➤in➤the➤recovery➤rooms)➤and➤the➤additional➤revenue➤(more➤operations➤and,➤there-

fore,➤more➤money➤collected).➤On➤the➤basis➤of➤the➤calculation,➤the➤CFO➤would➤be➤able➤to➤

make➤an➤informed➤decision➤about➤whether➤increasing➤the➤number➤of➤operations➤would➤

be➤profitable➤for➤the➤hospital.

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The CIO’s role is critical because the strategic planning process hinges on the man- agement of information and the use of information systems. Data collection is essential to strategy development and includes gathering both internal and external information. Sources of external data include peer-reviewed articles, professional associations, healthcare websites, databases, community surveys, patient focus groups, interviews with community leaders, and physicians. Internal data from leaders, staff, and internal databases are impor- tant because they highlight an organization’s strengths and weaknesses.

tHe senIor marKetIng executIve

The senior marketing executive is responsible for developing, directing, and executing a comprehensive, systemwide marketing strategy. This strategy includes promoting new and existing programs and services, conducting market research, and advertising via various media. The senior marketing executive typically reports to the CEO. In 2015, the median compensation for a senior marketing executive in a hospital with total net revenue less than $250 million was $183,000 (ACHE 2015).

consultants

The healthcare environment is extremely complex. As a result, the need for highly skilled technical professionals is increasing. Many healthcare organizations fill this need through

Internal data

Information➤and➤facts➤

that➤can➤be➤gathered➤

from➤sources➤within➤an➤

organization.

Senior marketing

executive

Executive➤responsible➤

for➤developing,➤

directing,➤and➤

executing➤a➤

comprehensive,➤

systemwide➤marketing➤

strategy➤that➤includes➤

advertising,➤market➤

research,➤production,➤

and➤sales.

HIGHLIGHT 1.9 Nurse Staffing Models

How➤many➤nurses➤are➤needed➤to➤staff➤a➤hospital➤unit?➤This➤question➤is➤tricky;➤the➤answer➤

is➤not➤simply➤a➤ratio➤of➤patients➤to➤nurses.➤Nurse➤staffing➤models➤are➤guidelines➤a➤hos-

pital➤unit➤uses➤to➤determine➤how➤many➤and➤what➤kind➤of➤nurses➤are➤needed➤to➤care➤for➤

the➤patients➤on➤that➤unit.➤Nurse➤staffing➤models➤take➤into➤account

•➤ the➤number➤of➤patients➤on➤the➤unit,

•➤ how➤sick➤each➤patient➤is,

•➤ what➤kind➤of➤technology➤and➤other➤aids➤are➤available➤to➤help➤the➤nurses➤perform➤

their➤work,➤and

•➤ the➤nurses’➤and➤other➤caregivers’➤level➤of➤training.

The➤mix➤of➤these➤factors➤affects➤how➤well➤patients➤recover➤from➤their➤illnesses.➤A➤mix➤

that➤is➤deficient➤in➤some➤way➤can➤even➤cause➤hospitalized➤patients➤to➤become➤more➤ill.➤

This➤potential➤illustrates➤the➤importance➤of➤a➤proper➤nurse➤staffing➤model.

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the use of consultants. Because consultants are external to the organization, they can review data objectively, challenge the status quo, conduct in-depth research on highly technical topics, and obtain candid opinions from stakeholders.

A wide range of stakeholders and other individuals are involved in strategic plan- ning, and the use of an outside consultant to facilitate the strategic planning process may contribute to improved results. The outside consultant can provide a national perspective on the healthcare field as well as unbiased observations on issues associated with strategic planning. Consulting firms can aid in the strategic planning process and can participate in working groups in the organization that focus on key areas of operation.

On the negative side, consultants come and go, so the organization has access to their technical skills only for the period of their contract. For continuity and stability, many organizations decide to develop the skills of existing employees or recruit these consultants for permanent staff positions.

pHysIcIan Involvement In HealtHcare strategIc plannIng tHe cHIef medIcal offIcer

The chief medical officer (CMO) is responsible for planning and implementing pro- grams to improve the quality of patient care. The CMO also participates in medical staff meetings, credentialing, and medical staff recruitment. In larger hospitals, the CMO is usually a full-time employee who reports to the CEO. In 2015, the median compensation for a CMO in a freestanding hospital with total net revenue less than $250 million was $345,000 (ACHE 2015).

CMOs and other physician leaders (also called clinical leaders) develop strategic competencies by combining management theory and practical experience to address the healthcare challenges of the twenty-first century. They must be adept at strategic planning, allocating resources, and developing new clinical services. A primary goal is to create value for stakeholders. The most important competencies for physician executives include strong leadership skills, technical expertise, innovation, and a systems approach to problem solving.

Under the CMO’s direction, senior clinical leaders can improve treatment outcomes by supporting innovation in clinical practice and interdisciplinary collaboration among members of the healthcare delivery team. Physicians are key stakeholders in the organization and play an essential role in developing and marketing new clinical services. Even more important, physicians should be part of the feedback loop in monitoring quality of care.

In response to persistent and systematic shortcomings in quality, the IOM published a landmark report in 2001, Crossing the Quality Chasm: A New Health System for the 21st Century, which called for fundamental change in healthcare. The report identified six aims for achieving high-quality care delivery—safety, effectiveness, efficiency, patient-centeredness, timeliness, and equitability—all of which are important to strategic planning. Effective physician leaders need competencies such as strategic planning, mentoring, and budgeting to support organizational goals, improve performance, and ensure efficiency and quality of care (Dubinsky, Feerasta, and Lash 2015).

Chief medical officer

(CMO)

Executive➤responsible➤

for➤planning➤and➤

implementing➤

programs➤to➤improve➤

the➤quality➤of➤patient➤

care.

Medical staff

Full-➤and➤part-time➤

physicians➤and➤

dentists➤who➤are➤

approved➤and➤given➤

privileges➤to➤provide➤

healthcare➤to➤patients➤

in➤a➤hospital➤or➤another➤

healthcare➤facility;➤

may➤be➤employed➤by➤

the➤facility➤or➤granted➤

admitting➤privileges➤to➤

practice.

Credentialing

Process➤used➤to➤

evaluate➤a➤physician’s➤

qualifications➤and➤

practice➤history.

Systems approach

Management➤that➤

emphasizes➤the➤

interdependence➤

of➤elements➤inside➤

and➤outside➤an➤

organization.

