Strategic Management of Healthcare Organizations: A Stakeholder Management Approach PDF by Jeffrey S. Harrison and Steven M. Thompson

Contents

Preface
We wrote this book to help healthcare firms and their administrators successfully navigate what is one of the most challenging industries of this century. In addition to high levels of regulation, increasing costs, and a constant flow of new technologies and drugs, health care is morally and ethically complicated.1 Various groups such as patients, doctors, community leaders, nongovernmental organizations (NGOs), third party payers, and regulators have different opinions on any given topic, and finding a middle ground can be a challenging task. As the costliest health system in the world, health care organizations and the U.S. health care system in general make easy targets for politicians, NGOs, and the media.

Given this challenging and complex environment, it is not surprising to find dissatisfaction among some industry participants. Healthcare providers such as doctors often feel overwhelmed and dissatisfied. For example, a physician who left clinical practice describes “the stresses of practicing medicine in a health care system that often seemed blind to humanness, both mine and my patients.”2 Also, while the majority of patients may believe they are getting good care, others complain about high costs, long wait times, or the availability of particular types of care, whether as a result of scarcity, regulations, or third party payers unwilling to pay for them.

On the positive side, in spite of inefficiency and other problems in the current system, the vast majority of those who provide the care, as well as those who administer the programs, are genuinely committed to what they do, and for the right reasons. Furthermore, they tend to be some of the brightest, best-trained workers. So why is the healthcare industry in so much trouble? We suggest that it is not lack of healthcare knowledge and training that is the primary source of problems, but rather lack of appropriate administrative training is the culprit.

Many of the most popular business models that form the intellectual foundation of healthcare administration today are poorly suited to such a complex and turbulent environment. Many are built on the premise

that financial returns should be the superordinate goal of any organiza­tion. They are founded on a short-term philosophy that sometimes leads to the neglect of the needs of one stakeholder group or another. To some extent, these finance-driven models are also built on the idea that humans are completely self-interested; thus, leading to mistrust and a whole set of safeguards that are built into the administrative system in terms of the way the organization is run and how it interacts with other organi­zations. These safeguards are sometimes necessary, when they involve patient safety, but as they extend into the administrative processes of the firm they can stifle it a time when innovation is most needed to deal with the problems healthcare organizations are facing. In addition to the finance-based models, tools focused on operations tend to be focused on efficiency, and they make it difficult to factor in important variables like patient or staff satisfaction.

Stakeholder theory is based on important principles such as coop­eration, relationship building, fairness, integrity, reciprocity, long-term thinking, and win-win solutions. Consequently, it is well suited to help managers deal with complex environments characterized by high levels of uncertainty and change, as well as a high level of interdependence among participants.3 The practical application of stakeholder principles leads organizations to develop cooperative and trusting relationships with their major stakeholders, leading to higher levels of innovation, efficiency and value creation.4

Because of its practical approach to managing complexity and change, managing for stakeholders is becoming an increasingly popular management approach. We include in this book examples of HCOs that are having success with various aspects of this approach. However, we have observed many successful stakeholder oriented organizations across a variety of industries: Whole Foods, Harley Davidson, Ikea, and Honda are examples. We have been involved in some research with Andrew Wicks of the Darden School, University of Virginia, in which we interviewed very high-level executives from a variety of firms and industries regarding how they see stakeholder theory being applied today in their own firms as well as other firms. We would like to share just a few of their comments. Because the research is not published yet we will not include the names of the executives.

Luck Companies, a large construction aggregates manufac­turer: “What we said is we’re going to bet the farm on an idea that doing good, positively impacting the lives of our associates, customers, and communities, is the best path to doing well, making money… We are betting the farm on stakeholder theory, betting the farm on it.”

SunTrust, a financial services holding company: “We agree that value creation for a firm extends beyond the traditional focus on shareholder return determined by quarterly financial results. It is important for companies to take a wider view of the stakeholders that they serve in order to predict the longer-term health of the company and its ability to deliver sustained value.”

MeadWestvaco, a diversified global industrial manufacturer and service provider: “I would say that the general trend over the last 10 years has been that more firms are paying attention to these issues.”

Unum Group, a large international insurance company: “… I think we very much support the concept of multiple stake­holders and the growing importance of those stakeholders and, frankly, it defines the brand of this company.”

This book combines a stakeholder management approach with the most essential principles and practices of strategic management. Further­more, it is designed specifically for healthcare organizations. We bring to this book decades of combined experience that makes us well suited to write it (see About the Authors on page 117). We are passionate about this subject matter, and want to do what we can to help healthcare organi­zations cope better with the administrative challenges they are facing.

We would be remiss if we did not acknowledge the influence of several great scholars and friends in the writing of this book. Our list is long, but the most influential include Edward Freeman, Andrew Wicks, Robert Phillips, Douglas Bosse, Caron St. John and Graham Kenny. We would also like to acknowledge the constant support of our wives, Marie and Kim, during this project and in all our other professional endeavors.