Advances in Health Care Management, Volume 2 (Advances in Health Care Management, 2) (Advances in Health Care Management, 2)

LIST OF CONTRIBUTORS Jeffery A. Alexander

Department of Health Management and Policy University of Michigan

James W. Begun

Department of Healthcare Management University of Minnesota

Diane Brannon

Department of Health Policy and Adminstration Pennsylvania State University

Norman B. Bryan

Department of Management Georgia State University

Juliet A . Davis

Management and Marketing Department University of Alabama

Dean J. Driebe

Department of Physics The University of Texas at Austin

Myron D. Fottler

Department of Health Professions University of Central Florida

John E. Gamble

Department of Management University of South Alabama

Martha Gerrity

Department of Medicine Oregon Health Sciences University

Charmine E. J. Hdrtel

Graduate School of Management The University of Queensland

Marjorie L. Icenogle

Department of Management University of South Alabama ix

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Thomas R. Konrad

Cecil G. Sheps Center for Health Services Research University of North Carolina

Christy Harris Lemak

Department of Health Services Administration University of Florida

Mark Linzer

Department of Internal Medicine University of Wisconsin

David Lorber

PCS Health Systems, Inc .

Roice D. Luke

Department of Health Administration Virginia Commonwealth University

Reuben R . McDaniel, Jr .

Graduate School of Business Administration The University of Texas at Austin

Bruce Mann

Blue Cross/Blue Shield of New Mexico

Julia E. McMurray

Department of Internal Medicine University of Wisconsin

Kathleen Montgomery

Anderson School of Management University of California

Vincent Mor

Department of Community Health Brown University School of Medicine

Matthew Neale

Human Resources Department Queensland University of Technology

Stephen J . O'Connor

Department of Health Services Administration University of Alabama at Birmingham

Donald E. Pathman

Cecil G . Sheps Centre for Health Services Research and Department of Family Medicine University of North Carolina



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Inger Johanne Pettersen

Bodo Graduate School of Business

Daniel A . Rickert

Marketing Manager Therapy Management Services

Alison M. Roboski

Cap Gemini Ernst & Young U .S . LLC

Grant T. Savage

College of Commerce and Business Administration University of Alabama

Mark Schwartz

Department of Medicine New York University

William E. Scheckler

Department of Family Medicine University of Wisconsin

Richard M. Shewchuk

Department of Health Services Administration University of Alabama at Birmingham

Howard L. Smith

Anderson School of Management University of New Mexico

Liane Soberman Ginsburg

Department of Health Administration University of Toronto

Hanh Q. Trinh

Health Information Administration Department University of Wisconsin-Milwaukee

Eric S. Williams

Department of Management and Marketing University of Alabama

Elisabeth Wilson-Evered

Queensland Health

Steven Yourstone

Anderson School of Management University of New Mexico

Jacqueline Zinn

School of Business and Management Temple University



REVIEW BOARD MEMBERS Jeff Alexander

Department of Health Management and Policy School of Public Health, University of Michigan, Ann Arbor, MI, USA

James Begun

Department of Health Care Management, Carlson School of Management, University of Minnesota, Minneapolis, MN, USA

Thomas D'Aunno

School of Social Service Administration and Department of Health Studies, University of Chicago, Chicago, IL, USA

James Hoffman

Centre for Health Care Strategy, College of Business Administration, Texas Tech University, Lubbock, TX, USA

Arnold Kaluzny

Department of Heath Policy and Administration, School of Public Health, University of North Carolina, Chapel Hill, NC, USA

Keith Provan

School of Public Administration and Policy, University of Arizona, Tucson, AZ, USA

Howard Zuckerman

Centre for Health Management Research, School of Public Health and Community Medicine, University of Washington, Seattle WA, USA . xui



REVIEWERS Donde Ashmos

College of Business Administration, University of Texas

Diane Brannon

Deparrtment of Health Policy and Administration Penn State University

Kathryn Dansky

Department of Health Policy and Administration Penn State University

Eric Ford

Health Care Organization and Policy University of Alabama at Birmingham

Eric Kirlby

Department of Management and Marketing Southwest Texas State University

Beaufort Longest

Health Policy Institute University of Pittsburg

Donna Malvey

College of Public Health University of South Florida

Timothy Nix

College of Business Administration Texas Tech University

Neill Piland

Medical Group Management Association

Mary Richardson

School of Public Health and Community Medicine University of Washington

David Robinson

College of Business Administration Texas Tech University xv



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Donna Slovensky

School of Health Related Professions University of Alabama at Birmingham

Jeffrey Thompson

Richard T . Farmer School of Business Administration, Miami University

Eric Williams

Department of Health Care Management University of Alabama at Tuscaloosa

ADVANCES IN HEALTH CARE MANAGEMENT: THIS VOLUME John D . Blair, Myron D . Fottler and Grant T . Savage This is the second volume in our annual research volume titled Advances in Health Care Management. Our initial volume described in detail the types of papers we publish in each volume as well as the processes we use to select the papers we publish (Blair, Fouler & Savage, 2000) . Included in this volume are invited state-of-the-art review papers by distinguished scholars, several open and special topic competitive papers, and several "best-papers" presented at the Academy of Management Health Care Management Division . The result is a mix of theoretical contributions and empirical research . The editorial approach has resulted in a rich, complex set of papers touching on many "cutting-edge" issues in health care management . The papers composing this volume may be categorized loosely into four general thematic sections : (1) (2) (3) (4)

Theoretical Perspectives on the Field of Health Care Management ; The Role and Impact of Managed Care ; Evolution of the Health Professions ; Enhancing Health Care Organizational Performance.