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tHe medIcal staff

Physicians and hospital leaders are cofiduciaries for patients’ welfare. To be a fiduciary for a patient means possessing the knowledge needed to promote the patient’s well-being and being committed to using one’s expertise for the patient’s benefit. This healthcare concept of the cofiduciary draws on organizational ethics as well as a sense of morality.

The management of physician relationships is important and is becoming more complex as the healthcare system evolves. Physician managers must make strategic deci- sions regarding the employment of primary care physicians, hospitalist physicians, and clinical specialists. For example, hospital emergency departments need physician coverage, and trauma centers need on-call specialty physicians for support. Strategy decisions are also influenced by the increasing competition between hospitals and physician-sponsored outpatient services and other lucrative product lines.

Because physicians are major stakeholders in the healthcare system, they should be involved in business planning regarding the implementation of new clinical services. An outstanding physician reputation is fundamental to developing successful clinical service lines. Therefore, the strategic planning process should include physician input and foster physician support of the organization. To ensure medical staff support and long-term suc- cess, physicians should be involved in committees responsible for the review and approval of new business initiatives as well as in financial planning and medical staff development (Epstein 2014).

Unfortunately, as a result of increasing workload and administrative responsibili- ties, many physicians lack the time to participate in hospital-sponsored meetings, making physician participation in the strategic planning process problematic.

managed care organIzatIons In the 1980s, conventional fee-for-service health insurance plans began to be replaced by health maintenance organizations (HMOs) and preferred provider organizations (PPOs). By the end of the 1990s, enrollment in HMOs and PPOs had skyrocketed. To attract these enrollees, hospitals needed to contract with these organizations. HMOs and PPOs used this dependency to their advantage and began to reduce the amounts they paid to hospitals for the services they provided. To offset this decrease in income, hospitals had to find ways to maintain their profit margins. They began to emphasize shorter hospital stays for inpatients. If an HMO was reimbursing them at a flat rate regardless of how long the patient stayed in the hospital, shorter stays equated to higher profits. For example, say the HMO was reimbursing the hospital $20,000 for a particular treatment. If a two-day inpatient stay for this treatment cost the hospital $10,000 and a three-day stay cost the hospital $15,000, the hospital would make $10,000 if it limited the patient stay to two days, but only $5,000 if the patient stayed for three days. This pressure to reduce length of stay was even greater for hospitals with low occupancy rates. Unable to adapt and maintain profits in this changing

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environment, many independent hospitals were forced into bankruptcy, closure, merger with more successful hospitals, or acquisition by another company.

The Affordable Care Act (ACA) of 2010 includes a Centers for Medicare & Medicaid Services proposal to create accountable care organizations (ACOs; see Highlight 1.10). Since that time, more than 360 Medicare ACOs have been established in 47 states, serving more than 5.6 million Medicare beneficiaries. ACOs represent one part of a comprehensive series of initiatives and programs in the ACA that are designed to lower costs and improve care by advancing three key strategies for improving care while investing dollars more wisely: incen- tives, tools, and information. ACOs in the Pioneer ACO Model and Medicare Shared Savings Program generated more than $372 million in total program savings. This encouraging news comes from preliminary quality and financial results from the second year of performance for 23 Pioneer ACOs and final results from the first year of performance for 220 Shared Savings Program ACOs. Meanwhile, the ACOs outperformed published benchmarks for quality and patient experience in 2013 and improved significantly on almost all measures of quality and patient experience in 2014 (HHS 2014).

Healthcare is produced at the local level, and maximizing the quality and efficiency of healthcare services provides ongoing benefits in these communities. As a result, it is important to put in place structures and processes that improve the delivery of healthcare

HIGHLIGHT 1.10 Health Maintenance Organizations, Preferred Provider Organizations, and Accountable Care Organizations

HMOs,➤PPOs,➤and➤ACOs➤are➤managed➤care➤organizations—that➤is,➤insurance➤providers➤

that➤are➤structured➤to➤control➤costs➤and➤improve➤care➤by➤using➤certain➤strategies,➤such➤

as➤offering➤incentives➤to➤care➤providers➤who➤keep➤their➤costs➤of➤care➤down➤and➤prevent➤

unnecessary➤treatments.

HMOs➤contract➤with➤hospitals,➤physicians,➤and➤other➤caregivers➤to➤provide➤care➤to➤

their➤clients.➤In➤exchange➤for➤providing➤customers➤to➤the➤contracted➤providers,➤the➤HMO➤

is➤assigned➤a➤group➤of➤providers➤who➤have➤agreed➤to➤abide➤by➤the➤HMO’s➤treatment➤

guidelines.➤To➤receive➤coverage,➤clients➤of➤HMOs➤must➤see➤providers➤who➤are➤part➤of➤that➤

HMO’s➤network.➤In➤1973,➤the➤US➤government➤began➤to➤require➤all➤employers➤of➤at➤least➤

25➤people➤to➤offer➤an➤HMO➤option➤to➤their➤employees.

Groups➤of➤providers➤contract➤with➤PPOs➤to➤provide➤care➤at➤reduced➤rates➤to➤the➤PPO’s➤

clients.➤Unlike➤HMOs,➤PPOs➤cover➤services➤rendered➤by➤out-of-network➤providers,➤but➤at➤

a➤lower➤reimbursement➤rate➤than➤that➤offered➤for➤the➤services➤of➤an➤in-network➤provider.➤

Medicare➤ACOs➤are➤groups➤of➤doctors,➤hospitals,➤and➤other➤healthcare➤providers➤

and➤suppliers➤who➤come➤together➤voluntarily➤to➤provide➤coordinated,➤high-quality➤care➤

at➤lower➤costs➤to➤their➤Medicare➤patients➤(HHS➤2014).

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services. Within this context, federal healthcare policy attempts to enhance society’s ability to allocate scarce healthcare resources most appropriately across the continuum of healthcare services (see Exhibit 1.4).

tHe Impact of mIssIon, vIsIon, and culture on profIts and strategIc plannIng mIssIon

The mission of an organization is usually a one-sentence statement describing the funda- mental purpose of the organization’s existence. In healthcare, an organization’s mission is partially determined by ownership status. A hospital may be a not-for-profit organization, a for-profit organization, a government-operated organization, or a joint venture, and this status will shape its mission. A mission statement will help guide decisions about priorities, actions, and responsibilities. Differences in mission reflect different motivations and goals and influence the type of strategic plan an organization develops.

