To sustain themselves, these organizations must adapt to a bewildering array of threats from both beyond and within their organizations. But the traditional model of physician organizations is neither flexible nor adaptive. In these organizations, the focus is on the short term, and planning tends to be episodic and reactive.

Lack of capital, lack of infrastructure, and lack of management and operating systems often contribute to chronic operating deficiencies in any medical care delivery environment. Within these organizations it is the challenge of physician leaders and management to employ company assets most effectively and to continually examine the efficiency of operations, and when circumstances dictate these same leaders must be prepared to introduce and manage market driven organizational change.

Strategies to reshape and streamline physician organizations may proceed from a number of strategic reference points, including information technology, operations and clinical redesigning, management and staffing review, governance review, and compensation planning. This article focuses upon one of these strategies - and operations redesign - as a primary tool of organizational revitalization.

Guiding Principles of Organizational Change

The content and character of change in any organization is a function of the urgency of the situation and ambition of its leadership. Organizational change ranges from the aggressive (structural change) to the largely symbolic (cosmetic change). The more ambitious the strategy, the more disruptive (and perhaps unintentionally counter productive) the effect on operations and employee attitudes. Change of any type is perceived by many with anxiety, and is often met with resistance. For this reason a thoughtful strategy of organizational change takes into account the implications of such change on staff efficiency, morale, and cooperation. As described in Illustration, there is a spectrum of change strategies that exhibit distinct characteristics consistent with the scope and assertiveness of the process.

INSERT ILUSTRATION 1 TYPES OF ORGANIZATIONAL CHANGE

Conceptually, organizational change should conform to an articulated, vivid operational goal. Detailed, executable tactics must attend this goal. For instance, if the overreaching goal is to streamline business processes, there are systemic tactics that must define the process and outcomes, in this case through such tactics as operational assessments, process analysis, or systems audits. The style and outcomes of the change process may be defined by themes such as "faster, better, cheaper", but ultimately the broad theme must be translated in to measurable improvements such as reducing cycle time, handoffs, variation, cost or complexity.

Regardless of the focal point of organizational change, there are a number of principles and operating concepts that must be observed. These ideas must be embraced and practiced by each member of the execution team The central themes of the change process must be "communicate, educate, collaborate" in order to achieve the highest degree of success with the most efficient expense of resources. Specific concepts include:

• Communicate purpose and expectations
• Get those involved for achieving outcomes involved in planning
• Provide training and education as needed
• Be prepared to modify the Plan as events dictate
• Recognize successes and communicate results

INSERT ILLUSTRATION 2 A MODEL OF EFFECTIVE CHANGE

This logical sequence of events is the result of months of planning, meeting, communication, and consensus about process and outcomes. Without conducting an inclusive, collaborative planning exercise in advance of executing a change plan, the process may be viewed as punitive and arrogant. To enlist support, gain credibility, and to ensure that the process is fair and measurable, any organizational change must be grounded in solid assumptions and attainable outcomes based on quality information.

Information - the Linchpin of any Revitalization Strategy

Increasingly, information management is gravitating towards the center of healthcare redesigning efforts, because from both economic and clinical perspectives, it is information that drives decisions, sets standards and benchmarks to improve operating efficiency, and creates the means to measure outcomes and achievement. Standardizing information flows, promoting physician communication, creating access to patient information across the care continuum, and streamlining business processes are all typical examples of information -intensive redesigning strategies. As a planning and decision support tool, credible information is absolutely vital. To capture and interpret useful clinical and economic information, existing systems must be upgraded to create a common language, common platform, and common accessibility. As a business process support tool, information best serves the goal of controlling costs (for example claims processing, patient registration, eligibility and referral management). As a clinical services support tool, information best serves the goal of improving outcomes and patient satisfaction (guidelines and protocols, wellness and prevention, demand and disease management, outcomes measurement, etc). In addition, clinical information can be translated into an economic tool by creating performance evaluation and improvement tools, when tied to a compensation strategy.

The greatest obstacle to capturing and interpreting quality information is the incompatibility of information architectures in the practice and facility settings. Billing systems, hospital legacy systems, and myriad commercial software packages provide a poor foundation for shared information collection, interpretation, and distribution. In the past large sums of organization resources and cash had to be consumed in breaching this obstacle, but today the Internet and browser technology are providing a rapid rollout, low cost solution to this chronic dilemma. In fact, the Internet and browser based information technologies are bringing organizational change strategies of a very ambitious design within the reach of smaller, leaner organizations.

Operations Redesign
An organization's effectiveness is determined by the quality of its processes, staff, and systems. Since few organizations can effectively manage more than a small number of initiatives concurrently, it is worthwhile to expend considerable effort identifying the "vital few" business processes (often referred to as core processes) in order to focus upon the most important and most in need of redesign.

Michael Hammer, a leading authority on process reengineering, defines reengineering as "the fundamental rethinking and radical redesign of the entire business system to achieve dramatic improvements in the critical measures of performance."

