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Organizational Structure and Design - A case for a mid-sized Hospital

As part of a course on Org. Structure, we worked with a mid-sized hospital - Malar Hospital (which is now owned by Fortis Healthcare) and modelled an organizational structure for them. It is quite a comprehensive analysis and it took us a month and series of consultations with the hospital to deliver this. Thanks again to everyone at Malar for co-operating with our project.

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Organizational Structure and Design - A case for a mid-sized Hospital

  1. 1. Malar Hospital Organization Structure & Design Prepared By: Group 5 DoMS, IIT Madras, Batch of 2010 Cotnact: [email_address]
  2. 2. Introduction to Fortis – Malar Hospital <ul><li>Subsidiary of Fortis Healthcare Ltd </li></ul><ul><li>Fortis Healthcare, paid Rs 34.6 crores for a 48.8 percent stake in Malar Hospital in 2008 </li></ul><ul><li>FORTIS HEALTHCARE LIMITED: </li></ul><ul><li>Leading healthcare group in India matching international standard </li></ul><ul><li>First hospital opened in “1999” at Mohali </li></ul><ul><li>Hallmark is “patient-centricity” approach </li></ul><ul><li>At present it has 22 hospitals and 2,500 beds. </li></ul>06/07/09
  3. 3. <ul><li>Malar Hospital </li></ul><ul><ul><li>Located in South Chennai </li></ul></ul><ul><ul><li>5 super specialty centers setup </li></ul></ul><ul><ul><ul><li>MALAR Heart Institute (MHI-Commencing shortly at Malar) </li></ul></ul></ul><ul><ul><ul><li>MALAR Institute for Renal Sciences (MIRS) </li></ul></ul></ul><ul><ul><ul><li>MALAR Specialty Centre for Joints (MSCJ) </li></ul></ul></ul><ul><ul><ul><li>MALAR Health care for OBG and Gynecology </li></ul></ul></ul><ul><ul><ul><li>MALAR Health care Centre for Diabetes (MHCD) </li></ul></ul></ul>06/07/09
  4. 4. Organizational Life Cycle Formation Growth Maturity Decline Malar Hospital <ul><li>F & C stage </li></ul><ul><li>Formalization of rules </li></ul><ul><li>Stable structure </li></ul><ul><li>Emphasis on efficiency </li></ul>06/07/09
  5. 5. Effectiveness 06/07/09
  6. 6. <ul><li>Productivity and profit </li></ul><ul><ul><li>Net Profit for the year ended 31 th March 2008 was Rs 77.56 Lac </li></ul></ul><ul><ul><li>Profitability ratio is a healthy 26 percent </li></ul></ul><ul><ul><li>Occupancy rate 70-80 % </li></ul></ul><ul><li>Quality </li></ul><ul><ul><li>Wealth of medical expertise with the finest talent amongst doctors, nurses, technicians and management professionals </li></ul></ul><ul><li>Utilization of environment </li></ul><ul><ul><li>Located in best of residential locations </li></ul></ul>Malar Hospital - Effectiveness 06/07/09
  7. 7. <ul><li>Evaluation by external entities </li></ul><ul><ul><li>Financial audits are conducted every year by external auditors </li></ul></ul><ul><ul><li>ISO 9001:2000 certified by International Certification Services Limited </li></ul></ul><ul><li>Emphasis on Training and Development </li></ul><ul><ul><li>New joiners go through an initial training program </li></ul></ul><ul><ul><li>Fortis training centers are also used </li></ul></ul><ul><li>Participation </li></ul><ul><ul><li>Community outreach programs for senior citizens named “Arokya”, Kids & Teens </li></ul></ul>06/07/09
  8. 8. Applying strategic – constituencies approach <ul><li>Shareholders: Profit margins of 26 percent </li></ul><ul><li>Doctors and Administrative Staff: Competitive remuneration, Learning opportunities </li></ul><ul><li>Patients: Multi-specialty, Quality Service </li></ul><ul><li>Community: Various community outreach programs </li></ul><ul><li>Government: Transparent in operations </li></ul>06/07/09
  9. 9. Competing Values Approach Flexibility Organization People Control 06/07/09
  10. 10. Structure 06/07/09
  11. 11. Malar Hospital - Structure <ul><li>Structure can be analyzed on following dimensions </li></ul><ul><ul><li>Level of complexity </li></ul></ul><ul><ul><li>Centralization </li></ul></ul><ul><ul><li>Formalization </li></ul></ul>06/07/09
  12. 12. Complexity <ul><li>Horizontal Differentiation </li></ul><ul><ul><li>37 Medical departments covering the entire breadth of medical specialities </li></ul></ul><ul><ul><li>6 other departments (HR, Finance, Marketing and Sales, Materials, Engineering and Nursing) </li></ul></ul><ul><ul><li>Social Specialization – Doctors </li></ul></ul><ul><ul><li>Functional Specialization – Nurses, Technicians </li></ul></ul><ul><li>Vertical differentiation </li></ul><ul><ul><li>3 levels of Hierarchy </li></ul></ul><ul><ul><ul><li>Zonal Director </li></ul></ul></ul><ul><ul><ul><li>Head of Departments of all 43 departments </li></ul></ul></ul><ul><ul><ul><li>Teams under each department </li></ul></ul></ul><ul><ul><li>Wide span of control </li></ul></ul>06/07/09
  13. 13. 06/07/09
  14. 14. Formalization <ul><li>Standard operating procedures (SOP) </li></ul><ul><li>High level of standardization for administrative tasks </li></ul><ul><li>Low level formalization for Doctors </li></ul><ul><li>Subcontracts are highly formalized </li></ul><ul><li>Recruitment process is highly formalized </li></ul>06/07/09
  15. 15. Doctor writes ARF to initiate the process Patient registers the ARF at the reception Admission confirmed after two forms filled Patient/Family counseled about the estimated expenditure/ hospital rules & guidelines Patient informed about interim bills on a daily basis. Bills settlement at the time of discharge The doctor/nurse hands over the signed discharge summary and other relevant documents. Patient discharged after paying the bills in cash, debit/credit card or demand draft <ul><li>Consent form for admission </li></ul><ul><li>Cashless facility form for insured patients </li></ul>Patient expected to bring previous consultation & investigation records Bills prepared at billing office (Admin) Patient Cycle at Malar – A formalized procedure Treatment carried out. Follows the consulting cycle (next slide) 06/07/09
  16. 16. DMO allotted a patient, based on availability DMO provides initial consultation. Refers to a specialist unit, if needed Nurses divided into geographical zones, but are flexible on availability Observations by DMO/subsequent departments are recorded on a chart Diagnosis and treatment under a nurse, DMO/visiting consultant Nurse/DMO confirms completion of treatment, based on expertise Divided floor-wise & then department wise These include diagnosis, tests, subjective tests, objective & subjective comments Consultation Cycle at Malar – A formalized procedure 06/07/09
  17. 17. Centralization <ul><li>All departments are controlled by Head of Departments </li></ul><ul><li>Heads report to Zonal Director </li></ul><ul><li>Autonomy for each individual in the organization is limited </li></ul><ul><li>Financially – Highly Centralized </li></ul><ul><li>Functionally – Moderately Decentralized </li></ul>06/07/09
  18. 18. Size 06/07/09
  19. 19. Malar Hospital - Size <ul><li>Medium-sized organization </li></ul><ul><li>No apparent change in size, after Fortis deal </li></ul><ul><li>37 departments </li></ul><ul><li>250-bed facility </li></ul><ul><li>256 full-time staff </li></ul><ul><li>Workforce divided into department heads and teams </li></ul>06/07/09
  20. 20. 2 – MR co-ordination 2- Marketing initiatives Nurses Ward Boys Trainees 67 visiting consultants 31 DMOs External Contractors 06/07/09
  21. 21. Impact on Structure <ul><li>Medium-sized but multi-specialty hospital </li></ul><ul><li>Low Vertical but High Horizontal complexity </li></ul><ul><li>Moderately formalized </li></ul><ul><li>No direct impact on centralization </li></ul>06/07/09
  22. 22. Strategy 06/07/09
  23. 23. External Threats and Strategy Implemented 06/07/09 External factors Strategy Increasing cost of funds Cost effective business model Availability of funds from Financial institutions Focus on improvement in revenues, improvement of occupancy rate Stiff competition from other players Addition of departments, quality health care, improvement in infrastructure facilities, focus on high end health care services Unexpected eventualities Improvement in infrastructure and increase in buffer capacity Change in regulatory framework Constant interaction with the market Changes in parent company Company will try to increase its own brand value
  24. 24. Different types of strategies <ul><li>Corporate strategy </li></ul><ul><ul><li>Brand Extension by opening medical college & school </li></ul></ul><ul><li>Business strategy </li></ul><ul><ul><li>Focus on improvement in revenues and cash-flow by enhancing neuro and ortho departments </li></ul></ul><ul><ul><li>Enhancing the facilities in Cardiac department </li></ul></ul><ul><ul><li>Focus on high end health care services </li></ul></ul><ul><ul><li>(Minimal Invasive Surgery) </li></ul></ul>06/07/09
  25. 25. <ul><li>Functional strategy </li></ul><ul><ul><li>Use of strong HIS backbone, and PACS technology to safely transmit patient information </li></ul></ul><ul><ul><li>Use of HL7 and DICOM standards for telemedicine purpose </li></ul></ul><ul><ul><li>Self-defining and self-expiring passwords for maximum privacy </li></ul></ul>06/07/09
  26. 26. Strategy - Structure Relationship (Chandler’s Theory) Time Multi specialty Structure Simple Functional Divisional Low High t t + 2 t + 1 06/07/09
  27. 27. <ul><li>Miles and Snow’s Strategy Theory </li></ul>06/07/09 Strategy type Description Structure Analyzer <ul><li>High level of standardization, routinization and mechanization for efficiency </li></ul><ul><li>Also flexible in reacting to increased competition and changes in the market </li></ul><ul><li>High Formalization </li></ul><ul><li>Moderately centralized control </li></ul>
  28. 28. Porter’s Competitive Strategy <ul><li>Differentiation focus strategy </li></ul><ul><ul><li>Focused on upper middle class citizens of Chennai </li></ul></ul><ul><ul><li>Differentiated itself by emphasizing on high technology, patient-centric centers, high end health care service </li></ul></ul><ul><li>Impact on structure </li></ul><ul><ul><li>Moderately flexible structure </li></ul></ul><ul><ul><li>Moderate complexity in terms of hierarchy </li></ul></ul><ul><ul><li>Moderate formalization at higher level </li></ul></ul><ul><ul><li>Highly formalized, moderately decentralized decision making at operational level </li></ul></ul>06/07/09
  29. 29. Industry analyses Capital requirements Product-innovation rates High High Low low 06/07/09 <ul><li>“ C” category </li></ul><ul><li>Highly structured and standardized </li></ul><ul><li>Centralized structure </li></ul>
  30. 30. Environment 06/07/09
  31. 31. Specific Environment 06/07/09
  32. 32. Environmental Uncertainty 06/07/09
  33. 33. Burns & Stalker Model 06/07/09 Characteristic Structure Rigid Task Definition Mechanistic Lateral Communication Organic High Formalization Mechanistic Expertise Influence Organic Centralized Control Mechanistic
  34. 34. Lawrence and Lorsch Theory <ul><li>Fair collaboration exists </li></ul><ul><li>Collaboration between the departments defines the quality of service to the customer </li></ul><ul><li>Internal environment varies between departments </li></ul><ul><li>matches differentiation and integration activities </li></ul>06/07/09
  35. 35. Environment – Structure Relationship 06/07/09
  36. 36. Technology 06/07/09
  37. 37. Technology @ Malar Hospital <ul><li>Technology is applicable at all stages: Input, Conversion and Output </li></ul><ul><ul><li>Inputs: Skills and Expertise of Personnel, Softwares like HIS </li></ul></ul><ul><ul><li>Conversion: Medical equipment and techniques and Work procedures </li></ul></ul><ul><ul><li>Output: Infrastructure (Ambulance etc), Periodic checkups </li></ul></ul>06/07/09
  38. 38. Perrow’s Model Malar Hospital <ul><li>Structural Predictions </li></ul><ul><ul><li>Low on formalization </li></ul></ul><ul><ul><li>High on centralization </li></ul></ul><ul><ul><li>Moderately wide on span of control </li></ul></ul>06/07/09 Few exceptions Many exceptions Ill Defined Task Variability Problem Analyzability CRAFT NON-ROUTINE ENGINEERING ROUTINE Well Defined
  39. 39. Thompson’s Model 06/07/09 Transformational Process Resources A B C D E Feedback Output Inputs
  40. 40. Intensive Technology Model <ul><li>Form of task interdependence </li></ul><ul><ul><li>Reciprocal </li></ul></ul><ul><li>Main type of coordination </li></ul><ul><ul><li>Mutual adjustment </li></ul></ul><ul><li>Strategy for reducing uncertainty </li></ul><ul><ul><li>Specialism and diversity of task activities </li></ul></ul><ul><li>Cost of coordination </li></ul><ul><ul><li>High </li></ul></ul>06/07/09
  41. 41. <ul><li>Structural Predictions </li></ul><ul><ul><li>High Complexity </li></ul></ul><ul><ul><li>--- 37 medical departments leads to high horizontal differentiation </li></ul></ul><ul><ul><li>Low Formalization </li></ul></ul><ul><ul><li>--- Low formalization in the way doctors’ work </li></ul></ul><ul><ul><li>Moderate Decentralization </li></ul></ul><ul><ul><li>--- Financially – Highly Centralized </li></ul></ul><ul><li>--- Functionally – Moderately Decentralized </li></ul>06/07/09
  42. 42. Culture 06/07/09
  43. 43. Value system <ul><li>Confrontation </li></ul><ul><ul><li>Facing, rather than shying away from, problems </li></ul></ul><ul><li>Authenticity </li></ul><ul><ul><li>Congruence between claims and actions </li></ul></ul><ul><li>Pro activity </li></ul><ul><ul><li>Take initiative, pre-plan, take preventive action </li></ul></ul><ul><li>Autonomy </li></ul><ul><ul><li>Use and give freedom to plan and act in one’s sphere </li></ul></ul>06/07/09
  44. 44. <ul><li>Collaboration </li></ul><ul><ul><li>Give and ask for help to and from others </li></ul></ul><ul><li>Experimentation </li></ul><ul><ul><li>Use and encourage innovative approaches to solve problems </li></ul></ul><ul><li>Direction </li></ul><ul><ul><li>Clear objectives and performance expectations </li></ul></ul><ul><li>Management support </li></ul><ul><ul><li>Managers provide clear communication, assistance, and support to subordinates </li></ul></ul>06/07/09
  45. 45. <ul><li>Control </li></ul><ul><ul><li>Number of rules and regulations, amount of direct supervision used to control employee behaviour </li></ul></ul><ul><li>Trust </li></ul><ul><ul><li>Maintain confidentiality of information, integrity in dealings </li></ul></ul><ul><li>Conflict Tolerance </li></ul><ul><ul><li>Employees are encouraged to air conflicts and criticisms openly </li></ul></ul><ul><li>Reward System </li></ul><ul><ul><li>Reward allocations are based on employee performance </li></ul></ul><ul><li>Forgiving Nature </li></ul>06/07/09
  46. 46. Major Culture changes at Malar <ul><li>Hospital on its inception was positioned as an elite hospital </li></ul><ul><li>Changed its positioning as it realised the acute need for quality health care in the poorer sections of the society </li></ul><ul><li>In 2008, Malar hospital was taken over by Fortis group </li></ul><ul><ul><li>Major decisions were taken by the owning family and now the board of directors have taken the place. </li></ul></ul><ul><ul><li>More patient friendly than before. </li></ul></ul><ul><ul><li>The look and feel of the hospital underwent a major change </li></ul></ul>06/07/09
  47. 47. <ul><li>Thank you </li></ul>06/07/09