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chapter 8 CREATING SYSTEMS CHANGE FOR IN AHCS The prior chapter presented four recommendations for altering the direction of the AHC roles to meet the new demands of the coming decades. The complexity of the AHCs' organizational structures and their mix of roles pose a dilemma in how to approach these four recommendations. Organizationally, an AHC is essentially a conglomeration of organiza- tions. Most AHCs function like a holding company, a central entity that loosely supports and coordinates the component organizations (Zelman et al., 1999). The component organizations grew under separate governance and have generally pursued their own individual objectives, with a mini- mum of central management and oversight (Norlin and Osborn, 1998; Korn, 1996). The AHC roles are performed at different places in the insti- tution and have to satisfy different customers. Clinical care is the primary focus of the hospital and faculty practice plans. They must meet the needs of patients who want the best care possible. Education and research are the primary foci of the professional schools and, where they exist, research centers (Norlin and Osborn, 1998). Educational activities must be respon- sive to the needs of students, who have the right to expect the best educa- tion they can get; research activities must be responsive to the needs of funders, who expect sound inquiry and utility from the research they sup- port (Heyssel, 1984). Each organization also has its own culture. The fac- ulty at professional schools identify most closely with their own discipline rather than any organization, whereas the hospital tends to place greater value on cooperative institutional efforts (Magill et al., 1998). 127
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128 ACADEMIC HEALTH CENTERS Thus, even under routine operating conditions, AHCs face an inherent and continuing tension in managing their enterprise. They must simulta- neously run each individual entity and carry out each role with excellence, but must also integrate their various distinct organizations and cultures into a cohesive and smoothly running enterprise that collectively is accountable to meeting societal needs. As described throughout this report, however, AHCs are not facing routine operating conditions, so their challenges be- come even more acute. Whereas coordination and cooperation may not be mandatory during times of growth, they become imperative when retrench- ment is required (Magill et al., 1998). None of the committee's recommendations for transforming the AHC roles can be implemented unless the AHCs' organizational components work together more closely than has historically been required. The de- mands of transforming the roles surpass the capabilities of any individual organizational component. Although each component will have responsi- bilities for a portion of the changes required, none can accomplish those changes on their own. In addition, the targets of opportunity are so plenti- ful that it would be impossible to undertake them all. Even the most gener- ous level of resources is likely to be insufficient given the enormous range of potential activities. Whereas the past decades have been an era of growth for AHCs, during which they were able to expand all of their activities, the coming decades will be an era of choices. Thus, the primary role of the AHC in the process of change is that of integrator across its organizations and roles. Each role of the AHC can be conducted separately (Heyssel, 1984). Health professions education, re- search, and clinical care are performed by many organizations that have no affiliation with an AHC. Although organizations performing an individual role make important contributions, the unique contribution of AHCs is their ultimate focus on the impact of their work on people, rather than the individual functions. The external incentives in the recommendations of the prior chapter are designed to support such integration by encouraging plan- ning across the AHC organizations and roles. The committee offers two broad principles for AHCs to adopt as they endeavor to strengthen the level of integration across their diverse organiza- tions. First, each AHC should develop a shared vision based on the interde- pendence of their roles and organizations. Although each entity of an AHC will still pursue its own unique objectives, each should also work toward achieving common goals across the AHC (Zelman et al., 1999). One way of developing a shared vision is for AHCs to make a clear commitment to improving health--of populations as well individual pa- tients--by determining how the AHC overall can have an impact on the health of its patients and the populations that rely on it. This commitment should be stated at the highest levels of the AHC and recognized by its clinical and administrative leaders, the individual organizations that are
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CREATING SYSTEMS FOR CHANGE IN AHCs 129 part of the AHC, its governing body, and its parent university. AHCs typically describe themselves as having a three-part mission encompassing their roles in education, research, and patient care. But a commitment to health involves more than carrying out any individual role; the roles are the means for accomplishing a mission. A commitment to health means starting from the perspective of patient and population needs and asking how the AHC roles can be combined and aligned to have an impact on their health. AHCs will appropriately choose different priorities and approaches to this end and will still carry out a diverse set of activities in their various organi- zations. In addition, the committee recognizes that having an impact on health may happen over an extended period of