Not-for-Profit Hospitals

Not-for-profit hospitals are considered 501(c)(3) organizations by the Internal Revenue Service (IRS; see Highlight 1.11). The 501(c)(3) designation identifies an organization as a corporation that is operated exclusively for religious, charitable, scientific, public safety, literary, or educational purposes. The promotion of health is considered a charitable activity that relieves the government of having to provide healthcare services. As a result,

Mission

Written➤statement➤

of➤an➤organization’s➤

fundamental➤purpose.

Goals

Written➤objectives➤that➤

can➤be➤measured➤to➤

assess➤performance.

Not-for-profit hospital

Hospital➤designated➤as➤

a➤501(c)(3)➤organization➤

by➤the➤Internal➤Revenue➤

Service➤and➤eligible➤for➤

tax-exempt➤status.

exHIbIt 1.4 Healthcare Quality

and Efficiency Model

Structure • Size (beds) • Plant complexity (services) • Labor (full-time employees) • Operating expense

Process of care • Inpatient days • Outpatient visits • Quality

Culture • For-profit • Not-for-profit

Forecasting • Data envelopment analysis • Regression analysis

Inefficient

Efficient

ValueInputs Outputs

V a l u e

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not-for-profit hospitals receive favorable treatment from the government. They may apply for tax-exempt status, on the condition that they operate exclusively for the welfare of the public, do not have a profit motive, and provide appropriate levels of charity care. In addi- tion to exemption from federal taxes, exemption from property tax, and exemption from tax on bond interest, 501(c)(3) organizations enjoy many benefits, including tax-deductible donations from benefactors. (See Highlight 1.12 for an explanation of these tax concepts.) Large, not-for-profit health systems in the United States include Ascension Health, Kaiser Permanente, and Mayo Clinic.

For-Profit Hospitals

For-profit hospitals are organizations owned by investors, or shareholders (for a detailed discussion, see Harrison, Spaulding, and Mouhalis 2015). In contrast to not-for-profit hospitals, their mission is to generate profits for their shareholders. For-profit healthcare organizations must pay federal and state corporate income taxes and local property taxes and should generate appropriate returns for stockholders.

The modern for-profit healthcare field was born in the late 1960s with the creation of Hospital Corporation of America (HCA) by Dr. Thomas Frist and Jack Massey. Today, HCA operates 178 hospitals in the United States and additional hospitals abroad.

One major advantage of for-profit health systems is their ability to make money through the sale of stock. As a result, they can more easily enact rapid expansion (build or acquire hospitals), renovate their facilities, and purchase new technology. Building or acquiring new hospitals creates economies of scale (see Highlight 1.1), which can improve efficiency and lead to lower costs. The four largest for-profit hospital chains in the United States in 2015 were Community Health Systems in Brentwood, Tennessee; HCA in Nash- ville, Tennessee; Tenet Healthcare Corporation in Dallas, Texas; and LifePoint Hospitals in Brentwood, Tennessee (Gamble 2014).

Government Hospitals

Government hospitals are operated by state, local, and federal governments to meet specific missions. For example, some states and municipalities operate acute care and psychiatric

For-profit hospital

Investor-owned➤

hospital➤that➤must➤pay➤

federal➤and➤state➤taxes➤

on➤its➤profits.

HIGHLIGHT 1.11 Internal Revenue Service

The➤IRS➤is➤the➤US➤government➤agency➤that➤collects➤taxes➤from➤citizens➤and➤corporations➤

and➤enforces➤tax➤law.➤The➤IRS➤has➤been➤appointed➤by➤Congress➤to➤enforce➤the➤Internal➤

Revenue➤Code,➤which➤includes➤complicated➤tax➤guidelines➤for➤citizens,➤for-profit➤corpo-

rations,➤and➤not-for-profit➤and➤charitable➤organizations.

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hospitals for low-income patients. The US Department of Defense, Department of Veterans Affairs, Public Health Service, and Department of Justice all operate hospitals. Government hospitals are funded through a process that does not depend on the healthcare market (Har- rison and Meyer 2014). Funding for the construction of government hospitals is exempt from many governmental regulations over healthcare, including the National Health Planning and Resources Development Act of 1974 and certificate-of-need review (CON; see Highlight 1.13).

Joint Ventures

In healthcare, a joint venture is a partnership formed between two or more provider organizations with different missions for purposes of accomplishing a unified mission that draws on their individual strengths. Through joint ventures, healthcare organizations can

Joint venture

Partnership➤formed➤

between➤two➤or➤

more➤organizations➤

that➤draws➤on➤their➤

combined➤resources➤to➤

accomplish➤a➤specific➤

purpose.

HIGHLIGHT 1.12 Tax Exemption, Tax Deduction, Bond Interest, and Bad Debt Write-Off

•➤ Tax exemption:➤The➤hospital➤does➤not➤have➤to➤pay➤federal➤or➤property➤taxes➤

because➤it➤is➤a➤charitable➤organization.

•➤ Tax deduction:➤Any➤money➤given➤to➤a➤charitable➤hospital➤can➤be➤deducted—that➤

is,➤the➤donor➤can➤claim➤the➤contribution➤on➤his➤taxes,➤and➤the➤donated➤money➤is➤

subtracted➤from➤that➤person’s➤total➤taxable➤income➤for➤the➤year.➤Lower➤taxable➤

income➤means➤that➤person➤pays➤less➤income➤tax.➤This➤arrangement➤motivates➤

people➤to➤donate➤to➤the➤charitable➤hospital,➤and➤the➤hospital➤thus➤acquires➤

money.

•➤ Bond interest:➤Buyers➤of➤bonds➤issued➤by➤a➤charitable➤organization➤do➤not➤have➤

to➤pay➤taxes➤on➤the➤interest➤earned➤on➤those➤bonds.➤An➤organization➤might➤issue➤

bonds➤if➤it➤wanted➤to➤raise➤funds➤for➤new➤construction➤or➤to➤fund➤new➤technology,➤

for➤example.➤A➤bond➤is➤purchased➤for➤a➤certain➤price,➤and➤the➤purchaser➤receives➤

regular➤interest➤payments➤from➤the➤amount➤invested.➤After➤a➤certain➤period,➤

the➤purchaser➤receives➤the➤entire➤amount➤back,➤plus➤the➤interest➤he➤has➤been➤

collecting➤over➤that➤period.➤The➤exemption➤from➤bond➤interest➤tax➤encourages➤

people➤to➤purchase➤such➤bonds,➤and➤the➤charitable➤organization➤thus➤raises➤

money.

