Cases in healthcare management buchbinder pdf

THIRD EDITION

Introduction to Health Care Management

Edited by

Sharon B. Buchbinder, RN, PhD Professor and Program Coordinator

MS in Healthcare Management Program School of Graduate and Professional Studies

Stevenson University Owings Mills, Maryland

Nancy H. Shanks, PhD Professor Emeritus

Department of Health Professions Health Care Management Program

Metropolitan State University of Denver Denver, Colorado

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Library of Congress Cataloging-in-Publication Data Names: Buchbinder, Sharon Bell, editor. | Shanks, Nancy H., editor. Title: Introduction to health care management / [edited by] Sharon B.

Buchbinder and Nancy H. Shanks. Description: Third edition. | Burlington, Massachusetts : Jones & Bartlett

Learning, [2015] | Includes bibliographical references and index. Identifiers: LCCN 2015040132 | ISBN 9781284081015 (paper) Subjects: | MESH: Health Services Administration. | Efficiency, Organizational. | Health

Care Costs. | Leadership. Classification: LCC RA971 | NLM W 84.1 | DDC 362.1–dc23 LC record available at

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http://lccn.loc.gov/2015040132
We dedicate this book to our loving husbands, Dale Buchbinder and Rick Shanks—

Who coached, collaborated, and coerced us to “FINISH THE THIRD EDITION!”

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Contents

FOREWORD PREFACE ACKNOWLEDGMENTS ABOUT THE EDITORS CONTRIBUTORS

CHAPTER 1 An Overview of Health Care Management Jon M. Thompson, Sharon B. Buchbinder, and Nancy H. Shanks

Introduction The Need for Managers and Their Perspectives Management: Definition, Functions, and Competencies Management Positions: The Control in the Organizational

Heirarchy Focus of Management: Self, Unit/Team, and Organization Role of the Manager in Establishing and Maintaining

Organizational Culture Role of the Manager in Talent Management Role of the Manager in Ensuring High Performance Role of the Manager in Leadership Development and

Succession Planning Role of the Manager in Innovation and Change

Management Role of the Manager in Health Care Policy Research in Health Care Management Chapter Summary

CHAPTER 2 Leadership Louis Rubino

Leadership vs. Management

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History of Leadership in the U.S. Contemporary Models Leadership Styles Leadership Competencies Leadership Protocols Governance Barriers and Challenges Ethical Responsibility Important New Initiatives Leaders Looking to the Future Special Research Issues Conclusion

CHAPTER 3 Management and Motivation Nancy H. Shanks and Amy Dore

Introduction Motivation—The Concept History of Motivation Theories of Motivation A Bit More About Incentives and Rewards Why Motivation Matters Motivated vs. Engaged—Are the Terms the Same? Measuring Engagement Misconceptions About Motivation and Employee

Satisfaction Motivational and Engagement Strategies Motivating Across Generations Managing Across Generations Research Opportunities in Management and Motivation Conclusion

CHAPTER 4 Organizational Behavior and Management Thinking Sheila K. McGinnis

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Introduction The Field of Organizational Behavior Organizational Behavior’s Contribution to Management Key Topics in Organizational Behavior Organizational Behavior Issues in Health Organizations Thinking: The “Inner Game” of Organizational Behavior The Four Key Features of Thinking Mental Representation: The Infrastucture of Thinking Processing Information: Fundamental Thinking Habits Decision Making, Problem Solving, and Biased Thinking

Habits Social Cognition and Socio-Emotional Intelligence Research Opportunities in Organizational Behavior and

Management Thinking Conclusion

CHAPTER 5 Strategic Planning Susan Casciani

Introduction Purpose and Importance of Strategic Planning The Planning Process SWOT Analysis Strategy Identification and Selection Rollout and Implementation Outcomes Monitoring and Control Strategy Execution Strategic Planning and Execution: The Role of the Health

Care Manager Opportunities for Research in Strategic Planning Conclusion

CHAPTER 6 Healthcare Marketing Nancy K. Sayre

Introduction

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What Is Marketing? A Brief History of Marketing in Health Care The Strategic Marketing Process Understanding Marketing Management Health Care Buyer Behavior Marketing Mix Marketing Plan Ethics and Social Responsibility Opportunities for Research in Health Care Marketing Conclusion

CHAPTER 7 Quality Improvement Basics Eric S. Williams, Grant T. Savage, and Patricia A. Patrician

Introduction Defining Quality in Health Care Why Is Quality Important? The Relevance of Health Information Technology in

Quality Improvement Quality Improvement Comes (Back) to America Leaders of the Quality Movement Baldrige Award Criteria: A Strategic Framework for Quality

Improvement Common Elements of Quality Improvement Three Approaches to Quality Improvement Quality Improvement Tools Opportunities for Research in Health Care Quality Conclusion

CHAPTER 8 Information Technology Nancy H. Shanks and Sharon B. Buchbinder

Introduction Information Systems Used by Managers The Electronic Medical Record (EMR)

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The Challenges to Clinical System Adoption The Future of Health Care Information Technology The Impact of Information Technology on the Health Care

Manager Opportunities for Research on Health Care Professionals Conclusion

CHAPTER 9 Financing Health Care and Health Insurance Nancy H. Shanks

Introduction Introduction to Health Insurance Brief History of Health Insurance Characteristics of Health Insurance Private Health Insurance Coverage The Evolution of Social Insurance Major “Players” in the Social Insurance Arena Statistics on Health Insurance Coverage and Costs Those Not Covered—The Uninsured Opportunities for Research on Emerging Issues Conclusion

CHAPTER 10 Managing Costs and Revenues Kevin D. Zeiler

Introduction What Is Financial Management and Why Is It Important? Tax Status of Health Care Organizations Financial Governance and Responsibility Structure Managing Reimbursements from Third-Party Payers Coding in Health Care Controlling Costs and Cost Accounting Setting Charges Managing Working Capital Managing Accounts Receivable

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Managing Materials and Inventory Managing Budgets Opportunities for Research on Managing Costs and

Revenues Conclusion

CHAPTER 11 Managing Health Care Professionals Sharon B. Buchbinder and Dale Buchbinder

Introduction Physicians Registered Nurses Licensed Practical Nurses/Licensed Vocational Nurses Nursing Assistants and Orderlies Home Health Aides Midlevel Practitioners Allied Health Professionals Opportunities for Research on Health Care Professionals Conclusion

CHAPTER 12 The Strategic Management of Human Resources Jon M. Thompson

Introduction Environmental Forces Affecting Human Resources

Management Understanding Employees as Drivers of Organizational

Performance Key Functions of Human Resources Management Workforce Planning/Recruitment Employee Retention Research in Human Resources Management Conclusion

CHAPTER 13 Teamwork Sharon B. Buchbinder and Jon M. Thompson

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Introduction What Is a Team? The Challenge of Teamwork in Health Care Organizations The Benefits of Effective Health Care Teams The Costs of Teamwork Electronic Tools and Remote and Virtual Teams Face to Face Versus Virtual Teams Real-World Problems and Teamwork Who’s on the Team? Emotions and Teamwork Team Communication Methods of Managing Teams of Health Care Professionals Opportunities for Research on Emerging Issues Conclusion

CHAPTER 14 Addressing Health Disparities: Cultural Proficiency Nancy K. Sayre

Introduction Changing U.S. Demographics and Patient Populations Addressing Health Disparities by Fostering Cultural

Competence in Health Care Organizations Best Practices Addressing Health Disparities by Enhancing Public Policy Opportunities for Research on Health Disparities and

Cultural Proficiency Conclusion

CHAPTER 15 Ethics and Law Kevin D. Zeiler

Introduction Legal Concepts Tort Law Malpractice

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Contract Law Ethical Concepts Patient and Provider Rights and Responsibilities Legal/Ethical Concerns in Managed Care Biomedical Concerns Beginning- and End-of-Life Care Opportunities for Research in Health Care Ethics and Law Conclusion

CHAPTER 16 Fraud and Abuse Kevin D. Zeiler

Introduction What Is Fraud and Abuse? History The Social Security Act and the Criminal-Disclosure

Provision The Emergency Medical Treatment and Active Labor Act Antitrust Issues Physician Self-Referral/Anti-Kickback/Safe Harbor Laws Management Responsibility for Compliance and Internal

Controls Corporate Compliance Programs Opportunities for Research in Fraud and Abuse Conclusion

CHAPTER 17 Special Topics and Emerging Issues in Health Care Management Sharon B. Buchbinder and Nancy H. Shanks

Introduction Re-Emerging Outbreaks, Vaccine Preventable Diseases,

and Deaths Bioterrorism in Health Care Settings Human Trafficking Violence in Health Care Settings

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Medical Tourism Consumer-Directed Health Care Opportunities for Research on Emerging Issues

CHAPTER 18 Health Care Management Case Studies and Guidelines Sharon B. Buchbinder, Donna M. Cox, and Susan Casciani

Introduction Case Study Analysis Case Study Write-Up Team Structure and Process for Completion

CASE STUDIES* Metro Renal—Case for Chapters 12 and 2 United Physician Group—Case for Chapters 5, 9, 11, and 15 Piecework—Case for Chapters 9 and 10 Building a Better MIS-Trap—Case for Chapter 8 Death by Measles—Case for Chapters 17, 11, and 15 Full Moon or Bad Planning?—Case for Chapters 17, 11, and

15 How Do We Handle a Girl Like Maria?—Case for Chapters

17 and 4 The Condescending Dental Hygienist—Case for Chapters

7, 12, 15, and 4 The “Easy” Software Upgrade at Delmar Ortho—Case for

Chapters 8 and 13 The Brawler—Case for Chapters 11, 12, and 17 I Love You…Forever—Case for Chapters 17, 12, and 11 Managing Health Care Professionals—Mini-Case Studies

for Chapter 11 Problems with the Pre-Admission Call Center—Case for

Chapters 13 and 10 Such a Nice Young Man—Case for Chapters 17, 11, and 12 Sundowner or Victim?—Case for Chapters 15 and 17 Last Chance Hospital—Case for Chapters 5 and 6

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The Magic Is Gone—Case for Chapters 3, 12, and 13 Set Up for Failure?—Case for Chapter 3 Sustaining an Academic Food Science and Nutrition Center

Through Management Improvement—Case for Chapters 2 and 12

Giving Feedback—Empathy or Attributions?—Case for Chapter 4

Socio-Emotional Intelligence Exercise: Understanding and Anticipating Major Change—Case for Chapter 4

Madison Community Hospital Addresses Infection Prevention—Case for Chapters 7 and 13

Trouble with the Pharmacy—Case for Chapter 7 Emotional Intelligence in Labor and Delivery—Case for

Chapters 2, 12, and 13 Communication of Patient Information During Transitions

in Care—Case for Chapters 7 and 12 Multidrug-Resistant Organism (MDRO) in a Transitional

Care Unit—Case for Chapters 7 and 12 Are We Culturally Aware or Not?—Case for Chapters 14

and 5 Patients “Like” Social Media—Case for Chapters 6 and 5 Where Do You Live? Health Disparities Across the United

States—Case for Chapter 14 My Parents Are Turning 65 and Need Help Signing Up for

Medicare—Case for Chapter 9 Newby Health Systems Needs Health Insurance—Case for

Chapter 9 To Partner or Not to Partner with a Retail Company—Case

for Chapters 17, 5, and 6 Wellness Tourism: An Option for Your Organization?—

Case for Chapters 17 and 5 Conflict in the Capital Budgeting Process at University

Medical Center: Let’s All Just Get Along—Case for Chapter 10

The New Toy at City Medical Center—Case for Chapters

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11 and 13 Recruitment Challenge for the Middle Manager—Case for

Chapters 2 and 12 I Want to Be a Medical Coder—Case for Chapter 10 Managing Costs and Revenues at Feel Better Pharmacy—

Case for Chapter 10 Who You Gonna Call?—Case for Chapter 16 You Will Do What You Are Told—Case for Chapter 15

GLOSSARY INDEX

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Foreword

In the U.S., health care is the largest industry and the second-largest employer, with more than 11 million jobs. This continuous growth trend is a result of many consequences, including: the large, aging Baby Boomer population, whose members are remaining active later in life, contributing to an increase in the demand for medical services; the rapidly changing financial structure and increasingly complex regulatory environment of health care; the integration of health care delivery systems, restructuring of work, and an increased focus on preventive care; and the ubiquitous technological innovations, requiring unceasing educational training and monitoring.

Given this tremendous growth and the aforementioned causes of it, it is not surprising that among the fastest-growing disciplines, according to federal statistics, is health care management, which is projected to grow 23% in the next decade. Supporting this growth are the increasing numbers of undergraduate programs in health care management, health services administration, and health planning and policy—with over 300 programs in operation nationwide today.

The health care manager’s job description is constantly evolving to adapt to this hyper-turbulent environment. Health care managers will be called on to improve efficiency in health care facilities and the quality of the care provided; to manage, direct, and coordinate health services in a variety of settings, from long-term care facilities and hospitals to medical group practices; and to minimize costs and maximize efficiencies, while also ensuring that the services provided are the best possible.

As the person in charge of a health care facility, a health care administrator’s duties can be varied and complex. Handling such responsibilities requires a mix of business administration skills and knowledge of health services, as well as the federal and state laws and regulations that govern the industry.

Written by leading scholars in the field, this compendium provides future and current health care managers with the foundational knowledge needed to succeed. Drs. Buchbinder and Shanks, with their many years of clinical, practitioner, administration, and academic experience, have assembled experts in all aspects of health care management to share their knowledge and experiences. These unique viewpoints, shared in both the content and case studies accompanying each chapter, provide valuable insight into the health care industry and delve into the

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core competencies required of today’s health care managers: leadership, critical thinking, strategic planning, finance and accounting, managing human resources and professionals, ethical and legal concerns, and information and technology management. Contributing authors include clinicians, administrators, professors, and students, allowing for a variety of perspectives.

Faculty will also benefit from the depth and breadth of content coverage spanning all classes in an undergraduate health care management curriculum. Its most appropriate utility may be found in introductory management courses; however, the vast array of cases would bring value to courses in health care ethics, managerial finance, quality management, and organizational behavior.

This text will serve as a cornerstone document for students in health management educational programs and provide them with the insight necessary to be effective health care managers. Students will find this textbook an indispensable resource to utilize both during their academic programs, as well as when they enter the field of health care management. It is already on its way to becoming one of the “classics” in the field!

Dawn Oetjen, PhD Associate Dean, Administration and Faculty Affairs

College of Health and Public Affairs University of Central Florida

Orlando, FL

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Preface

The third edition of Introduction to Health Care Management is driven by our continuing desire to have an excellent textbook that meets the needs of the health care management field, health care management educators, and students enrolled in health care management programs around the world. The inspiration for the first edition of this book came over a good cup of coffee and a deep-seated unhappiness with the texts available in 2004. This edition builds on the strengths of the first two editions and is based on an ongoing conversation with end users— instructors and students—from all types of higher education institutions and all types of delivery modalities. Whether your institution is a traditional “bricks and mortar” school or a fully online one, this book and its ancillary materials are formatted for your ease of use and adoption.