time. However, the commit- tee believes it is important for each AHC to develop a shared vision that recognizes the interdependent and complementary nature of their roles within an overall context that encompasses a commitment to health. Second, each AHC should support openness and transparency of infor- mation across the enterprise. All parties should have access to performance information about the entire AHC enterprise for sound decision making and resource allocation (The Blue Ridge Academic Health Group, 1998). Because each organization within the AHC has developed and operated with significant independence, information across the AHC is often weak or unavailable. Although it may be possible to assess how each unit is functioning, it is more difficult to understand the accomplishment of com- mon goals. AHCs should be able to answer such questions as the extent to which clinical care subsidizes research and education; what it costs to train a health professional from initial training to readiness for practice; and, looking at the totality of the research done across all of the organizations in the AHC, what the research portfolio is (and should be) relative to chronic care (for example) or what is known about improving quality. A lack of transparency in setting and communicating strategic priorities creates mis- understandings about the need for change and hampers its progress. Cap- turing the intellectual energy across the AHC and breaking down barriers within the institutions requires an openness and transparency of informa- tion that makes it possible to understand the cross-subsidies and interde- pendencies across the AHC roles, organizations, and populations served. The committee offers its final three recommendations with these two broad principles in mind. The principles guide the recommendations, but the recommendations are intended to realize the principles. Utilizing Information and Communications Technology Information and communications technology is central to all of the roles of AHCs. Basic biomedical research is becoming increasingly reliant on such technology, and emerging areas, such as genomics and proteomics, require manipulation of large amounts of data. Clinical and health services
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130 ACADEMIC HEALTH CENTERS research, central to translating the results of basic research into clinical care, demand such systems for analysis, synthesis, and dissemination of information. Information and communications technology is also becom- ing central to clinical education as a teaching tool through the use of simulators and interactive learning models and is making it possible for students to learn to practice in care settings that make more extensive use of advanced clinical information and communications systems. Moreover, delivery of services will increasingly rely on interdisciplinary teams that are linked over time and across settings through this technology. They will also provide a tool for more effective surveillance of health at the community- wide level. Finally, information and communications technology is integral to managing complex systems like AHCs, making strategic decisions, and supporting performance and financial accountability within the institution. Recommendation 5: AHCs must make innovation in and implementa- tion of information technology a priority for both managing the enter- prise and conducting their integrated teaching, research, and clinical activities. a. AHCs should have information systems that span the enterprise for integrated decision making, performance assessment, and financial management. b. AHCs need to pioneer the use of information systems for clinical purposes and incorporate their use into clinical education and re- search. Given the importance of information and communications technology to the ability of AHCs to perform their roles in the future, it is essential that AHCs make the implementation of such systems a high priority. Capital for information technology needs to be as high a priority as capital for new buildings and medical equipment. If resources for the purpose are not sufficient within AHCs, federal and state governments should consider ways to encourage the needed ongoing investments, particularly for those AHCs that face persistent financial difficulties as a result of serving as safety-net institutions in their communities. A central goal in improving information technology at AHCs is to maximize the capacity and capability for managing the knowledge and information produced within and used by the AHC in conducting its roles. Knowledge management has clear clinical applications, ensuring that staff has access to all the types of information and knowledge needed to conduct their work, as they conduct their work (The Blue Ridge Academic Health Group, 2000). These applications include, for example, access to internal and external databases, sharing of best practices, connections with relevant communities and practices, and synthesized updates of developing knowl-
