HMGT 320 Mini Assignment

2 9

L e a r n i n g O b j e c t i v e s

C H A P T E R 2

M A N A G E M E N T

The worker is not the problem. The problem is at the top! Management!

W. Edwards Deming, quality expert,

business consultant, and writer

Studying this chapter will help you to

➤ define and explain management;

➤ describe how management has evolved as a field of knowledge, theory, and

practice;

➤ explain major theories of management;

➤ identify important roles, functions, activities, and competencies of healthcare

managers; and

➤ explain how management theory is used to manage healthcare organizations.

C o p y r i g h t 2 0 1 9 . H e a l t h A d m i n i s t r a t i o n P r e s s .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s3 0

Here’s WHat HaPPeneD Partners HealthCare’s management team planned, organized, staffed, led, and controlled the healthcare organization (HCO) and its work. Managers planned new initiatives for accountable care and population health. To accomplish plans, manag- ers organized tasks, division of work, and jobs. They redesigned care processes for diabetes, heart attacks, and colorectal cancer. Specific tasks, responsibilities, and authority were assigned to specific jobs such as health coach, cardiologist, and nurse. A Connected Cardiac Care team coordinated diverse jobs toward the shared goal of improving cardiac care for remote patients. Managers staffed new jobs by hiring nurses and training them for telehealth responsibilities. When leading employees, managers overcame resistance from some nurses who disliked technology replac- ing their human touch. Managers led physicians by using financial incentives to motivate them. Performance of the telehealth program was controlled by monitoring enrollment, hospital readmissions, emergency room use, patient satisfaction, and cost savings. When data analytics showed that patient enrollment was below target, managers redesigned the enrollment process to increase the number of enrollees. All this planning, organizing, staffing, leading, and controlling by Partners HealthCare’s managers—including new, entry-level managers—enabled the managers and HCO to serve their community and improve population health.

C hapter 1 introduced us to HCOs that provide healthcare services. As shown by Partners HealthCare, these HCOs must be managed. In this chapter’s Here’s What Happened, managers demonstrated five essential management functions—they

planned, organized, staffed, led, and controlled. Managers at all career stages and organiza- tion levels use these management actions. This chapter introduces us to the management knowledge, theory, and practice used to manage HCOs. Management has evolved as a profession, and this chapter reviews how management has developed from the early twen- tieth century to today. We learn how managers today use classic management approaches in conjunction with more recent approaches. Chapter 2 introduces the work, skills, func- tions, roles, and competencies of managers; later chapters will review them in more depth and explain how to apply them to HCOs. You will learn about tools to include in your healthcare management toolbox and use throughout your career.

This chapter is important because it provides the foundation on which subsequent chapters will build. It explains many management terms, concepts, and principles that are used throughout the book—and in HCO management jobs and careers. The chapter open- ing quote suggests that problems in HCOs sometimes are caused by managers. Problems occur when managers do not properly use management principles and methods. Managers, including young professionals on their first day at work, can use this chapter to help them

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C h a p t e r 2 : M a n a g e m e n t 3 1

manage HCOs wisely. With a proper foundation in management principles, you can make a good start in your career and then build on it.

WH at Is ma n a g e m e n t? What comes to mind when you see the word management? Consider a manager you know. What does she do? What makes him a manager? Perhaps we have different ideas about what management means, what managers do, and who does management work. This book defines management as “the process of getting things done through and with people” (Dunn 2016, 14). Always remember that management involves people—usually lots of them! Managers can work at all levels of an organization.

People who perform management work (for much or all of their job) might have job titles such as manager, executive, administrator, supervisor, coordinator, or lead. However, people who only occasionally perform management work might also have job titles that imply they are managers. To determine whether someone really is a manager, we should consider how much of the work described in this chapter that person does.

tH e HI s t o ry a n D ev o L u t I o n o f ma n a g e m e n t tH e o ry As a field of study, management is younger than some (e.g., biology, mathematics, psychol- ogy) but older than others (e.g., computer science, aerospace engineering). Although man- agement techniques surely were used before recorded history, writing about management as a body of knowledge is a more recent practice. This section draws from book chapters on both classical theories of organization (Olden and Diana 2019) and modern theories of organization (Diana and Olden 2019), plus other cited authors, to discuss theoretical approaches that created the foundation of management theory. As you read this section, think about how management has evolved by expanding on existing ideas, building on past ideas, and creating entirely new ideas that guide managers today. Also note that some management scholars studied work tasks, some studied work processes, others studied the structure of organizations, and still others studied the workers. Although some management theories are from long ago, they are still used today (just as theories of Sir Isaac Newton and Sigmund Freud are still used today in physics and psychology).

t ay L o r a n D s c I e n t I f I c m a n a g e m e n t

Management began to develop as a body of knowledge more than a century ago with the scientific management work of Frederick W. Taylor (Olden and Diana 2019). He told fac- tory managers they could increase productivity and output not by finding bigger, stronger workers to shovel coal and lift iron but instead by designing the workers’ repetitive work for

management

The process of getting

things done through

and with people.

scientific management

A type of

management that

uses standardization,

specialization, and

scientific experiments

to design jobs for

greater efficiency and

production.