•➤ Bad debt write-off:➤A➤hospital’s➤bad debt is➤money➤that➤other➤organizations➤or➤

individuals➤owe➤the➤hospital➤that➤will➤never➤be➤paid.➤The➤hospital➤is➤able➤to➤write➤

off➤the➤amount➤of➤bad➤debt➤as➤an➤expense➤to➤the➤organization➤(rather➤than➤income➤

as➤it➤was➤originally➤recorded).

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pool their resources (e.g., management expertise), attract new customers, adopt new tech- nologies, spread costs and risks, or meet a community’s need for a new healthcare service. Joint ventures also provide opportunities for improved relationships between hospitals and physician groups. Instead of competing with each other, hospitals and physician groups can combine their resources to produce mutually beneficial outcomes. Additionally, a joint venture may streamline the patient care experience. For example, say Physician Group A operates independently of Hospital B. A patient of Physician Group A has a need that it is not able to fulfill. Hospital B, however, has the resources to fulfill that need, so Physi- cian Group A refers the patient to Hospital B. Physician Group A’s record-keeping system is different from that of Hospital B, so the transfer of information between hospitals is unlikely to be smooth. Further, Physician Group A will not profit from referring a patient

HIGHLIGHT 1.13 Regulations: National Health Planning and Resources Development Act of 1974 and Certificate-of-Need Review

These➤two➤regulations➤were➤created➤in➤response➤to➤the➤rising➤costs➤of➤the➤US➤health➤

services➤system➤and➤the➤inequity➤of➤access➤to➤healthcare➤across➤the➤nation.➤Before➤these➤

regulations,➤healthcare➤providers➤were➤reimbursed➤(by➤Medicare➤and➤other➤insurers)➤

even➤for➤inefficient➤or➤failed➤care,➤so➤they➤had➤few➤incentives➤to➤keep➤costs➤down.➤Some➤

areas➤of➤the➤country➤had➤too➤many➤hospitals➤and➤healthcare➤options,➤which➤resulted➤

in➤duplicate➤costs➤(money➤was➤spent➤building➤and➤maintaining➤a➤hospital➤when➤there➤

already➤was➤a➤facility➤a➤few➤blocks➤away)➤and➤uncoordinated➤care.➤Other➤areas➤(often➤

rural)➤had➤no➤options➤for➤reasonably➤priced➤healthcare.

The➤National➤Health➤Planning➤and➤Resources➤Development➤Act➤was➤passed➤in➤1974➤

to➤enforce➤more➤careful➤planning➤of➤health➤services.➤Among➤other➤things,➤the➤act➤created➤

regional➤health➤services➤agencies➤and➤assigned➤them➤the➤responsibility➤of➤collecting➤

data➤so➤that➤they➤could➤identify➤needs➤and➤deficiencies➤in➤the➤area,➤develop➤long-range➤

plans➤to➤correct➤the➤deficiencies,➤and➤provide➤technical➤and➤financial➤assistance➤to➤im-

plement➤the➤plans.

CON➤regulations,➤which➤require➤health➤services➤planners➤to➤obtain➤approval➤from➤

state➤or➤federal➤government➤to➤build➤a➤new➤healthcare➤facility,➤were➤implemented➤to➤give➤

a➤structure➤to➤the➤National➤Health➤Planning➤and➤Resources➤Development➤Act.➤Initially,➤

all➤50➤states➤were➤required➤to➤develop➤a➤structure➤through➤which➤all➤new➤facility➤pro-

posals➤had➤to➤pass➤to➤receive➤approval.➤The➤CON➤requirements➤are➤aimed➤at➤reducing➤

healthcare➤costs➤and➤controlling➤the➤building➤of➤new,➤potentially➤unnecessary➤facilities.➤

Although➤the➤mandate➤was➤repealed➤in➤1987,➤36➤states➤still➤have➤a➤CON➤program,➤and➤

the➤remaining➤14➤states➤have➤some➤type➤of➤regulation➤over➤duplication➤of➤services➤(NCSL➤

2015).

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elsewhere. If Hospital B and Physician Group A formed a joint venture, they could adopt a mutual record-keeping system, allowing for seamless transfer of patient information. Further, Physician Group A would not have to direct its business elsewhere. As a partner with Hospital B, it, too, would profit from the services performed by Hospital B.

Joint ventures are located in communities that have more elderly patients, lower unemployment, and fewer HMOs. They also offer more clinical services and have a higher patient occupancy rate, a higher average patient length of stay, lower long-term debt, and a greater number of managed care contracts. Most important, joint ventures can have a posi- tive financial impact on US hospitals; joint ventures provide an opportunity to implement new healthcare services in the local community while allowing the partners to combine their money, people, and facilities for the maximum benefit of all.

Specialty Hospitals

Not-for-profit hospitals, for-profit hospitals, government hospitals, and nongovernment hospitals can be further broken down by specialty, which affects their mission and, hence, strategic planning process. Exhibit 1.5 provides information on the types of specialty hos- pitals in the United States and the ownership of those hospitals.

vIsIon

An organization’s vision is a short, inspiring statement of what it intends to achieve in the future. A vision statement should be broad and forward thinking and should specify goals the organization wishes to accomplish over time. A hospital’s senior leadership team should create a vision that is meaningful to staff and describes the state of affairs to which the organization aspires.

culture

Culture is a collection of values and norms shared by a group of people. Organizations have cultures composed of values, customs, and traditions that reflect their ethical beliefs. Senior leadership teams base their decisions on these tenets, and these decisions affect their organization’s performance.

At the most basic level, society is composed of families who share genetic material and have developed similar values to cope with changes in their environment. Some species (such as Tyrannosaurus rex) have become extinct, and some societies (such as that of the Incas) have disappeared, suggesting that animals, humans, and even societies must adapt to survive. Like people, organizations progress through a life cycle that includes birth, growth, maturation, and regeneration or death. Their culture and values dictate how they deal with change as they move through this cycle. In a dynamic, complex industry such as healthcare, an organization’s culture must support change if it is to successfully evolve over time.

Vision

Short,➤inspiring➤

statement➤of➤what➤an➤

organization➤intends➤to➤

achieve➤in➤the➤future.

Culture

Collection➤of➤values➤

and➤norms➤shared➤by➤a➤

group➤of➤individuals.

Values

Social➤principles,➤

goals,➤and➤standards➤of➤

an➤organization.