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CREATING SYSTEMS FOR CHANGE IN AHCs 131 edge, all of which need to be employed by health professionals who are proficient at accessing, applying, and sharing the knowledge in their daily work (and rewarded for doing so). Knowledge management also applies to any knowledge that is useful and/or essential to the proper management of institutions, teams, departments, and interdisciplinary efforts in conducting clinical care, research, and education. AHCs will need to become more aware of and involved in knowledge management given the expanding knowledge base in health, the potential for genomics research to foster individualized care processes, the expectations of more informed and en- gaged patients, and demands on them for significant improvements in qual- ity and safety. To date, the use of information technology at AHCs has focused prima- rily on meeting institutional needs, driven mainly by clinical operations (The Blue Ridge Academic Health Group, 2000). Current use of informa- tion technology at AHCs typically collects and organizes data and may streamline certain work processes (such as ordering tests and reporting results). In some cases, information technology may be in place to guide clinical decision-making. This level of information technology is insuffi- cient for addressing the demands of knowledge management. Knowledge management requires organizational strategies designed to convert infor- mation systematically into usable knowledge and enable its sharing and application when and where needed (Detmer, 2001). Information systems do not automatically lead to knowledge manage- ment but are a prerequisite for moving toward it. In recommending that AHCs pioneer the use of information and communications systems, the committee intends that the various components of the AHC initiate (or aggressively continue) discussions with each other about these types of issues, and break down the boundaries that inhibit the sharing of informa- tion and knowledge across the AHC organizations and roles. Although some AHCs have been able to make significant progress in developing their information capabilities, rapid progress by all will require the resolution of issues related to confidentiality of data and data stan- dards. The provisions of the Health Insurance Portability and Accountabil- ity Act of 1996 are just going into effect at this writing, so its impact on privacy for patients or on the AHC roles (especially in research) remain to be seen. In terms of standards, the committee urges the development of national data standards to facilitate the development of information tech- nology in the health arena and its incorporation into practice. Standards have been developed by private organizations,1 but a strong federal role is 1See, for example, Health Level 7 (HL7), one of the largest private-sector standards-setting organizations, focusing on Version 3 standards for data interchange (Institute of Medicine, 2003).
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132 ACADEMIC HEALTH CENTERS also required to enhance standardization, thereby ensuring interoperability of systems and comparability of data (Institute of Medicine, 2003). Al- though AHCs can make some progress in this area, the development of standards can ease the implementation and affordability of information systems for AHCs and others. Establishing and Measuring AHC-wide Goals for Change Given the magnitude of the changes required by AHCs, it is important that clear goals be set so that progress toward making those changes can be steadily measured. This information will also be of interest to the public, including federal and state policy makers, payers, and patients. AHCs need to be accountable for the public resources they receive, and policy makers need to be accountable for the way public funds are disbursed. Recommendation 6: Both AHCs and the public should evaluate the progress of AHCs in: (1) redesigning the content and methods of clini- cal education; (2) developing organizational structures and team ap- proaches in care to improve health; and (3) increasing emphasis on health services, clinical, prevention, and translational research. a. To aid AHCs in evaluating their progress, the Secretary of Health and Human Services should: · Identify broad areas of AHC performance (e.g., quality of educa- tion programs, financial accountability). · Establish an advisory group to suggest guidelines for measure- ment and examples of measures that could be used by AHCs. · Obtain information from AHCs related to the broad areas of performance and issue a report every 2 years on progress made in transforming the roles, identifying areas of success as well as obstacles encountered. b. University leaders and/or AHC boards of trustees should establish mechanisms for accountability and transparency that can be used to assess their progress toward meeting the goals established for trans- forming the roles of AHCs. To accomplish the recommendations set forth in this report, AHCs will need to establish measurable goals at the level of the overall AHC. AHCs will need to look across their entire enterprise to align programmatic and financial management, understand the flow of funds, and reorient internal planning and financing arrangements to improve coordination across clini- cal departments and institutions. Individual organizations within an AHC
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CREATING SYSTEMS FOR CHANGE IN AHCs 133 may set their own objectives, but transforming the roles according to the recommendations in the prior chapter will require better coordination across the entire AHC since (as noted previously) it is not possible for any single AHC organizational component to implement the actions required for a given recommendation independently or to examine one role in isolation from the others. The challenge in initiating action is that AHCs generally have highly complex governance and management structures. For example, an AHC board may have oversight over the medical school but not the nursing school, or it may contract with several affiliated hospitals but not own one. In such instances, the governing body does not necessarily control the actions of its component units. In some cases, there may not be an oversight board for the AHC at all, with governance being structured at the level of each individual organization that comprises the AHC. AHCs also commonly face a tension-filled relationship with their par- ent university (Nonnemaker and Griner, 2001). The university often per- ceives the