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s3 2

ease and efficiency. He analyzed factory workers’ physical motions, postures, steps, actions, task completion times, and production. Based on the analysis, Taylor made changes that led to large improvements. For example, standing or sitting a certain way could help someone work with less strain on the body, similar to practicing good posture when working at a computer workstation today. Taylor also designed tools that enabled laborers to work with less effort yet accomplish more. (Does this remind you of the saying “Work smarter, not harder”?) Taylor developed detailed instructions, methods, rules, techniques, training, and time allowances for each job. Thus, work was based on objective scientific analysis rather than subjective personal preferences.

Taylor tested his ideas with the scientific method and detailed research in factories. He believed there was “one best way” to perform each repetitive job, and he set out to discover it. Factory managers then taught workers the one best way to do their job rather than let workers do their job however they wanted to (with varying results). Factory pro- duction and workers’ pay increased. Managers’ early efforts to redesign physical work led to redesigning their own management work. Managers now had to identify work tasks, set standards, and plan schedules for workers. Thus, managers’ work also became more objective and less subjective.

Taylor’s ideas became known as Taylorism and scientific management. This approach to management was further developed by Frank and Lillian Gilbreth (1917) and Henry L. Gantt (1919). The Gilbreths’ work included studies of surgeons, which led to creating the surgical nurse job to assist the surgeon and the use of a tray to hold instruments (Langabeer and Helton 2017). Followers of Taylorism later realized that the best way to perform a job depended on a worker’s experience, the work situation, and other factors. Nonetheless, principles of scientific management were useful back then and are still used today in many organizations, including HCOs.

Today we use terms such as ergonomics and human engineering to refer to how jobs, tools, work, postures, and workstations are designed to maximize productivity and minimize injury. When HCO managers design jobs such as nurse anesthetist, data analyst, and intake coordinator, they apply ideas that evolved from scientific management. We will learn more about this approach in later chapters.

f ay o L a n D a D m I n I s t r at I v e t H e o r y

Early in the twentieth century, Henri Fayol was a pioneer in developing administrative theory to improve organizations (rather than improve individual jobs as Taylor did). His ideas were top-down, for top managers to apply to lower levels of the organization (Olden and Diana 2019). Fayol believed his principles were flexible and applicable to any kind of organization. Although history has shown that his principles work better in some types of organizations than in others, the principles have contributed much to the foundation of theory for managing people and organizations. His work helped develop administrative

administrative theory

An integrated set

of ideas to organize

work, positions,

departments,

supervisor–

subordinate

relationships,

hierarchy, and span of

control to design an

organization.

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C h a p t e r 2 : M a n a g e m e n t 3 3

principles that are still widely used today. In the Partners HealthCare example in the open- ing Here’s What Happened, we read how managers used some of these principles.

Have you seen an organization chart for a medical group practice, health website design company, pharmaceutical firm, or community health alliance? A typical organization chart (exhibit 2.1) reflects much administrative theory.

Division of work is how work is separated into smaller, more specialized tasks and activities. For example, building maintenance work is divided into plumbing, carpen- try, painting, masonry, air-conditioning, and other types of specialized work to maintain buildings.

Specialization refers to the width of the range of tasks done by an employee or department. A maintenance worker who does only painting is more specialized than a maintenance worker who does painting, carpentry, and plumbing. A surgical nursing department is more specialized than a nursing department.

Coordination is connecting individual tasks, activities, jobs, departments, and people to work together toward a common purpose. It forms linkages and interrelation- ships to overcome the division of work caused by specialization. In a hospital, nursing is coordinated with laboratory, pharmacy, environmental services, patient access, and other specialized departments so they all work toward the common purpose of patient care.

Authority is power formally given to a job position (not to the person hired for a position) to make decisions and take actions, such as allocating resources and directing subordinates. The director position of a college wellness clinic has authority to allocate the clinic’s resources and assign work to the director’s subordinates. Whoever is hired as the director can use the director’s authority to do the job. For example, Nicole was hired as the clinic director and used the authority of that position to perform her job. When she later transferred to a different job, Nicole no longer was able to use the authority of the

division of work

How work is separated

into smaller, more

specialized tasks and

activities.

specialization

The width of the range

of tasks and work done

by an employee or

department.

coordination

Connecting individual

tasks, activities,

jobs, departments,

and people to work

together toward a

common purpose.

authority

Power formally given

to a job position to

make decisions, take

actions, and direct and

expect obedience from

subordinates.

exHIbIt 2.1 Organization ChartBoard of Directors

Director – Finance

President/CEO

Secretary Medical Director

Director – Patient Care Director – Administration

Accounting

Treasurer

Other

Nursing

Physical Therapy

Other

Marketing

Human Resources

Other

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s3 4

clinic director job. This authority is sometimes referred to as rational-legal authority (Daft 2016) or line authority (Dunn 2016). It is based on the line of authority discussed later.

Some writers describe other kinds of authority. Staff authority and functional authority may be held by staff experts in specialties (e.g., accounting or marketing) who advise line managers (Dunn 2016). Charismatic authority may exist for some people based on their admirable personal character and charisma that inspire others (Daft 2016). These types of authority are based on the expertise or charisma of the person in a position (rather than on the position itself ). To learn more about these kinds of authority, see chapter 10, which explains types of power.

Line of authority refers to the vertical chain of command, authority, and formal communication up and down an organization. In a health insurance company, the president gives commands and delegates authority down to the vice president of financial affairs, who gives commands and delegates authority down to the accounting director, who in turn gives commands and delegates authority down to the accounts payable supervisor. In the line of authority, the accounts payable supervisor communicates up to the accounting director, who communicates up to the vice president and so forth.

