“First, we didn’t want any layoffs,” Van Gorder says. “Fifty-one percent of our costs are people, and you can’t ask people to support changes if they fear they will lose their jobs.” Though the horizontal restructuring was announced last fall, he began laying the groundwork about four years ago, when he installed COOs in each hospital purely for succession planning purposes.
“We’d hired young, very talented COOs,” he says. “They were doing a terrific job, but I knew I could run the hospitals without them.”
So, after a corporate retreat, the decision was made to eliminate those positions and reinstall the COOs as corporate vice presidents whose responsibilities were to identify all variations in practice horizontally across the organization and integrate the hospitals into the ambulatory environment. The new reporting structure means everyone now has a matrix reporting structure. At the individual campuses, the vertical management staff, including the local CEO, is responsible for the day-to-day delivery of care and creating a safe, efficient, and positive patient experience.
“With anything suggested by our horizontal execs that will have a negative impact on those, our verticals must push back,” says Van Gorder. “At the same time, the horizontals may challenge every variation. We don’t expect one size to fit all, but expect to reduce our tremendous variation, and this creates a necessary constructive tension. That’s the hardest thing to learn to manage.”
Physicians were another powerful constituent group from which Van Gorder needed cooperation for this effort to pay off. He seems to be getting that cooperation.
“Now, it’s a lot easier for a physician leader at an individual campus to get decisions made on whether an action aligns with overall Scripps strategy, timing, and whether it should be happening at all the campuses,”
For instance, one of the corporate VPs is now responsible for surgery. She attends all the surgery supervisory meetings with surgical medical directors at each of the hospitals.
“Medical directors say their comanagement committee is not only worthwhile to get things done, but that decision-making overhead was dramatically reduced,” says LaBelle. “That’s huge for docs. They struggled with that previously.”
More than one way to improve
Some health systems are enacting variations of the matrix-based model that Scripps implemented, but in almost all cases, a common goal is working more closely to unify the standards to which all organizations within the system are expected to adhere.
“We’re evolving from a hospital system to a health system,” says Catholic Health Initiatives Vice President and Chief Operating Officer Michael Rowan.
With the idea that the system will become responsible for outcomes, CHI is investing heavily in patient coaching and home care and is leveraging the scale of a 72-hospital health system. He says expansion into these areas is essential because internally, they predict that 65% (versus about 50% currently) of net patient services revenues will be generated outside the inpatient side of the business by 2020.
Rowan says “regionality” is a strong theme in the management restructuring CHI is currently undergoing, and perhaps the best example of this philosophy exists in its Kentucky market, where CHI has taken nine hospitals that used to operate independently, and created a statewide health services organization with Jewish Hospital & St. Mary’s HealthCare/Jewish Hospital HealthCare Services; the University of Louisville Hospital/James Graham Brown Cancer Center; and Catholic Health Initiatives’ Kentucky-based operation, Saint Joseph Health System, which is headquartered in Lexington. The move creates market density, says Rowan, within a single large market that shares state regulatory protocols.
“It’s one thing to be one hospital within 72 nationwide,” he says. “It’s another thing to take those nine hospitals and merge them all into a single organization with a single corporate administrative team and a single governing board.”