AHC as overly focused on clinical activities and not very aca- demic, paying high salaries that cannot be sustained under tenure, unpredictable financially, and overly independent. AHCs often perceive the university as unable to make a decision, overburdened with layers of gover- nance, having little health care expertise, and being exceedingly risk-averse. Change at the AHC often outpaces that at the university (Nonnemaker and Griner, 2001). Furthermore, the various organizational relationships have been quite dynamic in recent years. Changes have typically taken one of two forms (Nonnemaker and Griner, 2001): (1) a change in legal status and the creation of a new entity separate from the main university, or (2) reorganization of existing governance structures, usually to give the AHC greater autonomy to increase its competitiveness in the marketplace. Within the AHC arrangement, clinical departments have traditionally played a strong role. Department chairs raise funds for research, direct budgets, control faculty promotion, design curriculum in the residency pro- grams, direct the undergraduate medical education process, and are the main source of information and communication between the faculty and the administration (Bulger, 1988). There are both historical and pragmatic reasons for this structure. One is that graduate medical education is accred- ited through the Accreditation Council of Graduate Medical Education, which is highly structured along departmental and divisional lines. Since accreditation of their graduate medical education programs is critical to most AHCs, there is great reluctance to make significant changes in the departmental organization (Snyderman and Saito, 2000). Moreover, de- partment chairs are reluctant to relinquish their decision-making authority out of concern for the quality of their education and research programs. The departmental structure can also be considered a rational response to
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134 ACADEMIC HEALTH CENTERS the rapid rate in the development of specialization and subspecialization in both the basic and the clinical sciences (The Blue Ridge Academic Health Group, 2001). The departmental structure reflects this clinical specializa- tion and the way work actually gets done. The strong departments structure, however, also has led to what some have called "semiautonomous baronies" (Ebert and Ginzberg, 1988, p. 14) and "independent fiefdoms" (Munson and D'Aunno, 1989, p. 415), mak- ing it difficult to build consensus around broad organization-wide goals. Although an organizational structure along departmental lines has histori- cally enabled AHCs to achieve success in their activities in research, educa- tion, and patient care, the question remains of whether it is the best struc- ture to meet the needs of the 21st century. Their organizational complexity poses a serious challenge to AHCs in developing a vision for the overall AHC enterprise. AHCs have tradition- ally focused on achieving excellence within each role or independent orga- nizational unit (e.g., the hospital, the medical school); they generally have poor information on their core functions and do not set strategic goals for each (Zelman et al., 1999; The Commonwealth Fund Task Force on Aca- demic Health Centers, 2000a). Performance measures that reflect goals for the entire system are often unavailable since the metrics for measuring success have focused on individual units. For example, a clinical depart- ment may document that it is running its residency program effectively, but it is more difficult to assess the extent to which the AHC is developing innovative training methods across its education programs (Zelman et al., 1999). While this situation may be sufficient for operational planning, decisions become more strategic when an organization has to make major changes, and require a more systemwide view and coordination (Zelman et al., 1999). Two efforts are aimed at helping AHCs improve their understanding of AHC-wide performance. Mission-based management is a measurement and reporting system for understanding the education, research, and patient care activities, although it is focused mainly on the medical school rather than the overall AHC (Association of American Medical Colleges). The primary purpose of mission-based management is as a management tool to integrate the medical school's financial statements, measure and track fac- ulty and departmental activities and contributions, clarify standards for accountability and expectations on overall performance, build organiza- tional support for reporting tools and metrics, guide leadership with de- pendable data to engage faculty in decision making, hold faculty and de- partment and institutional leaders accountable for performance, and build an institutional perspective. It is not known how widely mission-based approaches have been implemented (Dobson et al., 2002). Another initiative is the Funds Flow Project of the University
