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Turning an organization on its head.

MILITARY HOSPITALS ARE BECOMING PARTNERS IN an integrated system as the Department of Defense's nationwide managed care contract, TRICARE, is implemented. They are discovering they need to be competitive. No longer protected by a steady, reliable funding source, they must demonstrate relevance in order to survive. This realization has caused a paradigm shift in military medicine, generating new strategies in management and operations. In the Fall of 1993, the Executive Group at Keller Army Community Hospital (KACH) in New York decided it must change its culture and structure in order to thrive in what Tom Peters calls "a chaos of change."[1]

KACH is a primary care and specialty inpatient and outpatient facility serving a community of 29,000 with direct and managed care. This hospital occupies 35 beds on average and provides approximately 200,000 outpatient visits per year. The demographics of its patient population are well-balanced from pediatrics to geriatrics. Because of its size, KACH is at a critical mass for its core competencies of primary care and orthopedic sports medicine (KACH conducts the only accredited joint and soft tissue fellowship training program in the Department of Defense). The leadership decided that traditional bureaucracies had resulted in too many inefficiencies and operational redundancies to be overcome by incremental change. What was needed was a completely new approach to management.

A dysfunctional organization

KACH has been fortunate in having adequate resources because of its location at the National Military Academy. Its customers have always appeared to be well served. Yet, despite this appearance of effectiveness, a deeper look revealed a workplace filled with fear, low morale, apathy, and conflict. In our mechanistic management structure[2] (Figure 1, page 19), central control was prohibiting the innovation needed to meet future requirements.

Individual, authoritative power structures within KACH were divided, literally and figuratively, by steel-reinforced concrete walls. This parochialism interfered with communication and synergy. Teams responsible for a single function had individual members answering through different supervisory chains (Figure 2, page 20). Simple problems required executive solutions. One might see the very same issue, processed through a different pipeline or chain of command, receiving conflicting solutions from various executives. This situation was aggravated by poor communication among the executives. The result was an unacceptable length of time to sort out details to accomplish even minor tasks.

In an authoritarian hierarchy such as KACH's, the contributions of groups not in power was minimized. Military medicine is an example of a complex caste system described by Bender.[2] KACH contends with a caste system of physicians, nurses, and administrators of military rank, and of a military versus civilian work force, all perceiving their work as most important. Despite this complexity of group perspectives, the members of all groups are well trained and highly dedicated. Teamwork was good in crisis when the entire organization had to pull together to solve a problem, but cooperation was replaced by conflict in day-to-day operations.

The strategy

The goal was to build an organization that more readily accepted and understood the need for cost effective, quality care for the community. To gain staff commitment, it seemed necessary to evolve into an organization that is supported--rather than controlled by--its leadership. The entire staff had to be involved in the process for change. The end product, a new organization with a more functional outcome, would be the result of their work.

A model needed to be created placing the patient first, then the clinical teams, the departments, and so on down the organization (see Figure 3). The ideal vision for the new structure was a quality, customer-focused organization, in which every member of the staff would be viewed as a customer. Subordinates would be treated as the customers of managers. Teams who served common customers would be grouped together into departments.

An organizational climate survey taught us that communication was a critical issue with our people. Therefore, effective communication would be a principle performance criteria for managers. Subordinates (customers) would have input into the performance appraisals of their supervisors. After all, our definition of quality was a conformance to the needs[3] of customers. The new rules of the health care manager would be those of a communicator, facilitator, mentor, coach, and trainer. We hoped that grouping mutual supporting functions within a department would facilitate horizontal communication and promote cohesion (Figure 3).

For six months, leadership concentrated on training the staff to accept these revolutionary concepts, followed by a process that would prompt the organization to adopt a new structure. The plan was to create a three-management-layer organization--(1) executive, (2) departmental, and (3) intradepartmental teams (Figure 3). Later, as the organization matured, interdepartmental teams, transient or permanent, would be chartered to accomplish non-departmental missions. Eventually, all teams would become semi-autonomous and self-directed. Operational control of the organization would lie primarily with the department chiefs. The executives would support the organization at its interface with its environment. They would become the catalysts for interdepartmental unity and would set policy and strategy. The key to success for executing this plan would be the vision and support of a cohesive executive group.

It was imperative for quality to be elevated to the highest level of consciousness in order to move toward a customer-focused culture that was self-nurturing, rather than self-serving. Quality was defined as measurable conformance to requirements.[3] For instance, our patients require service they trust is appropriate from the physician of their choice, at a convenient time for them, in a hassle-free, clean, and friendly environment. Employees are entitled to an efficacious, supportive work place. Identifying the data needed to measure progress will be a challenge. Nevertheless, quality was to be the guiding light on the agenda for change. A focus on quality, single ownership of processes, cohesiveness, empowerment, and systems thinking in a learning organization[4] was the goal. In other words, we needed to create an organic organizational structure.[5]

It's all in the process

The first step in the process of radical change was the appointment of a senior executive for quality, as industry had done almost 30 years ago.[3] This person would bring the quality perspective to the executive group. A crash program of total quality management (TQM) training was implemented. At the onset, TQM training was provided by The Army Management Engineering College. Later, facilitators were developed to bring the training in-house; all staff were required to attend the training, and it became part of new personnels' orientation program. Progress toward a goal of 100 percent of trained personnel became one measure of quality. Mandatory reading for managers and executives included The 7 Habits of Highly Effective People,[6] The FiftH Discipline,[4] Reengineering Management,[7] and Requisite Organization.[8]

A Quality Management Team (QMT) was chartered for the second phase in the Spring of 1994. The QMT was tasked to restructure the organization and develop a strategy by using the input from all functional areas and grade levels throughout KACH. QMT members were mid-level managers from all areas of the organization. A nurse practitioner and a budget analyst cochaired the QMT.

