1. 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
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Organizational Growth
Pacific Medical Centers (PMC) is a nonprofit primary and specialty care organization
with 10 clinics in the Seattle metropolitan area. PMC was a public hospital from 1933 to 1987. In
1987, 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 7,000
employees (PMC: Our History, 2009). Approximately eight years ago, PMC was on the brink of
financial ruin. Contracts with health plans and a local hospital system were not profitable. Faced
with the decision to close the organization, the board of directors decided to invest in a new
strategy that included restructuring of the leadership team.
During the next four years, the new leadership team renegotiated contracts with health
plans, closed unprofitable clinics, and contracted with a different hospital system. A significant
infrastructure change involved the physician compensation model. Physicians became employees
with a compensation model that included a base salary plus productivity through relative value
unit (RVU) billing of services. The more patients the physician sees, the more he or she is
compensation. Today, PMC is a profitable health care organization that continues to grow and
expand services throughout the Seattle area. The redefined mission of PMC is “To provide
respectful, high-quality, patient-focused health care to each person and to the communities we
serve” (PMC: Mission & values, 2009).
Functioning of the Organization
In evaluating the structural changes that occurred at PMC, a change process model can be
used. For the purpose of this evaluation, we will look at McKinsey’s 7-S framework and how it
applies to the changes that occurred at PMC. According to Anderson and Anderson (2001), “This
model gives an accurate, albeit static representation of seven core elements of an organization
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and portrays that they are all interconnected” (p. 162). The McKinsey 7-S model involves seven
core elements categorized as either “hard or soft.” The hard elements are strategy, structure, and
systems. The soft elements are shared values, skills, style, and staff.
Seven Core Elements
Strategy
The first step in the process is to define a strategy. In terms of growth, PMC focused on
optimizing revenue and referral opportunities. The growth strategy must include a means to build
better services, position the service with the patient, deliver according to expectations, and gain
trust and loyalty. A growth strategy at PMC is to increase the customer base by building
additional patient care clinics in the Seattle area based on market demand. Canyon Park (CP) is a
suburban area in northeast Seattle that contains a large population of potential patients based on
current contracts with payors. In 2008, the leadership team set a strategic goal of building a clinic
in the CP region during the 2009-2010 fiscal budget year. Market analysis demonstrated that the
CP area lacked basic health care services based on the current and projected population. A home
zip code analysis of PMC’s current patient population provided the leadership team with
information on existing patients who live in CP and travel to other PMC clinics for care. The CP
clinic opened April 5, 2010, and consists of 30,000 square feet.
Structure
The PMC Board of Directors governs the organization by delegating operational
responsibilities to the leadership team. The leadership team is managed by the chief executive
officer (CEO). Reporting to the CEO are the chief operations officer (COO), chief medical
officer (CMO), and vice presidents of finance, marketing, contracting, information services,
physician services, and quality management. Oversight of staff and clinic operations are the
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responsibility of clinic directors. Each clinic has a medical director who reports to the CMO. The
physicians report to the medical director based on his or her location. The medical director for
the CP clinic has been with the organization for four years and is a practicing family medicine
physician. The workweek is structured so that the medical director has 30 hours per week for
direct 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). Two
registered nurses are responsible for patient triage and education. One patient coordinator is
responsible to process medication refills with a 24 hour expected turn-around-time. Patient visits
for a physical are scheduled for 30-45 minutes and follow-up visits are 15-20 minutes. Based on
productivity 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 including
cardiology, 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, and
chronic care needs. Clinicians choose PMC because the practice supports high quality,
innovative health care, and superior outcomes. PMC is a dynamic organization that offers an
opportunity for personal and professional growth.
Style
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The philosophy of the CEO is that the leadership team works for the physicians. This
leadership style empowers the physicians to develop their own growth ideas and goals for the
company. The CEO believes that if he includes staff and physicians in the strategic planning
process, the organization will develop a sense of family and result in high satisfaction rates
among staff and patients. At the beginning of the planning stage for the CP clinic, the medical
director was selected and participated in all vital decisions regarding the location, building,
design, marketing, and staffing model. Various committees included staff, for example, in
designing the workflow and set up of the physician and MA workstations. The MAs participated
in the design of the patient treatment rooms regarding the location of supplies, equipment, and
computers. “The development and implementation of a growth strategy that includes the staff in
planning, implementation and skill development is one of the best ways to ensure that your
organization’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 maintain
certification through an internal program taught by the clinical trainer. In an effort to promote
staff 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 20
employees at any given time. A requirement in this program is that the area of study must be
health 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 be
health care related at the master’s level and above. A common requirement of all three programs
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is the employee must be employed with the organization a minimum of one year. These
programs are available to staff and physicians.
Conclusion
The strategic decision to open the CP clinic provides PMC with a potential for growth in
the number of physicians, staff, patient volume, revenue and referral opportunities. The defined
structure is in place with local leadership by the medical director and clinical director. Through
thoughtful design, the patient has access to primary and specialty care, as well as laboratory and
diagnostic services. The corporate culture is evident by the positive atmosphere among all
employees 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 dedicated
professionals. In the coming months, PMC will move forward with other strategic initiatives
including opening an ambulatory surgery center and another patient care clinic.
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References
Anderson, 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, from
http://www.corporatehealthgroup.com/ftpuser/CHG%20Library/Business%20Development
%20and%20Marketing/A%20Growth%20Strategy-Making%20it%20work%20within%20your
%20organization.pdf
Pacific 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/