The papers in each of these sections are briefly described and summarized below in terms of their central questions, key contributions, and directions for future research .

Advances in Health Care Management, Volume 2, pages 1-7 . 2001 by Elsevier Science Ltd . ISBN : 0-7623-0802-8



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THEORETICAL PERSPECTIVES ON THE FIELD OF HEALTH CARE MANAGEMENT The three papers in this first general section deal with a wide range of theoretical issues related to health care management . They range from complexity science to a theoretical comparison of integrated networks vs . systems to how health care management researchers think about the research process . In the first paper, Reuben McDaniel and Dean Driebe describe how complexity science offers new ways of thinking about health care organizations that enable one to derive new insights about their nature and functioning. Complexity science is first defined and discussed in terms of its evolution in the organizational sciences . They make the point that complexity theory is not an extension of the Newtonian model . It is a different way of looking at organizations as not just an extension of, or complement to, other perspectives . Then they discuss the characteristics of complexity science and how these characteristics manifest themselves in health care organizations . These characteristics consist of agents, interconnections, self-organization, emergence and co-evolution . When the principal characteristics of complex adaptive systems are considered (i .e, agents interconnected by self-organizing, emergent and coevolving systems), a major insight is that behaviors in these systems are fundamentally unknowable. No one is smart enough to figure out where this health care system is going at almost any level. In this circumstance, sense-making is more important than decision making and the next most appropriate management strategy is to enhance the sensemaking capabilities of the health care organization . In addition, because the future is uncertain, success comes from a capacity to learn and learning replaces control as a key management function . Finally, managers must learn to deal with surprise through improvisional behavior . The second paper by Grant Savage and Alison Roboski examines the advantages of conjoining integrated delivery systems (IDSs) with integrated delivery networks (IDNs) . The authors note the three external forces that have determined various forms of integrated delivery organizations (IDOs) are managed care penetration, legislative and reform activity and antitrust issues . They apply a strategic stakeholders analysis to both IDS and IDN forms in order to determine which array of stakeholder relationships create a beneficial or hostile environment for the organization . The analysis indicates that networks have more benevolent stakeholder relationships than systems . In order for IDNs to be effective, certain managerial competencies and organizational structures must be in place. These involve standardization, interpenetration, a shared culture, alliance management and disease management .



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In the third paper, Richard Shewchuk, Stephen O'Connor, Myron Fouler and Hanh Trinh present the results of their empirical research concerning how scholars who conduct health care management research view the research process . A nominal group technique method was employed to elicit attributes attendees at the Health Care Management Division of the Academy of Management viewed as personally salient in terms of what research meant to them . Thirty distinct attributes were eventually derived . Later 78 health care management faculty members and doctoral students completed a questionnaire and were also asked to do a card sort of the thirty research attributes to determine possible underlying dimensions and clusters . An analysis of the card-sorted data via multidimensional scaling and hierarchical cluster analysis resulted in a cognitive map of what research means to researchers in health care management . The map arranged the thirty attributes across the two dimensions of research processes/outcomes and intangible/ tangible elements of research as well as seven clusters . These seven clusters were : (1) theory ; (2) analysis ; (3) research; (4) emotional ; (5) extrinsic expectations ; (6) social interaction/self concepts ; and (7) the actualized researcher . This chapter also discusses the implications of the data for academic researchers in health care management in terms of collaboration, career paths and research orientations .

THE ROLE AND IMPACT OF MANAGED CARE The second section of this volume addresses the significant challenges faced by health care managers as they attempt to respond to the increasing impact of managed care . In the first paper, Howard Smith, Steven Yourstone, David Lorber and Bruce Mann explore the challenging issue of how managed care plans are using and could use medical practice guidelines to choose cost-effective high quality patient care . The paper notes that physician compliance with medical practice guidelines has been problematic . Several initiatives for ensuring physician compliance are reviewed including improving access to the guidelines, peer reviews, reminders and feedback, stabilization of guidelines and education of physicians concerning the use of guidelines . The paper then compares staff model vs . network models in terms of their impacts on physician autonomy and various aspects of medical practice guideline implementation . The paper concludes with a set of medical practice guidelines and research issues for the future . The second paper in this section by Christy H . Lemak and Jeffrey Alexander is an application of two organizational theory perspectives to develop a model of how managed care influences the treatment practices of two outpatient drug