For this edition, many of the same master teachers and researchers with expertise in each topic revised and updated their chapters. Several new contributors stepped forward and wrote completely new cases for this text because we listened to you, our readers and users. With a track record of more than eight years in the field, we learned exactly what did or did not work in the classrooms and online, so we further enhanced and refined our student- and professor- friendly textbook. We are grateful to all our authors for their insightful, well- written chapters and our abundant, realistic case studies.

As before, this textbook will be useful to a wide variety of students and programs. Undergraduate students in health care management, nursing, public health, nutrition, athletic training, and allied health programs will find the writing to be engaging. In addition, students in graduate programs in discipline-specific areas, such as business administration, nursing, pharmacy, occupational therapy, public administration, and public health, will find the materials both theory-based and readily applicable to real-world settings. With four decades of experience in higher education, we know first and foremost that teaching and learning are not solo sports, but a team effort—a contact sport. There must be a give-and-take between the students and the instructors for deep learning to take place. This text uses active learning methods to achieve this goal. Along with lively writing and content critical for a foundation in health care management, this third edition continues to provide realistic information that can be applied immediately to the real world of health care management. In addition to revised and updated chapters

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from the second edition, there are learning objectives, discussion questions, and case studies included for each chapter, with additional instructors’ resources online and Instructor’s Guides for all of the case studies. PowerPoint slides, Test Bank items, and research sources are also included for each chapter, as well as a glossary. A sample syllabus is also provided. Specifically, the third edition contains:

Significantly revised chapters on organizational behavior and management thinking, quality improvement, and information technology.

Revisions and updates to all chapters, including current data and recent additions to the literature.

A new emphasis on research that is ongoing in each of the areas of health care.

A new chapter on a diverse group of emerging issues in health care management including: re-emerging outbreaks, vaccine-preventable diseases, and deaths; bioterrorism in health care settings; human trafficking; violence in health care settings; medical tourism; and consumer-directed health care.

Forty cases in the last chapter, 26 of which are new or totally revised for this edition. They cover a wide variety of settings and an assortment of health care management topics. At the end of each chapter, at least one specific case study is identified and linked to the content of that chapter. Many chapters have multiple cases.

Guides for all 40 cases provided with online materials. These will be beneficial to instructors as they evaluate student performance and will enable professors at every level of experience to hit the ground running on that first day of classes.

Totally revised test banks for each chapter, providing larger pools of questions and addressing our concerns that answers to the previous test banks could be purchased online.

Never underestimate the power of a good cup of joe. We hope you enjoy this book as much as we enjoyed revising it. May your classroom and online discussions be filled with active learning experiences, may your teaching be filled with good humor and fun, and may your coffee cup always be full.

Sharon B. Buchbinder, RN, PhD Stevenson University

Nancy H. Shanks, PhD

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Metropolitan State University of Denver

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Acknowledgments

This third edition is the result of what has now been a 10-year process involving many of the leaders in excellence in undergraduate health care management education. We continue to be deeply grateful to the Association of University Programs in Health Administration (AUPHA) faculty, members, and staff for all the support, both in time and expertise, in developing the proposal for this textbook and for providing us with excellent feedback for each edition.

More than 20 authors have made this contributed text a one-of-a-kind book. Not only are our authors expert teachers and practitioners in their disciplines and research niches, they are also practiced teachers and mentors. As we read each chapter and case study, we could hear the voices of each author. It has been a privilege and honor to work with each and every one of them: Mohamad Ali, Dale Buchbinder, Susan Casciani, Donna Cox, Amy Dore, Brenda Freshman, Callie Heyne, Ritamarie Little, Sheila McGinnis, Mike Moran, Patricia Patrician, Lou Rubino, Sharon Saracino, Grant Savage, Nancy Sayre, Windsor Sherrill, Jon Thompson, Eric Williams, and Kevin Zeiler.

And, finally, and never too often, we thank our husbands, Dale Buchbinder and Rick Shanks, who listened to long telephone conversations about the book’s revisions, trailed us to meetings and dinners, and served us wine with our whines. We love you and could not have done this without you.

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About the Editors

Sharon B. Buchbinder, RN, PhD, is currently Professor and Program Coordinator of the MS in Healthcare Management Program at Stevenson University in Owings Mills, Maryland. Prior to this, she was Professor and Chair of the Department of Health Science at Towson University and President of the American Hospital Management Group Corporation, MASA Healthcare Co., a health care management education and health care delivery organization based in Owings Mills, Maryland. For more than four decades, Dr. Buchbinder has worked in many aspects of health care as a clinician, researcher, association executive, and academic. With a PhD in public health from the University of Illinois School of Public Health, she brings this blend of real-world experience and theoretical constructs to undergraduate and graduate face-to-face and online classrooms, where she is constantly reminded of how important good teaching really is. She is past chair of the Board of the Association of University Programs in Health Administration (AUPHA) and coauthor of the Bugbee Falk Award–winning Career Opportunities in Health Care Management: Perspectives from the Field. Dr. Buchbinder also coauthors Cases in Health Care Management with Nancy Shanks and Dale Buchbinder.

Nancy H. Shanks, PhD, has extensive experience in the health care field. For 12 years, she worked as a health services researcher and health policy analyst and later served as the executive director of a grant-making, fund-raising foundation that was associated with a large multihospital system in Denver. During the last 20 years, Dr. Shanks has been a health care administration educator at Metropolitan State University of Denver, where she has taught a variety of undergraduate courses in health services management, organization, research, human resources management, strategic management, and law. She is currently an Emeritus Professor of Health Care Management and an affiliate faculty member, after having served as Chair of the Department of Health Professions for seven years. Dr. Shanks’s research interests have focused on health policy issues, such as providing access to health care for the uninsured.

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Contributors

Mohamad A. Ali, MBA, MHA, CBM Healthcare Strategy Consultant MASA Healthcare, LLC Washington, DC

Dale Buchbinder, MD, FACS Chairman, Department of Surgery and Clinical Professor of Surgery The University of Maryland Medical School Good Samaritan Hospital Baltimore, MD

Susan Casciani, MSHA, MBA, FACHE Adjunct Professor Stevenson University Owings Mills, MD

Donna M. Cox, PhD Professor and Director Alcohol, Tobacco, and Other Drugs Prevention Center Department of Health Science Towson University Towson, MD

Amy Dore, DHA Associate Professor, Health Care Management Program Department of Health Professions Metropolitan State University of Denver Denver, CO

Brenda Freshman, PhD Associate Professor Health Administration Program

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California State University, Long Beach Long Beach, CA

Callie E. Heyne, BS Research Associate Clemson University Clemson, SC

Ritamarie Little, MS, RD Associate Director Marilyn Magaram Center for Food Science, Nutrition, & Dietetics California State University, Northridge Northridge, CA

Sheila K. McGinnis, PhD Healthcare Transformation Director City College Montana State University, Billings Billings, MT

Michael Moran, DHA Adjunct Faculty School of Business University of Colorado, Denver Denver, CO

Patricia A. Patrician, PhD, RN, FAAN Colonel, U.S. Army (Retired) Donna Brown Banton Endowed Professor School of Nursing University of Alabama, Birmingham Birmingham, AL

Louis Rubino, PhD, FACHE Professor & Program Director Health Administration Program

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Health Sciences Department California State University, Northridge Northridge, CA

Sharon Saracino, RN, CRRN Patient Safety Officer Nursing Department Allied Services Integrated Health Care System–Heinz Rehab Wilkes-Barre, PA

Grant T. Savage, PhD Professor of Management Management, Information Systems, & Quantitative Methods Department University of Alabama, Birmingham Birmingham, AL

Nancy K. Sayre, DHEd, PA, MHS Department Chair Department of Health Professions Coordinator, Health Care Management Program Assistant Professor, Health Care Management Program Metropolitan State University of Denver Denver, CO

Windsor Westbrook Sherrill, PhD Professor of Public Health Sciences Associate Vice President for Health Research Clemson University Clemson, SC

Jon M. Thompson, PhD Professor, Health Services Administration Director, Health Services Administration Program James Madison University Harrisonburg, VA

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Eric S. Williams, PhD Associate Dean of Assessment and Continuous Improvement Professor of Health Care Management Minnie Miles Research Professor Culverhouse College of Commerce University of Alabama Tuscaloosa, AL

Kevin D. Zeiler, JD, MBA, EMT-P Associate Professor, Health Care Management Program Department of Health Professions Metropolitan State University of Denver Denver, CO

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CHAPTER 1

An Overview of Health Care Management

Jon M. Thompson, Sharon B. Buchbinder, and Nancy H. Shanks

LEARNING OBJECTIVES By the end of this chapter, the student will be able to:

Define healthcare management and the role of the health care manager; Differentiate among the functions, roles, and responsibilities of health care managers;

Compare and contrast the key competencies of health care managers; and Identify current areas of research in health care management.

INTRODUCTION Any introductory text in health care management must clearly define the profession of health care management and discuss the major functions, roles, responsibilities, and competencies for health care managers. These topics are the focus of this chapter. Health care management is a growing profession with increasing opportunities in both direct care and non–direct care settings. As defined by Buchbinder and Thompson (2010, pp. 33–34), direct care settings are “those organizations that provide care directly to a patient, resident or client who seeks services from the organization.” Non-direct care settings are not directly involved in providing care to persons needing health services, but rather support the care of individuals through products and services made available to direct care settings. The Bureau of Labor Statistics (BLS, 2014) indicates health care

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management is one of the fastest-growing occupations, due to the expansion and diversification of the health care industry. The BLS projects that employment of medical and health services managers is expected to grow 23% from 2012 to 2022, faster than the average for all occupations (see Figure 1-1).

These managers are expected to be needed in both inpatient and outpatient care facilities, with the greatest growth in managerial positions occurring in outpatient centers, clinics, and physician practices. Hospitals, too, will experience a large number of managerial jobs because of the hospital sector’s large size. Moreover, these estimates do not reflect the significant growth in managerial positions in non–direct care settings, such as consulting firms, pharmaceutical companies, associations, and medical equipment companies. These non–direct care settings provide significant assistance to direct care organizations, and since the number of direct care managerial positions is expected to increase significantly, it is expected that growth will also occur in managerial positions in non–direct care settings.

Health care management is the profession that provides leadership and direction to organizations that deliver personal health services and to divisions, departments, units, or services within those organizations. Health care management provides significant rewards and personal satisfaction for those who want to make a difference in the lives of others. This chapter gives a comprehensive overview of health care management as a profession. Understanding the roles, responsibilities, and functions carried out by health care managers is important for those individuals considering the field to make informed decisions about the “fit.” This chapter provides a discussion of key management roles, responsibilities, and functions, as well as management positions at different levels within health care organizations. In addition, descriptions of supervisory level, mid-level, and senior management positions within different organizations are provided.

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FIGURE 1-1 Occupations with the Most New Jobs in Hospitals, Projected 2012– 2022. Employment and Median Annual Wages, May 2013

Source: U.S. Bureau of Labor Statistics, Employment Projections program (projected new jobs, 2012–2022) and Occupational Employment Statistics Survey (employment and median annual wages, May 2013).

THE NEED FOR MANAGERS AND THEIR PERSPECTIVES Health care organizations are complex and dynamic. The nature of organizations requires that managers provide leadership, as well as the supervision and coordination of employees. Organizations were created to achieve goals beyond the capacity of any single individual. In health care organizations, the scope and complexity of tasks carried out in provision of services are so great that individual staff operating on their own could not get the job done. Moreover, the necessary tasks in producing services in health care organizations require the coordination of many highly specialized disciplines that must work together seamlessly. Managers are needed to ensure organizational tasks are carried out in the best way possible to achieve organizational goals and that appropriate resources, including financial

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and human resources, are adequate to support the organization. Health care managers are appointed to positions of authority, where they shape

the organization by making important decisions. Such decisions relate, for example, to recruitment and development of staff, acquisition of technology, service additions and reductions, and allocation and spending of financial resources. Decisions made by health care managers not only focus on ensuring that the patient receives the most appropriate, timely, and effective services possible, but also address achievement of performance targets that are desired by the manager. Ultimately, decisions made by an individual manager impact the organization’s overall performance.

Managers must consider two domains as they carry out various tasks and make decisions (Thompson, 2007). These domains are termed external and internal domains (see Table 1-1). The external domain refers to the influences, resources, and activities that exist outside the boundary of the organization but that significantly affect the organization. These factors include community needs, population characteristics, and reimbursement from commercial insurers, as well as government plans, such as the Children’s Health Insurance Plans (CHIP), Medicare, and Medicaid. The internal domain refers to those areas of focus that managers need to address on a daily basis, such as ensuring the appropriate number and types of staff, financial performance, and quality of care. These internal areas reflect the operation of the organization where the manager has the most control. Keeping the dual perspective requires significant balance and effort on the part of management in order to make good decisions.

MANAGEMENT: DEFINITION, FUNCTIONS, AND

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COMPETENCIES As discussed earlier, management is needed to support and coordinate the services provided within health care organizations. Management has been defined as the process, comprised of social and technical functions and activities, occurring within organizations for the purpose of accomplishing predetermined objectives through human and other resources (Longest, Rakich, & Darr, 2000). Implicit in the definition is that managers work through and with other people, carrying out technical and interpersonal activities to achieve the desired objectives of the organization. Others have stated that a manager is anyone in the organization who supports and is responsible for the work performance of one or more other persons (Lombardi & Schermerhorn, 2007).

While most beginning students of health care management tend to focus on the role of the senior manager or lead administrator of an organization, it should be realized that management occurs through many others who may not have “manager” in their position title. Examples of some of these managerial positions in health care organizations include supervisor, coordinator, and director, among others (see Table 1-2). These levels of managerial control are discussed in more detail in the next section.

Managers implement six management functions as they carry out the process of management (Longest et al., 2000):

Planning: This function requires the manager to set a direction and determine

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what needs to be accomplished. It means setting priorities and determining performance targets.

Organizing: This management function refers to the overall design of the organization or the specific division, unit, or service for which the manager is responsible. Furthermore, it means designating reporting relationships and intentional patterns of interaction. Determining positions, teamwork assignments, and distribution of authority and responsibility are critical components of this function.

Staffing: This function refers to acquiring and retaining human resources. It also refers to developing and maintaining the workforce through various strategies and tactics.

Controlling: This function refers to monitoring staff activities and performance and taking the appropriate actions for corrective action to increase performance.

Directing: The focus in this function is on initiating action in the organization through effective leadership and motivation of, and communication with, subordinates.

Decision making: This function is critical to all of the aforementioned management functions and means making effective decisions based on consideration of benefits and the drawbacks of alternatives.

