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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

http://lccn.loc.gov/2015040132

6048

Printed in the United States of America 20 19 18 17 16 10 9 8 7 6 5 4 3 2 1

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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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