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treatment providers . Resource dependence theory suggests that treatment practices will vary as a function of the organization's dependence on managed care and the scope and stringency of oversight mechanisms used by managed care firms. Institutional theory suggests that the expectations of professional staff and sources of legitimacy will also directly influence treatment practices . Research propositions derived from both resource dependence theory and institutional theory are presented . The paper concludes with a discussion of how resource dependence theory and institutional theory converge and might be integrated . Research propositions based on integration of the two theoretical perspectives are presented . The paper concludes that institutional pressures may moderate or limit relationships between managed care and treatment practices through the power of professional treatment staff and sources of organizational legitimacy . The third paper by Marjorie L . Icenogle, John Gamble, Norman Bryan and Daniel Rickert examines the variable "open access to specialists" as a determinant of HMO member satisfaction and intentions to remain enrolled in the HMO plan. This empirical study is the first test of the strategic importance of member autonomy and open access in a managed care environment . The proposed model tests the relative importance of member autonomy, service convenience, satisfaction with value/pricing and convenience of care . Results indicate that all four factors significantly influence satisfaction and that subsequently, satisfaction influences intentions to remain enrolled in the plan. In addition, the importance of autonomy is demonstrated by significant direct and indirect paths to intentions to remain in the plan. The authors conclude that high member retention rates are critical to the long-term success of managed care plans since the costs associated with losing customers and attracting new customers is very high and negatively impact company profit margins .

EVOLUTION OF THE HEALTH PROFESSIONS The third section of this volume looks at the evolving roles of the health professions . The first paper by James Begun and Roice Luke notes that the health professions are loose aggregations of practitioners and professional associations that are involved in dynamic and often conflictual relationships with buyers, regulators, teachers/researchers, substitutes and suppliers . It is through these linkages that the health professions manage their adaptation to environmental change . The authors note that as the health professions have grown in size in recent decades, they have also grown in vertical differentiation by educational level, in horizontal level by setting and by specialty . In smaller and newer health professions, internal differentiation has been less pervasive and more manage-



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able and internal cohesion has been easier to maintain . Moreover, the health profession associations have largely reacted sluggishly and defensively to the changing demands of buyers, regulatory bodies and substitutes . However, these associations have had an enormous impact on public policy formation at the state and federal levels . Since health care organizations and professions are coevolving, the authors conclude with a recommendation that researchers study the interplay between the two. The second paper by Kathleen Montgomery is a review of the literature on the role and impact of physician executives during the recent era of managed care . The conceptual framework is that of Eliot Friedson which posits that physician executives represent that segment of the profession whose role is to balance the needs of the organization with the desires of the medical profession . This paper traces the development of research on physician executives in terms of who they are, why they have chosen their career paths, what they do and how effective they are . Since there is only minimal research addressing the effectiveness of this hybrid profession, the paper focuses on the process of trust building and maintenance . A set of antecedents to trust are described followed by a discussion of the special challenges physician executives face in fostering a perception of trustworthiness among those with whom they interact . The author concludes that it behooves organizations to assure that physician executives are given meaningful responsibilities associated with merging clinical interests with managerial ones ; however, such responsibilities need to be accompanied by sufficient discretion and autonomy to enable physician executives to function as effective representatives and leaders of powerful multiple constituencies . The third paper by Eric Williams and his colleagues is an empirical study of 1735 physicians, which tests a conceptual model of the impact of physician stress on intentions to withdraw from practice . The model posits that stress impacts withdrawal behavior through global job satisfaction, mental health and physical health . Four measures of "intention to withdraw" used in the study were intention to quit, intention to decrease hours, intention to change specialty and intention to leave patient care . Structural equation analysis with latent variables was used to test the model . Results indicate that the overall fit of the model was good . Perceived stress was significant and negatively associated with job satisfaction, mental health and physical health . Job satisfaction was significantly and negatively associated with intention to leave, intention to reduce working hours, intention to change specialty and intention to leave direct patient care . Strategies for managing stress include increased physician control, more "buffering" of physicians and reduced time pressure on physicians .