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exHIbIt 1.5 US Hospitals by Specialty and OwnershipMedical and surgical

2005 205 1,132 2,762 732 4,831 2014 190 1,033 2,719 741 4,683 Change (no.) –15 –99 –43 9 –148 Change (%) –7.3 –9 –1.5 1.2 –3

Psychiatric 2005 10 205 85 161 461 2014 11 191 99 229 530 Change (no.) 1 –14 14 68 69 Change (%) 10 –6.8 16.5 42 15

OB/GYN 2005 0 1 9 9 19 2014 0 0 6 6 12 Change (no.) 0 –1 –3 –3 –7 Change (%) 0 –100 –33 –33 –37

Ear, nose, and throat 2005 0 0 6 0 6 2014 0 0 4 0 4 Change (no.) 0 0 –2 0 –2 Change (%) 0 0 –33 0 –33

Rehabilitation 2005 1 14 63 155 233 2014 2 8 53 196 259 Change (no.) 1 –6 –10 41 26 Change (%) 100 –43 –16 26 –33

Orthopedic 2005 0 0 5 18 23 2014 0 1 6 25 32 Change (no.) 0 1 1 7 9 Change (%) 0 100 20 39 39

Children’s 2005 0 18 103 17 138 2014 0 12 107 22 141 Change (no.) 0 –6 4 5 3 Change (%) 0 –33 4 29 2

Other 2005 8 68 135 424 635 2014 7 49 124 442 622 Change (no.) –1 –19 –11 18 –13 Change (%) –12.5 –28 –8 4 –2

All 2005 6,346 2014 6,283 Change (no.) –63 Change (%) –1

Type Government,

Federal Government, Nonfederal

Not-for- Profit

For- Profit Total

Source:➤Data➤from➤AHA➤(2005,➤2014).

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Organizational culture is an expression of shared beliefs among individuals in an organization. Culture is important because it ensures healthcare professionals are working toward common goals. The development of organizational policies and practices sets the achievement of these goals in motion. Furthermore, organizational culture should give staff members the authority they need to do their jobs and should hold them responsible for their actions. An empowering organizational culture is associated with improved team morale, enhanced healthcare quality, and higher levels of patient satisfaction.

Changing a healthcare organization’s culture can improve patient safety (Wick et al. 2015). In particular, a cultural emphasis on quality can play a key role in improved clinical outcomes. Healthcare organizations should provide a positive working environment for clinical providers because physicians and other clinicians who are stressed or dissatisfied with their jobs have a greater incidence of providing suboptimal patient care.

The development of core behaviors that support a common purpose is crucial to achieving improved quality and clinical outcomes. Organizational culture needs to focus on improving clinical processes rather than blaming individuals for suboptimal care. When members of the healthcare team focus on the clinical process, they can clearly see their roles. When there is no confusion about roles, team members will communicate more effectively with each other. In addition, a focus on the clinical process instead of blame encourages the team to think from a position of curiosity and innovation rather than of fear and anxiety.

strategIc plannIng Strategic planning is an ongoing process, not a onetime project, based on an organization’s mission, vision, and values. In many healthcare organizations, this process begins with an off-site retreat during which the board of directors and senior leadership revisit the orga- nization’s mission, vision, and values to ensure they are still valid. The board retreat also serves as a forum in which senior leaders and other stakeholders build consensus on the action to be taken and clarify how they will contribute to and support the planning effort.

A hospital’s mission, vision, and strategy must be in sync with the way it allocates its money. Healthcare organizations have limited financial resources, so a hospital’s mission, vision, and strategy need to guide its investments. If an organization fails to link its strategic plan to its financial decisions, it may invest in inappropriate technology, equipment, or facilities and end up depleting its resources.

When organizations link their strategic plan to their spending behaviors, their invest- ments benefit them over the long term. They may build new facilities, renovate existing ones, or invest in appropriate new information technology. Historically, many financial decisions were driven solely by physician requests. Unfortunately, many of these decisions had a short- term impact rather than a long-term, lasting effect on their organizations’ development.

When an organization’s vision lines up with its strategic plan, it maximizes its return on investment (ROI; see Highlight 1.14). By balancing its mission and its need to maintain

Organizational culture

Shared➤beliefs➤among➤

individuals➤in➤an➤

organization.

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a competitive advantage, an organization can adjust its strategy (1) to ensure that profit- able business initiatives are able to fund unprofitable mission-based activities and (2) to determine when to invest in new programs or close others. The mission, vision, and values statements of Piedmont Healthcare are shown in Exhibit 1.6.

An organization’s mission, vision, and values should be the guideposts in assessing organizational performance, and compliance with the organization’s values should be a fac- tor in annual employee performance evaluations. In support of its values, the organization should have annual goals and objectives, and part of the performance measurement process should be based on the organization’s progress toward their fulfillment.

According to the AHA (2015a) report Engaging Trustees in the Redefinition of the H (see Highlight 1.15), an organization’s mission and vision should describe its commitment to the community. They should be documented and shared with leadership, physicians, and staff as well as with patients and their families. Organizational leaders should meet regularly with community partners to assess the delivery of healthcare in the community and, on the basis of their evaluation, plan initiatives to improve the community’s health status.

An organization’s mission in healthcare must include a commitment to quality and patient safety. The concept of servant leadership is crucial to this commitment. In a culture that embraces servant leadership, relationships are based on communication and listening. Leaders serve as mentors and teachers to ensure that their staff members become wiser and more autonomous. At the same time, these leaders are followers in that they continually learn from individuals in the organization. Servant leadership creates a culture in which employees are considered partners in the organization’s mission, not a disposable resource.

Servant leadership

Culture➤in➤which➤

employees➤become➤

partners➤in➤fulfilling➤the➤

organization’s➤mission.

HIGHLIGHT 1.14 Return on Investment

ROI➤is➤a➤performance➤measure➤used➤to➤evaluate➤the➤efficiency➤of➤an➤investment.➤To➤cal-

culate➤the➤ROI,➤the➤benefit➤of➤the➤investment➤is➤divided➤by➤the➤cost➤of➤the➤investment➤

and➤expressed➤as➤a➤percentage.➤A➤simple➤formula➤expresses➤it:➤

ROI➤=➤(Money➤gained➤from➤investment➤–➤Money➤invested)÷Money➤invested.

A➤positive➤result➤indicates➤a➤positive➤ROI;➤a➤negative➤result➤indicates➤a➤loss.➤For➤

example,➤if➤you➤buy➤five➤lottery➤tickets➤at➤$1.00➤each➤and➤win➤$15,➤the➤ROI➤would➤be➤($15➤

–➤$5)÷$5➤=➤2➤(i.e.,➤200%).➤You➤have➤a➤positive➤ROI.➤If,➤however,➤you➤win➤only➤$3,➤the➤

ROI➤would➤be➤($3➤–➤$5)÷$5➤=➤–0.4➤(or➤–40%).➤The➤ROI➤is➤negative—you’ve➤lost➤money.