In order to effectively carry out these functions, the manager needs to possess several key competencies. Katz (1974) identified key competencies of the effective manager, including conceptual, technical, and interpersonal skills. The term competency refers to a state in which an individual has the requisite or adequate ability or qualities to perform certain functions (Ross, Wenzel, & Mitlyng, 2002). These are defined as follows:

Conceptual skills are those skills that involve the ability to critically analyze and solve complex problems. Examples: a manager conducts an analysis of the best way to provide a service or determines a strategy to reduce patient complaints regarding food service.

Technical skills are those skills that reflect expertise or ability to perform a specific work task. Examples: a manager develops and implements a new incentive compensation program for staff or designs and implements modifications to a computer-based staffing model.

Interpersonal skills are those skills that enable a manager to communicate

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with and work well with other individuals, regardless of whether they are peers, supervisors, or subordinates. Examples: a manager counsels an employee whose performance is below expectation or communicates to subordinates the desired performance level for a service for the next fiscal year.

MANAGEMENT POSITIONS: THE CONTROL IN THE ORGANIZATIONAL HEIRARCHY Management positions within health care organizations are not confined to the top level; because of the size and complexity of many health care organizations, management positions are found throughout the organization. Management positions exist at the lower, middle, and upper levels; the upper level is referred to as senior management. The hierarchy of management means that authority, or power, is delegated downward in the organization, and lower-level managers have less authority than higher-level managers, whose scope of responsibility is much greater. For example, a vice president of Patient Care Services in a hospital may be in charge of several different functional areas, such as nursing, diagnostic imaging services, and laboratory services; in contrast, a director of Medical Records—a lower-level position—has responsibility only for the function of patient medical records. Furthermore, a supervisor within the Environmental Services department may have responsibility for only a small housekeeping staff, whose work is critical, but confined to a defined area of the organization. Some managerial positions, such as those discussed previously, are line manager positions because the manager supervises other employees; other managerial positions are staff manager positions because they carry out work and advise their bosses, but they do not routinely supervise others. Managerial positions also vary in terms of required expertise or experience. Some positions require extensive knowledge of many substantive areas and significant working experience, and other positions are more appropriate for entry-level managers who have limited or no experience.

The most common organizational structure for health care organizations is a functional organizational structure, whose key characteristic is a pyramid- shaped hierarchy that defines the functions carried out and the key management positions assigned to those functions (see Figure 1-2). The size and complexity of the specific health services organization will dictate the particular structure. For example, larger organizations—such as large community hospitals, hospital

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systems, and academic medical centers—will likely have deep vertical structures reflecting varying levels of administrative control for the organization. This structure is necessary due to the large scope of services provided and the corresponding vast array of administrative and support services that are needed to enable the delivery of clinical services. Other characteristics associated with this functional structure include a strict chain of command and line of reporting, which ensure communication and assignment and evaluation of tasks are carried out in a linear command and control environment. This structure offers key advantages, such as specific divisions of labor and clear lines of reporting and accountability.

Other administrative structures have been adopted by health care organizations, usually in combination with a functional structure. These include matrix, or team-based, models and service line management models. The matrix model recognizes that a strict functional structure may limit the organization’s flexibility to carry out the work, and that the expertise of other disciplines is needed on a continuous basis. An example of the matrix method is when functional staff, such as nursing and rehabilitation personnel, are assigned to a specific program, such as geriatrics, and they report for programmatic purposes to the program director of the geriatrics department. Another example is when clinical and administrative staff are assigned to a team investigating new services that is headed by a marketing or business development manager. In both of these examples, management would lead staff who traditionally are not under their direct administrative control. Advantages of this structure include improved lateral communication and coordination of services, as well as pooled knowledge.

In service line management, a manager is appointed to head a specific clinical service line and has responsibility and accountability for staffing, resource acquisition, budget, and financial control associated with the array of services provided under that service line. Typical examples of service lines include cardiology, oncology (cancer), women’s services, physical rehabilitation, and behavioral health (mental health). Service lines can be established within a single organization or may cut across affiliated organizations, such as within a hospital system where services are provided at several different affiliated facilities (Boblitz & Thompson, 2005). Some facilities have found that the service line management model for selected clinical services has resulted in many benefits, such as lower costs, higher quality of care, and greater patient satisfaction, compared to other management models (Duffy & Lemieux, 1995). The service line management model is usually implemented within an organization in conjunction with a functional structure, as the organization may choose to give special emphasis and

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additional resources to one or a few services lines.

FIGURE 1-2 Functional Organizational Structure

FOCUS OF MANAGEMENT: SELF, UNIT/TEAM, AND ORGANIZATION Effective health care management involves exercising professional judgment and skills and carrying out the aforementioned managerial functions at three levels: self, unit/team, and organization wide. First and foremost, the individual manager must be able to effectively manage himself or herself. This means managing time, information, space, and materials; being responsive and following through with peers, supervisors, and clients; maintaining a positive attitude and high motivation; and keeping a current understanding of management techniques and substantive issues of health care management. Drucker (2005) suggests that managing yourself also involves knowing your strengths, how you perform, your values, where you belong, and what you can contribute, as well as taking responsibility for your relationships. Managing yourself also means developing and applying appropriate technical, interpersonal, and conceptual skills and competencies and being comfortable with them, in order to be able to effectively move to the next level— that of supervising others.

The second focus of management is the unit/team level. The expertise of the manager at this level involves managing others in terms of effectively completing

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the work. Regardless of whether you are a senior manager, mid-level manager, or supervisor, you will be “supervising” others as expected in your assigned role. This responsibility includes assigning work tasks, review and modification of assignments, monitoring and review of individual performance, and carrying out the management functions described earlier to ensure excellent delivery of services. This focal area is where the actual work gets done. Performance reflects the interaction of the manager and the employee, and it is incumbent on the manager to do what is needed to shape the performance of individual employees. The focus of management at this echelon recognizes the task interdependencies among staff and the close coordination that is needed to ensure that work gets completed efficiently and effectively.

The third management focus is at the organizational level. This focal area reflects the fact that managers must work together as part of the larger organization to ensure organization-wide performance and organizational viability. In other words, the success of the organization depends upon the success of its individual parts, and effective collaboration is needed to ensure that this occurs. The range of clinical and nonclinical activities that occur within a health care organization requires that managers who head individual units work closely with other unit managers to provide services. Sharing of information, collaboration, and communication are essential for success. The hierarchy looks to the contribution of each supervised unit as it pertains to the whole. Individual managers’ contributions to the overall performance of the organization—in terms of various performance measures such as cost, quality, satisfaction, and access—are important and measured.

ROLE OF THE MANAGER IN ESTABLISHING AND MAINTAINING ORGANIZATIONAL CULTURE Every organization has a distinct culture, known as the beliefs, attitudes, and behavior that are shared among organizational members. Organizational culture is commonly defined as the character, personality, and experience of organizational life i.e., what the organization really “is” (Scott, Mannion, Davies, & Marshall, 2003). Culture prescribes the way things are done, and is defined, shaped, and reinforced by the management team. All managers play a role in establishing the culture of a health care organization, and in taking the necessary leadership action to sustain, and in some cases change, the culture. Culture is

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shaped by the values, mission, and vision for the organization. Values are principles the organization believes in and shape the organization’s purpose, goals, and day-to-day behaviors. Adopted values provide the foundation for the organization’s activities and include such principles as respect, quality service, and innovation. The mission of the organization is its fundamental purpose, or what the organization seeks to achieve. The vision of the organization specifies the desired future state for the organization and reflects what the organization wants to be known and recognized for in the future. Statements of values, mission, and vision result from the organizational strategic planning process. These statements are communicated widely throughout the organization and to the community and shape organizational strategic and operational actions. Increasingly, organizations are establishing codes of conduct or standards of behavior that all employees must follow (Studer, 2003). These standards of behavior align with the values, mission, and vision. The role of managers in the oversight of standards of behavior is critical in several respects: for setting expectations for staff behavior, modelling the behavior, measuring staff performance, and improving staff performance. Mid- level and lower-level managers are instrumental to organization-wide adoption and embracing of the culture as they communicate desired behaviors and reinforce culture through modelling expectations through their own behaviors. For example, a value of customer service or patient focus requires that managers ensure proper levels of service by their employees via clarifying expectations and providing internal customer service to their own staff and other managers. Furthermore, managers can measure and evaluate employee compliance with organizational values and standards of behavior by reviewing employee performance and working with staff to improve performance. Performance evaluation will be explored in a later chapter in this text.

ROLE OF THE MANAGER IN TALENT MANAGEMENT In order to effectively master the focal areas of management and carry out the required management functions, management must have the requisite number and types of highly motivated employees. From a strategic perspective, health care organizations compete for labor, and it is commonly accepted today that high- performing health care organizations are dependent upon individual human performance, as discussed further in Chapter 12. Many observers have advocated for health care organizations to view their employees as strategic assets who can

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create a competitive advantage (Becker, Huselid, & Ulrich, 2001). Therefore, human resources management has been replaced in many health care organizations with talent management. The focus has shifted to securing and retaining the talent needed to do the job in the best way, rather than simply filling a role (Huselid, Beatty, & Becker, 2005). As a result, managers are now focusing on effectively managing talent and workforce issues because of the link to organizational performance (Griffith, 2009).

Beyond recruitment, managers are concerned about developing and retaining those staff who are excellent performers. Many health care organizations are creating high-involvement organizations that identify and meet employee needs through their jobs and the larger organizational work setting (Becker et al., 2001). One of the critical responsibilities of managers in talent management is promoting employee engagement, which describes the motivation and commitment of staff to contribute to the organization. There are several strategies used by managers to develop and sustain employee engagement, as well as to develop and maintain excellent performers. These include formal methods such as offering training programs; providing leadership development programs; identifying employee needs and measuring employee satisfaction through engagement surveys; providing continuing education, especially for clinical and technical fields; and enabling job enrichment. In addition, managers use informal methods such as conducting periodic employee reviews, soliciting employee feedback, conducting rounds and employee huddles, offering employee suggestion programs, and other methods of managing employee relations and engagement. These topics are explored in more detail in a later chapter in this book.

ROLE OF THE MANAGER IN ENSURING HIGH PERFORMANCE At the end of the day, the role of the manager is to ensure that the unit, service, division, or organization he or she leads achieves high performance. What exactly is meant by high performance? To understand performance, one has to appreciate the value of setting and meeting goals and objectives for the unit/service and organization as a whole, in terms of the work that is being carried out. Goals and objectives are desired end points for activity and reflect strategic and operational directions for the organization. They are specific, measurable, meaningful, and time oriented. Goals and objectives for individual units should reflect the

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overarching needs and expectations of the organization as a whole because, as the reader will recall, all entities are working together to achieve high levels of overall organizational performance. Studer (2003) views the organization as needing to be results oriented, with identified pillars of excellence as a framework for the specific goals of the organization. These pillars are people (employees, patients, and physicians), service, quality, finance, and growth. Griffith (2000) refers to high- performing organizations as being championship organizations—that is, they expect to perform well on different yet meaningful measures of performance. Griffith further defines the “championship processes” and the need to develop performance measures in each of the following: governance and strategic management; clinical quality, including customer satisfaction; clinical organization (caregivers); financial planning; planning and marketing; information services; human resources; and plant and supplies. For each championship process, the organization should establish measures of desired performance that will guide the organization. Examples of measures include medication errors, surgical complications, patient satisfaction, staff turnover rates, employee satisfaction, market share, profit margin, and revenue growth, among others. In turn, respective divisions, units, and services will set targets and carry out activities to address key performance processes. The manager’s job, ultimately, is to ensure these targets are met by carrying out the previously discussed management functions. A control process for managers has been advanced by Ginter, Swayne, and Duncan (2002) that describes five key steps in the performance management process: set objectives, measure performance, compare performance with objectives, determine reasons for deviation, and take corrective action. Management’s job is to ensure that performance is maintained or, if below expectations, improved.

Stakeholders, including insurers, state and federal governments, and consumer advocacy groups, are expecting, and in many cases demanding, acceptable levels of performance in health care organizations. These groups want to make sure that services are provided in a safe, convenient, low-cost, and high-quality environment. For example, The Joint Commission (formerly JCAHO) has set minimum standards for health care facilities operations that ensure quality, the National Committee for Quality Assurance (NCQA) has set standards for measuring performance of health plans, and the Centers for Medicare and Medicaid Services (CMS) has established a website that compares hospital performance along a number of critical dimensions. In addition, CMS has provided incentives to health care organizations by paying for performance on measures of clinical care and not paying for care resulting from never events i.e.,

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shocking health outcomes that should never occur in a health care setting such as wrong site surgery (e.g., the wrong leg) or hospital-acquired infections (Agency for Healthcare Research and Quality, n.d.). Health insurers also have implemented pay-for-performance programs for health care organizations based on various quality and customer service measures.

In addition to meeting the reporting requirements of the aforementioned organizations, many health care organizations today use varying methods of measuring and reporting the performance measurement process. Common methods include developing and using dashboards or balanced scorecards that allow for a quick interpretation of organizational performance across a number of key measures (Curtright, Stolp-Smith, & Edell, 2000; Pieper, 2005). Senior administration uses these methods to measure and communicate performance on the total organization to the governing board and other critical constituents. Other managers use these methods at the division, unit, or service level to profile its performance. In turn, these measures are also used to evaluate managers’ performance and are considered in decisions by the manager’s boss regarding compensation adjustments, promotions, increased or reduced responsibility, training and development, and, if necessary, termination or reassignment.

ROLE OF THE MANAGER IN LEADERSHIP DEVELOPMENT AND SUCCESSION PLANNING Because health care organizations are complex and experience challenges from internal and external environments, the need for leadership skills of managers at all levels of the organization has become paramount. Successful organizations that demonstrate high operational performance depend on strong leaders (Squazzo, 2009). Senior executives have a primary role in ensuring managers throughout the organization have the knowledge and skills to provide effective leadership to achieve desired levels of organizational performance. Senior management also plays a key role in succession planning to ensure vacancies at mid- and upper levels of the organization due to retirements, departures, and promotions are filled with capable leaders. Therefore, key responsibilities of managers are to develop future leaders through leadership development initiatives and to engage in succession planning.