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ENHANCING HEALTH CARE ORGANIZATIONAL PERFORMANCE The final section of this research volume focuses on various approaches to enhancing health care organizational performance . The first paper by Liane Soberman Ginzburg examines how implementation of total quality management (TQM) can be enhanced through a goal-setting approach . The author argues that two of the four assumptions about TQM (about people and the top-down nature of TQM) pose serious challenges to the practical implementation of TQM . Consequently, there are significant obstacles in the implementation of TQM . The author proposes a detailed process for integrating goal setting and TQM in healthcare organizations using planning goals, learning goals and doing goals . This approach should also enhance our ability to measure the effects of TQM . The second paper by Juliet A . Davis, Diane Brannon, Jacqueline Zinn and Vincent Mor examines the relationship between strategy, structure and performance in nursing facilities . The sample consisted of 308 facilities in eight states . The study tests the contingency theory proposition that a nursing facility's strategy moderated by its management structure impact performance . Strategy is defined as degree of innovation . Structure is defined as degree of organic vs . mechanistic relationships . Financial performance is defined as the payor mix, measured by the proportion of Medicaid residents . Results indicate that facilities that are both innovative and have an organic structure are more likely to have a lower proportion of Medicaid patients (i .e. stronger financial performance) . Moreover, the interaction of strategy and structure provided an overall stronger model than either alone . Implications for future research and practice are also discussed. The third paper by Elisabeth Wilson-Evered, Charmine Hartel and Matthew Neale argues for the integration of two possible improvement strategies : the use of work groups to generate and implement new ideas and the development of leadership capacity to promote innovativeness in others . The paper presents the results of a longitudinal study of 45 groups of employees at a 200-bed specialist teaching hospital in Australia . Simple regression was used to examine the effects of transformation leadership on morale . Following this analysis, hierarchical multiple regression was used to examine the effect of morale on three innovation variables : benefit to patients, benefit to staff and benefit to administration . Results showed that transformational leadership was associated with high morale . High morale, in turn, results in work group interventions having measurable benefit to patients . These



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results suggest that a leader must concentrate on developing skills to inspire, motivate, stimulate, consider and influence others . This results in enthusiasm and high morale in the workplace . Morale seems to be the key to producing an environment in which employees perceive that their ideas are supported and subsequently introduced, implemented and tested . The fourth paper by Inger Pettersen studies a national sample of 48 intensive care units (ICU's) in Norwegian hospitals in order to determine the relations between abstract and concrete measurements of unit performance . Results indicate there are no necessary conflicts between abstract perceptual measures and more concrete efficiency measures in high-reliability organizations like ICUs. Making sense of the patterns of empirically developed correlations and the patterns of overlapping elements may assist us in the effort to improve the quality of patient care .

COMPLEXITY SCIENCE AND HEALTH CARE MANAGEMENT Reuben R . McDaniel, Jr. and Dean J . Driebe

INTRODUCTION Complexity science offers new ways to think about health care organizations that enable one to have new insights about their nature and about their functioning (Begun, 1985 ; Beinhocker, 1997 ; Anderson & McDaniel, 2000 ; Arndt & Bigelow, 2000 ; Kiel, 1994 ; Lewin & Regine, 2000 ; Miller, Crabtree, McDaniel & Strange, 1998 ; Zimmerman, et al., 1998) . These new insights lead to a rethinking of managerial strategies . The purpose of this paper is to identify some of the most critical insights from complexity science that affect how we view health care organizations . Based on these insights, the paper will identify some managerial changes that are indicated and some new areas for research in health care management that are indicated . Health care organizations are, of course, members of the set of all organizations and as such share some characteristics with all organizations . However, there are some particular characteristics of health care organizations that make complexity science a particularly useful tool for studying them . For example, there is significant information asymmetry in health care organizations, particularly between professional clinician providers of services and

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typical patients receiving these services and these asymmetries create unusual interdependencies . There is also a weak link between service recipients and payers for services received and the weakness of this link leads to potential distortions of system's characteristics. There is, typically, considerable technological and professional heterogeneity within any health care organization and this increases the difficulty of understanding the organization as a whole . The "mystical" nature of much of health care delivery adds another level of difficulty in understanding their management . These factors, and others like them, have made it hard to simply fit health care organizations into our general understandings of more typical organizational forms . However, complexity science offers insights that enable innovative approaches to health care management practice and research . Complexity science is the study of systems that are characterized by nonlinear dynamics and emergent properties and it is certainly true that health care organizations are such systems . One of the types of systems often studied in complexity science is Complex Adaptive Systems (CAS) . CAS are characterized by diverse agents interacting with each other and capable of undergoing spontaneous self-organization (Cilliers, 1998) . For example, the multiple professionals often required to accomplish the goals of health care organizations comprise such a system . CAS are qualitatively different from linear systems so often studied in more traditional sciences . The dynamic of CAS is nonlinear, with the state of the system at a given time being a nonlinear function of the state of the system at some previous time . The history of the system matters in a fundamental way . Existing managerial and policy issues in health care are the result of, among other things, the history of health care within the cultural milieu and this contributes to the usefulness of a complexity perspective in studying health care organizations . The state of a complex adaptive system as a whole is irreducible to a linear superposition of the states of its constituent elements . The essence of complexity science is in the study of patterns and relationships, rather than objects and substance, and in the search for characteristics of systems far from equilibrium rather than at the point of balanced stability (Capra, 1996) . Complexity science looks not at the parts, but at the wholes in an effort to gain a deeper, qualitatively different understanding of phenomenon . Complexity results from the interactions between the components of a system (Cilliers, 1998) and it is manifest at a level that transcends the local dynamics among each constituent element. Its characteristics at one level cannot be understood from knowledge of its characteristics at other levels (Holland, 1998 ; Newman, 1996). When considering issues such as the medical error rate in hospitals, it is necessary to consider these issues at the systems level rather than simply as the failure of some



