IM 600: Healthcare

Systems

Week 1

 Week 1 To-Do List

• Introduction

• Syllabus and Important Due Dates

• Pre-discussion Topics

• Overview of the US Healthcare Systems

 Introduction

• Let’s get to know each other. • Name

• Specialty (if you have one or are interested in) • A favorite food and a favorite self-care activity

 Syllabus and Assignments • Refer to syllabus

 Overview of the US Healthcare Systems

 Health

• The World Health Organization (WHO) defines health as:

a state of complete physical, mental and social well- being and not merely the absence of disease or infirmity. With this definition, a person with mental or physical disabilities would not be in a state of health. The enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being without distinction of race, religion, political belief, economic or social condition.

• Merriam-Webster defines health as a “condition of sound mind, body, and spirit”

 Healthcare and Health Care

• Healthcare and health care are both seen in medical literature.

• In some instances, these words are used interchangeably. However, defining the words is difficult, as there is no clear-cut definition for them. It then becomes a matter of debate on which version of the word is correct.

• In the Meriam Webster dictionary, we find the words health care with the word healthcare included as a variant of the two words (Merriem Webster, s.v.).

• The word healthcare is an adjective or noun based on how it is used.

• As an adjective, it denotes an industry or system, such as the healthcare industry or a healthcare system. Other uses of this term are denoted as follows: healthcare resources, healthcare costs, healthcare provider, healthcare facility or organization.

• Used as a noun, the word healthcare can be used in the following contexts: “the theme for our discussion this week is healthcare” or performing a search on the healthcare job board (Ruhl, 2013).

 Healthcare and Health Care

• Health care refers to an act or deed between the healthcare provider and the patient to maintain or improve the patient’s healthcare status (Ruhl, 2013). Therefore, health care can be used to describe a variety of services to improve an individual’s health and wellbeing.

 Overview of Healthcare Organizations

• An organization is an entity developed for a specific purpose.

• The organization will usually have a mission, vision, and values supporting the purpose of the organization.

• Additionally, an organization will employ individuals who can share the mission and vision and act as advocates to ensure the organization’s objectives are met and sustained.

• The purpose of an organization is to create products or provide services, using people and resources, and to maintain relationships with the external environment consisting of customers, suppliers, competitors and

regulatory bodies.

 Overview continued...

• Based on the premise that health care refers to services provided within a health care system to improve the health of an individual, a healthcare organization is an establishment that provides healthcare services.

• A health care organization can range from a single physician’s private practice to a health system to an integrated delivery network of health systems.

• Examples:

• insurance companies that serve as payors for healthcare services rendered

• Independent physicians’ practices that take care of the medical needs of patients

• Pharmaceutical companies that provide medicines prescribed to treat various diseases

• Facilities: hospitals, nursing homes, home health agencies, outpatient medical, imaging and surgical centers.

 Continued...

• Healthcare organizations rely on health policies, the healthcare market, organizational governing bodies, and the overall desire to improve patient satisfaction to dictate how work is structured and completed.

• Internal policies, external governing bodies, and various levels of authority govern organizations and thereby assist the organization in making decisions.

• Each has it’s own set of challenges that will influence the behavior of it’s internal and external stakeholders, including payers and providers of healthcare, public health agencies, providers, and services provided by manufacturers.

 Organizational Structure

• Structure of an organization is outlined reference to how specific activities are performed to ensure the mission and vision of the organization are achieved. It also stipulates the flow of information within the organization.

• For example, does the information flow from the chief executive officer to the lower subordinates within the organization (top-down approach)?

• There are three fundamental types of organizational structures: functional, multidivisional, and matrix.

 Functional Organization Structure

• A.k.a. bureaucratic organizational structure

• Splits the organization into departments based on the expertise of employees.

• May have various departments, such as CEO, commercial and marketing, finance, accounting, managerial, facilities, operations, maintenance, safety, or environment, housekeeping, nursing, laboratory, pharmacy, etc.

• This type of structure works best in small to medium size organizations wherein the business environment is stable and predictable and routine tasks are emphasized and practiced to improve quality.

• Healthcare delivery is usually structures based on functionality, with unit level divisions established according to roles, services, tasks, etc.

 Functional Organizational Structure

• Advantages:

• Reinforces specialized skills and resources

• Reduces duplication of scarce resources

• Facilitates communication within department

• Disadvantages:

• Short-term focus on routine tasks

• Business perspectives are narrow

• Communication with other departments is reduced

• Works Best When:

• Business environment is stable and predictable • Organization is small to medium size

• Quality is maintained through routine tasks

 Multidivisional Organizations

• Chief corporation comprises several smaller business units or divisions, which are based on geographic locations, products or services so that the daily processes or functions occur at the unit of divisional level, thus allowing the separate units or divisions to operate independently.

• In this structure, tasks are duplicated by each division, fostering innovation and receptiveness to their specific requirements.

• This process allows executives at the corporate level to use statistics from each unit to focus on strategies that will propel overall organizational performance through the successful allocating of people and resources.

• When organizations create divisions based on geography or products, cultures, markets, or laws will vary significantly. Because of this, healthcare organizations, such as Hospital Corporation of America (HCA), established an international division to manage it’s ventures in other countries more effectively and efficiently.

 Multidivisional Organizations • Advantages:

• Ability to hold corporate executives accountable for the results of local operations that are within their control.

• Disadvantages:

• Healthcare costs and quality

• Duplication of functions, such as products and services across divisions, place the division at a disadvantage, which threatens quality and costs of healthcare. This process decreases the division’s ability to achieve economies of scale and thereby increases the division’s operating cost.

• Duplication of functions can also lead to a lack of standardization and inefficiencies

• Efficiency measures the ability of healthcare resources in attaining the best value for the

money invested.

• Inefficiency occurs as a result of poor resource allocation in the form of spending that can be reduced without decreasing quality and spending that increases overall costs (equipment, labor, capital).

 Matrix Organizations

• Most useful when problems need to be solved

• Comprises the functional structure, along with a temporary project structure.

• One characteristic: presence of two managers creating multiple reporting relationships

• Departmental manager controls vertical relationships • Project manager handles horizontal relationships

• Because healthcare delivery is multifaceted and complex with rapidly changing operating environments, many healthcare facilities find the matrix structure useful in assisting the organization to fulfill the quality improvement.

 Matrix Organizations

• Advantages:

• Clearly defined project objectives

• Seamless integration of project and functional objectives

• Efficient use of limited human resources

• Fluid streaming of information throughout the project.

• Prompt diffusion of team members back into the functional organization upon project completion without organizational disruption and ability of functional management to handle conflicts arising at the project level

• Disadvantages:

• Increases the organization’s complexity

• Problems due to employees having to answer too many bosses and having conflicting managerial directives.

• Establishing priorities suitable to both the functional and project management may prove difficult

• Potential delay in management’s reaction to the problems when both structures are required to provide solutions.

 Discussion Topics

• 8 Major Problems with the US Healthcare Systems • Preventable Medical Errors

• Poor Amenable Mortality Rates

• Lack of Transparency

• Difficulty Finding a Good Doctor • High Costs of Care

• Lack of Insurance Coverage

• Nursing and Physician Shortage • Inefficiencies