Leadership development programs are broadly comprised of several specific organizational services that are offered to enhance leadership competencies and

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skills of managerial staff in health care organizations. Leadership development is defined as educational interventions and skill-building activities designed to improve the leadership capabilities of individuals (Kim & Thompson, 2012; McAlearney, 2005). Such initiatives not only serve to increase leadership skills and behaviors, but also ensure stability within organizational talent and culture through career advancement and succession planning (Burt, 2005). In order to embrace leadership development, managers provide technical and psychological support to the staff through a range of leadership development activities:

Leadership development program: Training and leadership development on a variety of required topics, through a formally designated program, using structured learning and competency-based assessment using various formats, media, and locations (Kim & Thompson, 2012)

Courses on leadership and management: Didactic training through specific courses offered face-to-face, online, or in hybrid form (Garman, 2010; Kim & Thompson, 2012)

Mentoring: Formal methods used by the organization for matching aspiring leaders with mid-level and senior executives to assist in their learning and personal growth (Garman, 2010; Landry & Bewley, 2010)

Personal development coaching: Usually reserved for upper-level executives; these formal organizational efforts assist in improving performance by shaping attitudes and behavior and focusing on personal skills development (Garman, 2010; Scott, 2009)

Job enlargement: The offering of expanded responsibilities, developmental assignments, and special projects to individuals to cultivate leadership skills for advancement advance within the organization (Fernandez-Aaroz, 2014; Garman, 2010; Landry & Bewley, 2010)

360-degree performance feedback: Expensive, labor-intensive, and usually reserved for upper-level executives; a multisource feedback approach where an individual staff member or manager receives an assessment of performance from several key individuals (e.g., peers, superiors, other managers, and subordinates) regarding performance and opportunities for improvement (Garman, 2010; Landry & Bewley, 2010)

Leadership development programs have shown positive results. For example, health systems report benefits such as improvement of skills and quality of the workforce, enhancing organizational efficiency in educational activities, and reducing staff turnover and related expenses when leadership training is tied to

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organization-wide strategic priorities (McAlearney, 2005). In addition, hospitals with leadership development programs have been found to have higher volumes of patients, higher occupancy, higher net patient revenue, and higher total profit margin when compared to hospitals without these programs (Thompson & Kim, 2013). Studies have also shown that leadership development programs in health systems are related to greater focus on employee growth and development, improved employee retention, and greater focus on organizational strategic priorities (McAlearney, 2010). Finally, within a single health system, a leadership development program led to greater market share, reduced employee turnover, and improved core quality measures (Ogden, 2007). However, one of the key drawbacks to leadership development programs is the cost of developing and operating the programs (Squazzo, 2009).

Due to the competitive nature of health care organizations and the need for highly motivated and skilled employees, managers are faced with the challenge of succession planning for their organizations. Succession planning refers to the concept of taking actions to ensure staff can move up in management roles within the organization to replace those managers who retire or move to other opportunities in other organizations. Succession planning has most recently been emphasized at the senior level of organizations, in part due to the large number of retirements that are anticipated from Baby Boomer chief executive officers (CEOs) (Burt, 2005). To continue the emphasis on high performance within health care organizations, CEOs and other senior managers are interested in finding and nurturing leadership talent within their organizations who can assume the responsibility and carry forward the important work of these organizations.

Health care organizations are currently engaged in several practices to address leadership succession needs. First, mentoring programs for junior management that includes the participation of senior management have been advocated as a good way to prepare future health care leaders (Rollins, 2003). Mentoring studies show that mentors view their efforts as helpful to the organization (Finley, Ivanitskaya, & Kennedy, 2007). Some observers suggest having many mentors is essential to capturing the necessary scope of expertise, experience, interest, and contacts to maximize professional growth (Broscio & Scherer, 2003). Mentoring middle-level managers for success as they transition to their current positions is also helpful in preparing those managers for future executive leadership roles (Kubica, 2008).

A second method of succession planning is through formal leadership development programs. These programs are intended to identify management potential throughout an organization by targeting specific skill sets of individuals

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and assessing their match to specific jobs, such as vice president or chief operating officer (COO). One way to implement this is through talent reviews, which, when done annually, help create a pool of existing staff who may be excellent candidates for further leadership development and skill strengthening through the establishment of development plans. Formal programs that are being established by many health care organizations focus on high-potential people (Burt, 2005). Thompson and Kim (2013) found that 48% of community hospitals offered a leadership development program, and McAlearney (2010) reported that about 50% of hospital systems nationwide had an executive-level leadership development program. However, many health care organizations have developed programs that address leadership development at all levels of the organization, not just the executive level, and require all managers to participate in these programs to strengthen their managerial and leadership skills and to contribute to organizational performance.

ROLE OF THE MANAGER IN INNOVATION AND CHANGE MANAGEMENT Due to the pace of change in the health services industry and the complexity of health services organizations, the manager plays a significant role in leading innovation and spearheading change management. Health services organizations cannot remain static. The environmental forces discussed earlier in this chapter strongly point to the need for organizations to respond and adapt to these external influences. In addition, achieving and maintaining high performance outcomes or results is dependent on making improvements to the organizational structure and processes. Moreover, managers are encouraged to embrace innovation to identify creative ways to improve service and provide care effectively and efficiently.

Innovation and change management are intricately related, but different, competencies. Hamel (2007) describes management innovation and operational innovation. Management innovation addresses the organization’s management processes as the practices and routines that determine how the work of management gets conducted on a daily basis. These include such practices as internal communications, employment assessment, project management, and training and development. In contrast, operational innovation addresses the organization’s business processes. In the health care setting, these include processes such as customer service, procurement of supplies and supply chain

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changes, care coordination across staff, and development and use of clinical procedures and practices. Some operational innovation is structural in nature and involves acquisition of information and clinical products, such as electronic medical/health records, or a new device or procedure, such as robotic surgery or new medications (Staren, Braun, & Denny, 2010). There are specific skills needed by managers to be innovators in management. These skills include thinking creatively about ways to proactively change management and operational practices to improve the organization. It also involves a willingness to test these innovative practices and assess their impact. Also, a manager must facilitate recruitment and development of employees who embrace creativity and innovation. Having innovative clinical and administrative staff is critical to implementing operational innovation. A culture of innovation depends upon staff who are generating ideas for operational innovation, and the manager is a linchpin in establishing a culture of innovation that supports idea generation. Recent studies of innovative and creative companies found that leaders should rely on all staff collaborating by helping one another and engaging in a dynamic process of seeking and giving feedback, ideas, and assistance (Amabile, Fisher, & Pillemer, 2014). Several barriers to innovation have been identified. These barriers include lack of an innovation culture that supports idea generation, lack of leadership in innovation efforts, and high costs of making innovative changes (Harrington & Voehl, 2010). In addition, formal rules and regulations, professional standards, and administrative policies may all work against innovation (Dhar, Griffin, Hollin, & Kachnowski, 2012). Finally, daily priorities and inertia reflecting the status quo that cause managers to focus on routines and day-to-day tasks limit staff ability to be creative, engage in discovery, and generate ideas (Dhar et al., 2012).

Organizational change, or change management, is related to but different from innovation. Organizational change is a structured management approach to improving the organization and its performance. Knowledge of performance gaps is a necessary prerequisite to change management, and managers must routinely assess their operational activities and performance and make adjustments in the work structure and processes to improve performance (Thompson, 2010). Managing organizational change has become a significant responsibility of managers and a key competency for health care managers (Buchbinder & Thompson, 2010). Managing the change process within health care organizations is critical because appropriately and systematically managing change can result in improved organizational performance. However, change is difficult and the change process creates both staff resistance and support for a change.

A process model of change management has been suggested by Longest et al.

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(2000). This rational, problem-based model identifies four key steps in systematically understanding and managing the change process: (1) identification of the need for change, (2) planning for implementing the change, (3) implementing the change, and (4) evaluating the change.

There are several key management competencies that health care managers need to possess to effectively manage change within their organizations. Thompson (2010) suggests that managers:

–Embrace change and be a change agent; –Employ a change management process; –Effectively address support and resistance to change; –Use change management to make the organization innovative and successful

in the future; and, –Recruit staff and succession plan with change management in mind.

ROLE OF THE MANAGER IN HEALTH CARE POLICY As noted earlier in this chapter, managers must consider both their external and internal domains as they carry out management functions and tasks. One of the critical areas for managing the external world is to be knowledgeable about health policy matters under consideration at the state and federal levels that affect health services organizations and health care delivery. This is particularly true for senior- level managers. This awareness is necessary to influence policy in positive ways that will help the organization and limit any adverse impacts. Staying current with health care policy discussions, participating in deliberations of health policy, and providing input where possible will allow health care management voices to be heard. Because health care is such a popular yet controversial topic in the U.S. today, continuing changes in health care delivery are likely to emanate from the legislative and policy processes at the state and federal levels. For example, the Patient Protection and Affordable Care Act, signed into law in 2010 as a major health care reform initiative, has had significant implications for health care organizations in terms of patient volumes, reimbursement for previously uninsured patients, and the movement to improve population health and develop value-based purchasing. Other recent federal policy changes include cuts in Medicare reimbursement and increases in reporting requirements. State legislative

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changes across the country affect reimbursement under Medicaid and the Children’s Health Insurance Program, licensure of facilities and staff, certificate of need rules for capital expenditures and facility and service expansions, and state requirements on mandated health benefits and modified reimbursements for insured individuals that affect services offered by health care organizations.

In order to understand and influence health policy, managers must strive to keep their knowledge current. This can be accomplished through targeted personal learning, networking with colleagues within and outside of their organizations, and participating in professional associations, such as the American College of Healthcare Executives and the Medical Group Management Association. These organizations, and many others, monitor health policy discussions and advocate for their associations’ interests at the state and federal levels. Knowledge gained through these efforts can be helpful in shaping health policy in accordance with the desires of health care managers.

RESEARCH IN HEALTH CARE MANAGEMENT Current research in management focuses on best practices. For example, the best practices of managers and leaders in ensuring organizational performance has been the focus of work by McAlearney, Robbins, Garman, and Song (2013) and Garman, McAlearney, Harrison, Song, and McHugh (2011). The best practices identified by these researchers include staff engagement, staff acquisition and development, staff frontline empowerment, and leadership alignment and development. Understanding what leaders do to develop their staff and prepare lower-level managers for leadership roles has been a common research focus as well. Leadership development programs have been examined in terms of their structure and impact. McAlearney (2008) surveyed health care organizations and key informants to determine the availability of leadership development programs and their role in improving quality and efficiency, and found these programs enhanced the skills and quality of the workforce, improved efficiency in educational development, and reduced staff turnover. A study of high-performing health organizations found various practices are used to develop leaders internally, including talent reviews to identify candidates for upward movement, career development planning, job rotations, and developmental assignments (McHugh, Garman, McAlearney, Song, & Harrison, 2010). In addition, a 2010 study examined leadership development in health and non-health care organizations and found best practices included 360-degree performance evaluation, mentoring,

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coaching, and experiential learning (National Center for Healthcare Leadership, 2010). A study of U.S. health systems found about half of health systems offered a leadership development program and also found that leadership development initiatives helped the systems focus on employee growth and development and improved employee retention (McAlearney, 2010). As noted earlier in this chapter, some recent studies have examined the characteristics of leadership development programs in hospitals, finding correlations of programs with size, urban location, and not-for-profit ownership status (Kim and Thompson, 2012; Thompson and Kim, 2013). A new area of management research is the participation of early careerists in leadership development programs, and recent evidence shows that some leadership development activities are of more interest to staff than others (Thompson and Temple, 2015). A number of important areas of management research exist today, and include looking at the effect of leadership development training on specific decision-making by managers, career progression due to participation in leadership development, and the impact of collaboration among staff on firm innovation and performance (Amabile, Fisher, & Pillemer, 2014).

CHAPTER SUMMARY The profession of health care management is challenging yet rewarding, and requires persons in managerial positions at all levels of the organization to possess sound conceptual, technical, and interpersonal skills to carry out the necessary managerial functions of planning, organizing, staffing, directing, controlling, and decision making. In addition, managers must maintain a dual perspective where they understand the external and internal domains of their organization and the need for development at the self, unit/team, and organization levels. Opportunities exist for managerial talent at all levels of a health care organization, including supervisory, middle-management, and senior-management levels. The role of manager is critical to ensuring a high level of organizational performance, and managers are also instrumental in establishing and maintaining organizational culture, talent recruitment and retention, leadership development and succession planning, innovation and change management, and shaping health care policy.

Note: Portions of this chapter were originally published as “Understanding Health Care Management” in Career Opportunities in Healthcare Management: Perspectives from the Field, by Sharon B. Buchbinder and Jon M. Thompson, and an adapted version of this chapter is reprinted here with permission of

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the publisher.

DISCUSSION QUESTIONS

1. Define health care management and health care managers.

2. Delineate the functions carried out by health care managers and give an example of a task in each function.

3. Explain why interpersonal skills are important in health care management.

4. Compare and contrast three models of organizational design.

5. Why is the health care manager’s role in ensuring high performance so critical? Explain.

6. Characterize the health care manager’s role in change management and assess the extent to which this has an impact on the success of the change process.

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http://intqhc.oxfordjournals.org/content/15/2/111
CHAPTER 2

Leadership Louis Rubino

LEARNING OBJECTIVES By the end of this chapter, the student will be able to:

Distinguish between leadership and management; Summarize the history of leadership in the U.S. from the 1920s to current times;

Compare and contrast leadership styles, competencies, and protocols; Summarize old and new governance trends; Analyze key barriers and challenges to successful leadership; Provide a rationale for why health care leaders have a greater need for ethical behavior;

Explore important new initiatives requiring health care leaders’ engagement; and

Discuss special research issues related to leadership.

LEADERSHIP VS. MANAGEMENT In any business setting, there must be leaders as well as managers. But are these the same people? Not necessarily. There are leaders who are good managers and there are managers who are good leaders, but usually neither case is the norm. In health care, this is especially important to recognize because of the need for both. Health care is unique in that it is a service industry that depends on a large number of highly trained personnel as well as trade workers. Whatever the setting, be it a hospital, a long-term care facility, an ambulatory care center, a medical

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device company, an insurance company, an accountable care organization, or some other health care entity, leaders as well as managers are needed to keep the organization moving in a forward direction and, at the same time, maintain current operations. This is done by leading and managing its people and assuring good business practices.

Leaders usually take a focus that is more external, whereas the focus of managers is more internal. Even though they need to be sure their health care facility is operating properly, leaders tend to spend the majority of their time communicating and aligning with outside groups that can benefit their organizations (partners, community, vendors) or influence them (government, public agencies, media). See Figure 2-1. There is crossover between leaders and managers across the various areas, though a distinction remains for certain duties and responsibilities.

Usually the top person in the organization (e.g., Chief Executive Officer, Administrator, Director) has full and ultimate accountability. This type of leader may be dictated by the current conditions faced by the organization. A more strategic leader, who defines purpose and vision and aligns people, processes, and values, may be needed. Or, a network leader, who could connect people across disciplines, organizational departments, and regions, may be essential. Whichever type surfaces, there will be several managers reporting to this person, all of whom have various functional responsibilities for different areas of the organization (e.g., Chief Nursing Officer, Physician Director, Chief Information Officer). These managers can certainly be leaders in their own areas, but their focus will be more internal within the organization’s operations. They are the operational leaders of the organization. Together, these three types of leaders/followers produce an interdependent leadership system, a team which will prove more high performing in the current health care field (Maccoby, Norman, Norman, & Margolies, 2013).