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CREATING SYSTEMS FOR CHANGE IN AHCs 135 HealthSystem Consortium. This project is designed to provide an under- standing of the types and extent of financial transactions that occur across the various enterprises within an AHC, and the economic interrelationships among education, research, and patient care (University HealthSystem Con- sortium, 2000). The aim is to improve management and business decisions by obtaining a comprehensive financial picture of the entire AHC enter- prise. Continuing work will focus on the development of methods for benchmarking so AHCs can have information to compare their perfor- mance against that of others. The Blue Ridge Academic Health Group (1998a) has also identified potential performance measures for each role of AHCs, categorizing the measures along four dimensions: productivity, qual- ity, innovation, and societal value. Examples are illustrated in Box 8-1. The groups note that measures related to productivity are more developed than measures in the other categories. Because of the functional and organizational variability across AHCs, the committee believes that each AHC will need to determine its own goals and priorities and identify specific mechanisms and measures for monitor- ing their achievement. In recent years, performance measurement has moved toward the use of more standardized measures because they make it pos- BOX 8-1 Examples of AHC Performance Measures from the Blue Ridge Academic Health Group (1998a) Productivity Quality Innovation Societal Value Patient Cost per case Health-related Savings from Improvements Care outcomes new clinical in community protocols health markers Research Direct grant Publications Reduction in Cost impact of revenue per per faculty grant new diagnostic faculty FTE preparation or treatment full-time time capabilities equivalent (FTE) Education Contact hours Percentage Improvements Percentage of per faculty of students in student students who FTE in who satisfaction enter primary teaching pass or board care or other boards scores from needed curricular disciplines reforms
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136 ACADEMIC HEALTH CENTERS sible to draw comparisons, learn from best performers, and identify general areas for improvement (Institute of Medicine, 2002a). However, most cur- rent efforts in health focus on clinical care in specific settings, such as hospitals, nursing homes, or home health agencies. For example, a recently announced effort by the Association of American Medical Colleges, the American Hospital Association, and the Federation of American Hospitals is aimed at establishing quality measures for hospital patient care (Associa- tion of American Medical Colleges, 2002). Such efforts should have appli- cability for AHCs but are not sufficient for understanding progress across the AHC roles. The committee sees applicability in the general approach taken in the Government Performance and Results Act (GPRA). The goal of this legisla- tion, passed in 1993, is to focus on the actual results of government activity and services. Rather than measuring the outputs of an agency, such as grants disbursed or inspections made, GPRA forces agencies to focus on the desired results, such as gains in employment, safety, or quality, and to measure accomplishment of those results (U.S. General Accounting Office, 2002). For example, the goals of the Veterans Administration have in- cluded reducing health care costs per patient by 13 percent in 1 year and improving quality as measured by the Chronic Disease Index (U.S. General Accounting Office, 2000). Federal agencies develop their own goals and strategic plans and identify how results will be measured. Because of the diversity of federal agencies, a single set of indicators would not be mean- ingful, but it was deemed important that each agency set goals specific to its functions and mission, and that the agency be held accountable for achiev- ing those explicitly-stated goals. This is not a simple task and agencies face serious challenges in effecting this level of accountability, including com- plexities in negotiating across agencies for cross-cutting programs, linking activities and budgets to results, and building the information capacity to meet the demands of GPRA. In applying this approach to AHCs, the committee recommends that each AHC set and monitor its own measurable goals for transforming each of its roles. Goal setting and strategic planning should occur through clearly established mechanisms that link the organizations in the AHC at the gov- ernance, management, and strategic levels. Decision structures need to en- able joint problem solving and resolution of the conflicts that are natural and inherent among the AHC's organizations and roles. Despite their inter- dependence, mechanisms are not always in place to bring the various par- ties to the table. Although management and governance at each individual organization ensure that its own activities are carried out well, this does not automatically translate into compatible goals across the AHC and may suboptimize priority setting for the AHC overall (for example, decisions
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CREATING SYSTEMS FOR CHANGE IN AHCs 137 about the purchase of medical technology versus information technology, or decisions about space allocations). Barriers within the AHC need to be broken down to provide opportu- nities for discussion and decision making by the various interests across the AHC. Some AHCs may do this by tapping into existing interdisciplinary councils or forming new ones to expand the core membership beyond the hospital and medical school. Some may reorganize the flow of information and funds to empower leaders with greater authority to influence and direct change. Some may fundamentally restructure to consolidate governance and management. In one example, the University of California, San Fran- cisco, reorganized to overlay on the departmental structure a research and training organization that would easily let faculty and students cross de- partmental boundaries to pursue collaborative work. This was accom- plished by (1) establishing an executive committee made up of basic science chairs and elected faculty members; (2) centralizing responsibilities for fac- ulty recruitment, admissions, curricula, and facilities with the executive committee; (3) retaining department control over their full-time employees, space, appointments, and promotions; and (4) having each department house one or more research programs so that interdisciplinary research and training