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exHIbIt 1.6 Sample Mission,

Vision, and Values Statements (Piedmont

Healthcare, Atlanta, Georgia)

Vision By 2020, Piedmont Healthcare will be nationally recognized as a Top 10 community healthcare system where patients want to go for a superior healthcare experience, dedicated professionals want to work, and the best physicians want to practice.

Mission

Healthcare marked by compassion and sustainable excellence in a progressive environment, guided by physicians, delivered by exceptional professionals, and inspired by the communities we serve

Values

• Compassion: Caring for every person every day with dignity and respect • Commitment: Dedicating ourselves to improving the lives of others • Service: Providing a safe and supportive environment to ask, learn, and heal • Excellence: Leading in quality through expertise, innovation, and technology • Balance: Using resources efficiently and effectively

HIGHLIGHT 1.15 American Hospital Association

The➤AHA➤is➤a➤national➤association➤for➤hospitals➤and➤healthcare➤networks.➤Healthcare➤

organizations➤as➤well➤as➤individuals➤can➤become➤members➤of➤the➤AHA.

The➤mission➤of➤the➤AHA➤is➤to➤advance➤the➤health➤of➤individuals➤and➤communities.➤

The➤AHA➤(2015b)➤leads,➤represents,➤and➤serves➤hospitals,➤health➤systems,➤and➤related➤

organizations➤ that➤ are➤ accountable➤ to➤ their➤ communities➤ and➤ committed➤ to➤ health➤

improvement.

It➤meets➤this➤mission➤through➤the➤following:

1.➤ Advocacy:➤The➤AHA➤represents➤and➤lobbies➤for➤the➤concerns➤of➤healthcare➤

facilities➤in➤Washington,➤DC,➤whenever➤an➤issue➤comes➤up➤in➤Congress➤that➤will➤

affect➤hospitals.

2.➤ Research:➤The➤AHA➤researches➤healthcare➤trends➤and➤publishes➤its➤findings➤in➤

many➤newsletters➤and➤periodicals.

3.➤ Information:➤The➤AHA➤provides➤information➤about➤healthcare➤to➤providers➤and➤the➤

public.

The➤AHA➤works➤with➤its➤members;➤state,➤regional,➤and➤metropolitan➤hospital➤asso-

ciations;➤and➤other➤organizations➤to➤shape➤and➤influence➤federal➤legislation➤and➤regula-

tion➤to➤improve➤the➤ability➤of➤its➤members➤to➤deliver➤quality➤healthcare.

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tHe Impact of ownersHIp on profIts and tHe strategIc plannIng process Reduced operating margins affect a healthcare organization’s ability to raise capital for replace- ment facilities, adopt new medical technology, and participate in joint ventures. As healthcare reimbursements decline and the requirement for costly healthcare technology grows, many healthcare organizations, driven by financial need, are using the strategic planning process to explore merger or acquisition, which could lead to a change in ownership status.

Research shows that healthcare organizations are improving efficiency and quality through consolidation and integration of services. Although health systems in the United States continue to acquire hospitals, not-for-profit health systems have reduced their acqui- sitions over the past decade, whereas for-profit health systems have been actively acquir- ing hospitals over the past decade (refer to Exhibit 1.1). These acquisitions are leading to significant growth in the for-profit hospital industry.

not-for-profIt strategy

Historically, not-for-profits’ strategic capital plans were primarily focused on physical assets (e.g., diagnostic and clinical equipment, real estate property, buildings). However, as all systems experience more complexity in patient care, changes in reimbursement policies, and the advent of ACOs, they need to focus on strategies such as physician acquisition, clinical information technology investments, and reengineering their ambulatory care approaches to transform care delivery models. Regardless of their tax status, hospitals and health systems face operating environments that include declining volumes and demand for inpatient services and limited revenue growth. They have also experienced the shift away from hospital-based care to more outpatient settings (Wong-Hammond and Damon 2013).

Given the undeniable stress on finances this shift has created, and in combination with the further pressures of value-based purchasing and the possibility of penalties for low-value care, routine maintenance and large capital expenditures for aging facilities are often delayed. However, they should not be delayed indefinitely; strategic capital plans can help find funding sources in support of mission-driven operational and growth initia- tives. Ensuring that a health system’s access to capital is sustained and available through multiple channels will allow for a more seamless execution of initiatives to meet long-term organizational needs and goals (Wong-Hammond and Damon 2013).

for-profIt strategy

Although significantly smaller than the not-for-profit hospital sector, the for-profit hos- pital industry is rapidly growing in size and market penetration. A focus on new clinical services and an increasing presence in developing communities have prompted this growth. Additionally, many for-profit hospitals are evaluating the closure of duplicate, unprofitable clinical services as part of the strategic planning process.

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government HospItal strategy

Although most government hospitals provide care to a predetermined population, they still need to participate in strategic planning to meet the changing needs of their patients and foster an organizational culture that supports change. In some northern communities, demand for inpatient services has decreased as a result of migration of the veteran popula- tion to the Sunbelt. Consequently, occupancy levels have decreased in the federal hospitals located in these communities. This development has made these facilities potential targets for closure. To prevent closure, the federal hospital system should explore ways these hos- pitals could use their excess hospital beds and resources. Services the federal government purchases from local markets, such as skilled nursing care and ambulatory care, could be provided by these facilities instead. For example, the Veterans Administration operates 171 medical centers, 350 outpatient clinics, 126 nursing home care units, and 35 domiciliary- care units for veterans. Similarly, the Department of Defense currently operates 59 hospitals worldwide (Harrison and Meyer 2014).

Research has shown that federal hospitals have become more efficient in providing both inpatient and outpatient services. Specifically, Harrison and Meyer (2014) used data envelopment analysis software to evaluate a panel of 165 federal hospitals in 2007 and 157 of the same hospitals again in 2011. Results indicated that overall efficiency in federal hospitals improved from 81 percent in 2007 to 86 percent in 2011.

joInt venture strategy

As shown in Exhibit 1.1 and documented further in Chapter 11, the number of freestanding (i.e., independent) hospitals is decreasing as more and more hospitals join multihospital systems. Many not-for-profit healthcare organizations are only marginally profitable, and their aging facilities need major renovations. As a result, they are considering joint ventures with for-profit companies as a method of acquiring additional financial resources.