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individual worker to "do his/her job" (Edmondson, 1996) . Complexity science helps in developing this perspective . Complexity science transcends traditional disciplines and has been a source of new insights in physics, biology, geology, cosmology as well as the social sciences (Fontana & Ballati, 1999) . As noted by Mainzer (1996, 272), "The crucial point of the complex systems approach is that from a macroscopic point of view the development of political, social or cultural order is not only the sum of single intentions, but the collective result of nonlinear interactions". When we look at the world through the lens of more conventional science it may seem as though order is unnatural because the orderly arrangements of elements seems so unlikely . Complexity science attempts to explain why there is, in fact, order in the universe (Johnson, 1995 ; Kauffman, 1992) . While there is certainly a relationship between complexity science and chaos theory, they should not be mistaken for each other (Morel & Rananujam, 1999, Cilliers, 1998) . James Gleick (1987), in his enormously popular book, Chaos, has contributed to a broad familiarity with many of the ideas of chaos theory and these have often been assumed to be the same as the notions that define complexity science . They are not. Chaotic behavior, in the technical sense of deterministic chaos, results from the nonlinear development of a relatively small number (as few as one) of variables and the study of chaos focuses on how complexity can arise from simplicity (Lewin, 1992; Cilliers, 1998) . Complexity science, on the other hand, focuses on how order can emerge from a complex dynamical system (Nicolis & Prigogine, 1989) . "Complexity means we have structure with variations" (Goldenfeld & Kandanoff, 1999, 87). It is probably most appropriate to say that chaos is a subset of complexity . Because we wish to reduce possible confusion, in this analysis we will be centering on complexity rather than chaos and the reader should be aware of this . CAS have been difficult to study in the past because of the mathematics associated with modeling their behavior . However, recent advances in computational power and new computational techniques used in fields such as Cellular Automata and Boolean Networks and theoretical tools such as Fractal Geometry allow complexity scientists to uncover some of the common characteristics of complex systems and to understand the spontaneous self-organizing dynamics of the world (Kaplan & Glass, 1995 ; Capra, 1996 ; Waldrop, 1992 ; Casti, 1997) . Increasingly the science of complexity is being used as a metaphor to examine the science of organizational management (Morgan, 1997) . For decades organizational scientists have labored clumsily with metaphors, myths and misunderstandings about the nature of organizations that did not fit managers' experience of organizations (Wheatley, 1992 ; Stacey, 1992, 1996 ; McDaniel,



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1997) . Rational approaches to understanding organizations have worked poorly ; at least when we think that to be rational is to be Newtonian in one's logic . There are numerous inconsistencies between traditional theoretical descriptions of organizations and what participants in those organizations experience . Evidence of the level of interest by organizational theorists in complexity science is found in the wide range of articles and books that they are writing on the subject. The May-June, 1999 edition of Organization Science dedicated to the Application of Complexity Theory to Organization Science, and the founding in 1999 of the new journal Emergence, A Journal of Complexity Issues in Organizations and Management, are but two examples . It has been difficult for managers and organizational scientists to truly incorporate insights from complexity science into their thinking . People are tempted to adopt the language of complexity science but ignore the logic ; creating a new lexicon for old ideas (Stacey, 2001) . For example, Brown and Eisenhardt (1998), in their book, Competing on the Edge, speak about complexity as associated with speed of change, but complexity science does not speak to the speed of a system's dynamics, but rather to the nonlinearity of its unfolding over time . It is difficult to break old patterns of thinking. We are constantly tempted to try to make new models fit into our old models . But complexity science is not an extension of the Newtonian model or traditional views, nor is it caught up in the notion that health care organizations are "living systems" . Complexity science is a different way of looking at the organizational world, not just an extension of, or complement to, other ways of looking at the organizational world . For managers and researchers in health care to take complexity science seriously means to accept the idea that health care organizations are complex adaptive systems and that they share the deep characteristics (properties) of complex adaptive systems . Applying a complexity framework suggests a different focus of attention for managerial analysis . Thoughtful organizational scientists are asking themselves these kinds of questions : How do we manage organizations in the face of the realization that they are complex adaptive systems? What would I think about health care management if I took complexity science seriously? How can you understand organizations better if you know complexity science? In order to avoid the trap of falling back to old models, we must be sure we thoroughly understand the characteristics of CAS and how those characteristics manifest themselves in health care organizations . The remainder of this paper is organized as follows . The characteristics of CAS are delineated . The way in which these characteristics manifest themselves in health care organizations is identified . Managerial strategies rising from complexity science are identified . Lastly, suggestions for research are given .