Achieving change of the order that Hammer is advocating requires alignment of the organization's mission, goals, objectives, strategy, and tactics and a realization that operational redesign is not an isolated process, but an element of a broader scale systems change. Redesign impacts not only work processes, but also organizational structure, information systems, staffing, as well as human resources and improvement processes. It's opting for planned change and not quick fix approaches.

Better design methodologies address the common elements of design: launching, assessment, design, development, implementation, and evaluation of the process. The design effort must create a vision for the process and prepare the organization for the change. The process includes an assessment of the current state and environmental impact. Organizational approval of the design concept necessitates a "road map" complete with a cost/benefit analysis, metrics, and performance targets.

INSERT ILLUSTRATION 3 ORGANIZATIONAL SYSTEMS DESIGN

Prototypes (process models) need to be constructed, as do development and transition plans. Ongoing training for the new process is required during implementation. As with any successful design or improvement process, results must be periodically assessed and modifications made to both the design and approach.

Essential to the redesign process is a complete understanding of customer needs and market conditions. Will the redesigned process meet and exceed customer expectations and surpass competitors' current and near future capabilities?

Opting not to completely redesign a core process may occur for many reasons. Frequently, sufficient resources are not available for the redesign. Perhaps there are too many other critical initiatives underway or the area's leadership may not be stable. In these cases, serious consideration must be given to how much redesign, if any, is appropriate. It may be useful to consider redesign on a continuum with the current state at one end and the idealized process at the other. Potentially, a modified design can proceed to an interim point along the continuum toward the visionary process without violating the initial concern. Care must be exercised to proceed in a direction consistent with the future process. Later, the process can be upgraded to achieve the visionary design so not to waste the interim effort. Note that identification of the idealized process is still required in this alternative design strategy.

Concurrent with the redesign phases is a set of change management activities to ensure successful implementation. These activities range from achieving consensus on the need for change and understanding the scope and process for change to training employees and recognizing early successes.

Redesign projects function best when staffed with a few dedicated employees, relying on the expertise of non-team members as needed. For specialized expertise such as information technology, change management, etc. consultants may be required and should be utilized if necessary. Since teams function well with few people, physician's office staff is more than adequate in numbers to staff a team. Just because most office staff are limited in number is not a reason redesign cannot occur with great success.

The timeframe for a redesign project depends upon the scope and criticality of the change. Generally, projects take from 6 to 9 months to complete, but in no case should they exceed a year due to the potential loss of momentum.

During the design process, identifying the optimal design is often contentious and problematic. Developing evaluation criteria for use with a decision matrix is essential to avoid getting bogged down later in the redesign effort. The following criteria have been found suitable for design of many types of processes and when answered will provide a solid basis for redesign:

Is the design customer oriented?

• Who are the internal and external customers?
• Is the redesign customer-friendly?
• Does the process utilize the Pareto Principle (80/20 Rule) to identify and eliminate the 20 percent of the processes that cause 80 percent of the issues?
• Have departmental "silos" been minimized to facilitate customer interface and create a single point of contact for issue resolution?
• Does the process have multiple versions leading to customer confusion?
• Does the process have a single inflexible version requiring customer adaptation?

• Are all process steps value added?
• Are the unit and lifecycle costs reduced?
• By utilizing smart systems, are functions combined?

• Are delays eliminated?
• Are handoffs minimized? Does the redesign reduce the number of people involved in the process? Is paperwork handled the fewest number of times possible?
• Does the redesign eliminate manual interventions?
• Are just-in-time materials management techniques employed?
• Are checks, controls, and reconciliation minimized?

• Does the process reduce complexity? The KISS (keep it simple) principle is good design.
• Is the process reliable? Have fail-safe procedures been built-in for robustness?
• Is work performed in the appropriate order where it to makes the most sense?

Any discussion of operational redesign is incomplete without a mention of the potential causes of failure. Significant numbers of redesign efforts fail due to the loss of management support, middle management stonewalling, unclear process ownership, processes that were not aligned with strategy, goals/targets that were set too low, and solution options that were too constrained. With careful consideration and forewarning these pitfalls can be avoided.

Utilizing superior design technique and having the appropriate people on the team will generally produce excellent results. However, it is important to understand your organizations' limitations and ensure that the necessary skills are available to the team for the design process. Redesign is neither fast nor easy, but is effective when done well.

In summary, effective redesign focuses on "vital" processes. Work processes, organizational structure, information systems, staffing, human resources, and improvement systems need to be properly aligned for redesign processes to function well. Operational redesign will result in the improved customer satisfaction, better financial outcomes, and improved employee morale.

Recommended Reading

Reengineering: The Implementation Perspective Workbook, 1994 - Michael Hammer The Fifth Discipline, August 1990, Doubleday Currency, Peter M. Senge OSD Advanced Course In Organizational Design In Reengineering, the OSD Alliance, 1995

James Bale is president of TBG Consulting, a healthcare management consulting firm specializing in operations improvement and process redesign. TBG Consulting is based in Columbia, Maryland. Mr. Bale can be contacted at (301) 604-7171.

Richard Krohn is president of HealthSense, a health care business development and management-consulting firm based in Guyton, GA (www.health-sense.com). He can be reached at 912.772.4018