programs are administered by individual departments as a resource for all departments (The Blue Ridge Academic Health Group, 2001). In another example, the University of Pennsylvania streamlined its governance by creating a new corporate structure that created a unified governance structure for the school of medicine and clinical components of the AHC, and reduced the number of layers between the university and the individual clinical and academic components of the AHC to three layers from seven (Rodin, 2002). Regardless of the approach taken, the aim is to provide the means and structures for the right players to be at the table, with the right information, from throughout the AHC. The Secretary of Health and Human Services should support measure- ment efforts by identifying key dimensions of performance and sample measures for each. This work should be done with input from AHCs, states, and groups that rely on the work of AHCs (e.g., employers that hire their trainees) and should be designed to be useful at both the federal and state levels. Leadership for Strategic Change Throughout the AHC The demand for leadership at AHCs has never been greater. In stable times, organizations need good managers, but in times of turmoil and instability, they need strong leadership. If AHC leaders are unable to create a vision for the future and take their organizations forward, AHCs will not succeed, regardless of the support they receive. Society has placed great
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138 ACADEMIC HEALTH CENTERS trust in AHCs to carry out their roles in a way that meets its needs. As society's needs change, so, too, must AHCs. Recommendation 7: AHCs must be leaders and must develop leaders, at all levels, who can: a. Manage the organizational and systems changes necessary to im- prove health through innovation in health professions education, patient care, and research. b. Improve integration and foster cooperation within and across the AHC enterprise. c. Improve health by providing guidance on pressing societal prob- lems, such as reduction of health disparities, responses to bio- terrorism, or ethical issues that arise in health care, research, and education. Meeting the strategic challenges set forth in this report will require leadership and innovation at all levels of the AHC. A major role of leader- ship is to guide organizations in adapting to changing circumstances (Kotter, 1996). Leaders define the future, align people with a vision, and remove obstacles to allow people to realize the vision. Several models describe how organizations undertake major strategic change. While the scope of the present discussion does not permit a comprehensive review, three ap- proaches are briefly described. Kotter (1996) describes a multistage process designed to overcome the inertia that typically stalls innovation. This eight-step process of change involves: (1) creating a sense of urgency, (2) building the team to lead change, (3) developing a clear vision and strategy, (4) communicating this vision and strategy at every opportunity, (5) eliminating obstacles to action, (6) achieving short-terms wins to create momentum, (7) continuing to make changes, and (8) embedding the changes made in the culture. The first four steps are designed to interrupt the status quo; steps 5 through 7 are de- signed to introduce new practices; and step 8 is intended to make the changes stick. Although multiple steps may be under way at the same time, they are generally believed to follow this order. Many organizations try to initiate change at step 5 and hit a wall of resistance because of a sense of complacency and a lack of understanding of the need for the change or its course. Although many people believe that initiating change requires a cultural transformation, this framework suggests that cultural change comes at the end of the process, after people's behaviors have changed, and there is a connection between the new actions and improved performance. The new behaviors shape the culture, rather than the reverse.
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CREATING SYSTEMS FOR CHANGE IN AHCs 139 Another model that has received attention in recent years is the bal- anced scorecard approach (Kaplan and Norton, 1996), a strategic manage- ment system that helps an organization translate its mission and strategy into a set of performance measures to manage the business and build long- term capabilities critical for success. An organization's performance is evalu- ated along four dimensions: financial performance, customer satisfaction and support, internal processes at which the company must excel, and innovation and learning to constantly improve. The scorecard is balanced in that it considers short- and long-term performance, financial and nonfi- nancial performance, and internal and external performance, and uses both lagging and leading indicators. Although the process results in a balanced set of performance measures, its aim is to clarify the vision or strategy of top leaders and translate that strategy into operational terms, focusing the entire organization on making the changes that will ensure future success, rather than simply documenting past performance. The above approaches suggest that strategic change occurs through a linear process. An alternative perspective is provided by theories of com- plex adaptive systems (Plsek, 2001). A complex adaptive system is a "col- lection of individual agents that have the freedom to act in ways that are not always predictable and whose actions are interconnected such that one agent's actions changes the context for other agents" (Institute of Medicine, 2001b, p. 312). The actions and reactions of mechanical systems can be well understood, and production can be planned and predicted in great detail. In