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FIGURE 2-1 Leadership and Management Focus

Leaders have a particular set of competencies that require more forward thinking than those of managers. Leaders need to set a vision or direction for the organization. They need to be able to motivate their employees, as well as other stakeholders, so the business continues to exist and, hopefully, thrive in periods of change. No industry is as dynamic as health care, with rapid change occurring due to the complexity of the system and government regulations. Leaders are needed to keep the entity on course and to maneuver around obstacles, like a captain commanding his ship at sea. Managers must tend to the business at hand and make sure the staff is following proper procedures and meeting established targets and goals. They need a different set of competencies. See Table 2-1.

HISTORY OF LEADERSHIP IN THE U.S. Leaders have been around since the beginning of man. We think of the strongest

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male becoming the leader of a caveman clan. In Plato’s time, the Greeks began to talk about the concept of leadership and acknowledged the political system as critical for leaders to emerge in a society. In Germany during the late 19th century, Sigmund Freud described leadership as unconscious exhibited behavior; later, Max Weber identified how leadership is present in a bureaucracy through assigned roles. Formal leadership studies in the U.S., though, have only been around for the last 100 years (Sibbet, 1997).

We can look at the decades spanning the 20th century to see how leadership theories evolved, placing their center of attention on certain key components at different times (Northouse, 2016). These emphases often matched or were adapted from the changes occurring in society.

With the industrialization of the U.S. in the 1920s, productivity was of paramount importance. Scientific management was introduced, and researchers tried to determine which characteristics were identified with the most effective leaders based on their units having high productivity. The Great Man Theory was developed out of the idea that certain traits determined good leadership. The traits that were recognized as necessary for effective leaders were ones that were already inherent in the person, such as being male, being tall, being strong, and even being Caucasian. Even the idea that “you either got it or you don’t” was supported by this theory, the notion being that a good leader had charisma. Behaviors were not considered important in determining what made a good leader. This theory discouraged anyone who did not have the specified traits from aspiring to a leadership position.

Fortunately, after two decades, businesses realized leadership could be enhanced through certain conscious acts, and researchers began to study which behaviors would produce better results. Resources were in short supply due to World War II, and leaders were needed who could truly produce good results.

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This was the beginning of the Style Approach to Leadership. Rather than looking at only the characteristics of the leader, researchers started to recognize the importance of two types of behaviors in successful leadership: completing tasks and creating good relationships. This theory states leaders have differing degrees of concern over each of these behaviors, and the best leaders would be fully attentive to both.

In the 1960s, American society had a renewed emphasis on helping all of its people and began a series of social programs that still remain today. The two that impact health care directly, by providing essential services, are Medicare for the elderly (age 65 and over) and the disabled and Medicaid for the indigent population. The Situational Approach to Leadership then came into prominence and supported this national concern. This set of theories focused on the leader changing his or her behavior in certain situations in order to meet the needs of subordinates. This would imply a very fluid leadership process whereby one can adapt one’s actions to an employee’s needs at any given time.

Not much later, researchers believed perhaps leaders should not have to change how they behaved in a work setting, but instead the appropriate leaders should be selected from the very beginning. This is the Contingency Theory of Leadership and was very popular in the 1970s. Under this theory, the focus was on both the leader’s style as well as the situation in which the leader worked, thus building upon the two earlier theories. This approach was further developed by what is known as the Path–Goal Theory of Leadership. This theory still placed its attention on the leader’s style and the work situation (subordinate characteristics and work task structure) but also recognized the importance of setting goals for employees. The leader was expected to remove any obstacles in order to provide the support necessary for them to achieve those goals.

In the later 1970s, the U.S. was coming out of the Vietnam War, in which many of its citizens did not think the country should have been involved. More concern was expressed over relationships as the society became more psychologically attuned to how people felt. The Leader–Member Exchange Theory evolved over the concern that leadership was being defined by the leader, the follower, and the context. This new way of looking at leadership focused on the interactions that occur between the leaders and the followers. This theory claimed leaders could be more effective if they developed better relationships with their subordinates through high-quality exchanges.

After Vietnam and a series of weak political leaders, Americans were looking for people to take charge who could really make a difference. Charismatic leaders came back into vogue, as demonstrated by the support shown to President Ronald

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Reagan, an actor turned politician. Unlike the Great Man Theory earlier in the century, this time the leader had to have certain skills to transform the organization through inspirational motivational efforts. Leadership was not centered upon transactional processes that tied rewards or corrective actions to performance. Rather, the transformational leader could significantly change an organization through its people by raising their consciousness, empowering them, and then providing the nurturing needed as they produced the results desired.

In the late 1980s, the U.S. started to look more globally for ways to have better production. Total Quality Management became a popular concept and arose from researchers studying Japanese principles of managing production lines. In the health care setting, this was embraced through a process still used today called Continuous Quality Improvement or Performance Improvement. In the decade to follow, leaders assigned subordinates to a series of work groups in order to focus on a particular area of production. Attention was placed on developing the team for higher level functioning and on how a leader could create a work environment that could improve the performance of the team. Individual team members were expendable, and the team entity was all important.

We have entered the 21st century with some of the greatest leadership challenges ever in the health care field. Critical personnel shortages, limited resources, and increased governmental regulations provide an environment that yearns for leaders who are attentive to the organization and its people, yet can still address the big picture. Several of today’s leadership models relate well to the dynamism of the health care field and are presented here. Looking at these models, there seems to be a consistent pattern of self-aware leaders who are concerned for their employees and understand the importance of meaningful work. As we entered the 2000s, leaders needed to use Adaptive Leadership to create flexible organizations able to meet the relentless succession of challenges faced in health care and elsewhere (Heifetz, Grashow, & Linsky, 2009). Plus, today’s astute health care leaders recognize the importance of considering the global environment, as health care wrestles with international issues that impact us locally, such as outsourcing services, medical tourism, and over-the-border drug purchases, giving rise to the global leader. See Table 2-2.

CONTEMPORARY MODELS Today’s health care industry does not prescribe any one type of leadership model. Many leaders are successful drawing from a variety of traditional and

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contemporary models. It is wise for the leadership student, as well as the practitioner, to become familiar with the various contemporary models so they can be utilized when appropriate. See Table 2-3.

Emotional Intelligence (EI) Emotional Intelligence (EI) is a concept made famous by Daniel Goleman in the late 1990s. It suggests that there are certain skills (intrapersonal and interpersonal) that a person needs to be well adjusted in today’s world. These skills include self-awareness (having a deep understanding of one’s emotions, strengths, weaknesses, needs, and drives), self-regulation (a propensity for reflection, an ability to adapt to changes, the power to say no to impulsive urges), motivation (being driven to achieve, being passionate about one’s profession, enjoying challenges), empathy (thoughtfully considering others’ feelings when interacting), and social skills (moving people in the direction you desire by your ability to interact effectively) (Freshman & Rubino, 2002).

Since September 11, 2001, leaders have needed to be more understanding of

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their subordinates’ world outside of the work environment. EI, when applied to leadership, suggests a more caring, confident, enthusiastic boss who can establish good relations with workers. Researchers have shown that EI can distinguish outstanding leaders and strong organizational performance (Goleman, 1998). For health care as an industry and for health care managers, this seems like a good fit, especially during this time of change (Delmatoff & Lazarus, 2014). See Table 2-4.

Authentic Leadership The central focus of authentic leadership is that people will want to naturally associate with someone who is following their internal compass of true purpose (George & Sims, 2007). Leaders who follow this model are ones who know their authentic selves, define their values and leadership principles, understand what motivates them, build a strong support team, and stay grounded by integrating all aspects of their lives. Authentic leaders have attributes such as confidence, hope, optimism, resilience, high levels of integrity, and positive values (Brown & Gardner, 2007). Assessments given to leaders in a variety of international locations have provided the evidence-based knowledge that there is a correlation between authentic leadership and positive outcomes based on supervisor-rated performance (Walumbwa, Avolio, Gardner, Wernsing, & Peterson, 2008).

Diversity Leadership Our new global society forces health care leaders to address matters of diversity, whether with their patient base or with their employees. This commitment to diversity is necessary for today’s leader to be successful. The environment must be assessed so goals can be set that embrace the concept of diversity in matters such as employee hiring and promotional practices, patient communication, and

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governing board composition, to name a few. Strategies have to be developed to make diversity work for the organization. The leader who recognizes the importance of diversity and designs its acceptance into the organizational culture will be most successful (Warden, 1999). Health care leaders are called to be role models for cultural competency (see Chapter 14 for more on this important topic) and to be able to attract, mentor, and coach those of different, as well as similar, backgrounds (Dolan, 2009).

Servant Leadership Many people view health care as a very special type of work. Individuals usually work in this setting because they want to help people. Servant leadership applies this concept to top administration’s ability to lead, acknowledging that a health care leader is largely motivated by a desire to serve others. This leadership model breaks down the typical organizational hierarchy and professes the belief of building a community within an organization in which everyone contributes to the greater whole. A servant leader is highly collaborative and gives credit to others generously. This leader is sensitive to what motivates others and empowers all to win with shared goals and vision. Servant leaders use personal trust and respect to build bridges and use persuasion rather than positional authority to foster cooperation. This model works especially well in a not-for-profit setting, since it continues the mission of fulfilling the community’s needs rather than the organization’s (Swearingen & Liberman, 2004).

Spirituality Leadership The U.S. has experienced some very serious misrepresentations and misreporting by major health care companies, as reported by U.S. governmental agencies (e.g., Columbia/HCA, GlaxoSmithKline, HealthSouth). Trying to claim a renewed sense of confidence in the system, a model of leadership has emerged that focuses on spirituality. This spiritual focus does not imply a certain set of religious beliefs but emphasizes ethics, values, relationship skills, and the promotion of balance between work and self (Wolf, 2004). The goal under this model is to define our own uniqueness as human beings and to appreciate our spiritual depth. In this way, leaders can deepen their understanding and at the same time be more productive. These leaders have a positive impact on their workers and create a working environment that supports all individuals in finding meaning in what they do. They practice five common behaviors of effective leaders as described by Kouzes and Posner (1995): (1) Challenge the process, (2) Inspire a shared vision,

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(3) Enable others to act, (4) Model the way, and (5) Encourage the heart, thus taking leadership to a new level.

Resilient Leadership Being a health care leader is an exciting yet challenging job. Much stress is placed on the executive and its takes a strong, resilient leader to overcome these pressures, bounce back, and keep the organization moving forward. Certain resilience-building practices can be used by the leader to build inner strength and perseverance (Wicks & Buck, 2013). A self-care protocol that includes self- awareness, alone time, mindfulness, and keeping a healthy perspective can be essential to not only the individual leader but also to coach his/her team members to avoid burnout and foster high staff morale.

The Emerging Health Care Leader Students of health administration do not become successful leaders overnight. It usually takes years of study and experience to become comfortable and proficient in the role. A basic foundation is necessary before a leader can emerge and certain strategies can be applied to help an individual build and grow their career (Baedke & Lamberton, 2015). Some of these include paying attention to one’s character, examining self-discipline, cultivating your personal brand, and to constantly network. The best leaders are ones who are continually learning and using this new knowledge to further their development as a leader in today’s changing health care world.

LEADERSHIP STYLES Models give us a broad understanding of someone’s leadership philosophy. Styles demonstrate a particular type of leadership behavior that is consistently used. Various authors have attempted to explain different leadership styles (Northouse, 2015; Studer, 2008). Some styles are more appropriate to use with certain health care workers, depending on their education, training, competence, motivation, experience, and personal needs. The environment must also be considered when deciding which style is the best fit.

In a coercive leadership style power is used inappropriately to get a desired response from a follower. This very directive format should probably not be used unless the leader is dealing with a very problematic subordinate or is in an

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emergency situation and needs immediate action. In health care settings over longer periods of time, three other leadership styles could be used more effectively: participative, pacesetting, and coaching.

Many health care workers are highly trained, specialized individuals who know much more about their area of expertise than their supervisor. Take the generally trained chief operating officer of a hospital who has several department managers (e.g., Imaging, Health Information Systems, Engineering) reporting to him or her. These managers will respond better and be more productive if the leader is participative in his or her style. Asking these managers for their input and giving them a voice in making decisions will let them know they are respected and valued.

In a pacesetting style, a leader sets high performance standards for his or her followers. This is very effective when the employees are self-motivated and highly competent—e.g., research scientists or intensive care nurses. A coaching style is recommended for the very top personnel in an organization. With this style, the leader focuses on the personal development of his or her followers rather than the work tasks. This should be reserved for followers the leader can trust and those who have proven their competence. See Table 2-5.

LEADERSHIP COMPETENCIES A leader needs certain skills, knowledge, and abilities to be successful. These are called competencies. The pressures of the health care industry have initiated the examination of a set of core competencies for a leader who works in a health care setting (Dye & Garman, 2015). Criticism has been directed at educational institutions for not producing administrators who can begin managing effectively right out of school. Educational programs in health administration are working with the national coalition groups (e.g., Health Leadership Council, National Center for Healthcare Leadership, and American College of Healthcare Executives) and health care administrative practitioners to come up with agreed upon competencies. Once identified, the programs can attempt to have their students learn how to develop these traits and behaviors.

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Some of the competencies are technical—for example, having analytical skills, having a full understanding of the law, and being able to market and write. Some of the competencies are behavioral—for example, decisiveness, being entrepreneurial, and an ability to achieve a good work/life balance. As people move up in organizations, their behavioral competencies are a greater determinant of their success as leaders than their technical competencies (Hutton & Moulton, 2004). Another way to examine leadership competencies is under four main groupings or domains. The Functional and Technical Domain is necessary but not sufficient for a competent leader. Three other domains provide competencies that are behavioral and relate both to the individual (Self-Development and Self-Understanding) and to other people (Interpersonal). A fourth set of competencies falls under the heading Organizational and has a broader perspective. See Table 2-6 for a full listing of the leadership competencies under the four domains.

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LEADERSHIP PROTOCOLS Health care administrators are expected to act a certain way. Leaders are role models for their organizations’ employees, and they need to be aware that their actions are being watched at all times. Sometimes people at the top of an organization get caught up in what they are doing and do not realize the message they are sending throughout the workplace by their inappropriate behavior. Specific ways of serving in the role of a health care leader can be demonstrated and can provide the exemplary model needed to send the correct message to employees. These appropriate ways in which a leader acts are called protocols.

There is no shortage of information on what protocols should be followed by today’s health care leader. Each year, researchers, teachers of health administration, practicing administrators, and consultants write books filled with their suggestions on how to be a great leader (for some recent examples, see Dye, 2010; Ledlow & Coppola, 2011; and Rath and Conchie, 2008). There are some key ways a person serving in a leadership role should act. These are described here and summarized in Table 2-7.