Managers usually organize work into line jobs (and departments) and staff jobs (and departments). These types of jobs are based on two different kinds of work and contributions to the organization’s goals. Line jobs (and departments) contribute directly to—and are accountable for—achieving the organization’s goals (Dunn 2016). Alternatively, staff jobs (and departments) indirectly help achieve the organization’s goals by providing specialized advice, expertise, and support to the line jobs and departments (Dunn 2016). In a sports medicine clinic, physical therapists perform line work that contributes directly to their clinic’s patient care goals. A secretary performs staff work for the clinic, such as schedul- ing patients, to support therapists in achieving the patient care goals. In a rehabilitation hospital, the nursing department performs line work to achieve the hospital’s patient care goals. The strategic planning department does staff work to advise the line managers and board of directors (who then decide the strategic direction of the hospital). Compared to line workers, staff workers have less authority. Staff workers are expected to advise and support the line workers who have the authority to make the decisions. Yet line workers depend on staff workers and could not as readily accomplish their line work without the help of the staff workers.

The separation of line work and staff work is not always clear. For example, legal work may be staff work in a medical group practice but be line work in a law firm. Also, people might disagree on which jobs directly contribute to an organization’s main goals. As noted in chapter 1, HCOs have become more concerned with the entire patient experi- ence, which includes all interactions a patient has with the HCO’s employees. Thus, any employee who interacts with a patient—including an employee who schedules appoint- ments—contributes to the patient experience and could be viewed as contributing directly to patient experience goals. Managers should clarify for workers the extent to which a job

line of authority

The vertical chain

of command,

authority, and formal

communication up and

down an organization.

line jobs

Jobs that contribute

directly to achieving an

organization’s purpose

and main goals.

staff jobs

Jobs that use

specialized skills,

abilities, and expertise

to support line jobs

and thereby indirectly

contribute to the

organization’s main

goals.

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C h a p t e r 2 : M a n a g e m e n t 3 5

is line or staff. That will help workers know if they have authority to make decisions or if they instead just advise others who then make decisions.

Separation of line work and staff work also may be unclear for managers of depart- ments that perform staff work. Confusion can arise because a staff department in an orga- nization has a manager who does line work within that one department (Dunn 2016). Assume the strategic planning department mentioned earlier has a department manager plus two employees who both gather and analyze data, study the external environment, and prepare reports. The department does staff work to assist line decision makers. Yet within that staff department, the department manager does line work, that is, she decides how to allocate resources, assign tasks to the two subordinates, and manage the department.

Unity of command means a worker takes commands from and is responsible to only one boss. An example is a computer technician who takes commands from and is respon- sible to only the director of information technology in a large cardiology group practice.

Span of control is how many subordinate workers a manager is directly respon- sible for, that is, how many workers report up one level (in an organization chart) to that boss. Suppose Brian is a hospital patient access manager in Scranton. Six employees report directly to Brian, so his span of control is six. Span of control varies based on factors such as the ability of the manager, ability of the subordinates, the proximity of the manager and subordinates to each other (physically and online), frequency and kinds of interactions, extent to which work is usually consistent and standardized, and variety and complexity of subordinates’ tasks (Dunn 2016).

Centralization (and decentralization) is how high (and low) in an organization the authority to make a decision exists. In a mental health alliance, purchasing decisions costing $20,000 or more are centralized at the board of directors level. The board decentral- izes authority for purchasing decisions costing less than $20,000 to the alliance executive director. Then the executive director decentralizes authority for purchases costing less than $1,000 to the department manager level.

unity of command

Arrangement in

which a worker takes

commands from and is

responsible to only one

boss.

span of control

How many subordinate

workers a manager is

directly responsible

for; how many workers

report directly to that

manager (sometimes

called span of

supervision or span of

management).

centralization

How high or low in

an organization the

authority exists to

make a decision.

TRY IT, APPLY IT

Think about a job you’ve had, such as a summer job or a current part-time job. Try to

apply this chapter’s administrative theory concepts to describe your job and the organi-

zation. For example, how was work divided? Which departments were coordinated with

your department? What, if any, authority did your job have? Share your analysis with

classmates.

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s3 6

These ideas from administrative theory help managers determine supervisor–sub- ordinate relationships, group workers into work units such as departments, design levels of hierarchy in an organization chart, arrange who reports to whom, and structure the organization. Most HCOs apply at least some of these administrative principles. In later chapters on organizing and staffing, we will learn how managers and supervisors use these principles in HCOs.

m ay o a n D H u m a n r e L at I o n s

In the 1920s and 1930s, a team of researchers led by Fritz Roethlisberger and W. J. Dick- son studied workers at the Western Electric Hawthorne Plant outside of Chicago. The researchers conducted experiments in which they changed the physical working condi- tions, such as lighting, of the rooms where workers manually assembled telephone com- ponents. These experiments, combined with observations, were to help Western Electric managers understand factors affecting work- ers’ productivity, morale, and other aspects of performance. The researchers were puzzled that productivity did not vary as expected. Some- times productivity improved in the experiment room where lighting was increased, yet it also improved in the control room where the light- ing was not changed.

Eventually, Elton Mayo and other scientists in the Hawthorne studies determined that social and psychological factors were involved. The experiments affected the workers’ cooperation, teamwork, feelings of importance, and recognition, which then influenced their morale, work effort, and productivity. The workers were not machines or robots; they were humans. They had thoughts, feelings, emotions, and personalities, which they brought to work. They were more complex than previously realized, and they were not always rational. Western Electric was not a machine either; it was a social organization with norms, peer pressure, informal leaders, interpersonal relations, and group behaviors that affected workers (Dunn 2016).