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CHARACTERISTICS OF COMPLEX ADAPTIVE SYSTEMS Agents

Complex adaptive systems are made up of a large number of agents that are information processors (Zimmerman, Lindberg & Plsek, 1998 ; Cilliers, 1998 ; Waldrop, 1992; Holland, 1998 ; Casti, 1997) . These agents may be nerve cells, computer programs, individuals, or firms . In a health care system agents might include individual people such as clinicians, patients and administrators . Agents might also include processes such as nursing processes and medical processes, functional units such as nursing, accounting and marketing and entire organizations such as insurance companies and regulatory agencies . The one characteristic that these agents all share is that they can process information and react to changes in that information (Casti, 1997) . Agents have the capacity to exchange information among themselves and with their environment and to adjust their own behavior as a function of information they process . Agents are constantly acting and reacting to what other agents are doing (Holland, 1995) . It is important when thinking about health care organizations not to simply consider them as the people in the organization but to recognize the wide variety of kinds of agents in the system . CAS agents are diverse from each other (Kauffman, 1995 ; Coleman, 1999). This diversity is critical to the ability of the CAS to function because diversity is a source of novelty and adaptability . If all of the agents were the same, and all processed information in the same way, there would be no potential for change and/or growth. Agents have different information about the system and none understand the system in its entirety (Casti, 1997) . As noted by Cilliers, "If each element `knew' what was happening to the system as a whole, all the complexity would have to be present in that element" (Cilliers, 1998, 5, italics in original) . Each individual agent pays attention to its local environment ; it is ignorant of the system as a whole and some central agent with responsibility for overall system behavior does not control it (Casti, 1997) . This very diversity among agents can be a source of significant frustration . The different structure and goals of accounting processes in health care often come into conflict with the structure and goals of healing processes . Yet diversity is also the source of invention and improvisation . Although agents are elements in their own right, and are often CAS themselves, it is also true that agents at any one level in a CAS serve as building blocks for agents at a higher level (Waldrop, 1992) . Different agents take different roles as the dynamic of the system unfolds . "CAS are constantly revising and rearranging their building blocks as they gain



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experience" (Waldrop, 1992, 146) . The health care organization as a whole consists of functional units each of which is a CAS . At the same time, each is a building block for a CAS, the health care organization itself. As these building blocks change over time, the whole organization changes . Interconnections

While a diverse set of agents is necessary for a CAS, it is not sufficient . In fact, the essence of a CAS is captured in the relationships among agents, rather than in the agents themselves . Recently, as scientists have begun to approach questions about organizations, they have noted that their questions tend to refer to systems where there are a great many interdependent agents interacting with each other in a great many ways (Waldrop, 1992) . The dynamics of these interactions makes these systems qualitatively different from static systems that may be complicated, but not complex adaptive systems . The environment for agents in a CAS is a function of the interconnections that agent has with other agents in the system and with agents in the system's environment. Therefore, understanding a CAS requires understanding patterns of relationships among agents rather than simply understanding the nature of agents . In family medicine, it has become clear that the management of many illnesses requires attention to the relationship of the patient to others in the family, but health care organizations are ill equipped to treat the family rather than the patient . As we look at the incidence of litigation in health care, we note that the relationship of the patient and the physician may be a significant moderating factor in whether or not the patient sues the health care organization over an alleged error. And clearly, the relationship among the clinical staff of a health care organization is critical to the overall performance of the organization. We speak of well functioning surgical teams and recognize that the relationships among team members is important . Some attempts have been to manage relationship systems in health care through the adoption of increasingly sophisticated information systems . These have not been very successful . For example, computerized patient information systems have not been widely adopted in health care despite over a decade of effort (Dick, Steen & Detmer, 1997) . Telemedicine has been seen as a major potential strategy for increasing the quality and access to health care and to lower costs and yet it has been disappointing in its impact (Office of Technology Assessment, 1995) . In both cases, failure to resolve relationship problems, rather than failure to resolve information technology issues, seems to be the major cause of difficulty (Paul, Pearlson & McDaniel, 1999 ; Seligman, 1999) . When treated from the



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perspective of complexity science these difficulties are easier to understand and alternative approaches to resolving them emerge . The relationships among agents in a CAS are nonlinear in nature . Inputs are not proportional to outputs . Small changes can lead to big effects and big changes can lead to small effects. A general system has both positive and negative feedback loops and the effect of any one agent's activity can feed back on itself as well as influence other agents . In the world of linear equations we thought we knew that systems described by simple equations behaved in simple ways, while those described by complicated equations behaved in complicated ways . In the nonlinear world - which includes most of the real world, as we begin to discover - simple deterministic equations may produce an unsuspected richness and variety of behavior . On the other hand, complex and seemingly chaotic behavior can give rise to ordered structures, to subtle and beautiful patterns . . . Another important property of nonlinear equations that has been disturbing to scientists is that exact prediction is often impossible, even though the equations may be strictly deterministic (Capra, 1996, 123) .

