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Brace for Healthcare Management Shakeups

 |  By Philip Betbeze  
   June 03, 2011

No, this isn't a story about the latest CEO to face a no-confidence vote from his physicians. In today's healthcare world, that kind of revolt seems quaint.

It's about how you're going to be able to thrive in a lower reimbursement environment that requires you to find and implement big efficiencies.

You're probably pretty comfortable with the way your lieutenants report to you in your organization. Sure there are issues, but for the most part, you and your team get things done.

But don't get too comfortable. Dealing with accountable care organizations or value-based purchasing protocols is challenging.

I'm not exaggerating when I say we are experiencing a seismic shift in what you're ultimately compensated and rewarded for in healthcare, whether from the commercial or government payer side. Perhaps, in light of that fact, you should look at performing a similar seismic shift in your organizational hierarchy.

While researching this topic for an upcoming story in HealthLeaders magazine, I talked to several top executives at leading healthcare organizations across the country. To be sure, most of them are large, multi-hospital, multi-site organizations, but their lessons also apply to smaller systems and even standalone hospitals. The old way of strategic planning and execution just isn't going to cut it anymore. You can be proactive about it or you can wait until there's no other choice but to blow up your management team—either way, you're going to have to change.

"Ok smart guy," you're probably saying to yourself, "what do you know about how best to organize my top executives?"

Well, honestly, not much, but I do talk to a lot of people who have proved over time that they know what they're doing by demonstrating quality outcomes and patient experience scores, and yet, they realize their current structure is not preparing them to deal with accountability for those metrics as well as many others. So I give them the benefit of the doubt when they tell me that they're reorganizing their reporting structure to centralize authority and reduce the independence of individual sites to do things that would be best done with the clout and expertise of the entire system, such as technology upgrades, bricks and mortar, and labor issues. That approach provides more flexibility and keeps organizational goals, as opposed to individual site goals, at the forefront.

Now you're probably saying, "if I do that, my docs will revolt, and I'll be out of a job."

That once might have been the case. But in many of the organizations with whom I chatted for my story, much of the reorganization results in placing physicians in positions of responsibility and power in the organization, where once they might have had big voices but little accountability on the business rationale for what they were arguing for.

No one understands the importance of data better than a physician, so it's a little ironic that hospitals were pushing physicians to follow evidence-based treatment guidelines and protocols while eschewing that philosophy in the purchase of drugs, equipment, technology, labor and other myriad expensive things any healthcare facility must purchase.

For instance, today's CMO is much more than a guy who's popular with all his physician friends. Instead, he or she is a voracious consumer of evidence. That's not just on treatment guidelines, it's also in determining where to put the latest imaging machine or whether it makes sense to buy it. In the past, equipment might have gone to a hospital that was conveniently located near a high-volume physician who would be using it, regardless of the market's need for it, or the ability of system-wide scheduling to avoid unnecessary delays.

Many hospital systems in the past have been systems in name only. Essentially there's a small core group of professionals at corporate headquarters, but individual executives at the local level made virtually all decisions regarding their facilities independently. That model appears to be going the way of the dinosaur. In any case, it's time to start thinking about how your system is going to change to meet the new realities, which are lower reimbursement and higher accountability.

Are you looking for ways to meet that challenge with new voices, new organizational structures and new protocols? If not, you should be. The leaders are.

Philip Betbeze is the senior leadership editor at HealthLeaders.

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