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Professionalism is essential to good leadership. This can be manifested not only in the way people act but also in their mannerisms and their dress. A leader who comes to work in sloppy attire or exhibits discourteous or obnoxious behavior will not gain respect from followers. Trust and respect are very important for a leader to acquire. Trust and respect must be a two-way exchange if a leader is to get followers to respond. Employees who do not trust their leader will consistently question certain aspects of their job. If they do not have respect for the leader, they will not care about doing a good job. This could lead to low productivity and bad service.

Even a leader’s mood can affect workers. A boss who is confident, optimistic, and passionate about his or her work can instill the same qualities in the workers. Such enthusiasm is almost always infectious and is passed on to others within the organization. The same can be said of a leader who is weak, negative, and obviously unenthusiastic about his or her work—these poor qualities can be acquired by others.

Leaders must be very visible throughout the organization. Having a presence can assure workers that the top people are “at the helm” and give a sense of stability and confidence in the business. Quint Studer (2009), founder and CEO of Studer Group, states how rounding can help leaders meet certain standard goals: making sure staff know they are cared about, know what is going on (what is working well, who should be recognized, which systems need to work better, which tools and equipment need attention), and know that proper follow-up actions are taking place. Leaders must be open communicators. Holding back information that could have been shared with followers will cause ill feelings and a concern that other important matters are not being disclosed. Leaders also need to

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take calculated risks. They should be cautious, but not overly so, or they might lose an opportunity for the organization. And finally, leaders in today’s world need to recognize that they are not perfect. Sometimes there will be errors in what is said or done. These must be acknowledged so they can be put aside and the leader can move on to more pressing current issues.

Health care leaders today need to balance many agendas. To do so, a set of protocols needs to be followed which allows a systems-thinking perspective. The Master Leadership framework takes into account these competing values and encourages the leader to shift to being a motivator, vision-setter, analyzer, and task-master depending upon the immediate concern (Belasen, Eisenberg, & Huppertz, 2016). All of these roles though must be followed, and it is the accomplished leader who can develop a sense of equilibrium when he/she acts between them.

GOVERNANCE Individuals are not the only ones to consider in leadership roles. There can be a group of people who collectively assume the responsibility for strategic oversight of a health care organization. The term governance describes this important function. Governing bodies can be organized in a variety of forms. In a hospital, this top accountable body is called a board of trustees in a not-for-profit setting and a board of directors in a proprietary, or for-profit, setting. Since many physician offices, long-term care facilities, and other health care entities are set up as professional corporations, these organizations would also have boards of directors.

Governing boards are facing heightened scrutiny due to the failure of many large corporations in the last decade. The U.S. government recognizes the importance of a group of people who oversee corporate operations and give assurances for the fair and honest functioning of the business. Sarbanes-Oxley is a federal law enacted in 2002 that set new or enhanced standards for proprietary companies that are publicly traded. Financial records must be appropriately audited and signed off by top leaders. Operations need to be discussed more openly so as to remove any possibility of cover-up, fraud, or self-interest. Each governing board member has fiduciary responsibility to forgo his or her own personal interests and to make all decisions concerning the entity for the good of the organization. Many believe the not-for-profits should have the same requirements and are applying pressure for them to fall under similar rules of

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transparency. Although health care boards are becoming smaller in size, they recognize the

importance of the composition of their members. A selection of people from within the organization (e.g., system leaders, the management staff, physicians) should be balanced with outside members from the community who represent the populations served by the organization (see Table 2-8). The trend is to appoint members who have certain expertise to assist the board in carrying out its duties. Also, having governing board members who do not have ties to the health care operations will reduce the possibility of conflicts of interests. Board meetings have gone from ones in which a large volume of information is presented for a “rubber stamp” to meetings that are well prepared, purposeful, and focused on truly important issues. A self-assessment should be taken at least annually and any identified problem areas (including particular board members) addressed. This way, the governing board can review where it stands in its ability to give fair, open, and honest strategic oversight (Gautam, 2005). A new way of looking at governance goes beyond fiduciary and strategic responsibility, whereby the board serves as the generative source of leadership, espousing the meaning for the organization’s health care delivery and reframing the priorities (Chait, Ryan, & Taylor, 2005). The American Hospital Association Center for Healthcare Governance (2012) produced a Blue Ribbon Panel Report which identified recommendations for health care governance during this period of transformation. These included: strengthen the board and organizational capacity to manage change; encourage collaboration among providers; actively oversee physician alignment, integration, engagement and development; and create a compelling vision for the future.

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BARRIERS AND CHALLENGES Health care leaders are confronted with many situations that must be dealt with as they lead their organizations. Some can be considered barriers that, if not managed properly, will stymie the capacity to lead. Certain other areas are challenges that must be addressed if the leader is to be successful. A few of the more critical ones in today’s health care world are presented here. See Table 2-9.

Due to the complex health care system in the U.S., many regulations and laws are in place that sometimes can inhibit innovative and creative business practices. Leaders must ensure the strategies developed for their entity comply with the current laws, or else they jeopardize its long-term survivability. Leaders are expected to sometimes think “outside the box,” i.e., go beyond the usual responses to a situation, to provide new ideas for the development of their business. This can be challenging when many constraints must be considered. Some examples are the government’s antitrust requirements, which can affect developing partners; federal privacy laws, which can prevent sharing patient information needed for collaboration; and safe harbor requirements, which can affect physician relations. These and other laws and regulations can affect a health care leader’s ability to lead.

The health care industry is unique. Major players in the arena, physicians, are not always easily controlled by the medical organizations where they work (e.g., hospitals, medical groups, insurance companies). Yet this very influential group of stakeholders has substantial input over the volume of patients that a health care facility receives and revenues produced. This necessitates that the health care leader find ways to include doctors in the process of setting a direction, monitoring the quality of care, and fulfilling other administrative functions. The wise health care leader will include physicians early on in any planning process. Doctors are usually busy with their own patients and practices, but if they are not looked to for their expertise and advice on certain important matters in the facilities where they work, they will become disengaged. Everybody would much rather work at a place where their opinions are requested and respected. Health care leaders must pay special attention to physicians during the current period to overcome any resistance to change as the health care system evolves (Kornacki & Silversin, 2012).

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Technology is a costly requirement in any work setting. Information systems management and new medical equipment are especially expensive for the modern health care facility or practice due to the rapidly changing data collection requirements and medical advances in the field. Health care leaders must assess the capabilities of their entities for new technology and determine if their systems and equipment are a barrier to making future progress. The U.S. Department of Health and Human Services (2009) has provided incentives for health care organizations to promote the adoption and meaningful use of health information technology through the HITECH Act (Health Information Technology for Economic and Clinical Health Act) (U.S. Department of HHS, 2009). Health care leaders cannot be successful if their organizations have antiquated systems and out-of-date support devices in today’s high-tech world. Computer hardware and clinical software must be integrated to provide the quality and cost information needed for an efficient medical organization. Electronic medical records, wireless devices, and computerized order entry systems, as well as advanced medical equipment and new pharmaceuticals, will be items the leader must have in place in order to lead his or her health care organization in the 21st century.

Safety concerns have traditionally been a management responsibility. However, safety has become such an important issue in today’s health care world that leaders must be involved in its oversight. A top-down direction must be given throughout the organization that mistakes will not be tolerated. Coordinated efforts must shift from following up on errors to preventing their recurrence to developing systems and mechanisms to prevent them from ever occurring. The Joint Commission (TJC) has leadership standards for all sectors, calling for the leaders in the health care entity to accept the responsibility for fostering a culture of safety. The focus of attention is on the performance of systems and processes instead of the individual, although reckless behavior and blatant disregard for safety are not tolerated (The Joint Commission, 2010).

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Value-based purchasing is quickly becoming the norm. The Centers for Medicare and Medicaid Services’ game-changing initiative is being adopted by private payers. It provides reimbursement incentives to accountable providers who produce high-quality outcomes, and disincentives for the provision of poor-quality outcomes (i.e., read-missions within 30 days for some diagnoses). Health care leaders need to focus on demonstrating achievement of high-quality standards to ensure not only the operational excellence but also the fiscal stability of their organizations (Chan & Rubino, 2014).

Even though women make up the majority of the health care workforce, they are under-represented in the top leadership positions. One recent study showed that only 24% of the senior health care executives were women and only 14% were members of boards of directors (Hauser, 2014). A call must be made to existing health care leaders to pave the way for women to be given the opportunity for these executive jobs by removing traditional barriers and providing active mentoring, introduction into the promotion pipeline, and leadership development programs.

ETHICAL RESPONSIBILITY Ethics are principles determining behavior and conduct appropriate to a certain setting. It is a matter of doing right vs. wrong (see Chapter 15 for a detailed discussion of ethics and law). Ethics are especially important for health care leadership and require two areas of focus. One area is biomedical ethics and the actions a leader needs to consider as he or she relates to a patient. Another is managerial ethics. This involves business practices and doing things for the right reasons. A leader must ensure an environment in which good ethical behavior is followed.

The American College of Healthcare Executives (ACHE, 2014) does an excellent job in educating its professional membership as to the ethical responsibilities of health care leaders. Ethical responsibilities apply to several different constituencies: to the profession itself, to the patients and others served, to the organization, to the employees, and to the community and society at large (see Table 2-10). A health care leader who is concerned about an ethical workplace will not only model the appropriate behavior but will also have zero tolerance for any deviation by a member of the organization. A Code of Ethics gives specific guidelines to be followed by individual members. An Integrity Agreement would address a commitment to follow ethical behavior by the organization.

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IMPORTANT NEW INITIATIVES The world is constantly changing all around us and health care is no different. Several new initiatives are coming on to the scene in which a health care leader must demonstrate active engagement in order to have everyone in the organization recognize its importance.

With health care reform comes a need for a population health approach to health care education, delivery, and policy. The distribution of health outcomes within a specific population will be used to measure a health care organization’s success and determine its reimbursement under new payment methods. A movement away from focusing on individualized care to group performance will require the health care leader to shift his/her team’s attention to innovative strategies to promote wellness and coordination of care. Productive interactions are necessary if the organization is to be successful in the new health care environment (Nash, Reifsnyder, Fabius, & Pracilio, 2011).

Health care is moving away from a provider-centeredness to patient-family centeredness. An astute health care leader will recognize the importance in such

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a shift as consumers are making more direct health care decisions based on the information now readily available. All leaders of a health care organization, from the board level down, need to embrace this concept and be actively engaged in its roll-out, serving as a role model for others (Cliff, 2012).

LEADERS LOOKING TO THE FUTURE Some people believe leaders are born and that one cannot be taught how to be a good leader. The growing trend, however, is that leaders can, in fact, be taught skills and behaviors that will help them to lead an organization effectively (Parks, 2005). In health care, many clinicians who do well at their jobs are promoted to supervisory positions. Yet they do not have the management training that would help them to be successful in their new roles. For example, physicians, laboratory technologists, physical therapists, and nurses are often pushed into management positions with no administrative training. We are doing a disservice to these clinicians and setting them up for failure.

Fortunately, this common occurrence has been recognized, and many new programs have sprouted to address this need. Universities have developed executive programs to attract medical personnel into a fast-track curriculum to attempt to give them the essential skills they need to be successful. Some schools have developed majors in health care leadership or created online programs for better accessibility, and some health care systems have started internal leadership training programs. This trend will continue into the future, since health care services are expected to grow due to the aging population, and thus there will be a need for more people to be in charge. In addition, leaders should continually be updated as to the qualities that make a good leader in the current environment, and therefore, professional development, provided through internal or external programs, should be encouraged.

The Baldrige National Quality Program recognizes in its most recent criteria for performance excellence the need for senior leaders to create a sustainable environment for their organizations through the continual development of future leaders by enhancing their personal leadership skills, such as communicating with the entire workforce and key customers and focusing on action that will achieve the organizations’ mission (Baldrige Excellence Framework, 2015). Yet Garman and Dye (2009) caution us to distinguish leader development from leadership development. They call for the need to bind leadership development activities into a collective network of leaders who are linked to organizational level goals

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rather than each leader’s individual performance. Further understanding of the difference can be explained through decision making. A leader collaborating with his or her superior would be considered leader development, but in leadership development, the process would be team based.

Each of the different sectors in health care has a professional association that will support many aspects of its particular career path. These groups provide ongoing educational efforts to help their members lead their organizations. Another benefit for leaders is that these groups provide up-to-date information about their particular field. Professional associations are a good way to network with people in similar roles, a highly desirable process for health care leaders. Also, ethnic professional associations link health care leaders from representative minority groups as they attempt to increase diversity in the health care profession and improve health status, economic opportunities, and educational advancement for their communities. Most of these various professional groups have student chapters, and early involvement in these organizations is highly recommended for any future health care leader. Table 2-11 lists some of these associations.

To prepare an organization for the future, its leader needs to be looking out for

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opportunities to partner with other entities. Health care in the U.S. is fragmented, and to be successful, different services need to be aligned and networks need to be created that will allow patients to flow easily through the continuum of care. Leaders must determine who are the best partners and negotiate a way to have a win–win situation. Of course, these efforts to develop partnerships must be in line with the organization’s mission and vision, or the strategic direction will have to be reexamined. The health care leader who is concerned about the future, as well as today’s business, must continuously reassess how he or she fits in the organization. Nothing could be worse than a disenchanted person trying to lead a group of followers without the motivation and enthusiasm needed by great leaders. A leader should consider his or her own succession planning so that the organization is not left at any time without a person to lead. Truly unselfish leaders think about their commitment to their followers and do their best to ensure that consistent formidable leadership will be in place in the event of their departure. This final act will allow adequate time for a smooth transition and ensure the passage of accountability so that the followers can realign themselves with the new leader.

SPECIAL RESEARCH ISSUES A leader who is concerned about the future will stay on top of things in the health care industry. Reading newspapers, industry journals, and Web reports, as well as attending industry conferences, helps to keep leaders in the know and allows them to determine how changes in the field could impact their organization. Leaders who remain current will be better positioned to act proactively and to provide the best chance for their organizations to seize a fresh opportunity.

A new appreciation for evidence-based management commands today’s health care leader go beyond the typical sources of current information and dive deeper into the latest peer-reviewed research articles on health administration. These secondary sources of information will review how to improve leadership capabilities, and thus organizational performance, based on demonstrated studies in the field. White papers prepared by government, as well as private agencies, are easily obtainable through the Internet and can provide important insight on how to address common industry issues.

An exciting opportunity is upon us to go beyond what has been analyzed before due to the emergence of big data sets. With electronic medical records, various information systems, and advanced biomedical devices, organizations have more

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data and information than ever before. The potential benefits of integrating and analyzing the abundance of cost and clinical information exist to support data driven decision making. Leaders must become executive champions in knowledge management and use technology to have their teams develop new projects which will reduce costs, optimize quality, and increase performance. Better strategic planning resource utilization, unit productivity, and insurance contract risk management are just a few of the areas which could be enhanced by leveraging new information technology and putting big data to good use (Hood, 2011). Some examples of big data sets available to the public are at the end of this chapter.