This work led to the human relations approach in management, which was further developed by Chester Barnard (1938), an executive who emphasized cooperation based on communication and both social and psychological motivators. Decades of study have focused greater attention on the human relations aspects of management, such as motivation,

norms

Behaviors and

attitudes expected

of people in a group,

organization, or

society.

human relations

A type of management

based on psychology

and sociology that

considers employees’

feelings and behaviors,

especially in groups.

CHECK IT OUT ONLINE

The research of Roethlisberger, Dickson, Mayo, and others at

the Western Electric Hawthorne Plant led to the discovery of

the Hawthorne effect: We are motivated to change our behav-

ior (e.g., produce more) when we are being watched. How-

ever, these researchers discovered much more than that about

human behavior in the workplace. The Hawthorne studies ran

from 1924 to 1936. Their deep effect on organization develop-

ment and management still strongly influences managers today.

The studies also led to new approaches for conducting research

about organizations and people. You can learn more about the

Hawthorne studies and lessons for today’s managers at www.

library.hbs.edu/hc/hawthorne/07.html#seven. Check it out

online and see what you discover.

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C h a p t e r 2 : M a n a g e m e n t 3 7

organization culture, group behavior, and job design. In recent years, new approaches to human relations have led to innovations in management. We will learn more about human relations in later chapters on staffing, leadership, and communication.

g u L I c k , u r W I c k , a n D m a n a g e m e n t f u n c t I o n s

In the 1930s, Luther Gulick and Lyndall Urwick studied what executives do (Olden and Diana 2019). Executives plan, organize, staff, direct, coordinate, report, and budget (some- times referred to as POSDCORB). Gulick and Urwick, and Fayol before them, identified five fundamental management functions: planning, organizing, staffing, directing, and controlling. Managers plan, organize, staff, direct, and control. In more recent years, the words lead, influence, and motivate have been used in place of direct.

In planning, managers decide what to do and how to do it. Planning can involve establishing mission, vision, goals, objectives, strategies, and methods. Planning may be short-term, such as a single eight-hour shift in an emergency department, or long-term, such as the five-year strategic plan of a medical school. What kind of short-term and long- term planning have you done in your life?

In organizing, managers arrange work into jobs, teams, departments, and other work units; arrange supervisor–subordinate relationships; and assign responsibility, authority, and resources. Organizing involves designing an organization chart. For example, five investors build a new assisted-living retirement home and then organize the jobs, departments, and 87 employees as shown on a new organization chart.

In staffing, managers obtain and retain people to fill jobs and do the work. Managers also recruit, select, orient, train, compensate, evaluate, protect, and develop employees. For example, an outpatient diagnostic center manager hires an ultrasonographer and decides how much to pay her.

In directing (also called influencing or leading), managers assign work to employees and motivate them to do the work. For example, a chemotherapy supervisor assigns three nurses to 13 patients who are scheduled for chemotherapy on Monday.

In controlling, managers compare actual performance to preset standards and make corrective adjustments if needed to meet the standards (Dunn 2016). For example, manag- ers use real-time data collection, analysis, and reports at their digital desktops to control expenses, overtime hours, schedules, and customer satisfaction.

It makes sense for managers to carry out these five functions in the sequence shown, and the functions should be thought of as a cycle rather than a straight line. After all steps are completed, the original plans have been fulfilled (or revised), so new plans must be created. New plans lead to new organizing, staffing, directing, and controlling. The cycle suggests that managers plan goals to pursue, organize tasks to accomplish planned goals, hire staff to perform organized tasks, direct and motivate staff to do the tasks, and then control what happens so that planned goals are achieved. Although managers generally

planning

Deciding what to do

and how to do it.

organizing

Arranging work

into jobs, teams,

departments, and

other work units;

arranging supervisor–

subordinate

relationships;

assigning

responsibility,

authority, and other

resources.

staffing

Obtaining and retaining

people to fill jobs and

do work.

directing

Assigning work to

workers and motivating

them to do the work.

controlling

Comparing actual

performance to preset

standards and making

corrective adjustments

if needed to meet the

standards.

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s3 8

follow this approach, sometimes they might have to back up and redo a prior step before proceeding. For example, when interviewing applicants for an ethics officer position at a healthcare system in Portland, the CEO might realize he is unable to clearly explain to applicants the job’s authority and reporting relationships throughout the health system. The job and its design are too fuzzy and have not been structured well. The CEO may return to the organizing function and more clearly design how the ethics officer will fit into the health system. Then the CEO can interview applicants and hire someone for the job. The five functions are used constantly by HCO managers—as they were used at Partners HealthCare in the scenario at the beginning of this chapter.

W e b e r a n D b u r e a u c r at I c t H e o r y

The word bureaucracy may elicit negative or cynical feelings because bureaucratic rules sometimes create obstacles and delays. However, wise use of bureaucratic principles con- tributes to effective management. These ideas were developed by economist, sociologist, and political scientist Max Weber in the 1940s. He used perspectives from his three areas of expertise to study organization management and recommend changes. Here are some of Weber’s basic principles of bureaucracy (Olden and Diana 2019):

◆ Staff members are subject to organization authority only in their work for the organization, not in their personal lives.

◆ Employees work in a hierarchy (organization chart) of bureaus, with a higher bureau (office) controlling lower ones.

