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Maintaining competitiveness in a changing industry.

Congratulations. You have far exceeded your original assignment of infiltrating the strategic planning department of Healthcare Organization Blue to obtain competitive information. As advisor to its transition team, you are in a unique position to influence Blue's top management. Your role is vital in getting us increased market share in Blue's service area. Therefore, you have been awarded a 50 percent bonus, deposited into your secret account. You are eligible for an additional 50 percent if you accomplish your new objectives.

Your new assignment is to destroy Blue's competitiveness in the marketplace. Our Change Management Research Department advises you to attempt the following strategies toward that end.

1. Communication Strategy

Whatever new structure top management decides, try to get them to release the information piecemeal. If necessary, leak a rumor yourself that "big changes are coming" weeks before they are released. Try to get top management changes released first, with no details of the impact on lower level managers for several more weeks. (If some want to release a bottom-up plan, subvert them by preying on senior manager insecurities. They want their own futures secured.) A partial release will maximize uncertainty, anxiety, and turnover. We will be able to recruit the best managers away from Blue. Others will leave for private consulting or any other position they can find; any option will appear safer than remaining in their current positions. Only those least confident in their abilities to produce will remain.

We have found that the period of uncertainty is unproductive to many employees, who do not wish to invest themselves in projects they may not be around to finish. Those employees who do wish to keep working despite the uncertainty will be stymied by the passivity of others. Every employee will spend hours each day rumor mongering and asking "what's going on?" All new projects will grind to a halt. Creativity will be stifled. If you can get them to stretch the transition out for three months, you'll reduce Blue's competitiveness by 25 percent.

2. Layers of Management

If possible, suggest adding to layers of top management. Blue is already top heavy, with 14 levels and 50 executives with titles higher than Vice President. We are most concerned that they will reduce the number of highly paid senior managers, reducing their administrative expenses. Try to influence them to keep that number. If you can add to it, even better. You will receive a bonus for every additional senior manager above the 50 mark.

3. The Vision Thing

Our advisors suggest that Blue's transition plan will be most effective if those who directly serve the customer have a clear vision of management's goals. To do this, they must know their customers and products. Second, they must clarify the processes needed to produce these products. Third, they determine the teams of front-line employees needed in those processes. Then, they decide the management structure needed to support those teams, with senior management structural changes last. If they communicate that vision, the most critical employees will discern their role in the new organization and remain.

Suggest that they work backwards, from the top down. "Stir the pot" to keep the vision vague at the top. Advise against releasing the vision to every employee. Perhaps you can suggest that they not let their competitors know their strategy, or that a little uncertainty will make all employees value their jobs more. Prevent front-line employees from getting the impression that senior management has a vision of what the new company will look like at a functional level. If they insist on communicating a vision, ensure that the vision is fuzzy - that it looks as if management has no idea how the changes will affect each department. Make it look as if top management does not even know how the changes will affect key processes, or what those processes are.

4. Integration

Our advisors say that a key competitive attribute of successful health care companies in the `90s will be integration among hospital, ambulatory, home health, and other sites of care. Medical groups and hospital are forming coalitions (integrated delivery systems) to provide the entire gamut of care seamlessly to patients. To keep Blue noncompetitive, suggest structures that prevent that integration. We were pleased to see that their independent business concept fosters competitiveness rather than cooperation among entities. Unfortunately, their geographic regional managers have an incentive to foster cooperation. They also have had meetings aimed at sharing cooperative projects and information. Suggest keeping the business unit idea but scrapping the geographic "integrator" role. Suggest they scrap those interdepartmental/interdivisional meetings. Say there are too many meetings, and one way to save money is to cut down. If they take your suggestions, you can fragment them irreparably. We believe their managers cannot distinguish between meetings that add value (integration, communication, motivation, education) and those that waste time (some group decision-making, general discussion).

Get them to create separate structures, and recommend that each division head be rewarded solely on the ability to look good on his or her separate budget. Keep hospital management separate from medical groups, home health, and other structures. Leaders of those fiefdoms might set up walls of protectiveness. This will prevent the few front-line employees who see the need for cooperating across site lines from doing so, further fragmenting care in the perception of the customers.

5. Prevent Specialized Managerial


We attribute part of Blue's success to its ability to develop delivery systems appropriate to the setting. This has allowed them to capitalize on opportunities. Lately, they have been hampered by the way senior management has begun looking at different delivery systems the same way. It hired the same types of managers and used the same measures of success for these very different products. The preliminary table of organization you sent suggests it may move toward managing these product lines differently. Try to stop that.

If you cannot influence the structure, try to get Blue to put in the wrong people. In contracted care, financial managers are key. HMOs, exclusive provider organizations, and preferred provider organizations are mostly funnels for money between customers and suppliers. Profits depend on contracts and highly leveraged financial distributions. Few operational managers are needed, because the organization has few processes. Medical groups, staff model HMO operations, and hospitals deliver health care, so they have many processes. They keep most of the revenue themselves, so operational and medical managers are most important to reduce process waste. Financial managers must manage cash flow, payroll, accounts payable, and accounts receivable and prepare budgets, but mostly they do not determine profitability.

Try to get them to put operational and medical managers In charge of contracted care, and financial managers in charge of delivered care.

6. Choosing Managers

We fear Blue will use this change as an opportunity to replace poorly performing managers with better ones. Key management skills in the `90s are process orientation, system orientation (understanding the cross-functional impact of any process changes), team skills, and customer orientation. We know that Blue's CQI program has stalled. You can still influence them to promote managers who care about nothing but this quarter's bottom line; who look at long-term process improvements as distractions; and who measure their own tenure in months and do not wish to spend time on any project whose results will be evident beyond that timeframe. Our analysis suggests that solutions to Blue's problems are mostly intermediate to long-term.

Who should you suggest for promotion? Managers who talk tough, who say that they are "action oriented," who use the expression, "ready, fire, aim." Those who say, "We don't have the time to analyze this problem to death." Managers who have not demonstrated the skills to get to the root causes of problems, who sneer at those who attempt to use their CQI program. Managers who would rather be seen as decisive than proven right. These managers create a flurry of activity and crises without actually improving anything. They can keep senior management snowed for months, while we continue to make real progress and cut waste out of our processes.

Put in a good word for managers who are "goal-oriented" or "focused." These are good traits, of course, but the terms are generally applied to those who meet their own goals at the expense of others, and therefore at the expense of the company as a whole. Performance goals only approximate what a manager should do. A manager who pursues only those goals and does not look for ways for the entire team to benefit may appear to a casual observer as a high performer. It should not be hard to get such people promoted. Identify managers with blinders, who succeed in their own department at the expense of others. Try to discourage promotion of "systems" managers, who consider the impact of their decisions on the whole organization before acting.

In summary, we congratulate you on a job well done. Blue's transition "plan" provides us a unique opportunity to remove an obstacle to our continued success and growth, by removing a competitor. A few chosen words in the right place, and you will have earned your promotion ... and a considerable bonus.
COPYRIGHT 1995 American College of Physician Executives
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1995, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Physician Executive
Date:Feb 1, 1995
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