Running head: DIRECT CARE VS. NON-DIRECT CARE HEALTH ORGANIZATIONS 1
A Comparison and Contrast of Direct Health Care Versus Non-Direct Health Care
Organizations and the Roles of Health Care Managers
David M Dersch III
Liberty University
DIRECT CARE VS. NON-DIRECT CARE HEALTH ORGANIZATIONS 2
Abstract
This paper will present a study comparing the differences between the organizational structures,
missions, and roles of healthcare administrators in both direct care and non direct care settings.
Attributes such as services provided, opportunities for healthcare management careers, roles of
managerial positions, and various challenges specific to management that each organization may
experience will be explored. Incorporated throughout the text will be two case studies, one from a
direct healthcare organization, Health First Hospital System from Brevard County, Florida. The second
case study will be from a non-direct healthcare organization, Johnson & Johnson, which is the largest
pharmaceutical company in the United States. This paper will explore how both of these organizations
are interrelated and the commonalities and differences that healthcare managers within each
organization might experience.
DIRECT CARE VS. NON-DIRECT CARE HEALTH ORGANIZATIONS 3
For a case study into a direct care facility, we will first look at Health First in Brevard County,
Florida. According to their official website, Health Firsts' official mission is: “Our team improving the
wellness and health of you and your family through excellent and compassionate health care.”
(https://hf.org/about_us/vision.cfm ) Founded in 1995, Health First is a non-profit community hospital
system that contains four hospitals located throughout Brevard County, including one Level II trauma
center. There are several key aspects that differentiate a non-profit hospital from a for-profit one. Non-
profits typically don't pay local sales and property tax, making their culture more service oriented and
less cost-efficiency driven. (Cheney, 2017) Cheney also notes that the for-profit does have some
advantages, "In managed care contracts, for-profits look for leverage and non-profits look for
partnership opportunities. The appetite for aggressive negotiations is much more palatable among for-
profits.” (Cheney, 2017) From a managers perspective, the primary real world difference they will feel
between a for profit and non-profit is the culture, with non-profits being mission and service oriented
and the for-profit operating similar to any other business and making profits a priority since their
financial margins are smaller. (Cheney, 2017) As a result, managers at the non-profit Health First could
expect to find initiatives and programs that enhance the patient experience.
One such managerial function from Health First was seeking to improve their efficiency through
data driven management. Health Firsts' system found the need to re-position themselves and respond to
the rising cost of pharmaceuticals, supplies, medical technology, and personnel. Up until around 2012,
most hospitals were able to leverage their positions within the community to negotiate favorable rates.
(Hussey et al., 2012) Health Firsts' solution to at least part of this issue was incorporating “Lean
thinking.” The Lean Process was initially developed by Toyota, and focuses on process improvement,
affecting both structural components (erg., technology, staffing, physical setup) and operational
processes (Mason, Nicolay, and Darzi, 2015; Niemeijer et al., 2012).
DIRECT CARE VS. NON-DIRECT CARE HEALTH ORGANIZATIONS 4
The Lean Process worked for Health First and produced several positive changes that the
managers were responsible for tracking. On a broader scope, one such aspect was managers articulating
clear strategic goals to the employees so everyone was on the same page. They also implemented bed-
tracking software that allowed for more advanced metrics in tracking patient flow, holding employees
and caregivers responsible, spotting bottlenecks, and monitoring overall efficiency. (Blanchard, 2016)
They also adopted a more inclusive management approach by requesting feedback and suggestions for
improvement from their employees. They also incorporating incentives and rewards for performance.
The reward for performance concept is something typically used on an individual basis, as according
to some studies, organizations themselves tend not to increase efficiency as a whole due to performance
based incentives. According to Health Services Research from a 2014 study, the conclusions were that
“We found little evidence that hospitals' receipt of quality bonuses was associated with subsequent
improvement in performance. This raises questions about whether winning in pay-for-performance
programs, such as Hospital Value-Based Purchasing, will lead to subsequent quality improvement.”
(Ryan, Sutton, Doran 2014) Nevertheless, the individual incentives had at least a small part to play in
the success of Health First's implementation of the Lean Method. Health First was able to increase
adult transfer rates within the system by more than 300 percent and emergency department times
between admission and inpatient bed occupancy to decrease by 37 percent. (Blanchard, 2016)
The situation at Health First and their pursuit of increased bed-flow is a great example of
problem and solution responsibilities of which the upper level management took charge. In a larger
hospital system, opportunities to increase such widespread efficiency and improvement programs are
more limited for floor and department managers. Since part of the The Lean Method involves
incorporating feedback from employees to make systems better, this methodology would help to give
lower and mid-level managers the ability to make more of an impact on the system as a whole while
still maintaining their day to day operations responsibilities. The challenges remain for floor and
DIRECT CARE VS. NON-DIRECT CARE HEALTH ORGANIZATIONS 5
department managers in handling the individual people who work for them. In a large hospital setting,
lower and mid-level managers have a lot more face time with their subordinates and play a larger role
in determining their work schedule, time off, promotion availabilities, and work environment. Personal
relationships carry much more weight with these types of managers, since as a newly hired healthcare
manager in a hospital, direct care setting, one is likely to be in charge of a small group of people and
have direct impact over their experience. These people skills, along with department and organization
responsibilities, can help a manager new in the career field to develop both their interpersonal skills
whilst maintaining a dual role responsibility to their healthcare organization as a whole.
Johnson & Johnson is the largest pharmaceutical company in the United States and at $82
billion produces more operating revenue than any other pharmaceutical company in the world
(Biospace.com, retrieved Feb 1, 2020) Johnson & Johnson does not actively participate in end user
patient care, rather they manufacture and sell medical devices, consumer products, and over the counter
and prescription medications for both hospital and at home use, which makes them a non-direct care
organization. One role that a health-care manager in this sort of organization would fill is as a sales
manager of a team responsible for selling and providing medical devices and drugs to a hospital system
within a designated sales territory. Managers in medical equipment firms must be self-directed,
motivated, organized, and able to multitask. (Buchbinder, pg. 62, 2010) As is the case for many sales
related careers, there is intense competition among firms, regulation of the medical products, and
uncertainty regarding both reimbursement from insurance providers and meeting sales quota that make
medical sales particularly challenging. (Buchbinder, 2019) Entry level sales representatives can make
anywhere from $38,000 to $71,000 annually while sales directors can range to over $200,000 per year,
making the high stress and demanding environment financially very rewarding to those who are able to
excel.
The challenges that a pharmaceutical representative for Johnson & Johnson may experience
DIRECT CARE VS. NON-DIRECT CARE HEALTH ORGANIZATIONS 6
also extend to the relationships they attempt to establish with doctors and hospital administration.
While he or she is on the clock, a doctor's time is very valuable and a medical representative should
acknowledge that they must have very clear communication principles. One such obstacle an employee
in any capacity for Johnson & Johnson may run into is their “big pharma” label. “Big pharma” is a
colloquial term that technically references the pharmaceutical industry as a whole, but more
specifically alludes to massive pharmaceutical companies, such as Johnson and Johnson, that operate
with little regard to the negative physical effects their products have on people. A quick search of big
pharma reveals that there are a lot of strong, negative opinions about it. One such book is entitled
“Deadly medicines and organized crime : how big pharma has corrupted healthcare”. The book
describes big pharma as conducting “fraudulent behavior, both in research and marketing where the
morally repugnant disregard for human lives is the norm.” (Gøtzsche, P., Smith, R., & Rennie, D. 2013)
Despite the underlying disdain that many healthcare providers have for big pharma, hospitals
like Health First are still to a large part dependent on larger medical manufacturers in order to keep
their business afloat since many times the scale of the larger companies allows for lower pricing for
already expensive materials. There is also positive sentiments towards big pharma organizations like
Johnson & Johnson. Michael J. Dowling, President & CEO of Northwell Health, wrote in in his 2018
article that “ it would be a misstep to paint the industry in broad strokes based on the actions of a few.
Almost every member of the public takes some kind of prescription drug and medication, and if
providers approach the manufacturers of those drugs with a collaborative mindset, innovative solutions
can create significant benefits for both parties and, most importantly, the consumer.” (Dowling, 2018)
Dowling further notes that hospitals and pharmaceutical manufacturers have traditionally considered
themselves as transaction partners, but the sentiment is changing. As pharmaceutical companies are key
stakeholders in the healthcare ecosystem, ( Dowling, 2018) partnerships between hospitals and
manufacturers are beginning to form. One such example from Northwell is that they have already
DIRECT CARE VS. NON-DIRECT CARE HEALTH ORGANIZATIONS 7
established partnerships with Johnson & Johnson, among others, to enhance customer experience,
lower costs, and help better inform physicians about clinical trials and new treatment options.
( Dowling, 2018) .
In conclusion, some of the roles and responsibilities working in management at a direct care
facility, such as Health First, involve people managing and interpersonal skills as well as program
specific initiatives to increase overall efficiency. At a non-direct care pharmaceutical facility such as
Johnson & Johnson, emphasis is put on building partnerships with hospitals and providing service and
increasing sales revenue on products on which hospitals are dependent.
DIRECT CARE VS. NON-DIRECT CARE HEALTH ORGANIZATIONS 8
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