◆ Control is based on authority rather than on personal relationships.

◆ Each bureau has an established division of labor and duties.

◆ A bureau is managed according to written documents kept in files for continuity.

◆ Workers are hired to fill positions based on open selection rather than election.

◆ Staff members are selected based on qualifications and ability rather than personal relationships.

◆ Staff members are paid based on position and responsibilities in the hierarchy.

◆ A worker can be promoted in the hierarchy based on seniority and achievement.

◆ Employees do not own rights to the bureau where they work, nor do they own property, equipment, or other resources used for work production.

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C h a p t e r 2 : M a n a g e m e n t 3 9

◆ Staff must follow a system of rules, standards, and discipline that controls their work.

◆ Staff must follow orders given by superiors in official positions.

As you might have realized, the bureaucratic approach makes work and organiza- tions more efficient but less personal. This design was intentional because Weber thought work and organizations were based too much on personal connections, favoritism, fam- ily relationships, and office politics. In bureaucracy, rules and authority dominate, and human creativity and personal feelings are stifled. This approach has advantages and disadvantages, as do other management approaches. Bureaucracy makes organizations more predictable, efficient, and stable. However, as Weber realized, it also makes them less flexible and less innovative.

Would you want to work in a bureaucracy? Today, many organizations and HCOs follow bureaucratic principles, some more rigidly than others. Bureaucracy helps you be paid properly, deters your boss from directing you to mow her lawn, and lets you be pro- moted even though you’re not the president’s nephew. However, bureaucracy might also stifle your creative ideas and control you with many rules. We will learn more about these principles in later chapters on organizing and controlling performance.

b e r ta L a n f f y , b o u L D I n g , a n D o P e n s y s t e m s t H e o r y

A system is a “set of interrelated parts that function as a whole to achieve a common pur- pose” (Daft 2013, 33). The study of systems theory began in the 1950s with Bertalanffy’s general systems theory and Boulding’s classification of systems into nine hierarchical levels of complexity (Olden and Diana 2019). Boulding’s fourth level is open systems, which are “self-maintaining structures that utilize a throughput of resources from their environment” (Diana and Olden 2019, 37). An open system obtains materials from its environment, uses them to maintain itself, and discharges its own materials into the organization’s environ- ment. This approach led to open systems theory, which has been applied extensively to organizations from the 1960s to the present. The theory asserts that an organization—as an open system—must understand, be open to, and interact with its external environment to sustain itself. Previously, managers and researchers had viewed an organization mostly as a closed system; they focused on the organization without regard to its external environment. Scholars and managers have further developed this open systems theory since the 1960s (Katz and Kahn 1978; Scott 2003; Thompson 1967), and it is now used more frequently than the closed system view.

Modern theories of organizations are open system theories that help us understand how an organization’s external environment greatly influences the organization (Diana and Olden 2019). As an open system, an organization is open to (i.e., affected by) its external environment. It cannot seal itself off from external forces such as economic conditions,

system

A set of interrelated

parts that function as

a whole to achieve a

common purpose.

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s4 0

new technology, people’s attitudes, and competitors’ actions. An organization is aff ected by its environment because external forces and external stakeholders act on the organization; recall the current trends and developments discussed in chapter 1. Th e organization must recognize these forces and adapt to them (or else suff er).

Organizations are also open systems, so they can import resources from the envi- ronment and export products and services into the environment. An organization must import staff , supplies, equipment, information, technology, and other inputs from the environment. Th ese inputs are brought into the organization and used to produce services and products. Th is production occurs in the organization’s production subsystem, which transforms inputs into outputs by mixing, arranging, connecting, combining, and process- ing inputs in diff erent ways to create diff erent services and products. Th en the organiza- tion must be open to the external environment to export its outputs to customers, clients, and people outside the organization. For example, a medical lab in Teaneck is open to its

USING CHAPTER 2 IN THE REAL WORLD

St. Joseph Hoag Health, a health system in Orange County, California, demonstrates the

open system approach for improving population health. Based on demand from con-

sumers in Orange County, the system has opened “wellness corners” in six locations,

including an apartment community, a fi tness center, and an offi ce complex. Hoag Health

managers choose locations convenient to where people live, work, and play. These

facilities offer medical, fi tness, and wellness services. Hoag Health strives to span the

continuum of care, including preventive care and wellness, by partnering with other

organizations in its community (Hegwer 2016; Perkes 2017).

The Brain Injury Alliance of Utah uses the systems approach to help people with

traumatic brain injuries. The alliance works with many other organizations to create a

seamless system of holistic care for patients at all stages of the brain injury continuum.

This continuum ranges from emergency care and critical care to community care when

the patient is living at home. Patients and families can get medical, social, fi nancial,

and other kinds of services and resources. Such services might include emergency care,

acute care, post-acute care, diagnostic testing, treatment, therapies (physical, occu-

pational, speech), case management, caregiver support, coping strategies, services to

enable living at home, and yoga. Services and support may last for years. The alliance

also offers community-based preventive education (Radick 2018).

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C h a p t e r 2 : M a n a g e m e n t 4 1

environment to acquire lab equipment, test reagents, lab technicians, waiting room chairs, technical advice, lab certification, paper clips, blood tubes, and other inputs. The lab is also open to its environment to sell its services and outputs to patients, businesses, and health insurance companies.

