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Case Study
Leadership for Health Professionals: Theory, Skills, and Applications
Third Edition
Gerald R. Ledlow
D1.
The CEO of our two-hospital system wanted to build a third hospital within our market. The health system was financially
sound, so there was never a question as to whether we could afford to pay for a new hospital. However, this market already
had eight other hospitals, so it was questionable whether an additional new hospital was needed. I was not in favor of building
this third hospital. However, the CEO insisted, and she proceeded to develop plans to build this new hospital. She brought
in nationally known consultants and coached them to find a way to justify building a new hospital.
At a very important board of trustees meeting, the system CEO and the outside consultants presented their case for building a third hospital that included data I knew was incorrect. At the end of this 3-hour presentation, one of the leading board
members, who knew me well and trusted me, asked for my frank opinion. He asked me whether the information they had
presented was correct and whether I recommended that the board approve this new hospital. Well, my whole career flashed
before my eyes as I considered my response. All the board member wanted was a yes or a no. If I said yes, the new hospital
would go forward, and I eventually would become president of the entire system. If I said no, then my tenure with this system
would probably come to an end. This was a big decision for me, and I had a lot to lose. My family and I had a very comfortable
house on the ocean, and my children were happily attending private schools.
I replied to the board member that no, the consultants’ information was not correct, primarily because they misunderstood (or misrepresented) the soon-to-be-implemented prospective payment system (PPS). The consultants tried to justify
building a new hospital by arguing that, under PPS, the length of stays in all our hospitals would increase, and currently
there wasn’t enough bed capacity in this market area to handle the increased volume. However, that information was
absolutely incorrect. Anybody who understood the PPS knew that the length of stays were going to decrease, and that our
hospital’s occupancy would decrease, which is exactly what eventually happened. Before PPS, we were running at about 93%
occupancy. After PPS, our occupancy decreased to about 57%. Therefore, my statement to the board was absolutely correct.
When I told that board member “No, this information is not correct, and we do not need a new hospital,” the whole board
meeting blew up. They went absolutely bananas, and voted not to build this new hospital. After the board meeting, the
system president brought me aside and wanted to know what I was doing. And I replied, “I wasn’t going to lie to the board.
If you want to lie to the board, that’s up to you.” I knew that my future there, particularly the prospect of becoming system
president, was over from that meeting. Within 18 months I had left that system and taken over the presidency of another
system. Two years later, the board member who had asked my opinion at this board meeting died in a plane crash. After his
death, the system CEO again proposed building a third hospital. This time, the board approved, and they actually built that
hospital. It was a major mistake. The hospital was not really needed, and the debt became a big drag on the balance sheet.
Fortunately, I went on with my career and became president of another system, where I was very happy. That was probably
the most explosive board meeting I’ve ever been a factor in a major decision, and I’ve had some very interesting ones.
Content Link:
Ledlow & Stephens, Leadership for Health Professionals: Theory, Skills, and Applications, 3rd Edition, Jones & Bartlett Learning,
2017
Chapter 9: Leadership and the Complex Health Organization
Chapter 10: Ethics in Health Leadership
Chapter 12: Understanding the Executive Roles of Health Leadership
Copyright © 2018 by Jones & Bartlett Learning, LLC, an Ascend Learning Company
2 ❚ Case Study
Name:
Date:
Section:
D1. Case Study Questions
1. If you were the COO, how would you have handled the question from the board member about whether the new hospital was justified?
2. How would you have dealt with the system president who was lying to the board and was about to change your career
path?
3. Would you have said yes to the board member’s question of whether the hospital was justified in order to protect your
career and your family?
Copyright © 2018 by Jones & Bartlett Learning, LLC, an Ascend Learning Company
Chapter 9
Leadership and the
Complex Health
Organization:
Strategically Managing
the Organizational
Environment Before It
Manages You
“We need leadership on the fundamentals of eating
right, exercising, and not smoking. I am interested
in getting people to use the healthcare system at the
right time, getting them to see the doctor early
enough, before a small health problem turns
serious.”
Donna Shalala,
U.S. News and World Report,
“America’s Best Leaders” (2005)
Learning Objectives
• Identify the strategic direction elements of the
strategic plan, identify the other elements of the
strategic and operational plan, describe each of
these elements in summary, and outline which
internal and external environmental factors
influence the strategic plan.
• Distinguish the levels of organizational culture
and summarize the actions and behaviors a health
leader would perform to proactively and
positively change organizational culture.
Learning Objectives, cont.
• Predict and relate how strategic planning can positively
influence organizational culture (and the internal
environment); describe how strategy selection (competitive,
adaptive, etc.) reinforces those changes to organizational
culture and the internal environment.
• Analyze how external and internal environmental factors
influence the strategic plan and the organizational culture of
a health organization.
• Design a methodology to perform internal environmental
scanning, monitoring, and assessment and external
environmental scanning, forecasting, and monitoring for a
hospital or group practice, public health organization, longterm care organization, or stand-alone allied health practice
or retail pharmacy.
Learning Objectives, cont.
• Interpret the current external environmental
factors in the health industry; translate your
interpretation into a critical list for action for a
health organization and appraise each element on
the critical list for action as to where it should be
addressed by the health organization (strategic
plan, directional strategies, external/internal
environment, organizational culture, etc.) noting
that critical list items may impact more than one
area of the health organization.
Mission, Vision, Values, Strategies,
Goals, Objectives, and Action Steps
• Leaders in health organizations utilize a strategic
system of leadership and management.
• The health leadership team most likely will utilize
a strategic and operational planning process to
derive an organization’s mission, vision,
strategies, goals, objectives, and action steps.
Mission, Vision, Values, Strategies, Goals,
Objectives, and Action Steps, cont.
• Mission, vision, and values are guideposts that leaders
utilize to focus the health organization’s collective energy
and resources.
• “Mission, vision, values, and strategic goals are
appropriately called directional strategies because they
guide strategists when they make key organizational
decisions.”
− Swayne, L. E., Duncan, W. J., & Ginter, P. M. (2006). Strategic
Management of Health Care Organizations (5th ed.). Malden,
MA: Blackwell; p. 187.
• A health organization’s mission is tied to its purpose.
– Purpose is what the organization does every day to meet the
needs and demands of the external environment.