One characteristic of CAS is that each agent is generally connected to local agents, and the nature of these connections among diverse agents can lead to complex behavior . However, it is not simply the number of connections in a CAS that determines its character ; it is also the richness of these connections . Any element in the system influences and is influenced by, quite a few other ones (Cilliers, 1998) . Even though an agent's range of interaction may be short, its range of influence is often wide. Information is carried throughout the system through feedback (Kauffman, 1995 ; Eisenhardt & Brown, 1999), creating patterns of interaction. "Such interactions are typically associated with the presence of feedback mechanisms in the system. These interactions in turn introduce nonlinearities in the dynamics of the system" (Morel & Ramanujam, 1999, 279) . These patterns of interconnections can follow fairly simple rules and complex behavior can emerge from these rules . Order is created through the patterns of interconnections, not complicated controls and rules . A large number of connections between agents is not required, and in fact can lead to random behavior (Kauffman, 1995 ; McKelvey, 1999). In many ways this flies in the face of conventional wisdom that suggests that everyone should participate in all activities . Sometimes, programs such as shared governance programs for nursing fail because of too much connectivity rather than too little . Research on participation in decision making in health care organizations suggests that attention must be paid to patterns of participation, not just amount or frequency of participation (Anderson & McDaniel, 1999 ; Ashmos & McDaniel, 1991) . Adaptability is reflected in the ability of the CAS and its agents to change the rules through their interactions, thus changing the system . Interactions can take many forms . For example, Thompson (1979) describes interactions in terms of



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pooled, sequential, and reciprocal interactions. More recently, Dooley and Van de Ven (1999) have discussed the dynamic interactions among agents in terms of Chaos, Colored Noise, Periodic, and White Noise . Dooley and Van de Ven (1999) have identified appropriate mathematical techniques for distinguishing among these dynamic interactions . They suggest that complexity scientists studying organizations carefully utilize appropriate models when attempting to describe the interconnections among agents in a CAS . Self-Organization "Self-organization is the spontaneous emergence of new structures and new forms of behavior in open systems far from equilibrium, characterized by internal feedback loops and described mathematically by nonlinear equations" (Capra, 1996, 85) . Self-organization arises from the changing patterns of relationships in CAS . When diagnostic related groups became the standard for prospective payment in health care, then health care organizations began to develop entire work units devoted to redefining physician's diagnosis of illnesses in such a way as to maximize payments to the organization. This was not the intent of those who implemented drgs but it was an organizational form that emerged from changing patterns of relationships . The structure and form of CAS is not simply externally imposed from some hierarchical controller . Rather, structure and form are a function of patterns of relationships among agents and interactions of these agents with their environment (Cilliers, 1998 ; Mainzer, 1996) . As noted by Zimmerman, Lindberg and Plsek (1998, 10), "CAS have distributed control rather than centralized control" . Many health care policy makers and managers have learned, to their dismay, that their control over the organizational patterns in health care can be minimal . Two examples that have been often used for illustrating the self-organizing properties of CAS are the flocking of birds and the schooling of fish . In neither case is there some "smart" bird or fish that "gets things organized" (Callen & Shapero, 1974) . Rather the pattern of organization develops from local interactions among agents, apparently following very simple rules . This phenomenon of self-organization has been used to better understand how colonies of ants seek food and organize their living arrangements (Deneubourg, Pasteels & Verhaege, 1983 ; Bossomaier & Green, 1998) . "The crucial point of the complex systems approach is that from a macroscopic point of view the development of political, social, or cultural order is not only the sum of individual intentions, but the collective result of nonlinear interactions" (Mainzer, 1996, 272) . When one observes order in a system, one is tempted to assert that the order must come from some intentionally on the part of some



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external controller . Complexity science teaches us that order in a system may well be a result of the properties of the system itself (Nicolis & Prigogine, 1989 ; Kauffman, 1993) . Order is a result of nonlinear interactions and the capacity for self-organization is a function of (among other things) the number of connections among agents and the intensity of these connections . It is not true that the more connections the better. Too many connections may lead to behavior that never settles into any recognizable pattern of self-organization . On the other hand, too few connections may lead to frozen behavior rather than dynamical self-organization. Kauffman (1995, 84) expresses the importance of this observation as follows, "Our intuitions about the requirements for order have, I contend, been wrong for millennia . We do not need careful construction ; we do not require crafting . We require only that extremely complex webs of interacting elements are sparsely coupled" . CAS consist of agents, interconnected, generating order . Emergence

"Emergence is above all a product of coupled, context-dependent interactions. Technically these interactions and the resulting system are nonlinear: The behavior of the overall system cannot be obtained by summing the behaviors of the constituent parts" (Holland, 1998, 122, italics in original) . Agents interacting in a nonlinear fashion may self organize and cause system properties to emerge . We see units in integrated health care systems developing patterns of behavior that make it difficult, if not impossible, for the integrated system to achieve anticipated synergies . Organizational mergers and the issues,created by these mergers need to be viewed from a complexity science viewpoint in order to detect their emerging properties (Baskin, Goldstein & Lindberg, 2000) Because individual agents are ignorant of the behavior of the whole system of which they are a part, they cannot control emergence of the system . Rather emergence is a result of the pattern of connections among diverse agents . But it is more than connectivity alone that leads to complexity arising from emergence . The nature of the interactions among agents is critical (Casti, 1997) . The global characteristics of the CAS arise from characteristics of agents and their relationships but are not reducible to these characteristics . The properties of the whole are distinctly different from the properties of the parts . The quality of a surgical team arises from the properties of the individual physicians, nurses and surgical technicians but is not reducible to these properties . A medical unit in a hospital is more than the sum of the talents of individual workers but is an emergent property of the whole unit . This means that the managerial task goes beyond getting the best employees but to facilitating the emergence of the