contrast, in adaptive systems, the parts have the freedom and ability to respond in different ways, with the potential for creativity and innovation (as well as surprises). Research on complex adaptive systems reveals that relatively few simple rules can guide very complex behaviors and create the conditions for self- organization (Plsek, 2001). For example, the credit card company VISA is based on a few simple rules, such as agreement among banks on card numbering, card appearance, and electronic interface standards. Simple rules tend to fall into three categories: (1) general direction (e.g., leadership aims); (2) prohibitions (e.g., setting boundaries); and (3) provision of re- sources or permission (e.g., incentives). The theory of complex adaptive systems suggests that fewer (rather than more) rules from leadership can provide a framework for redesign. An AHC can be considered a complex adaptive system in that it has many interrelated parts, but the parts have significant freedom. Although not derived from theories of complex adap- tive systems, the beginning of this chapter suggested two simple rules for strategic change in AHCs: commit to health, and ensure transparency of information. Regardless of whether these or other approaches are taken, all empha- size the importance of a clear aim or vision. A clear and shared vision serves
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140 ACADEMIC HEALTH CENTERS multiple objectives for an AHC. It communicates to internal staff why the organization exists and motivates them around a common good (The Blue Ridge Academic Health Group, 2000a). It helps in the recruitment of per- sonnel whose values are compatible with those of the organization. For audiences outside the AHC, the vision communicates the institution's goals and values. To the extent that the input of external stakeholders is gathered in formulating or affirming a vision, an opportunity is provided to garner external support for the AHC. During times of major change, an enduring vision enables leadership and staff to stay focused on a clear and consis- tently stated mission (Simone, 1999) and allows leaders to make strategic decisions that are understood by staff and external supporters. Shortell (2002) notes that undertaking strategic change absent a vision is likely to fail because of a lack of understanding of the need for change or the direction of that change. Notes Shortell, if there is no vision, the result is confusion. Despite the tension common between an AHC and its parent university (noted earlier) university leadership also has a role in supporting the AHC vision and fostering accountability. At one of the meetings of this commit- tee, Judith Rodin, president, University of Pennsylvania, spoke about the challenges that faced the university when its AHC encountered severe fi- nancial difficulties. It was perceived that the AHC had pursued an aggres- sive growth strategy even though its surrounding environment was shifting, and that it had grown beyond its core mission and its capacity. During 1998 and 1999, the AHC lost approximately $300 million, but by 2001 it had a positive bottom line of about $25 million on just its clinical services. This turnaround was achieved through aggressive and decisive leadership from both the university and the AHC and included a complete restructur- ing and streamlining of governance structures, turnover in senior manage- ment staff to bring in leaders who had both the will and the skills to make the needed changes, and strict financial discipline and accountability. Leadership development involves more than hiring the right person; it needs to be approached as a core system. AHCs have done little in a formal sense to prepare young people for leadership roles or for succession to senior positions. In comments to the committee, Robert Galvin of General Electric estimated that about half of that company's senior management time is devoted to recruiting, developing, and retaining managerial leader- ship (Galvin, 2002). Four characteristics are reinforced through all levels of the organization and direct how its core leadership is identified and devel- oped: a rigorous financial approach, operational excellence that is value driven and measured constantly, rewards based on performance, and fos- tering of a team orientation that focuses on the success of the entire com- pany. The core leadership development sequence at General Electric con- sists of four stages (in order): skill competency, mastery in a field of
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CREATING SYSTEMS FOR CHANGE IN AHCs 141 expertise, development of functional leadership skills, and development of business leadership skills. The traditional path to AHC leadership is through academic or clinical achievement, although the characteristics required for organizational lead- ership do not always correlate with the criteria for academic promotions (The Commonwealth Fund Task Force on Academic Health Centers, 2000a). Leading an AHC requires skills in collaboration and teamwork (The Blue Ridge Academic Health Group, 2000a). Management skills, in- terpersonal skills, and experience are often undervalued, as is the impor- tance of attitude and team compatibility (Simone, 1999). Individual achieve- ment is emphasized. One study of 22 medical school deans found that faculty had been promoted on the basis of individual achievement and that the commitment to collective goals had generally not been rewarded. The Commonwealth Fund Task Force on Academic Health Centers (2000a) also determined that incentives for clinical faculty were not always aligned with the interests of the clinical enterprise. Faculty were often hired with little explicit direction in writing on how they would spend their time, making it difficult to set and