Stakeholders
• Stakeholders are individuals, groups, community
members (individual and collective), and
companies that interact with your organization:
–
–
–
–
–
Patients
Customers
Staff members
Suppliers
The community
• Stakeholders can directly and indirectly influence
the success of your organization.
Purpose and Vision
• An extension of purpose is a health organization’s
mission.
– Mission is why your organization exists, what business
it is in, who it serves, and where it provides its
products or services.
• Vision is an aspiration of what the organization
intends to become.
– Vision is the shared image of the future organization
that places the organization in a better position to do
its mission/fulfill its purpose.
Strategies, Goals, and Objectives
• Strategies, goals, and objectives are the sequential
building blocks of planning to successfully
achieve the mission, but also to strive to achieve
the vision of the health organization.
• “Strategic goals are those over-arching end results
that the organization pursues to accomplish its
mission and achieve its vision.”
− Swayne, L. E., Duncan, W. J., & Ginter, P. M. (2006). Strategic
Management of Health Care Organizations (5th ed.). Malden,
MA: Blackwell; p. 187.
• Strategies follow “a decision logic of
development.”
Goals
• Goals translate the broad strategies of
the vision into specific statements for
organizational action by focusing the
organizational resources to achieve the
strategy to build the vision.
– Goals are broader statements, sometimes
aspirations, and are hierarchically above
objectives.
Objectives
• Objectives align organizational resources to
meet the stated goals.
– Objectives should be measurable, assigned to
a responsible person or agent or owner, have
timelines for completion, and be frequently
reviewed by the health organization leadership
for progress and resource sufficiency.
Action Steps
• Action steps (or action plans) are created to
produce a step-by-step or task-level
implementation sequence for each objective.
– Each task in the action steps (or plan) has a
responsible person(s) or owner, a time range for
accomplishment, and may have a measureable
variable as well.
– Action step owners “report” to the objective owner
who “reports” to the goal owner, who ultimately
reports to the leadership team at the strategy level.
Mission, Vision, Values, Strategies, Goals,
Objectives, and Action Steps, cont.
• Mission, vision, values, strategies, goals,
objectives, and action steps are essential
components of the strategic system of leadership
and management.
• Health leaders utilize the strategic system’s tools,
such as planning (strategic and operational), to
transform, guide, and develop organizational
culture to focus the collective energy and
resources of the health organization to effectively,
efficiently, and efficaciously serve its purpose.
Mission, Vision, Values, Strategies, Goals,
Objectives, and Action Steps, cont.
• “Strategy-making processes are
organizational-level phenomena involving key
decisions made on behalf of the entire
organization.”
– Dess, G. G. & Lumpkin, G. T. (2005). Emerging issues in strategy
process research. In M. A. Hitt, R. E. Freeman, & J. S. Harrison (Eds.),
The Blackwell Handbook of Strategic Management. Malden, MA:
Blackwell; p. 3.
Understanding the Internal Environment
• Internal scanning, monitoring, and assessment of
the health organization are vital leadership
activities; effective leaders are effective internal
organization scanners, monitors, and assessors.
– Most important elements of understanding the internal
health organization’s environment should focus on
systems such as human resources management system,
supply chain system, technological system,
information system, and culture and subcultures.
– The salient theme is one of integrated synergy among
all the health organization’s systems.
Scanning, Monitoring, and Assessing
• Specific areas of scanning, monitoring, and
assessing for the health leader are:
1. Competitive advantage and the unique or distinctive
competencies the organization possesses (centers of
excellence for example)
2. Strengths and weaknesses of the organization
3. Functional strategies for implementation of strategies
that are supported by goals, objectives, and action
steps
4. Operational effectiveness, efficiency, and efficacy
5. Organizational culture (Is the culture aligned with
the organization’s direction?)
Institutional Factors
• Institutional organizations and environments
highlight the importance of social, political, and
psychological aspects of organizational dynamics.
• The institutional view, in essence, is an
assessment of the organization’s situation as
compared against a health leader’s predetermined
standard or benchmark or expectations as
compared with competitors.
Van Wijngaarden, J. D. H., Scholten, G. R. M., & Van Wijk, K. P. (2012).
Strategic analysis for health care organizations: The suitability of the SWOT
analysis. The International Journal of Health Planning and Management,
27(1), 34–49.
Institutional Factors, cont.
• Institutional organizations focus on the
reproduction of organizational activities and
routines in response to external pressures,
expectations of professionals in the industry,
and collective norms of the institutional
environment.
• Most often health organizations are a hybrid of
institutional and technical environments.
Resource-Dependent Organizations
• The resource-dependent organization desires to
maintain autonomy and remain relatively
independent of its environment.
• One of the basic propositions of the resourcedependent organization is that leaders must be
aware that the most efficient or effective
organizations do not always survive. Not
surprisingly, organizations with the most
power survive.
Resource-Dependent Organizations, cont.
• Power is defined as the ability to secure and
maintain the most stable and most respected
networks of resource chains.
• In the resource-dependent environment, the
organization requires resources to gain and
maintain power and therefore must (sometimes
reluctantly) interact with the environment.
− Pfeffer J., & Salancik, G. (1978). The External Control of
Organizations: A Resource Dependence Perspective. New
York: Harper and Row.
Contingent Organizations
• Contingent organizations are more flexible and
rely less on rigid policies and practices.
– These organizations utilize more loosely established
internal best practices.
– This organization will be loosely coupled.
• Within this type or organization, a leader’s
success is based on a unique amalgam of internal
and external factors.
– Organizational and environmental factors are
contingent on each other.
Contingent Organizations, cont.
• The leadership approach is always based on the
organization's current situation.
• The underlying assumptions of contingent
organizations are based on the premise that
organizational structures are open and are not
organizationally egalitarian.
– There is no one best way to organize, and any one
way of organizing is not equally effective in another
organization.
• The contingent view utilizes a scenario-based
methodology.
Understanding the External Environment
• Understanding the external environment
focuses on scanning, monitoring, forecasting,
and assessing the macro and micro forces of
the external environment.
– Scanning involves identifying the subtle to
dramatic signals of macro and micro forces
change.
– Monitoring focuses on deriving meaning from a
pattern of observations from scanning macro and
micro forces.
Understanding External Environment, cont.
− Forecasting is the active development of projections and
likely scenarios based on patterns indicated from
monitoring.