Organizations are generally viewed as one of two types of open systems. Open rational systems strive to improve efficiency and performance and view organizations as somewhat mechanistic. Open natural systems strive to improve workers’ satisfaction and view organiza- tions as more organic. Both perspectives help us understand HCOs, as we will see throughout this book. The Using Chapter 2 in the Real World sidebar provides interesting examples of HCOs as systems striving to serve patients through the continuum of care (system).

L e W I n a n D o r g a n I z at I o n D e v e L o P m e n t t H e o r y

Organization development (OD) is “a process that applies . . . behavioral science knowl- edge and practices to help organizations build their capability to change and to achieve greater effectiveness” (Cummings and Worley 2015, 1). OD strives to change the whole system rather than focus only on a project, department, or part of the system. This approach began to evolve in the 1950s based on work by Kurt Lewin and Wilfred Bion (Johnson and Rossow 2019), and it strives to change social systems and organization culture to change human behavior in the organization. OD goes beyond continuing education and training. It uses interventions, team building, interdepartment activities, employee participation, constructive conflict resolution, organization redesign, process redesign, culture change, group dynamics, respect, trust, autonomy, fairness, and empowerment of employees (Cum- mings and Worley 2015; Daft 2016; Johnson and Rossow 2019).

OD has much applicability in HCOs. For example, UnitedHealth, a large national health insurance company, used OD with thousands of its managers to change toxic, hos- tile behavior into civil cooperation (Daft 2016). Other outcomes of OD have included improved change, decisions, employee satisfaction, customer satisfaction, innovation, and service quality (Dunn 2016). Cummings and Worley (2015, 690) suggest that OD will be useful for HCOs as they try to

◆ develop emotionally intelligent leaders and teams;

◆ develop more collaborative team-based organization systems, structures, and cultures;

◆ develop comprehensive learning for customer service and performance improvement; and

◆ develop engaged employees who have pride, passion, connection, and identity in their work.

organization

development

A process that

applies behavioral

science knowledge

and practices to help

organizations build

their capability to

change and achieve

greater effectiveness.

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s4 2

W o o D Wa r D a n D c o n t I n g e n c y t H e o r y

There is no one best way to organize the structure of an organization, as discovered by man- agement pioneers Joan Woodward; Tom Burns and G. M. Stalker; and Paul R. Lawrence and J. W. Lorsch in the late 1950s and 1960s (Diana and Olden 2019). Instead, the best organization structure is contingent. According to contingency theory, the best structure depends on other factors, such as the organization’s environment, purpose, plans, size, and work technology (Daft 2016). For example, one organization structure works best if the external environment is mostly stable and predictable, whereas a different organiza- tion structure is best if the external environment changes quickly and unpredictably. This statement is true not only for an entire organization but also for individual departments and work units in the organization. Different departments face different circumstances, uncertainties, and contingencies and thus should be organized with different centralization, specialization, division of work, vertical hierarchy, coordination, and so forth. There is no single best way to organize; instead, “it all depends.”

Think back to the kinds of HCOs identified in chapter 1, such as a consulting firm, rehabilitation center, accountable care organization, and public health department. How should these HCOs be organized? Which specialization, division of work, and vertical chain of command would be best? It depends on the unique circumstances and characteristics of each HCO. In a biotech company, should the research department be organized differently than the accounting department? Probably, yet it depends on the unique circumstances and characteristics of each department.

k at z a n D m a n a g e m e n t s k I L L s

Robert Katz (1974) spent years examining the work of managers. He found that they use three basic kinds of skills—technical, human, and conceptual—to perform three kinds of work. Managers use technical skills to work with things. They use human skills to work with people. They use conceptual skills to work with ideas. Managers may use these skills together, such as using conceptual skills with technical skills.

In HCOs, a manager’s technical work might be preparing a therapist’s job description, a dental clinic budget, or an outpatient lab marketing plan. An HCO manager’s human interpersonal work might include motivating bereavement counselors or forming coopera- tive work relationships between the counselors and nurses. A manager’s conceptual work might include envisioning future population health goals or considering how relocation to a new building could affect patients’ access to care.

m e y e r a n D r o Wa n , D I m a g g I o a n D P o W e L L , a n D I n s t I t u t I o n a L t H e o r y

Institutional theory was developed by John Meyer and Brian Rowan in the late 1970s and later expanded by Paul DiMaggio and Walter Powell (Diana and Olden 2019). They argued

contingency theory

Theory that there is

no single best way to

organize; the best way

depends on factors

that differ from one

situation to another.

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C h a p t e r 2 : M a n a g e m e n t 4 3

that organizations feel compelled to fulfill expected obligations of the external environment even though those expectations may cause less efficiency. The external environment creates laws, regulations, customs, beliefs, standards, ethics, norms, and values about what should (and should not) be done. Some of these become firmly institutionalized (i.e., established) in society. For example, companies should not divulge confidential information. A local not-for-profit charitable organization should act for the good of its community. Dozens of healthcare professions, such as occupational therapy, have their own code of ethics. These codes establish social expectations that become institutionalized as expected normal behavior. (Look ahead to chapter 11 on leadership to see a code of ethics for healthcare managers.) Laws, ethical codes, local customs, and other institutions can force an organiza- tion’s employees to behave a certain way.

Organizations that follow and comply with society’s institutions are viewed as more appropriate and legitimate than organizations that do not. If an organization’s stakeholders view the organization as legitimate, they will support it in many ways. If an organization loses legitimacy, stakeholders may withdraw support including funding, sales, accreditation, and resources. Then the organization might not survive. Therefore, managers feel pressure to do what is viewed as right and proper even if that action does not seem to be efficient. Why would a health education company buy supplies from a local vendor when it could buy the supplies for a lower price on Amazon? The manager feels external institutional pressure to “buy local” and support the community’s supplier even though that is costlier (and thus less efficient). Managers must judge the pros and cons of complying with insti- tutional expectations.

m I n t z b e r g a n D m a n a g e m e n t r o L e s

Henry Mintzberg (1990) helped analyze management by identifying ten roles performed by managers. He grouped the roles into three broad groups: interpersonal roles, informational roles, and decisional roles. The roles are shown in exhibit 2.2. (Note that in Mintzberg’s view, leadership is not the same as management, nor is it separate from management: Leadership is one part of management.)

Mintzberg emphasized that these roles are interrelated. Suppose Kaitlyn manages an ambulatory surgery center in Cincinnati. She receives complaints from patients, families, and employees about insufficient parking. She uses interpersonal roles to represent the HCO and connect it with groups of people to resolve the problem. Kaitlyn uses informational roles to monitor the situation, gather information about the problem and possible solutions, and speak to others on behalf of the HCO. As the manager, she uses decisional roles to handle the problem, negotiate a solution, and allocate resources for more parking. Kaitlyn performs multiple managerial roles shown in exhibit 2.2. Because managers often perform different roles simultaneously—and may handle several projects at the same time—they need a special skill: juggling. We will learn more about these management roles in the remaining chapters.

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s4 4

Role Type Action Healthcare Example

Figurehead Interpersonal Symbolically representing one’s own organization (or work unit) at ceremonial and social events

Appearing at a ground- breaking ceremony for a new healthcare building

Leader Interpersonal Developing, motivating, overseeing, and leading subordinate employees to achieve goals

Telling employees that with more teamwork the cancer center could improve survival rates

Liaison Interpersonal Connecting one’s own organi- zation (or work unit) to other organizations and people outside one’s own chain of command

Meeting monthly with the city’s youth sports council

Monitor Informational Gathering and using informa- tion (internal and external) to know what is happening

Analyzing opioid addic- tion rates based on zip codes and ages

Disseminator Informational Sharing information with oth- ers in one’s own organization (or work unit)

Posting names and job titles of new employ- ees on the company’s intranet

Spokesperson Informational Sharing information with others outside one’s own organization (or work unit)

Speaking at a college job fair about plans to increase employment

Entrepreneur Decisional Changing, adapting, and improving the organization (or work unit)

In a personal fitness business, adding evening yoga classes

Disturbance handler

Decisional Taking care of problems and unexpected events

Arranging extra staffing in the emergency depart- ment after a nearby bus accident

Resource allocator

Decisional Distributing and assigning organizational resources

Budgeting funds to cre- ate virtual reality tours of the facility

Negotiator Decisional Working with others to reach agreements and settle disputes

Meeting with a labor union to agree on wages for next year

Source: Adapted from Mintzberg (1990).

exHIbIt 2.2 Mintzberg’s Ten

Managerial Roles

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C h a p t e r 2 : M a n a g e m e n t 4 5

Do aL L ma n a g e r s ma n a g e t H e sa m e Way? By now you should know what management is and the roles, activities, and functions that managers carry out. Perhaps you wonder if all managers perform their management work the same way. What do you think? Consider people in general: Do they perform the same role, activity, or function in the same way? You have probably noticed that professors do not all teach the same way. Students do not all study the same way. The same goes for managers: They do not all manage the same way. Managers differ in personalities, atti- tudes, worldviews, biases, styles, and preferences. They also work with different situations, problems, and goals. Although managers perform similar roles and functions, they do not perform them in the same way.

Management began to develop as a body of knowledge with the efforts of Taylor and the scientific method to improve work. Fayol pioneered administrative theory to improve orga- nization structure, levels of organization, and supervisor–subordinate relationships. Mayo studied how using psychology and sociology could help managers understand workers’ behaviors, norms, feelings, and motivations. Gulick and Urwick identified specific manage- ment functions, including planning, organizing, staffing, directing/influencing, and control- ling. Weber developed bureaucracy theory to manage organizations with formal structure, bureaus, hierarchy, authority, responsibility, accountability, and consistent rules (rather than personal favoritism). Bertalanffy and Boulding began systems theory that led to view- ing organizations as open systems that must interact with their external environments. Lewin’s work led to organization development, which strives to improve performance by changing social systems and organization culture. Woodward and others argued that the best way to organize is contingent on external factors. Katz asserted that managers use technical, human, and conceptual skills to perform technical, human, and conceptual work.

TRY IT, APPLY IT

External pressures and demands are causing many HCOs to merge and become larger.

Suppose you manage a social media consulting company for HCOs. You are going to

merge with a similar business. Explain in detail how you could use at least five of Mintz-

berg’s managerial roles to do that.

o n e m o r e t I m e

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s4 6

DiMaggio and Powell developed institutional theory to explain that organizations and man- agers sometimes take actions to be viewed as proper and legitimate—even though the actions may reduce organization efficiency. Mintzberg summarized the work of managers into ten interpersonal, informational, and decisional roles.

Management is a mix of art and science. A body of scientific research, theories, prin- ciples, knowledge, and practice is available to guide managers. Yet scientific methods can- not fully address the many people, situations, and nuances of management. The art of management is also needed, which comes from judgment and experience that you will develop in your career.

1. How do you think Taylor’s work has influenced present-day management of HCOs?

2. Why is Mayo’s work important for present-day management of HCOs?

3. How do you feel about bureaucracy? What are the advantages and disadvantages of bureaucracy in HCOs?

4. What is a system? How is the open-system perspective useful for managing HCOs?

5. What does contingency theory tell us? How do you feel about this view of management?

6. Which of Mintzberg’s ten managerial roles would come easily to you? Which of these roles would not come naturally to you and would require extra effort and practice?

FOR YOUR TOOLBOX

• Scientific management

• Administrative theory

• Human relations

• Management functions

• Bureaucratic theory

• Open systems theory

• Organization development

• Contingency theory

• Management skills

• Institutional theory

• Management roles

f o r D I s c u s s I o n

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C h a p t e r 2 : M a n a g e m e n t 4 7

These questions refer to the Integrative Case Studies at the back of this book.

1. Disparities in Care at Southern Regional Health System case: Explain how Mr. Hank could use each of Gulick’s fi ve management functions to help his HCO reduce disparities in care.

2. Hospice Goes Hollywood case: Explain which of Mintzberg’s management roles Ms. Thurmond should use to implement policies and procedures for accreditation.

3. Increasing the Focus on Patient Safety at First Medical Center case: Explain which management theories (tools) from this chapter you think Dr. Frame should use. (See the tools listed in the For Your Toolbox sidebar.)

4. Managing the Patient Experience case: Explain how Mr. Jackson could use each of Gulick’s fi ve management functions to implement his patient expectations program.

c a s e s t u D y Q u e s t I o n s

RIVERBEND ORTHOPEDICS MINI CASE STUDY

Riverbend Orthopedics is a busy group practice with expanded services for orthopedic

care. It has seven physicians and a podiatrist, plus about 70 other employees. At its big,

new clinic building, Riverbend provides extensive orthopedic care. Several technicians

provide diagnostic medical imaging, from basic X-rays to magnetic resonance images.

The physicians perform surgery in their own outpatient surgery center with Riverbend’s

own operating nurses and technicians. Therapy is provided by three physical thera-

pists and one part-time contracted occupational therapist. In addition to staff provid-

ing actual patient care, the clinic has staff for fi nancial management, medical records,

human resources, information systems/technology, building maintenance, and other

administrative matters. Occasional marketing work is done by an advertising company.

Legal work is outsourced to a law fi rm. Riverbend is managed by a new president, Ms.

Garcia. She and Riverbend have set a goal of achieving “Excellent” ratings for patient

experience from at least 90 percent of Riverbend’s patients this year.

Ms. Garcia’s expertise is in fi nancial management, reimbursement, and contracting

with insurers and payers. She did not study management in college but is now taking

management courses at a local college.

(continued)

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s4 8

Barnard, C. 1938. The Functions of the Executive. Cambridge, MA: Harvard University Press.

Cummings, T. G., and C. G. Worley. 2015. Organization Development and Change, 10th ed.

Stamford, CT: Cengage Learning.

Daft, R. L. 2016. Organization Theory and Design, 12th ed. Mason, OH: South-Western

Cengage.

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Cengage.

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zations: Theory, Behavior, and Development, 2nd ed., edited by J. A. Johnson and C. C.

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r e f e r e n c e s

RIVERBEND ORTHOPEDICS MINI CASE STUDY (continued)

mInI case stuDy QuestIons

1. Ms. Garcia asks if bureaucracy could help Riverbend accomplish this goal. Using

information from this book, how would you reply to Ms. Garcia? You may make rea-

sonable assumptions and inferences.

2. Using information from this book, explain which of Mintzberg’s management roles

Ms. Garcia could use to help Riverbend achieve its goal.

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C h a p t e r 2 : M a n a g e m e n t 4 9

Hegwer, L. R. 2016. “6 Business Imperatives for Population Health Management.” Health-

care Executive 31 (4): 10–20.

Johnson, J. A., and C. C. Rossow. 2019. Health Organizations: Theory, Behavior, and Devel-

opment, 2nd ed. Burlington, MA: Jones & Bartlett Learning.

Katz, D. N., and R. L. Kahn. 1978. The Social Psychology of Organizations, 2nd ed. New York:

John Wiley.

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90–102.

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ington, MA: Jones & Bartlett Learning.

Mintzberg, H. 1990. “The Manager’s Job: Folklore and Fact.” Harvard Business Review 68

(2): 163–76.

Olden, P. C., and M. L. Diana. 2019. “Classical Theories of Organization.” In Health Organi-

zations: Theory, Behavior, and Development, 2nd ed., edited by J. A. Johnson and C. C.

Rossow, 23–34. Burlington, MA: Jones & Bartlett Learning.

Perkes, C. 2017. “St. Joseph Hoag Health Opens Wellness Clinic Inside LA Fitness.”

Orange County Register. Published August 2. www.ocregister.com/2017/08/02/

st-joseph-hoag-health-opens-wellness-clinic-inside-la-fitness/.

Radick, L. E. 2018. “Integrating Care Across the Continuum for Four Major Conditions.”

Healthcare Executive 33 (1): 20–30.

Scott, W. R. 2003. Organizations: Rational, Natural, and Open Systems, 5th ed. Upper Sad-

dle River, NJ: Prentice Hall.

Thompson, J. D. 1967. Organizations in Action: Social Science Bases of Administrative The-

ory. New York: McGraw-Hill.

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L e a r n i n g O b j e c t i v e s

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