From the perspective of a for-profit company, a joint venture with a not-for-profit organization is advantageous because (1) a not-for-profit organization is less expensive to purchase than another for-profit company, (2) the for-profit company can gain increased market share (i.e., the not-for-profit organization’s customers will likely become custom- ers of the new joint venture), and (3) the community will look favorably on the for-profit organization for partnering with a not-for-profit organization.

From the perspective of a not-for-profit organization, a joint venture with a for-profit organization is advantageous because (1) together, they have a greater pool of resources (financial and other) and (2) the not-for-profit organization will not have to give up all its power and will continue to have a say in operational decisions. At the health system level, joint ventures are one way a corporation can extend its network and gain resources. A lesser- known organization also can achieve instant recognition by joining with an organization whose products and services carry a trusted, well-known brand name.

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In response to a rapidly changing healthcare environment, joint ventures are an opportunity for hospitals, physicians, and other healthcare organizations to work together to meet community healthcare needs. Faced with rising costs, decreasing reimbursement from insurers, and global competition, hospitals and physicians may use joint ventures to combine clinical and financial resources, claim a greater share of the market, and gain a better strategic position. To remain in a position of competitive advantage, organizations that pursue joint ventures must create a culture of trust between hospitals and physicians. In most cases, such a relationship requires a change of culture to see a joint venture as an opportunity rather than a threat. Physicians may view joint ventures as a threat because joint ventures often require them to give up their autonomy (e.g., the joint venture requires the physician to refer patients primarily to the joint venture, whereas previously the physi- cian could refer patients to a wide range of providers). Despite the fact that joint ventures promise to benefit both partners’ profit in the long run, some hospitals initially view joint ventures as a threat because joint ventures require them to share profits that they previously collected for themselves only.

One goal of physician–hospital joint ventures should be to increase the value of healthcare services to patients while providing a win–win situation for the hospital and physicians. When planning a joint venture, the two parties need to share information, develop a shared vision, and focus on improving efficiency in the delivery of healthcare. As a result, the joint venture will foster a sense of shared ownership.

ImplementIng organIzatIonal cHange The survival strategies discussed thus far require comprehensive organizational change. For change to occur smoothly and result in successful outcomes, everyone in the community needs to be involved in the strategic planning process, including the community’s leaders, the organization’s leaders and staff, and the organization’s patients. The organization must share its mission, vision, and values with the community and encourage all stakeholders to develop alliances. Such an approach strengthens the organization’s links with the external environment. Organizations whose culture emphasizes alliances, ongoing evaluation of change, wide par- ticipation from all stakeholders, and creativity are more likely to achieve successful outcomes. As will be discussed in Chapter 2, a transformational leadership approach that fosters a high level of staff involvement encourages innovation as part of the change process.

In➤today’s➤rapidly➤evolving➤healthcare➤environment,➤a➤leader➤is➤one➤who➤promotes➤change.➤ The➤literature➤and➤organizational➤theory➤provide➤clear➤evidence➤that➤outstanding➤leader- ship➤is➤associated➤with➤increased➤organizational➤performance➤and➤future➤success.➤Effective➤ leadership➤and➤strategic➤planning➤can➤significantly➤enhance➤the➤quality➤of➤patient➤care.

summary

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In➤the➤current➤environment➤of➤healthcare➤reform,➤healthcare➤leaders➤must➤uphold➤ professional➤ethics➤and➤operate➤from➤a➤foundation➤of➤trust,➤honesty,➤and➤integrity➤in➤their➤ dealings➤with➤patients➤and➤stakeholders.➤At➤all➤levels➤of➤the➤organization,➤leaders➤need➤to➤ demonstrate➤ethics➤and➤honesty➤to➤gain➤employees’➤support.

Healthcare➤in➤the➤United➤States➤is➤experiencing➤a➤growing➤shortage➤of➤financial➤re- sources.➤An➤inability➤to➤adapt➤to➤the➤changing➤environment➤has➤forced➤many➤hospitals➤into➤ bankruptcy,➤closure,➤merger➤with➤one➤or➤more➤hospitals,➤or➤acquisition➤by➤another➤company.➤ To➤survive,➤many➤healthcare➤organizations➤are➤using➤strategic➤planning➤to➤position➤themselves➤ for➤future➤success.➤Strategic➤planning➤is➤an➤ongoing➤process,➤not➤a➤onetime➤project,➤based➤ on➤an➤organization’s➤mission,➤vision,➤and➤values.➤These➤statements➤help➤organizations➤focus➤ their➤investments,➤allocate➤their➤resources,➤and➤provide➤the➤foundation➤for➤implementing➤ appropriate➤change.

An➤organization’s➤mission,➤vision,➤and➤values➤are➤shaped➤by➤its➤ownership➤status.➤ Organizations➤may➤be➤not-for-profit,➤for-profit,➤government➤operated,➤or➤joint➤ventures.➤Dif- ferences➤in➤mission➤reflect➤different➤motivations➤and➤goals,➤and➤these➤differences➤influence➤ the➤type➤of➤strategic➤plan➤an➤organization➤develops.

Top➤organizations➤focus➤on➤their➤mission;➤monitor➤performance;➤participate➤in➤con- tinuous➤quality➤improvement;➤and➤maintain➤relationships➤with➤patients,➤physicians,➤staff,➤ and➤community➤stakeholders.➤Such➤organizations➤provide➤higher-quality➤care,➤have➤lower➤ costs,➤are➤more➤profitable,➤and➤report➤higher➤rates➤of➤employee➤satisfaction.

revIew QuestIons

1.➤ Evaluate➤this➤statement:➤“The➤board➤of➤directors➤has➤fiduciary➤responsibility➤for➤ organizational➤resources.”➤Provide➤an➤example➤from➤your➤own➤experience➤that➤illus- trates➤the➤impact➤a➤board➤can➤have➤on➤organizational➤performance.

2.➤ In➤healthcare➤organizations’➤attempts➤to➤enhance➤their➤leadership,➤what➤are➤the➤ roles➤of➤the➤board➤of➤directors,➤senior➤leaders,➤and➤physicians?

3.➤ Adequate➤reimbursement➤levels➤are➤an➤important➤consideration➤in➤the➤strategic➤ planning➤process.➤Discuss➤the➤recent➤trends➤in➤HMO,➤PPO,➤and➤ACO➤development➤ and➤the➤impact➤they➤have➤on➤strategic➤planning.

4.➤ An➤organization’s➤mission➤is➤the➤fundamental➤purpose➤of➤its➤existence.➤Discuss➤the➤ types➤of➤hospital➤ownership➤in➤the➤United➤States➤and➤how➤they➤may➤influence➤an➤ organization’s➤strategic➤plan.