− Assessing is prioritizing and quantifying the impact of
changes in the macro and micro forces’ external
environment, considering scenario forecasts in that
valuation.
• Categories to give leaders structure through which
to scan, monitor, forecast, and assess a dynamic
health industry:
− Macro-environmental forces
− Health care environmental [micro-environmental] forces
− SWOT analysis
Program Guidelines
• PHEP program guidelines provide the basis for
assessment of capabilities and functions for public
health preparedness.
• HPP program guidelines provide the basis for
assessment of capabilities and functions for
healthcare delivery organizations/hospitals.
Both of these programs are funded and managed
separately but now require alignment and
integration to provide a better “picture” of
preparedness.
Horizontal Factors
• Horizontal organizations are organizations that
have cooperative relationships, affiliations, or
ownership rights with multiple outside agents
and actors.
• Horizontal organizations seek to maintain a
level of homeostasis with all elements internal
and external to the establishment.
Vertical Factors
• The horizontal organization is in stark contrast to
the vertical organization.
• The vertical organization builds a monument unto
itself and seeks to minimize reliance on any and
all outside stakeholders and actors.
– In the true sense of organizational dynamics there are
actually few true vertical organizations. As a result,
when we speak of vertical organizations, we refer to
organizations that attempt to control the environment
first rather than living in the environment and
becoming a participatory member within the
community.
Dynamic Factors
• Dynamic organizations are those that do not
qualify as either vertical or horizontal
organizations. However, there is a tendency for
many dynamic organizations to fit into the
open and horizontal architecture.
• Different possibilities in the environmental
characteristics constantly require the creation
of new and different ways of positioning the
organization for success.
Organizational Culture
• From a broad perspective, health leaders assess
the external and internal environments of the
organization, determine what organizational
culture will best meet the needs of the external
environment, then design, develop, implement,
and refine the organizational culture.
• From this “big picture” view, leadership seems
simple, yet accomplishing the task of
organizational alignment with the external
environment requires a focused, clear appealing
vision that is well communicated and leadership
and management team actions consistent with that
vision.
Organizational Culture, cont.
• From this standpoint, leaders must be
knowledgeable and competent about
organizational dynamics, culture,
communication, assessment and analysis,
and change management.
– All of these areas are important, yet culture is the
fabric that weaves all of these components
together.
Organizational Culture, cont.
• To begin moving an organizational culture
toward change, the health leader should:
– Model the behavior you expect yourself.
– Communicate expectations and train other leaders,
managers and staff.
– Revise structures and reporting relationships.
– Conduct team-based planning and policy
development.
– Use primary and secondary mechanisms
(discussed later in this chapter).
Organizational Culture, cont.
• To begin moving an organizational culture
toward change, the health leader should (cont.):
– Be consistent and communicate often to the
organization.
– Continue to scan, monitor, and assess the internal
health organization environment while you scan,
monitor, forecast, and assess the external
environment.
Organizational Culture, cont.
• Defining organizational culture
– Organizational culture is a complex construct that
incorporates many concepts and multitudes of
variables.
– It consists of a large set of largely ignored or invisible
assumptions that deal with how group members
interpret both their external relationships (external
environment) and their internal relationships with each
other. Culture is an outcome of group learning.
– As people solve problems together successfully, a
condition for culture formation exists.
Organizational Culture, cont.
• Defining organizational culture (cont.)
– Edgar Schein defines culture as a pattern of basic
assumptions that are invented, discovered, or
developed by a given group as it learns to cope with its
problems of external adaptation and integration.
– These assumptions have worked well enough to be
considered valid and, therefore, have to be taught to
new members as the correct way to perceive, think,
and feel in relation to their problems, challenges, and
opportunities.
Organizational Culture Levels
• Level 1: Artifacts and creations
– These elements are most visible and include the
organization’s constructed social and physical
environment.
– This level includes technology, art, visible and
audible behavior patterns (visible but often not
decipherable) such as written and spoken
language, overt behaviors, and how members
demonstrate status.
Organizational Culture Levels, cont.
• Level 2: Values
– These are testable in the physical environment;
they are testable only by social consensus (such as
taking care of patients).
– Central values provide the day-to-day operating
principles by which the members of the culture
guide their behavior.
– As values are taken for granted, they gradually
become beliefs and drop out of consciousness, just
as habits become unconscious and automatic.
Organizational Culture Levels, cont.
• Level 3: Basic underlying assumptions
– These include relationship to the environment; nature
of reality, time, and space; nature of human nature;
nature of human activity; and nature of human
relationships (taken for granted, invisible,
preconscious); implicit assumptions tell group
members how to perceive, think about, and feel about
things.
– These assumptions are taken for granted; members
would find behavior based on any other premise
inconceivable.
Interpersonal Interaction Model
• This typology categorizes organizational
cultures into one of four types:
– Power culture: Strong leaders are needed to
distribute resources. Leaders are firm, but fair and
generous to loyal followers. If the organization is
badly led, there is rule by fear, abuse of power for
personal gain, and political intrigue.
Interpersonal Interaction Model, cont.
• Four organizational culture types (cont.):
− Achievement culture: Results are rewarded, not
unproductive efforts. Work teams are self-directed.
Rules and structure serve the system, but not as an
end by themselves. A possible downside is sustaining
energy and enthusiasm over time.
− Support culture: Employees are valued as people, as
well as a workers. Employee harmony is important.
The weakness is a possible internal commitment
without an external task focus.
Interpersonal Interaction Model, cont.
• Four organizational culture types (cont.):
• Role culture: There is rule of law that outlines clear
responsibilities; reward systems are tight, with tight
coupling to responsibilities. This type provides
stability, justice, and efficiency. Its weakness is in
impersonal operating procedures and a stifling of
creativity and innovation.
Societal Expression Cultures
• There are different types of culture, just like
there are different types of personality.
Sonnenfeld identified the following four types
of cultures:
– Academy culture: Employees are highly skilled
and tend to stay in the organization, while working
their way up the ranks. The organization provides a
stable environment for employees to develop and
exercise their skills. Examples are universities,
hospitals, large corporations, etc.
Societal Expression Cultures, cont.
• Four types of culture (cont.):
− Baseball team culture: Employees are "free
agents" who have highly prized skills. They are
in high demand and can rather easily get jobs
elsewhere. This type of culture exists in fastpaced, high-risk organizations, such as
investment banking, advertising, etc.
Societal Expression Cultures, cont.
• Four types of culture (cont.):
− Club culture: The most important requirement for
employees in this culture is to fit into the group.
Usually employees start at the bottom and stay
with the organization. The organization promotes
from within and highly values seniority. Examples
are the military, some law firms, etc.
Societal Expression Cultures, cont.
• Four types of culture (cont.):
− Fortress culture: Employees don't know if they'll be
laid off or not. These organizations often undergo
massive reorganization. There are many
opportunities for those with timely, specialized
skills. Examples are savings and loans, large car
companies, etc.
• Office of Minority Health, United States Department of Health
and Human Services. (2013). What is cultural competence?
Retrieved from
http://minorityhealth.hhs.gov/templates/browse.aspx?lvl=2&lv
lID=11.
Defining Leadership from an
Organizational Culture Context
• The unique and important function of
leadership, as contrasted with management
or administration, is viewed as the
conceptualization, creation, and management
of organizational culture. Culture is a learned
and evolved system of knowledge, behavior,
attitudes, beliefs, values, and norms that is
shared by a group of people.
Defining Leadership from an
Organizational Culture Context, cont.
• “Leaders go beyond a narrow focus on power and
control in periods of organizational change. They
create commitment and energy among stakeholders
to make the change work. They create a sense of
direction, then nurture and support others who can
make the new organization a success.”
− Bennis, W., Parikh, J., & Lessem, R. (1996). Beyond
Leadership: Balancing Economics, Ethics, and Ecology
(rev. ed.). Cambridge, MA: Blackwell.
• Health leaders led people and manage resources
within a framework of organizational culture.
Changing and Adapting
Organizational Culture
• Primary embedding mechanisms
– Health leaders have a set of powerful tools, behaviors,
and mechanisms to develop, refine, maintain, or
change organizational culture. These are:
• What leaders pay attention to, measure, and control
• Leader reactions to critical incidents and organizational
crises
• Deliberate role modeling, teaching, and coaching by leaders
• Criteria for allocation of rewards and status
• Criteria for recruitment, selection, promotion, retirement, and
excommunication
Changing and Adapting
Organizational Culture, cont.
• Secondary reinforcement reinforcement mechanisms
reinforce the primary embedding mechanisms. The
following are of the most importance:
−
−
−
−
The organization’s design and structure
Organizational systems and procedures
Design of physical space, facades, and buildings
Stories, legends, myths, and parables about important events and
people
− Formal statements of organizational philosophy, creeds, and charters
• Schein calls these “secondary” because they work only
if they are consistent with the primary mechanisms.
Discussion Questions
• What are the strategic direction elements of the
strategic plan? What are the other elements of the
strategic and operational plan, and what are the
different challenges a health leader faces in
institutional, resource-dependent, and contingent
environments? What strategies might you suggest the
leader could implement for successful outcomes?
• Discuss the levels of organizational culture and
summarize the actions and behaviors a health leader
would perform to proactively and positively change
organizational culture.
Discussion Questions, cont.
• Can you predict how strategic planning can
positively influence organizational culture and
the internal environment? How does strategy
selection (competitive, adaptive, etc.) reinforce
those changes to organizational culture and the
internal environment?
Discussion Questions, cont.
• Can you analyze how external and internal
environmental factors influence the strategic plan
and the organizational culture of a health
organization? Highlight the basic differences
between vertical and horizontal external
environments compared to internal institutional,
resource-dependent, and contingent environments.
What are the strategies a health leader operating
in these environments might be able to leverage to
ensure success?
Discussion Questions, cont.
• Discuss a methodology to perform internal
environmental scanning, monitoring, and
assessment and external environmental
scanning, forecasting, and monitoring for a
hospital, group practice, public health
organization, long-term care organization, or
stand-alone allied health practice or retail
pharmacy.
Discussion Questions, cont.
• Explain how you would interpret the current
external environmental factors in the health
industry; translate your interpretation into a
critical list for action for a health organization.
How could you appraise each element on the
critical list for action as to where it should be
addressed by the health organization (strategic
plan, directional strategies, external/internal
environment, organizational culture, etc.) noting
that critical list items may impact more than one
area of the health organization?
Exercises
• Identify the different challenges a health leader
faces in institutional, resource-dependent and
contingent environments? What strategies should
a health leader implement for successful
outcomes? Write this answer in one to two pages.
• Summarize the levels of organizational culture
and estimate the actions and behaviors a health
leader would perform to proactively and
positively change organizational culture in one to
one and a half pages.
Exercises, cont.
• Explain how strategic planning can positively
influence organizational culture and the
internal environment. Describe how strategy
selection (competitive, adaptive, etc.)
reinforces those changes to organizational
culture and the internal environment in one to
two pages.
Exercises, cont.
• Analyze how external and internal environmental
factors influence the strategic plan and the
organizational culture of a health organization,
highlighting the basic differences between vertical
and horizontal external environments compared
with internal institutional, resource-dependent,
and contingent environments? What are the
strategies a health leader operating in these
environments might be able to leverage to ensure
success? Provide your answer in two to three
pages.
Exercises, cont.
• Design a methodology to perform internal
environmental scanning, monitoring, and
assessment and external environmental
scanning, forecasting, and monitoring for a
hospital, group practice, public health
organization, long-term care organization, or
stand-alone allied health practice or retail
pharmacy in one to two pages.
Exercises, cont.
• Evaluate and interpret the current external
environmental factors in the health industry;
translate your interpretation into a critical list for
action for a health organization. How could you
appraise each element on the critical list for action
as to where it should be addressed by the health
organization (strategic plan, directional strategies,
external/internal environment, organizational
culture, etc.) noting that critical list items may
impact more than one area of the health
organization?
Chapter 10
Ethics in Health
Leadership
“Healthcare executives should view ethics as a
special charge and responsibility to the patient,
client, or others served, the organization and its
personnel, themselves and the profession, and,
ultimately, but less directly, to society.”
American College of Healthcare Executives, 2009
Learning Objectives
• Define distributive justice, ethics, morals, and
values. Describe how they are used by leaders
in decision making.
• Explain four ethical principles that guide
decision making associated with patient care.
• Apply at least two ethical frameworks or
distributive justice theories, with examples of
moral practice of a leader, to an ethical issue in
a health organization.
Learning Objectives, cont.
• Analyze arguments and make a recommendation for
health leaders to adopt utilitarian and/or deontological
postures in their organization, and differentiate
potential decisions leaders would make between the
two frameworks to support your analysis and
recommendation.
• Compile a list of available options a leader in a health
organization has to develop for an integrated system of
ethics and moral practice, and summarize the potential
impact of each option regarding appropriate ethical
adaptation across the organization.
Learning Objectives, cont.
• Compare and contrast at least three ethical
frameworks or distributive justice theories for the
topics of patient autonomy, beneficence,
nonmaleficence, and justice, and interpret the
moral practice associated with those frameworks
(at least three) for a right-to-life issue and for the
practice of euthanasia.
Ethics in Health Leadership
• Ethics and the application of ethics, morality, are
leadership responsibilities.
– Too often, ethics, ethical practice, and discussions of ethics
are placed in a legal context of liability reduction and
“legalism.”
• Health organizational culture development that includes
an ethical framework, systems integrated in ethical
expectations, and moral practice of ethical actions and
behaviors are leadership responsibilities, not legal
counsel responsibilities.
– Health leaders model the behavior expected in the
organization; this especially includes being a moral actor.
What Is Ethics?
• Ethics is defined as a moral philosophy
between concepts of right and wrong behaviors
linked to resource allocation.
– It deals with values relating to human conduct with
respect to the rightness and wrongness of actions
and the “goodness” and “badness” of motives.
– Ethics in the health field can further be defined as
a set of moral principles and rules of conduct for
health professionals to follow.
What Is Ethics? cont.
• Ethics also can, at times, be culturally defined.
– This links back to distributive justice theories,
cultural values, and beliefs, and how a culture
selects and applies a model of resource allocation
based on societal norms and mores.
Difference Between Ethics,
Values, and Morals
• Values are enduring beliefs based on some
early form of indoctrination and experience.
– Values are learned from parents, the community,
school, peers, professional organizations, and
personal self-development, to name only a few
areas.
– Recall Rokeach’s model of values–beliefs–
attitudes.
Difference Between Ethics,
Values, and Morals, cont.
• Morals are applied practices derived from an
ethical framework that is based on values and
resource allocation beliefs. Different from values,
morals comprise the principals on which decision
making is based.
– Morality is the level of compliance to an ethical
framework.
– Morals are the actions and outcomes of the human
condition processed over time as evaluated against the
ethical framework based on values and resource
allocation principles.
The Difference Between Ethics,
Values, and Morals, cont.
• In Aesop’s fable of The Grasshopper and the Ants
– The “moral” of this story is that it is always best to
prepare for one’s future in the face of the uncertainty
of the environment. However, because this “lived
experience” may take an individual’s entire lifetime
to learn, the experience is shared through the lived
experience of others through moral tales.
Setting Ethical Standard in the
Health Organization
• Health leaders face ethical dilemmas in the daily work of
delivering health services and products within the health
organization.
• Health leaders may often find themselves torn between
owing allegiance to the financial stability of the organization
and the charitable nature of the health profession.
• Stakeholder expectations are expressed and integrated
through board of directors or board of trustees membership
that represents the communities served and the advocacy of
stakeholder expectations by senior leadership of the health
entity and within internal committee structures of the
organization, such as with the ethics committee.
Setting Ethical Standard in the
Health Organization, cont.
• The ethics committee has three main purposes:
education, consultation, and policy review.
– Challenges of the committee include internal organizational
principle conflict, values contradiction, leadership team
decision making, and community and industry ethical
attitudinal changes.
• The health organization should have an individual
appointed on staff as the resident ethicist to assist in
decision and policy making.
• The establishment of an ethics committee that meets on
a regular and reoccurring basis can likewise keep the
leadership informed of relevant and legitimate issues
confronting the health organization.
Ethics in Health Leadership
• Example: When actions and ethics collide
– During the financial collapse of many U.S.-based
organizations in the fall of 2008, Congress reacted
by providing over $700 billion to organizations
that had run themselves into the ground through
bad business practices and risky financial
behaviors. However, it was later learned that the
CEOs of many of these financially insoluble
organizations were still going to receive annual
bonus checks up to $620,000.
Common Ethical Dilemmas
• Common ethical dilemmas in health
organizations
– Ethical dilemmas in health organizations generally
arise out of professional, or values-based, conflicts
of interest.
– According to the American College of Healthcare
Executives, a conflict of interest occurs when one
has conflicting duties or responsibilities and meeting
one of them makes it impossible to meet the other.
The classic example occurs when a decision maker
for one organization is also a decision maker or
influence for another organization with which
business is transacted.
Relationship Morality
• Ethical dilemmas in the health organization are
inevitable. In the field of health leadership, ethical
dilemmas occur at three levels: micro, macro and
meso.
– The micro level involves individual issues, such as
relationships between individuals and leaders.
– The macro level involves societal or community issues
that reflect governmental actions or social policies.
These are typically culturally based.
– The meso level involves organizational or professional
issues.
Ethics in Health Leadership
• Business and financial ethics
• Contracts and negotiations
Ethics in Health Leadership, cont.
• Right to life issues
– Roe v. Wade
• Euthanasia
Ethics of Policy Making in U.S.
• Understanding the patient’s spirituality base in
decision making
– To adjust to the spiritual needs of patients entering the
health system, leaders should strive to be aware of the
diverse beliefs within their organizations and foster a
high degree of sensitivity and respect for those beliefs.
– Specific beliefs and practices to consider include, but
are not be limited to:
•
•
•
•
•
Healing rituals
Dying, death, and care of dead bodies
Harvesting and transplanting organs
End of life and right to life decisions
Use of reproductive technologies
Ethical Codes Adopted by Health Industry
• Two of these theories are contrasting frameworks:
utilitarianism and deontology.
• Issues surrounding patient rights of autonomy,
beneficence, nonmalificence, and justice
important as well.
• Common ethical codes or frameworks should be
integrated with the cost, quality, and access
paradigm considering changes to the health
system or resource allocation of health resources.
Distributive Justice
• At the foundation of ethics is distributive
justice.
– Distributive justice is a set of theories or ideologies
that attempt to instill a set of values, ideals of
fairness based on those values, and beliefs in the
allocation of resources, food, water, housing,
wealth/money, opportunities, materials, etc.,
throughout a society.
Distributive Justice, cont.
• At its root, ethics is a framework that is based
on a distributive justice theory or combination
of those theories; ethics is an extension of
resource allocation and the methods of that
allocation while morality or morals is the level
of congruence to that ethical framework.
Utilitarianism
• Utilitarianism is a theory that takes as its
primary aim the attainment of maximum
possible happiness of a society as a whole.
• This goal is to be achieved in such a way that
one first checks what makes every particular
individual in a society happy, then sums up all
these various wants and preferences, and
finally finds out how to satisfy the greatest
number of them.
Egalitarianism
• Egalitarianism is a set of closely related
theories that without exemption advocate the
thesis that all members of a society should
have exactly equal amount of resources.
Libertarianism and Deontology
• Libertarianism
– Libertarianism suggests that the market or market
forces should determine the distribution of
resources in a society.
• Deontology
– Deontology is the opposite of utilitarianism. It is
an ethical framework and philosophy of resource
allocation that suggests actions should be judged
right or wrong based on their own values and
principle driven characteristics.
Pluralism
• Pluralists hold that goods that are normally
distributed in any society are too different to
be distributed according to only one criterion.
To almost every one of these various kinds of
goods we should apply a criterion that is
characteristic for it. Thus we have diverse
spheres of justice in which there are different
criteria that tell us which distributions are
morally right.
Autonomy, Beneficence,
Nonmaleficence, and Justice
• Autonomy: The patient's right to self
governance and medical decision making
• Beneficence: The requirement of the health
organization to do “good”
• Nonmaleficence: The requirement for the
health organization to do no harm
• Justice: The obligation to give each patient fair
resource allocation (services and products
associated with the care process)
Difference Between Medical Ethics,
Clinical Ethics, and Bioethics
• Clinical ethics refers to the ethics of the clinical
practice of medicine and with ethical problems
that arise in the care of patients.
– Includes traditional professional medical ethics that
place the patient at the center of consideration.
• Traditional medical ethics were deficient in the
face of technological advances of recent years;
this reality has giving rise to bioethics.
– Bioethics’ first concern is with “the intersection of
ethics and the life sciences” and later expanded to
include human values.
Difference Between Medical Ethics,
Clinical Ethics, and Bioethics, cont.
• Health organizations have to balance and
develop systems to adhere to medical and
clinical ethical standards as well as bioethical
standards.
Health Leaders Are Part Ethicist
Steps to ensuring ethical framework in health
organization:
• Establishing and chartering ethics committees with
authority
• Requiring staff attendance, participation, and evaluation
of education programs
• System of policy development and review
• Seeking consultation by utilizing consultants with
similar values and moral practices
• Integrating professional, clinical, and business ethical
performance through leader role modeling and
subordinate reinforcement (rewards and punishments)
Health Leaders Are Part Ethicist, cont.
• Fostering a positive ethical climate within an
open and supportive communication environment
(For example, it is acceptable to tell leadership
about a mistake of error.)
• Reviewing relationships with external
stakeholders, partners, and entities with which the
health organization has contract relationships to
evaluate ethical framework and moral practice
congruence with the health organization
Health Leader’s Challenge: Where to Start?
Questions for health leaders to consider when
creating ethics system in their organizations:
• Which values does the organization hold?
• On what distributive justice theoretical framework
should ethical decisions be based?
– Does that framework apply to all situations and if not,
when does the framework not apply and what framework
takes its place?
− How do values of the health organization get put into
practice?
Health Leader’s Challenge, cont.
• How does a health organization establish an
ethical framework and moral application of
principles (planning, group discussions,
professional associations, laws and regulations,
community expectations, community needs, etc.)?
• Does the health organization have an ethical
statement or creed highly visible and accessible
by all stakeholders?
Health Leader’s Challenge, cont.
• To embed the ethical foundation and moral actions,
which systems need to be in place, such as committees,
policies, procedures, enforcement of those policies and
procedures (consider: should coupling be tight or loose
regarding ethical frameworks and moral behavior and
actions?), and leadership role modeling considering
customers’/patients’ expectations, business conduct and
operations, negotiations, contract agreements and
compliance, legal/regulation compliance, error
remediation (how do you resolve errors made?), and
health service and/or product delivery?
• How can leadership decisions remain consistent to the
ethical framework over time? How do you know you
are consistent?
Health Leader’s Challenge, cont.
• How can organizational culture incorporate the
ethical framework and moral application of
principles the health organization holds
important?
• How does the health organization integrate its
ethical framework and moral applications into its
strategic planning, decision making, and daily
operations?
Health Leader’s Challenge, cont.
• How does the health organization integrate its
ethical framework and moral application into the
communities they serve and to the interface and
external stakeholders of the health organization?
• How does the health organization ensure internal
staff and subordinate adaptation to the ethical
framework and moral application of that
framework (training, annual updates, rewards and
punishments, etc.) to long-term employees and to
new employees (orientation, training, etc.)?
Health Leader’s Challenge, cont.
• Who keeps the health leadership team
accountable to the ethical framework and moral
application of established principles?
• Is the ethical framework and moral application of
those principles reasonable, relevant, and
realistic? How are boundaries established?
Health Leader’s Challenge, cont.
• Who (individuals, groups, legal counsel, etc.) has
the authority to initiate an ethical incident report,
an ethical discussion, an ethical incident
investigation, an ethically attributed reward or
punishment? Is the health organization legally or
liability oriented to ethical considerations,
leadership oriented, or both? (What may be
legally “moral” to limit liability may not be
leadership “moral” to do what is right.)
Regulatory Compliance
• Much integrates with governmental payment
(reimbursement with taxpayer funds) as part of
fiduciary responsibility.
• Much deals with private/personal financial
gain done outside the care process.
• How does the example organization create a
system of regulatory compliance?
Discussion Questions
• Define distributive justice, ethics, morals,
values, and conflict of interest. Can you
describe how they are used by health leaders in
decision making?
• Explain four ethical principles that guide
decision making associated with patient care.
How can leaders use these principles in
decision making with a health organization?
Discussion Questions, cont.
• How could you apply at least two ethical
frameworks or distributive justice theories, with
examples of moral practice of a leader, to an
ethical issue in a health organization? What would
be the results?
• Should health leaders adopt utilitarian and/or
deontological postures in their organization? How
could you differentiate potential decisions leaders
would make between the two frameworks?
Discussion Questions, cont.
• What available options does a leader in a health
organization have to develop for an integrated system
of ethics and moral practice? What would be the
potential impact of each option regarding appropriate
ethical adaptation across the organization?
• How would the utilization of at least three different
ethical frameworks (distributive justice theories) react
with regard to patient autonomy, beneficence,
nonmaleficence, and justice? How would the
application of moral practice associated with those
frameworks (at least three) be different for a right-tolife issue and for the practice of euthanasia?
Exercises
• Define distributive justice, ethics, morals, and
values. Describe how they are used by leaders in
decision making in one page or less.
• Explain four ethical principles that guide decision
making associated with patient care in one page
or less.
• Apply at least two ethical frameworks or
distributive justice theories, with examples of
moral practice of a leader, to an ethical issue in a
health organization in two pages or less.
Exercises, cont.
• Analyze arguments and make a
recommendation for health leaders to adopt
utilitarian and/or deontological postures in
their organization, and differentiate potential
decisions leaders would make between the two
frameworks to support your analysis and
recommendation in two to three pages.
Exercises, cont.
• Compile a list of available options a leader in a
health organization has to develop for an
integrated system of ethics and moral practice,
and summarize the potential impact of each
option regarding appropriate ethical adaptation
across the organization in one to two pages.
Exercises, cont.
• Read the Case Study of the Transferred Employee in
the text and answer the following questions in two to
three pages.
–
–
–
–
–
–
What do you do?
Do you change the documents?
Do you go back and confront your supervisor?
What is your decision and why did you make it?
What is your next course of action?
What other factors do you consider and what other actions
do you take?
– Which ethical framework or distributive justice theory best
supports your decisions regarding the case and why?
Chapter 12
Understanding
the Executive
Roles of Health
Leadership
“Necessity does the work of courage.”
George Eliot, Romola
Learning Objectives
• Identify the steps, characteristics, and behaviors a
health leader should take to build relationships
with internal and external stakeholders.
• Explain the Parity of Health Care model and its
usefulness to health leaders.
• Construct a health organization stakeholder list
and predict at least two motivations of each
stakeholder considering cost, quality, and access
to health services and products.
Learning Objectives, cont.
• Compare and contrast internal health organization
stakeholder motivations and issues.
• Using previously discussed theories and models,
combine two or more theories or models into a
practical stakeholder management and
relationship development model.
• Evaluate internal and external health organization
stakeholders and justify their motivations, needs
and aspirations with regard to health services and
products.
Leadership for Physicians, Nurses,
Administrators, and Medical Function Directors
• Health leadership is situational and contextual,
influenced by cultural constructs, and moderated
by relational factors.
• The myriad internal stakeholders and their
differences are complex in both breadth and
depth; in simple terms, health leaders need to lead
people and manage resources to direct the
collective energy toward successfully achieving
the mission of the organization.
Leadership for Physicians, Nurses,
Administrators, and Medical Function
Directors, cont.
• Similar to leading an orchestra, health leaders
must get everyone working together to perform
the mission; to do this, leaders must understand
and motivate the various stakeholders in different
ways while staying consistent to organizational
strategies, goals, and objectives.
Leadership for Physicians, Nurses,
Administrators, and Medical Function
Directors, cont.
• As the coordinated management of meaning
model suggests, each group (formal or informal)
in the health setting has a life script, a contract,
and certain expectations that embody the culture
of its group, profession, and specialty.
Physician Leaders
• Health leaders need physicians to diagnose,
treat, and refer patients to their organization
and/or their program or prescribe their services
or products. Without physicians, including
surgeons, health organizations would not
realize reimbursements or other revenues for
the patient care process, surgeries, procedures,
or referrals.
Physician Leaders, cont.
• With this in mind, health leaders need to
create a symbiotic, trusting, and integritybased relationship with physicians. This is
especially true of physician leadership, both
formal leaders such as the chief of the
medical staff and clinical department leaders
and informal leaders among the physician and
surgeon groups.
Physician Leaders, cont.
• Health leaders should visit and know all
physicians that practice and refer patients to
their organization; these visits should be
regular and at times when physicians are not
engaged in patient care.
• Health leaders should seek input from
physician leadership on important decisions
within the organization and provide frequent
feedback on the decision process as well.
Nurse Leaders
• Nurse leaders are important to the health
organization in that they provide care for your
patients on an ongoing basis, provide patient
education, and perform a variety of tasks that
require clinical expertise.
• In most health organizations such as in a hospital,
nurses comprise the largest personnel expense for
the health organization as a whole. Nurses are
needed to “staff” hospital beds, work in health
programs, provide home health services, and any
number of other jobs in health.
Nurse Leaders, cont.
• Nurse leaders, as physician leaders, want to be
respected, trusted, and sought out for input on
decisions impacting the care process and nurse
responsibilities.
• Nurses want good work environments, with
reasonable patient care loads (usually four to six
patients per nurse per shift for average acuity
patients); they want to be treated with respect by
administrators, physicians, and other medical staff
personnel, and to have some level of selfgovernance (nurse education, scheduling, etc.).
Nurse Leaders, cont.
• Building a solid relationship with nurse leaders
is like building a relationship with anyone
where trust, respect, and honesty form the
foundation for interaction.
• As with physicians, meet with nurse leaders
and ask how to best build great relationships
with them and other nurse leaders.
• Most nurses will respect the courage and intent
to build a good relationship with them.
Administrative Leaders and Medical
Function Leaders/Department Heads
• Building professional and effective relationships
with administrators and medical function leaders
(such as pharmacists, laboratory, etc.) are
important to build a cohesive team of superiors,
peers, and subordinates.
• Building relationships with these leaders should,
again, be built on trust, respect, and honesty.
• Different leaders will have different foci and
motivations.
Administrative Leaders and Medical
Function Leaders/Department Heads, cont.
• From the strategic plan, strategies, goals, and objectives
were developed.
• As a health leader it is your responsibility to determine
where your responsibilities intersect with other leaders’
responsibilities.
• Once you have determined these key intersections, it is
imperative to meet with, discuss with, and develop an
approach to meet organizational goals among the
various units, departments, or sections the plan assumes.
• This objective approach to building relationships is also
a good approach.
Administrative Leaders and Medical
Function Leaders/Department Heads, cont.
• Meet with other leaders regularly and get to know
them as people, respect them, learn to empathize
with their particular professional situation, and
learn to work together.
• In all relationships, physician, nurse,
administrator, or department leader, problem
solving and compromising build relationships
(remember conflict management styles) while
avoidance and competing tend to tear down
relationships.
Building Professional Relationships
– In building professional relationships, seek
guidance from mentors in relationship building;
listen, listen, and listen; be respectful, honest, and
find value-added reasons to interact regularly with
all leaders.
– Health leaders conduct the orchestra of health
professionals within their organization. The
differences between “noise” and a masterful
symphony are coordination, timing, team work,
each player playing his or her part with skill,
consistency, and leadership.
Stakeholder Dynamics
• Stakeholder dynamics are critically important
for leaders of health organizations to be aware
of; this reality becomes more salient as leaders
rise in position within the health organization.
• Stakeholders are groups, individuals, and
associations that influence an organization.
They can be categorized into three groups:
internal, interface, and external.
Stakeholder Dynamics, cont.
• Health organizations have a particularly
complex set of stakeholders.
• Can you identify internal, interface, and
external stakeholders for a health
organization?
Stakeholder Dynamics, cont.
• While the numbers of stakeholders in health
organizations can be numerous, there are four
main types of stakeholders to consider in any
healthcare decision making. These include:
1.
2.
3.
4.
Patients
Payers
Employers
Providers
Stakeholder Dynamics, cont.
• These four stakeholders make up a new term in
managed care called the managed care
quaternion.
• The managed care quaternion (MCQ) model
was developed in the early part of 2003 by
Coppola. The MCQ has gained popular
support within governmental organizations, as
well as some state Medicaid agencies.
Managed Care Quaternion
• Collectively, stakeholders in the managed care
quaternion affect all aspects of health
organizational life. These include patient care,
payment, reimbursement arrangements,
external costs, and other policy affecting
organization survivability. Patients, payers,
employers, and providers all play a vital role in
the operations of any health organization.
Managed Care Quaternion, cont.
• With any one of the four major stakeholders of
the managed care quaternion omitted in the
decision-making process for a healthcare
entity, failure at some level is sure to occur.
• However, the MCQ model alone is not a model
upon which to base policy or decision making.
It is more beneficial to view the model in
concert with the Iron Triangle of health care.
Iron Triangle
• The concept of the Iron Triangle was
developed by Kissick in the early 1990s during
the managed care revolution in the U.S.
Kissick coined the term Iron Triangle to
demonstrate the difficulty in selecting
priorities for health as they relate to healthcare
costs, quality, and access.
Iron Triangle, cont.
• Healthcare costs, quality, and access are kept in
balance by the expectations, cultural goals, and
economics of the society that supports the
industry.
• Any angle (or construct) in the triangle can be
increased, but only at the expense of the other
two.
• The concept of the Iron Triangle has been used by
health leaders for over a decade to guide strategic
plans, organizational vision, and mission
statements.
The Parity of Health Care
• The Parity of Health Care is a unique model that
juxtaposes the managed care quaternion and the
Iron Triangle together in an interrelated medium,
which allows leaders to forecast the impact of
new policy decisions that may impact the
organization.
• The challenge with health leaders regarding
employers, patients, providers, and payers is in
maintaining high satisfaction with each
stakeholder along the continuum of care as she or
he relates to aspects of cost, quality, and access.
The Parity of Health Care, cont.
• For example, a primary care clinic without
extended and weekend office hours may be
regarded as low quality to the patient and
employer, but high quality to the payers and by
the providers that work in the clinic.
• However, if employers and patients continue to
perceive lack of extended and weekend office
hours as low quality, dissatisfaction with the
overall health plan may result
• How do we balance stakeholder demands?
Sword of Damocles
• In continuing to understand the difficult nature of
the relationships between the Iron Triangle and
the managed care quaternion, we offer a metaphor
from classical literature called the Sword of
Damocles.
• In Greek mythology, the Sword of Damocles
represents “ever-present peril.”
• It is also used as a metaphor to suggest a “frailty
in existing relationships.”
Sword of Damocles, cont.
• In the Parity of Health Care, the Sword of
Damocles represents an inability of any one
stakeholder to reach sustained consensus for
priorities of cost, quality, and access.
• With health priorities constantly changing due to
environmental demands, it is no wonder why
agreements on health policy are difficult to reach.
Sword of Damocles, cont.
• An understanding of the Parity of Health Care can
be helpful to health leaders for strategically
forecasting threats to relationships amid
stakeholders, while also balancing priorities
among those stakeholders.
• The following slide presents a conceptual model
of the Parity of Health Care.
Discussion Questions
• What are the steps, characteristics, and behaviors
a health leader should take to build relationships
with internal and external stakeholders?
• What is the Parity of Health Care model and
explain its usefulness to health leaders?
• Select a health organization stakeholder and
predict at least two motivations of that
stakeholder considering cost, quality, and access
to health services and products. Are his or her
issues justified?
Discussion Questions, cont.
• What would the issues be to compare and contrast at
least two internal health organization stakeholder
motivations and issues? How does a health leader
empathize with those stakeholders to build a
relationship?
• Using previously discussed theories and models, what
two or more theories or models would you utilize to
construct a practical stakeholder management and
relationship development model? What constructs
facilitate those theories or models to be useful in
stakeholder management?
Discussion Questions, cont.
• What theory or model would you use to
evaluate internal and external health
organization stakeholders? Can those theories
or models justify stakeholder motivations,
needs, and aspirations with regard to health
services and products?
Exercises
• Identify the steps, characteristics, and behaviors a
health leader should take to build relationships with
internal and external stakeholders in one to two pages.
• Explain the Parity of Health Care model and its
usefulness to health leaders in one page.
• Construct a health organization stakeholder list and
predict at least two motivations of each stakeholder
considering cost, quality, and access to health services
and products in two or less pages.
• Compare and contrast internal health organization
stakeholder motivations and issues in one to two pages.
Exercises, cont.
• Using previously discussed theories and models,
combine two or more theories or models into a
practical stakeholder management and
relationship development model in three pages or
less.
• Evaluate an internal and external health
organization stakeholder and justify their
motivations, needs, and aspirations with regard to
health services and products in two pages or less.
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