enforce expectations for their involvement in patient care, teaching, research, or administration. The leadership team is also critical in implementing major change. Although leadership may start with one or two people, it needs to grow throughout the organization over time if change is to be sustained (Kotter, 1996). A team is needed to convey needed changes to many constituents and to bring forward the various areas of expertise required for most complex decisions. The membership of the team also matters. If an AHC's leadership team consists of the chief executive officer, chief financial of- ficer, and chief medical officer, the largest segment of the workforce, nurses, is omitted. Such omissions can represent a loss of knowledge to the organi- zation and undermine organizational innovations over time. Private companies such as General Electric spend years in succession planning and in the development of leaders within the organization, believ- ing that bringing in new leadership from the outside is more often disrup- tive than successful (The Blue Ridge Academic Health Group, 2001). One estimate suggests that 85 percent of the chief executive officers in private companies are recruited internally (Boufford, 2002). In contrast, AHCs fill the majority of their physician leadership positions through outside recruit- ment (Schwartz et al., 2000). Although this approach may result in bringing a new and different perspective to bear on the issues confronting the AHC, it may also lead to a lack of continuity in the institution's mission and vision. An existing member of the organization who has been groomed by current leaders can bring a continuity of values and vision, along with knowledge of the organization's culture and characteristics. Midlevel man- agement positions are the training ground for future leaders, where new
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142 ACADEMIC HEALTH CENTERS skills can be practiced. Unfortunately, young people may be discouraged from taking these positions by faculty who regard management as a task for those not able to excel as investigators or clinicians (The Commonwealth Fund Task Force on Academic Health Centers, 2000a). Leaders in the administrative and managerial aspects of health care delivery also need to improve their use of best evidence for decision making, just as the clinical practice of medicine is expected to rely increasingly on evidence from scientific research. Health care managers generally have been criticized for the overenthusiastic adoption and poor implementation of new business practices and premature discarding of those new initiatives in favor of the latest trend (Walshe and Rundall, 2001). As in evidence-based clinical practice, there are gaps between what is known and what is done, such as slow acceptance of nonphysician practitioners or of community- based treatment options as an alternative to hospitalization. Decision mak- ing is based most heavily on operating margins and past budgets (Kovner et al., 2000), an insufficient foundation for the complex decisions faced by AHCs. Clinical decision making is, by nature, quite different from managerial decision making (Walshe and Rundall, 2001). Clinical decisions tend to be made in a short time frame, and primarily by a single clinician who makes similar types of decisions repeatedly. In contrast, managerial decision mak- ing tends to rest more in teams, to have longer time horizons, to be quite varied in its topics, and to face significant constraints on action (e.g., regu- lations, financing, market competition). Nevertheless, the clear inadequacy of adapting and then discarding managerial initiatives based on little evi- dence as to their effectiveness argues for the need to develop and utilize an evidence base for management decisions to improve the linkages among research, policy, and practice. In addition to leading their own organizations, the committee also calls on AHCs to participate in solving the problems society faces in attempting to create healthy populations. This is a much broader perspective than caring for sick people and will require AHCs to work with, educate, and lead their communities in improving health for everybody. Society is facing a number of serious health-related issues, ranging from ethical issues to bioterrorism to end-of-life needs. AHCs need to contribute to the dialogue on these issues and the search for solutions. For example, the Association for Academic Health Centers (2002) has undertaken a major campaign to call attention to the uninsured. Likewise, responding to the threats of bioterrorism will require the involvement of many people and organiza- tions, including AHCs, which can contribute through each of their roles: educating practitioners on proper treatment, conducting research, and car- ing for patients during an outbreak. AHCs can also work with their local
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CREATING SYSTEMS FOR CHANGE IN AHCs 143 health departments, advise state policy makers on preparedness, and edu- cate community practitioners and the public on appropriate actions. This report has set forth an agenda for change. As discussed through- out the report, this agenda calls for each AHC role to be adjusted and adapted. Yet accomplishing the necessary transformation for even one role will require enormous energy and leadership and a high level of coordina- tion. And as noted, beyond leading change within their own organizations, AHCs must lead change to improve health for all people. To meet the challenges of the 21st century, AHCs will need public policy support; how- ever, AHCs must also embark on a period of critical self-evaluation and direct the enormous intellectual energy they house toward leading the changes required.
Representative terms from entire chapter: