Running head: ORGANIZATIONAL GROWTH 1 Organizational Growth Principles of Management and Decision Analysis DHS 601 Suny Gause A course assignment presented to the Arizona School of Health Sciences In partial fulfillment of the requirements for the Doctor of Health Science Degree A.T. Still University April 18, 2010
Running head: ORGANIZATIONAL GROWTH 2 Organizational Growth Pacific Medical Centers (PMC) is a nonprofit primary and specialty care organizationwith 10 clinics in the Seattle metropolitan area. PMC was a public hospital from 1933 to 1987. In1987, PMC closed the hospital and purchased several outpatient clinics. Today, PMC is a multi-specialty medical group practice with approximately 150 physicians, 24 specialties, and 7,000employees (PMC: Our History, 2009). Approximately eight years ago, PMC was on the brink offinancial ruin. Contracts with health plans and a local hospital system were not profitable. Facedwith the decision to close the organization, the board of directors decided to invest in a newstrategy that included restructuring of the leadership team. During the next four years, the new leadership team renegotiated contracts with healthplans, closed unprofitable clinics, and contracted with a different hospital system. A significantinfrastructure change involved the physician compensation model. Physicians became employeeswith a compensation model that included a base salary plus productivity through relative valueunit (RVU) billing of services. The more patients the physician sees, the more he or she iscompensation. Today, PMC is a profitable health care organization that continues to grow andexpand services throughout the Seattle area. The redefined mission of PMC is “To providerespectful, high-quality, patient-focused health care to each person and to the communities weserve” (PMC: Mission & values, 2009). Functioning of the Organization In evaluating the structural changes that occurred at PMC, a change process model can beused. For the purpose of this evaluation, we will look at McKinsey’s 7-S framework and how itapplies to the changes that occurred at PMC. According to Anderson and Anderson (2001), “Thismodel gives an accurate, albeit static representation of seven core elements of an organization
Running head: ORGANIZATIONAL GROWTH 3and portrays that they are all interconnected” (p. 162). The McKinsey 7-S model involves sevencore elements categorized as either “hard or soft.” The hard elements are strategy, structure, andsystems. The soft elements are shared values, skills, style, and staff. Seven Core ElementsStrategy The first step in the process is to define a strategy. In terms of growth, PMC focused onoptimizing revenue and referral opportunities. The growth strategy must include a means to buildbetter services, position the service with the patient, deliver according to expectations, and gaintrust and loyalty. A growth strategy at PMC is to increase the customer base by buildingadditional patient care clinics in the Seattle area based on market demand. Canyon Park (CP) is asuburban area in northeast Seattle that contains a large population of potential patients based oncurrent contracts with payors. In 2008, the leadership team set a strategic goal of building a clinicin the CP region during the 2009-2010 fiscal budget year. Market analysis demonstrated that theCP area lacked basic health care services based on the current and projected population. A homezip code analysis of PMC’s current patient population provided the leadership team withinformation on existing patients who live in CP and travel to other PMC clinics for care. The CPclinic opened April 5, 2010, and consists of 30,000 square feet.Structure The PMC Board of Directors governs the organization by delegating operationalresponsibilities to the leadership team. The leadership team is managed by the chief executiveofficer (CEO). Reporting to the CEO are the chief operations officer (COO), chief medicalofficer (CMO), and vice presidents of finance, marketing, contracting, information services,physician services, and quality management. Oversight of staff and clinic operations are the
Running head: ORGANIZATIONAL GROWTH 4responsibility of clinic directors. Each clinic has a medical director who reports to the CMO. Thephysicians report to the medical director based on his or her location. The medical director forthe CP clinic has been with the organization for four years and is a practicing family medicinephysician. The workweek is structured so that the medical director has 30 hours per week fordirect patient care with the remaining hours for administrative duties.Systems The CP clinic is home to seven full-time physicians that includes family medicine,internal medicine, and pediatrics. Each physician is assigned one medical assistant (MA). Tworegistered nurses are responsible for patient triage and education. One patient coordinator isresponsible to process medication refills with a 24 hour expected turn-around-time. Patient visitsfor a physical are scheduled for 30-45 minutes and follow-up visits are 15-20 minutes. Based onproductivity requirements, each physician is expected to see a minimum of 12 patients per four-hour timeframe. The CP clinic is also home to multiple specialty physicians includingcardiology, dermatology, endocrinology, podiatry, gastroenterology, oncology, neurology,optometry, orthopedics, otolaryngology, rheumatology, and urology.Shared Values The core values of the company are related to providing quality patient-centered care.This is evident by the corporate culture of being a leading source for primary, specialty, andchronic care needs. Clinicians choose PMC because the practice supports high quality,innovative health care, and superior outcomes. PMC is a dynamic organization that offers anopportunity for personal and professional growth.Style
Running head: ORGANIZATIONAL GROWTH 5 The philosophy of the CEO is that the leadership team works for the physicians. Thisleadership style empowers the physicians to develop their own growth ideas and goals for thecompany. The CEO believes that if he includes staff and physicians in the strategic planningprocess, the organization will develop a sense of family and result in high satisfaction ratesamong staff and patients. At the beginning of the planning stage for the CP clinic, the medicaldirector was selected and participated in all vital decisions regarding the location, building,design, marketing, and staffing model. Various committees included staff, for example, indesigning the workflow and set up of the physician and MA workstations. The MAs participatedin the design of the patient treatment rooms regarding the location of supplies, equipment, andcomputers. “The development and implementation of a growth strategy that includes the staff inplanning, implementation and skill development is one of the best ways to ensure that yourorganization’s business development efforts result in increased market share and profitability”(Merriman & Barlow, n.d., p. 1).Staff and Skills Primary care and specialty physicians at PMC are board certified. The MAs maintaincertification through an internal program taught by the clinical trainer. In an effort to promotestaff development, PMC offers tuition reimbursement programs. The first program is an award of$1,000 to every employee on an annual basis and can be used for any type of certification,training, or program. The second program is an award of $10,000 to a maximum of 20employees at any given time. A requirement in this program is that the area of study must behealth care related. A third is the Leadership Enhancement Program (LEP) with an award of$25,000 per degree with a maximum of five employees at any given time. The degree must behealth care related at the master’s level and above. A common requirement of all three programs
Running head: ORGANIZATIONAL GROWTH 6is the employee must be employed with the organization a minimum of one year. Theseprograms are available to staff and physicians. Conclusion The strategic decision to open the CP clinic provides PMC with a potential for growth inthe number of physicians, staff, patient volume, revenue and referral opportunities. The definedstructure is in place with local leadership by the medical director and clinical director. Throughthoughtful design, the patient has access to primary and specialty care, as well as laboratory anddiagnostic services. The corporate culture is evident by the positive atmosphere among allemployees of the clinic. Care is directed by the physician and involves numerous staff members.With ongoing education and skills requirements, CP offers superior care by dedicatedprofessionals. In the coming months, PMC will move forward with other strategic initiativesincluding opening an ambulatory surgery center and another patient care clinic.
Running head: ORGANIZATIONAL GROWTH 7 ReferencesAnderson, D., & Anderson, L. (2001). Beyond change management. San Francisco, CA: Jossey- Bass/Pfeiffer.Merriman, C., & Barlow, K. (n.d.). Strategic planning: A growth strategy. Corporate Health. Retrieved April 18, 2010, fromhttp://www.corporatehealthgroup.com/ftpuser/CHG%20Library/Business%20Development%20and%20Marketing/A%20Growth%20Strategy-Making%20it%20work%20within%20your%20organization.pdfPacific Medical Centers: Mission and values. (2009). Retrieved April 15, 2010, from http://pacificmedicalcenters.org/index.php/about-us/mission-values/Pacific Medical Centers: Our history. (2009). Retrieved April 15, 2010, from http://pacificmedicalcenters.org/index.php/about-us/our-history/