Time to Trash Your Org Chart?

It’s a new era in the business of healthcare. How do we know?

Start with a payment system that is changing dramatically, forcing healthcare providers from hospitals to the smallest physician practices to change from a volume- to a value-based model. Mix in some volatility in a business that faces thin margins in the best of times and you have the ingredients for a major shakeup. And restructuring of duties, talents, and reporting structures are happening not only at the frontline and middle management level, but also all the way up to the C-suite.

Most management hierarchies at hospitals and health systems are set up to thrive under the fee-for-service payment structure. But those structures are unlikely to be relevant in the near future because of hospitals’ increasing role as the site of last-resort treatment. Instead, the focus is now on prevention and ambulatory care, which means new talent and new reporting lines are necessary. Further, the focus on accountability is bringing clinicians into management at perhaps the greatest rate ever.

Scripps Health in San Diego is well into its management realignment. It’s risky. In a sense, says president and CEO Chris Van Gorder, it represents a return to an alignment structure similar to the one that ended his predecessor’s career at Scripps.

“When I came in 1999 as COO—literally the day I started—the medical staff revolted against the CEO, partially because he had organized a super-centralized system,” Van Gorder says. “Six months later, I was the CEO and we decentralized with the intent of changing the sense of accountability.”

Van Gorder explains that the decentralized structure has worked extraordinarily well, but is outdated. “We’ve hit our targets for 8 to 9 years,” he says. “But that wasn’t the permanent model.”