CONCLUSION There has been a lot of struggle to roll out the Patient Protection and Affordable Care Act. This Act may not have provided the U.S. with full health care reform, but it has dramatically altered the way health insurance is administered and care is delivered. Millions of Americans have selected affordable health plans through insurance exchanges and many have qualified under Medicaid expansion. Yet, there will continue to be challenges to the Act in the years to come (Antos, 2014).

A call is made for a new breed of leaders at every level to tame the chaos associated with this dynamic industry (Lee, 2010). Johansen (2012) writes how leaders will make the future by continuously cycling through phases of foresight (seeing the big picture), insight (being able to sense what is important), and action (being able to decide on a strong path ahead). These will certainly be challenging times for health care leaders, and some of the key elements identified for success will be perspective, adaptability, and finding their inner passion as a personal driving force (Sukin, 2009). There is no doubt there will be opportunities for leaders in all disciplines to make a difference for their organizations and their communities as we enter this exciting new phase of American health care delivery.

DISCUSSION QUESTIONS

1. What are the key differences between leadership and management?

2. Are leaders born, or are they trained? How has the history of leadership in the U.S. evolved to reflect this question?

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3. List and describe the contemporary models of leadership. What distinguishes them from past models?

4. What are the leadership domains and competencies? Can you be a good leader and not have all the competencies listed in this model?

5. Why do health care leaders have a higher need for ethical behavior than might be expected in other settings?

6. Do health care leaders have a responsibility to be culturally competent? Why or why not?

7. Why is emotional intelligence (EI) important for health care managers? Identify three ways someone who is new to the field can assess and develop his or her EI quotient.

8. What are some ways health care leaders can use research to improve their ability to lead?

Cases in Chapter 18 that are related to this chapter include:

Metro Renal Sustaining an Academic Food Science and Nutrition Center Through Management Improvement

Emotional Intelligence in Labor and Delivery Recruitment Challenge for the Middle Manager

Case study guides are available in the online Instructor’s Materials.

REFERENCES American College of Healthcare Executives. (2014). Annual report and reference

guide. Chicago: IL: Author. American Hospital Association Center for Healthcare Governance. (2012).

Governance practices in an era of health care transformation, Chicago, IL: Author. Antos, J. (2014). Health care reform after the ACA. New England Journal of

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Medicine, 370, 2259–2261. doi: 10.1056/NEJMp1404298 Baedke, L., & Lamberton, N. (2015). The emerging healthcare leader. Chicago, IL:

Health Administration Press. Baldrige Performance Excellence Program (2015). 2015–2016 Baldrige excellence

framework. Gaithersburg, MD: National Institute for Standards and Technology.

Belasen, A. T., Eisenberg, B., & Huppertz, J. W. (2016). Mastering leadership: A vital resource for health care organizations. Burlington, MA: Jones & Bartlett Learning.

Brown, J. A., & Gardner, W. L. (2007). Effective modeling of authentic leadership. Academic Exchange Quarterly, 11(2), 56–60.

Chait, R., Ryan, W., & Taylor, B. (2005). Governance as leadership. Hoboken, NJ: Wiley.

Chan, M., & Rubino, L. (2014). Leading quality initiatives. In New leadership for today’s health care professionals: Concepts and cases. Burlington, MA: Jones & Bartlett Learning.

Cliff, B. (2012). Patient-centered care: The role of healthcare leadership. Journal of Healthcare Management, 57(6), 381–383.

Delmatoff, J., & Lazarus, I. R. (2014). The most effective leadership style for the new landscape of healthcare. Journal of Healthcare Management, 59(4), 245– 249.

Dolan, T. C. (2009). Cultural competency and diversity. Healthcare Executive, 24(6), 6.

Dye, C. F. (2010). Leadership in healthcare: Essential values and skills (2nd ed.). Chicago, IL: Health Administration Press.

Dye, C. F., & Garman, A. N. (2015). Exceptional leadership: 16 critical competencies for healthcare executives (2nd ed.). Chicago, IL: Health Administration Press.

Freshman, B., & Rubino, L. (2002). Emotional intelligence: A core competency for health care administrators. The Health Care Manager, 20, 1–9.

Garman, A., & Dye, C. (2009). The healthcare c-suite: Leadership development at the top. Chicago, IL: Health Administration Press.

Gautam, K. (2005). Transforming hospital board meetings: Guidelines for comprehensive change. Hospital Topics: Research and Perspectives on Healthcare, 83(3), 25–31.

George, B., & Sims, P. (2007). True north: Discover your authentic leadership. San

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Francisco, CA: Jossey-Bass. Goleman, D. (1998, December). What makes a leader? Harvard Business Review,

76(6), 93–102. Hauser, M. C. (2014). Leveraging women’s leadership talent in healthcare. Journal

of Healthcare Management, 59(5), 318–322. Heifetz, R., Grashow, A., & Linsky, M. (2009, July–August). Leadership in a

(permanent) crisis. Harvard Business Review. Retrieved from http://hbr.org/2009/07/leadership-in-a-permanent-crisis/ar/1

Hilberman, D. (Ed.). (2005, June). Final report: Pedagogy enhancement project on leadership skills for healthcare management. The 2004 ACHE-AUPHA Pedagogy Enhancement Work Group. Washington, D.C.: Association of University Programs in Health Administration.

Hood, M. M. (2011). How CEOs drive the clinical transformation and information technology agenda, Frontiers of Health Services Management, 28(1), 15–23.

Hutton, D., & Moulton, S. (2004). Behavioral competencies for health care leaders. Best of H&HN OnLine. American Hospital Association, 15–18.

Johansen, B. (2012). Leaders make the future: Ten new leadership skills for an uncertain world. San Francisco; CA: Berrett-Koehler Publishers, Inc.

The Joint Commission. (2010). Hospital accreditation standards. Oakbrook Terrace, IL: Author.

Kornacki, M. J., & Silversin, J. (2012). Leading physicians through change (2nd ed). Tampa: FL: American College of Physician Executives.

Kouzes, J. M., & Posner, B. Z. (1995). The leadership challenge: How to keep getting extraordinary things done in organizations. San Francisco, CA: Jossey-Bass.

Ledlow, G. R., & Coppola, M. N. (2011). Leadership for health professionals: Theories, skills, and applications. Sudbury, MA: Jones and Bartlett.

Lee, T. H. (2010, April). Turning doctors into leaders. Harvard Business Review, 88(4), 50–58.

Maccoby, M., Norman, C. L., Norman, C. J., & Margolies, R. (2013). Transforming health care leadership: A systems guide to improve patient care, decrease costs, and improve population health. San Francisco: CA: Jossey-Bass.

Nash, D. B., Reifsnyder, J., Fabius, R. J., & Pracilio, V. P. (2011). Population health: Creating a culture of wellness. Sudbury, MA: Jones and Bartlett.

Northouse, P. (2015). Introduction to leadership concepts and practice (2nd ed.).

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http://hbr.org/2009/07/leadership-in-a-permanent-crisis/ar/1
Thousand Oaks, CA: Sage. Northouse, P. (2016). Leadership: Theory and practice (7th ed.). Thousand Oaks,

CA: Sage. Parks, S. (2005). Leadership can be taught: A bold approach for a complex world.

Boston, MA: Harvard Business School Press. Rath, T., & Conchie, B. (2008). Strengths-based leadership: Great leaders, teams, and

why people follow. New York, NY: Gallup Press. Sibbet, D. (1997, September/October). 75 years of management ideas and practice

1922–1997. Harvard Business Review Supplement. Studer, Q. (2008). Results that last: Hardwiring behaviors that will take your company

to the top. Hoboken, NJ: Wiley. Studer, Q. (2009). Straight A leadership: Alignment, action, accountability. Gulf

Breeze, FL: Fire Starter Publishing. Sukin, D. (2009). Leadership in challenging times: It starts with passion. Frontiers

of Health Services Management, 26(2), 3–8. Swearingen, S., & Liberman, A. (2004). Nursing leadership: Serving those who

serve others. The Health Care Manager, 23(2), 100–109. U.S. Department of Health & Human Services. (2009). HITECH Act enforcement

interim final rule. Retrieved from http://www.hhs.gov/ocr/privacy/hipaa/administrative/enforcementrule/hitechenforcementifr.html

Walumbwa, F., Avolio, B., Gardner, W., Wernsing, T., & Peterson, S. (2008). Authentic leadership: Development and validation of a theory-based measure. Journal of Management, 34(1), 89–126.

Warden, G. (1999). Leadership diversity. Journal of Healthcare Management, 44(6), 421–422.

Wicks, R. J., & Buck, T. C. (2013). Riding the dragon: Enhancing resilient leadership and sensible self-care in the healthcare executive. Frontiers of Health Services Manageement, 30(2), 3–13.

Wolf, E. (2004). Spiritual leadership: A new model. Healthcare Executive, 19(2), 22–25.

Additional Websites to Explore

American College of Healthcare Executives http://www.ache.org/

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http://www.hhs.gov/ocr/privacy/hipaa/administrative/enforcementrule/hitechenforcementifr.html
http://www.ache.org/
Center of Healthcare Governance http://www.americangovernance.com/

Coach John Wooden’s Pyramid of Success http://www.coachwooden.com/

Healthcare Leadership Alliance Competency Directory http://www.healthcareleadershipalliance.org/

Health Leadership Council www.hlc.org

Institute for Diversity of Health Management www.diversityconnection.org

National Center for Healthcare Leadership www.nchl.org

National Quality Forum http://www.qualityforum.org/Home.aspx

World Health Organization Leadership Service http://www.who.int/hrh/education/en/

White Papers for Healthcare Leaders American Hospital Association. (2004). Strategies for leadership: Does your hospital

reflect the community it serves? A diversity and cultural proficiency assessment tool for leaders. Chicago, IL: Author. Retrieved from http://www.aha.org/content/00-10/diversitytool.pdf

Garman, A., & Carter, C. (2014, October 14). Implications of health reform for healthcare executives positions: A national study of senior leadership teams in freestanding hospitals. Chicago, IL: American College of Healthcare Executives. Retrieved from https://www.ache.org/pubs/research/Implications_of_Health_Reform_for_Healthcare_Executive_Positions.pdf

Swensen, S., Pugh, M., McMullan, C., & Kabcenell, A. (2013). High-impact leadership: Improve care, improve the health of populations, and reduce costs. IHI white paper. Cambridge, MA: Institute for Healthcare Improvement. Retrieved from http://www.ihi.org/resources/Pages/IHIWhitePapers/HighImpactLeadership.aspx

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http://www.americangovernance.com/
http://www.coachwooden.com/
http://www.healthcareleadershipalliance.org/
http://www.hlc.org
http://www.diversityconnection.org
http://www.nchl.org
http://www.qualityforum.org/Home.aspx
http://www.who.int/hrh/education/en/
http://www.aha.org/content/00-10/diversitytool.pdf
https://www.ache.org/pubs/research/Implications_of_Health_Reform_for_Healthcare_Executive_Positions.pdf
http://www.ihi.org/resources/Pages/IHIWhitePapers/HighImpactLeadership.aspx
CHAPTER 3

Management and Motivation Nancy H. Shanks and Amy Dore

LEARNING OBJECTIVES By the end of this chapter, the student will be able to:

Conceptualize who and what motivates employees; Examine the relationship between engagement and motivation; Explain why motivation is important; Differentiate between the different theories of motivation; Compare and contrast extrinsic and intrinsic factors of motivation; Assess misconceptions about motivation; Analyze issues relating to motivating and managing across generations; and Critique strategies to enhance employee motivation.

INTRODUCTION Managers are continually challenged to motivate a workforce to do two things. The first is to motivate employees to work toward helping the organization achieve its goals. The second is to motivate employees to work toward achieving their own personal goals.

Meeting the needs and achieving the goals of both the employer and the employee is often difficult for managers in all types of organizations. In health care, however, this is often more difficult, in part as a result of the complexity of health care organizations, but also as a function of the wide array of employees who are employed by or work collaboratively with health care providers in delivering and paying for care. Workers run the gamut from highly trained and

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highly skilled technical and clinical staff members, e.g., physicians and nurses, to relatively unskilled workers (see Chapter 11 for more on this topic). To be successful, health care managers need to be able to manage and motivate this wide array of employees.

MOTIVATION—THE CONCEPT According to Webster’s New Collegiate Dictionary, a motive is “something (a need or desire) that causes a person to act.” Motivate, in turn, means “to provide with a motive,” and motivation is defined as “the act or process of motivating.” Thus, motivation is the act or process of providing a motive that causes a person to take some action. In most cases, motivation comes from some need that leads to behavior which, in turn, results in some type of reward when the need is fulfilled. This definition raises a couple of basic questions.

What Are Rewards? Rewards can take two forms. They can be either intrinsic/internal rewards or extrinsic/external rewards. Intrinsic rewards are derived from within the individual. For a health care employee, this could mean taking pride and feeling good about a job well done (e.g., providing excellent patient care). Extrinsic rewards pertain to those reinforcements that are given by another person, such as a health care organization giving bonuses to teams of workers when quality and patient satisfaction are demonstrated to be exceptional.

Who Motivates Employees? While rewards may serve as incentives and those who bestow rewards may seek to use them as motivators, the real motivation to act comes from within the individual. Managers do exert a significant amount of influence over employees, but they do not have the power to force a person to act. They can work to provide various types of incentives in an effort to influence an employee in any number of ways, such as by changing job descriptions, rearranging work schedules, improving working conditions, reconfiguring teams, and a host of other activities. While these may have an impact on an employee’s level of motivation and willingness to act, when all is said and done, it is the employee’s decision to take action or not. In discussing management and motivation, it is important to continually remember the roles of both managers and employees in the process of motivation.

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Is Everybody Motivated? As managers, we often assume that employees are motivated or will respond to inducements from managers. While this is perhaps a logical and rational approach from the manager’s perspective, it is critical to understand this is not always the case. The majority of employees do, in fact, want to do a good job and are motivated by any number of factors. Others, however, may not share that same drive or high level of motivation. Those people may merely be putting in time and may be more motivated by other things, such as family, school, hobbies, or other interests. Keeping this in mind is useful in helping health care managers understand employee behaviors that seem to be counterproductive.

HISTORY OF MOTIVATION There is a plethora of research on the topic of motivation, particularly motivation in the workplace. The concepts of management and motivation often coincide when an organization is striving toward a goal. In order to fully understand the concept of motivation, a manager must understand its significance. Motivation is not a new concept. Approximately 2,500 years ago, Athens rose to unparalleled political and economic power and allowed the citizenry to become active in civic governance. Through an engaged and participative citizenry, the Athenian people helped produce the first great Greek empire, which allowed for better commerce and trade; increased wealth of its citizens; and a culture that spawned historically known philosophers, artists, and academics. To achieve this type of success, organizations must recognize the full power of their employees and motivate them to reach for the common good of the organization (Manville & Ober, 2003).