5.➤ Culture is➤a➤collection➤of➤values➤shared➤by➤a➤group➤of➤people.➤Discuss➤important➤at- tributes➤of➤organizational➤culture➤in➤healthcare.

exercIses

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coastal medIcal center exercIse

On➤the➤basis➤of➤information➤provided➤in➤Chapter➤1➤and➤the➤CMC➤case,➤how➤effective➤has➤the➤ board➤trustees➤been➤in➤providing➤oversight➤for➤the➤organization?➤From➤an➤operational➤perspec- tive,➤how➤have➤the➤new➤CEO➤and➤senior➤leadership➤team➤provided➤the➤oversight➤necessary➤ for➤CMC➤to➤move➤forward➤on➤a➤new➤road➤to➤success?

coastal medIcal center QuestIons

1.➤ Discuss➤the➤role➤of➤the➤board➤of➤trustees➤in➤providing➤oversight➤to➤CMC.➤Has➤the➤ board➤met➤its➤fiduciary➤responsibility?

2.➤ Does➤the➤CMC➤board➤regularly➤monitor➤performance?➤If➤so,➤how➤and➤how➤often? 3.➤ Does➤the➤CMC➤board➤hold➤management➤accountable➤for➤achievement➤of➤the➤strategic➤

plan?➤If➤so,➤how? 4.➤ Recommend➤changes➤to➤the➤role➤of➤the➤board➤as➤well➤as➤types➤of➤members➤who➤

should➤be➤appointed➤to➤the➤board. 5.➤ CMC’s➤past➤CEO➤Don➤Wilson➤provided➤leadership➤to➤a➤highly➤successful➤healthcare➤

organization➤for➤more➤than➤20➤years➤and➤was➤considered➤a➤visionary.➤Develop➤a➤list➤ of➤five➤areas➤in➤which➤you➤think➤Wilson’s➤performance➤was➤particularly➤outstanding.

6.➤ Does➤the➤quality➤of➤the➤new➤leadership➤at➤CMC➤set➤the➤stage➤for➤future➤success?

IndIvIdual exercIse: developIng a personal career plan

Using➤the➤information➤discussed➤in➤Chapter➤1,➤the➤specific➤hospital➤data➤provided➤in➤Exhibits➤ 1.1,➤1.2,➤and➤1.5,➤and➤the➤following➤exercises,➤develop➤a➤personal➤career➤plan.➤The➤purpose➤of➤ the➤career➤plan➤is➤to➤enable➤you➤to➤look➤at➤yourself➤in➤relation➤to➤your➤career➤with➤particular➤ emphasis➤on➤the➤unique➤characteristics➤of➤the➤types➤of➤hospitals➤discussed.➤Think➤for➤some➤ time➤before➤attempting➤to➤formulate➤your➤thoughts➤on➤paper.➤Your➤overall➤perception➤and➤ analysis➤of➤the➤leadership➤team➤and➤its➤professional➤role➤will➤be➤important➤as➤you➤move➤ forward➤in➤your➤career.➤If➤you➤have➤not➤chosen➤a➤specific➤career➤at➤this➤time,➤then➤identify➤ a➤potential➤career➤of➤interest➤for➤this➤assignment.➤This➤report➤should➤represent➤your➤best➤ academic➤efforts➤to➤date.➤

IndIvIdual QuestIons

1.➤ Identify➤the➤organizational➤structure➤(e.g.,➤for-profit,➤not-for-profit,➤federal)➤and➤ specialty➤(e.g.,➤medical➤and➤surgical,➤psychiatric,➤children’s)➤of➤the➤hospital➤you➤are➤ most➤interested➤in.➤Why➤does➤the➤mission,➤vision,➤and➤culture➤of➤that➤organization➤ draw➤your➤interest?

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2.➤ What➤skills,➤education,➤qualifications,➤and➤experiences➤will➤be➤most➤important➤for➤ your➤future➤success?

3.➤ Project➤the➤next➤three➤years➤in➤terms➤of➤your➤selected➤career.➤What➤skills➤and➤ qualifications➤are➤required➤for➤you➤to➤excel➤during➤this➤time?➤Which➤of➤these➤do➤you➤ particularly➤need➤to➤strengthen?

4.➤ Describe➤the➤basic➤qualities➤of➤leadership➤discussed➤in➤Chapter➤1.➤What➤qualities➤do➤ you➤think➤will➤contribute➤most➤to➤the➤success➤of➤individuals➤in➤supervisory➤or➤ leadership➤positions?➤Do➤you➤think➤you➤possess➤some➤of➤the➤basic➤qualities➤neces- sary➤for➤future➤success➤in➤the➤same➤supervisory➤or➤leadership➤positions?

American➤College➤of➤Healthcare➤Executives➤(ACHE).➤2015.➤“Hospital➤Executive➤Salary➤Infor-

mation:➤2015.”➤Accessed➤February➤18,➤2016.➤www.ache.org/newclub/career/SALARY.cfm.

American➤Hospital➤Association➤(AHA).➤2015a.➤Engaging Trustees in the Redefinition of the H.➤

Accessed➤August➤2.➤www.aha.org/content/14/engaging_trustees_redefinition_H_tools_

resources.pdf.

———.➤2015b.➤“Vision➤and➤Mission.”➤Accessed➤April➤8.➤www.aha.org/about/mission/shtml.

———.➤2014.➤AHA Annual Survey Database 2014.➤Chicago:➤American➤Hospital➤Association.

———.➤2005.➤AHA Annual Survey Database 2005. Chicago:➤American➤Hospital➤Association.

Bowen,➤D.➤2014.➤“The➤Growing➤Importance➤of➤Succession➤Planning.”➤Healthcare Executive➤

29➤(4):➤8.

Catlin,➤A.,➤C.➤Cowan,➤M.➤Hartman,➤S.➤Heffler,➤and➤the➤National➤Health➤Expenditure➤Accounts➤

Team.➤2008.➤“National➤Health➤Spending➤in➤2006:➤A➤Year➤of➤Change➤for➤Prescription➤Drugs.”➤

Health Affairs 27➤(1):➤14–29.➤

Centers➤for➤Medicare➤&➤Medicaid➤Services➤(CMS).➤2014.➤“National➤Healthcare➤Expenditures➤

2014➤ Highlights.”➤ Accessed➤ December➤ 22.➤ www.cms.gov/Research-Statistics-Data-

and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/➤

highlights.pdf.➤

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