The QMT was told it had three months during the Summer of 1994 to complete the blueprint for the structure. Once departments were created, the team members nominated the leaders they wanted to chair their departments. Many of these individuals were not in management positions. Without exception, these nominees were deemed quality leaders and were approved by the executive group. During September 1994, these leaders were assigned individual responsibilities within their departments and, on October 1, the beginning of the new fiscal year, the new organization was born (Figure 3).

The executive group and department chiefs organized themselves into an executive steering committee (ESC) (Figure 3) to execute strategy and policies previously set by the executive group. The ESC developed management indicators to monitor progress and measure the effectiveness of the organization. It also developed and managed the budget. With the ESC assuming the bulk of operational control of the organization, the executive group could devote more time to responsibilities traditionally reserved for a board of directors.


Reengineering an organization is a multi-year process that cannot be compressed. A clear and concise vision--one that is created by consensus decision-building--must be in place at the onset to serve as the roadmap. Reengineering can not be successfully implemented unless there is buy-in by senior management.[7]

An early period of confusion was experienced, as new relationships were required and people were forced out of their comfort zones. Traditional military culture is one of power and control. In the new organization, power was redistributed. Staff that perceived they lost power grieved and resisted the change. Others who found themselves thrust into positions of power and responsibility became anxious as they developed the skills needed to be successful. While these leaders were developing skills, the organization became impatient with what it perceived as a decrease in its leadership.

These concerns were also experienced by the chain of command external to the organization. Had they intervened prematurely, the experiment might have failed. However, as a result of the initial successes, KACH's effort to change became a microcosm of a reengineering effort throughout army medicine and the chain of command remained supportive.

A persistent and positive attitude prevailed during this period, possibly because staff recognized the need for change and had been brought on board from the beginning as shareholders. At this writing, horizontal integration has improved among department heads and the executives. Interdepartmental, self-directed teams have been organized and are functioning well. For instance, there is an informatics executive steering committee chartered to plan our future information technology needs. The committee's members are experts representing all departments. This committee has made a tremendous impact on our ability to project state-of-the-art requirements in informatics. The army frequently rotates people, and executive turnover can be a problem. Progress can be halted until the new executive has time to discover and explore the vision and buy into the process. Since the beginning of KACH's reorganization, the hospital administrator and the nurse executive have changed twice. With each transition, progress stalled and energy had to be expended to reinstate momentum. An executive group completely buying into the vision is key to successfully implementing change. Executives must "walk" the change "talk" everyday. This cannot be accomplished unless executives have the will, experience, and knowledge needed to promote change. Understanding the organization's language of change is key. A new executive has to learn the language quickly or find him or herself out of sync with the rest of the organization.

Early in our change process, executive transitions threatened to derail our efforts. A consultant group was contracted to help the organization regain and maintain momentum. It facilitated cohesion within the executive group and assisted the organization in gaining universal involvement in its agenda for change. Now into the third year of the process and with the help of outside consultants, the general feeling of the staff is that the organization has matured enough that the process of change will continue.


Keller Army Community Hospital is in the midst of a major change. The goal of this reengineering effort was not to flatten the organization, but to increase services and improve quality by changing management philosophy. However, one result has been a command and control organizational structure evolving into a non-traditional one for military treatment facilities. The organization is beginning to learn that measurable conformance to requirements defines quality. Success will be measured after useful data are collected. In June of this year, Secretary of Defense William J. Perry announced that KACH was considered the second best customer-friendly military treatment facility in the nation, based on a DOD survey.

At this point visible, but subjective results, can be seen in improved morale, communication, comradeship, and trust. The organization appreciates the need for change and can speak to quality. It is synergistically using the expertise of all the diverse elements as it rapidly implements a myriad of programs designed to increase access to care, reduce cost, and improve services--all measurable elements of quality.

An organization attempting to reengineer must be willing to accept a heavy investment of energy and a risk of failure, before knowing if there are measurable results. Patience and persistence are imperative. Success depends on aggressive support from a stable executive group. Consultants experienced in organizational behavior can also be invaluable.



[1.] Peters T. Thriving on Chaos. New York: Alfred A. Knopf, 1987.

[2.] Bender, A, et al. "The Medical Practice as Business Organization" Physician Executive 22(3):5-9, March 1996.

[3.] Crosby, P. Quality is Free. St. Louis: McGraw-Hill, 1979.

[4.] Senge, P M. The Fifth Discipline. New York: Bantam Doubleday, 1990.

[5.] Burns, T., and Stalker, G. The Management of Innovation. London: Social Science Paperbacks, 1961.

[6.] Covey, S.R. The 7 Habits of Highly Effective People. New York: Simon and Schuster, 1989.

[7] Champy J Reengineering Management. New York: Harper Collins, 1995.

[8.] Jaques, E. Requisite Organization. Arlington, VA: Carson Hall, 1989.

Colonel Richard K. Bachman, MD, has been the Chief Executive Officer of Keller Army Community Hospital since July 1993. His address is Keller Army Community Hospital, West Point, New York 10996. The opinion expressed in this paper reflects that of the author and not necessarily that of the U.S. Army Medical Department. He can be reached at 914/938-3305.
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Title Annotation:military medical management
Author:Bachman, Richard K.
Publication:Physician Executive
Date:Aug 1, 1996
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