Fast forward to more recent times, and we can continue to identify the historical significance of motivation. In 1890, empirical psychologist William James identified aspects of motivation and its relationship with intrinsically motivated behavior. In 1943, psychologist Clark Hull published his now famous drive theory. Hull believed all behaviors to be connected to four primary drives: hunger, thirst, sex, and the avoidance of pain; according to this view, all drives provide the energy for behavior (Deci & Ryan, 1985). Research into human behavior started being recognized in the workplace in the 1940s. Researchers recognized people were motivated by several types of varying needs, not only in the workplace but also in their personal lives (Sperry, 2003). Workplace motivational theories continue to evolve, as is shown in the discussion concerning theories of motivation.

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THEORIES OF MOTIVATION Psychologists have studied human motivation extensively and have derived a variety of theories about what motivates people. This section briefly highlights the motivational theories that are widely known in the field of management. These include theories that focus on motivation being a function of (1) employee needs of various types, (2) extrinsic factors, and (3) intrinsic factors. Each set of theories follows.

Needs-Based Theories of Motivation

Maslow’s Hierarchy of Needs Maslow (1954) postulated a hierarchy of needs that progresses from the lowest, subsistence-level needs to the highest level of self-awareness and actualization. Once each level has been met, the theory is that an individual will be motivated by and strive to progress to satisfy the next higher level of need. The five levels in Maslow’s hierarchy are:

Physiological needs—including food, water, sexual drive, and other subsistence-related needs;

Safety needs—including shelter, a safe home environment, employment, a healthy and safe work environment, access to health care, money, and other basic necessities;

Belonging needs—including the desire for social contact and interaction, friendship, affection, and various types of support;

Esteem needs—including status, recognition, and positive regard; and Self-actualization needs—including the desire for achievement, personal growth and development, and autonomy.

The movement from one level to the next was termed satisfaction progression by Maslow, and it was assumed that over time individuals were motivated to continually progress upward through these levels. While useful from a theoretical perspective, most individuals do not view their needs in this way, making this approach to motivation a bit unrealistic.

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Alderfer’s ERG Theory The three components identified by Alderfer (1972) in his ERG theory drew upon Maslow’s theory, but also suggested individuals were motivated to move forward and backward through the levels in terms of motivators. He reduced Maslow’s levels from five to the following three:

Existence—which related to Maslow’s first two needs, thus combining the physiological and safety needs into one level;

Relatedness—which addressed the belonging needs; and Growth—which pertained to the last two needs, thereby combining esteem and self-actualization.

Alderfer also added his frustration–regression principle, which postulated that individuals would move in and out of the various levels, depending upon the extent to which their needs were being met. This approach is deemed by students of management to be more logical and similar to many individuals’ worldviews.

Herzberg’s Two-Factor Theory Herzberg (2003) further modified Maslow’s needs theory and consolidated it down to two areas of needs that motivated employees. These were termed:

Hygienes—lower-level motivators which included, for example, “company policy and administration, supervision, interpersonal relationships, working conditions, salary, status, and security” (p. 5).

Motivators—higher-level factors which focused on aspects of work, such as “achievement, recognition for achievement, the work itself, responsibility, and growth or advancement” (p. 5).

Herzberg’s is an easily understood approach that suggests that individuals have desires beyond the hygienes and that motivators are very important to them.

McClelland’s Acquired Needs Theory The idea here is that needs are acquired throughout life. That is, needs are not innate but are learned or developed as a result of one’s life experiences (McClelland, 1985). This theory focuses on three types of needs:

Need for achievement—which emphasizes the desires for success, for

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mastering tasks, and for attaining goals; Need for affiliation—which focuses on the desire for relationships and associations with others; and

Need for power—which relates to the desires for responsibility for, control of, and authority over others.

All four of these theories approach needs from a somewhat different perspective and are helpful in understanding employee motivation on the basis of needs. However, other theories of motivation also have been posited and require consideration.

Extrinsic Factor Theories of Motivation Another approach to understanding motivation focuses on external factors and their role in understanding employee motivation. The best known of these follow.

Reinforcement Theory B. F. Skinner (1953) studied human behavior and proposed that individuals are motivated when their behaviors are reinforced. His theory is comprised of four types of reinforcement. The first two are associated with achieving desirable behaviors, while the last two address undesirable behaviors:

Positive reinforcement—relates to taking action that rewards positive behaviors;

Avoidance learning—occurs when actions are taken to reward behaviors that avoid undesirable or negative behaviors. This is sometimes referred to as negative reinforcement;

Punishment—includes actions designed to reduce undesirable behaviors by creating negative consequences for the individual; and

Extinction—represents the removal of positive rewards for undesirable behaviors. Likewise, if the rewards for desirable behaviors cease, those actions can be impacted as well.

The primary criticism of the reinforcement approach is that it fails to account for employees’ abilities to think critically and reason, both of which are important aspects of human motivation. While reinforcement theory may be applicable in animals, it doesn’t account for the higher level of cognition that occurs in humans.

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Intrinsic Factor Theories of Motivation Theories that are based on intrinsic or endogenous factors focus on internal thought processes and perceptions about motivation. Several of these are highlighted:

Adams’ Equity Theory—proposes individuals are motivated when they perceive they are treated equitably in comparison to others within the organization (Adams, 1963);

Vroom’s Expectancy Theory—addresses the expectations of individuals and hypothesizes they are motivated by performance and the expected outcomes of their own behaviors (Vroom, 1964); and

Locke’s Goal-Setting Theory—hypothesizes establishing goals motivates individuals to take action to achieve those goals (Locke & Latham, 1990).

While each of these theories deals with a particular aspect of motivation, it seems unrealistic to address them in isolation, since these factors often do come into play in and are important to employee motivation at one time or another.

Management Theories of Motivation Other approaches to motivation are driven by aspects of management, such as productivity, human resources, and other considerations. Most notable in this regard are the following:

Scientific Management Theory—Frederick Taylor’s ideas, put into practice by the Gilbreths in the film Cheaper by the Dozen, focused on studying job processes, determining the most efficient means of performing them, and in turn rewarding employees for their productivity and hard work. This theory assumes people are motivated and able to continually work harder and more efficiently and that employee pay should be based on the amount and quality of the work performed. Over time, this approach is limited by the capacity of employees to continue to increase the quantity of work produced without sacrificing the quality.

McGregor’s Theory X and Theory Y—draws upon the work of Herzberg and develops a human resources management approach to motivation. This theory first classifies managers into one of two groups. Theory X managers view employees as unmotivated and disliking work. Under the Theory X approach, the manager’s role is to focus on the hygienes and to control and

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direct employees; it assumes employees are mainly concerned about safety. In contrast, Theory Y managers focus on Herzberg’s motivators and work to assist employees in achieving these higher levels. In assessing this theory, researchers have found approaching motivation from this either/or perspective is short-sighted.

Ouchi’s Theory Z—is rooted in the idea that employees who are involved in and committed to an organization will be motivated to increase productivity. Based on the Japanese approach to management and motivation, Theory Z managers provide rewards, such as long-term employment, promotion from within, participatory management, and other techniques to engage and motivate employees (Ouchi, 1981). In fact, Theory Z can be considered an early form of engagement theory.

While all of these theories are helpful in understanding management and motivation from a conceptual perspective, it is important to recognize that most managers draw upon a combination of needs, extrinsic factors, and intrinsic factors in an effort to help motivate employees, to help employees meet their own personal needs and goals, and ultimately to engage employees in and to achieve effectiveness and balance within the organization. Managers typically take into account most of the aspects upon which these theories focus. That is, expectations, goal setting, performance, feedback, equity, satisfaction, commitment, and other characteristics are considered in the process of motivating employees.

A BIT MORE ABOUT INCENTIVES AND REWARDS Throughout this chapter, we have discussed what motivates employees. As the previous discussion indicates, motivation for employees results from a combination of incentives that take the form of extrinsic and intrinsic rewards. These topics warrant a bit more discussion.

Extrinsic Rewards There are a host of external things that managers can provide that may serve as incentives for employees to become more engaged in an organization and increase their productivity. These include tangible rewards, such as: money (pay, bonuses, stock options), benefits (health, dental, vision, paid time off, retirement accounts,

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etc.), flexible schedules, job responsibilities and duties, promotions, changes in status, supervision of others, praise, feedback and recognition, a good boss, a strong leader, other inspirational people, and a nurturing organizational culture.

As this list demonstrates, extrinsic rewards are all tangible types of rewards. Intrinsic rewards stand in marked contrast to these.

Intrinsic Rewards Intrinsic rewards are internal to the individual and are in many ways less tangible. In fact, they are highly subjective in that they represent how the individual perceives and feels about work and its value. Five types of intrinsic rewards that have been summarized by Manion (2005) include:

Healthy relationships—in which employees are able to develop a sense of connection with others in the workplace.

Meaningful work—where employees feel they make a difference in people’s lives. This is typically a motivator for people to enter and stay employed in the health care industry. This type of work is viewed as that in which the meaningful tasks outweigh the meaningless ones. This reinforces the mantra Herzberg first espoused in 1968 and revisited in a 2003 issue of the Harvard Business Review, in which he stated: “Forget praise. Forget punishment. Forget cash. You need to make their jobs more interesting” (Herzberg, 2003, p. 87). As documentation and the hassle factor of getting approvals and reimbursement in health care have increased, managers need to be aware that such tasks and hassles detract from the meaningfulness quotient.

Competence—where employees are encouraged to develop skills that enable them to perform at or above standards, preferably the latter.

Choice—where employees are encouraged to participate in the organization in various ways, such as by expressing their views and opinions, sharing in decision making, and finding other ways to facilitate participatory approaches to problem solving, goal setting, and the like.

Progress—where managers find ways to hold employees accountable, facilitate their ability to make headway toward completing their assigned tasks, and celebrate when progress is made toward completing important milestones within a project.

Intrinsic rewards, coupled with extrinsic ones, lead to high personal satisfaction and serve as motivators for most employees.

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WHY MOTIVATION MATTERS Health care organizations face pressure externally and internally. Externally, the health care system must confront challenges such as the aging population, economic downturns, reductions in reimbursements, increases in market competition, increases in the cost of providing care, and health care reform. Internally, our health care system faces pressure stemming from challenges such as shortages of certain types of health care workers, increasing accreditation requirements, increasing regulations, dealing with limited resources, increasing responsibilities connected with providing quality care, and ensuring patient safety. These pressures can lead to employees who feel burned out, frustrated, and overworked. As health care employees are continually being asked to increase their responsibilities with fewer resources, managers must create a work environment in which employees are engaged, happy at their job, inspired, and motivated.

People spend approximately one-third of their lives at work, and managers need to recognize the workplace is one of the most important aspects of a person’s identity. In situations where people are not free to work at their maximum effectiveness and their self-esteem is constantly under attack, stress occurs, morale diminishes, illness prevails, and absenteeism goes up (Scott & Jaffe, 1991; Sherwood, 2013). As noted, motivated employees are fully engaged in their work and contribute at a much higher level than their counterparts who see their work as simply a job. Additional reasons why motivation matters include:

Employees who are motivated feel invested in the organization, are happier, work harder, are more productive, and typically stay longer with an organization (Levoy, 2007, p. 70).

Managers play important roles in the engagement process (O’Boyle & Harter, 2013), particularly with respect to providing recognition (Towers Watson, 2010a, 2010b).

Managers who understand employees’ job-related needs experience a higher level of motivated behavior from their employees (Levoy, 2007, p. 113).

All behavior is needs oriented. Even irrational behavior stems from a motivator of some sort. Once a need is satisfied, its impact as a motivator lessens. This basic foundational understanding of motivation is essential to successful motivation and management of employees (Levoy, 2007, p. 118).

Managers need to draw upon different strategies in order to engage different types of workers, such as Baby Boomers, Millennials, women, etc. (O’Boyle

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& Harter, 2013). Disengaged employees, as mentioned, have significant financial impacts on an organization’s bottom line (O’Boyle & Harter, 2013). They can also act as “Debby Downers” who pull other employees down, decrease morale, and increase turnover.

A motivated and engaged workforce experiences better outcomes and provides an organization with a competitive edge to successfully compete and be viewed as a dominant force in the market.

MOTIVATED VS. ENGAGED—ARE THE TERMS THE SAME? Oftentimes when you read about motivation, the term engaged appears within the same context. In order to be motivated, employees must be engaged—and in order to be engaged, they must be motivated. Towers Watson’s definition of employee engagement encompasses three dimensions:

Rational—How well employees understand their roles and responsibilities; Emotional—How much passion they bring to their work and their organization; and,

Motivational—How willing they are to invest discretionary effort to perform their roles well (Towers Watson, 2010a, p. 1).

This definition demonstrates the linkage between the two concepts and the importance of focusing on both of these areas by managers and leaders.

Why is this important in health care? The impacts can be significant. In fact, Cornerstone OnDemand reported, “recent research and practical in-the-field experience demonstrates that healthcare organizations can create the most profound improvements in patient care and satisfaction levels simply by improving employee engagement” (2014, p. 3). In particular, such engagement results in:

Better quality; Increased patient safety; Higher patient satisfaction; and Stronger organization financial performance.

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In addition, Gallup studies also show that engaged health care “employees are more:

loyal to the organization willing to put forth discretionary effort willing to trust and cooperate with others willing to work through challenges willing to speak out about problems and offer constructive suggestions for improvements” (Kamins, 2015, p. 1).

The health policy changes to move reimbursement to a “value-based purchasing” system, where payments from Medicare and Medicaid are tied to quality and patient care outcomes, suggest additional focus needs to be paid to those who deliver care to patients, which in turn suggests the need to enhance employee motivation and engagement (Sherwood, 2013). While several recent articles have been critical of the benefits and costs of employee engagement, the relationship to organizational outcomes and improvement efforts, and the lack of a uniform definition of the concept, Leeds and Nierle (2014) conclude continued efforts to study the concept and to utilize employee engagement strategies have been deemed effective.

This is also supported by other recent studies that suggest disengaged employees bring morale down and impact the organization’s bottom line. According to Gallup only 30% of U.S. full-time employees were highly engaged in their work; they estimated the cost of this at between $450 billion and $550 billion in lost productivity alone as a result of the 70% who are disengaged employees (O’Boyle & Harter, 2013). Towers Watson’s (2014) Global Workforce Study found a slightly higher percentage (40%) of workers being highly engaged. While the percentage of the hospital workforce is even a bit higher, it is still estimated by Towers Watson to be only 44% (Sherwood, 2013). This suggests leaders and managers need to increase their attention to engagement and motivation of their workforces. Sherwood (2013) states, “when employees believe their organization truly values quality care – and also get the support they need on the job – their patients are more satisfied, they take less sick time and have fewer on-the-job accidents, and health outcomes are better” (p. 5). This, in turn, impacts the organization’s bottom line.