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unit itself. For example one might call into question existing human resource practices in health care that focus on individual workers and suggest more focus is needed on the emergent system of workers . Continuing education programs for clinicians might well concern themselves with the education of emergent systems as well as education of individual members of systems . Emergence is the source of novelty and surprise in CAS (Goldstein, 1999) and the properties of the emergent system cannot be ascertained by observing the properties of lower level agents or subsystems . Complexity science focuses on dynamic states that emerge in far from equilibrium systems (Goldstein, 1999 ; Holland, 1998). Emergence is not a provisional construct that will succumb to more powerful analytical techniques or a better theory . Rather the unpredictability of emergent systems is fundamental . What is the outcome of emergence in CAS? There are emergent structures and organizations but perhaps most importantly, there are new patterns of relationships among agents and these modify the self-organizing characteristics of CAS . These new patterns emerge from the nonlinear relationships among agents and the rules that constrain agents . Emergence is a continuous property of CAS and emergent order is always changing in unpredictable ways . "A small set of well-chosen building blocks, when constrained by simple rules, can generate an unbounded stream of complex patterns . . . The most lucid examples of emergence arise when these persistent patterns obey macrolaws that do not make direct reference to the underlying generators and constraints" (Holland, 1998, 238-239) . Emergence is not the same as serendipitous novelty such as patterns of raindrops on a window pane but is the result of nonlinear dynamics generating new properties at the macro level of analysis (Goldstein, 1999 ; Holland, 1998) Coevolution CAS consist of agents interacting in a nonlinear fashion such that the system self-organizes and emerges in a dynamic fashion . But the CAS does not simply change ; it changes the world around it . There is coevolution of the CAS and its environment such that each fundamentally influences the development of the other (Kauffman, 1993, 1995 ; McKelvey, 1999) . When a major hospital system develops and implements a new pharmaceutical control system, this will change the hospital's relationship with pharmaceutical suppliers including, possibly, changing their source of competitive advantage . Agents do not simply adapt to the environment and each other. They coevolve with each other and with the environment in a constant dance of change . A physician changes her practice pattern and nurses, therapists and clerks are affected . A new process for managing pharmacy supplies is put in place and the relative competitive



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advantage of pharmacy suppliers is changed . The installation of a computer system makes some processes for assuring patient safety obsolete and demands that new, unanticipated ones be put in place. The organization acts and others react, in unexpected and unpredictable ways . Kauffman (1993, 1995) has suggested that CAS exist in "fitness landscapes" and that each seeks a point of maximum fitness with its environment. Managers have often considered the need for their organizations to adapt to the environment but when they consider that every adaptive move creates another move by another organization or set of organizations, they then can see that adaptation is not sufficient . A new hospital computer system creates new tasks for the training department as well as new functions for the purchasing department. Each of these must now rethink how it responds to its environment because the fitness landscape for each has changed . But the hospital itself has changed the environment in which other hospitals operate and they must seek to reestablish their position in the competitive field . Health care systems are constantly attempting to improve their functioning through seeking new peaks of fitness, or new places of competitive advantage on their fitness landscapes. They seek new ways to achieve better results given the circumstances in which they find themselves . But landscapes vary in their ruggedness and, therefore, there are significant differences in the efficiency with which an agent can achieve some point of improved fitness . Some health care systems exist in a milieu where there are few health care options for their clients and others exist in a milieu where there are many such options . No agent has some global view of the world and thereby, the capacity to see the "total picture" (Cilliers, 1998) . Rather each agent acts based on local information, seeking to continuously improve its fit with its environment and, therefore, usually can only achieve some local optimum. In the process of achieving this position, each agent changes the landscape for itself and for all other agents in the system . As explained by Kauffman (1993, 243) "In a coevolutionary system, we need to represent the fact that both the fitness and the fitness landscape of each species are a function of the other species . Thus, in general, it is necessary to couple the rugged fitness landscape for each species, such that an adaptive move by one species projects onto the fitness landscapes of the other species and alters those fitness landscapes more or less profoundly" . For CAS, the property of coevolution signals limits in their developmental processes . Agents posses conflicting constraints within themselves and among neighboring agents and because so many of the constraints are in conflict, compromise and cooperation lead to workable solutions rather than to some grand, superb solution (Kauffman, 1995) . The dynamics of the situation mean that you can't "get it right" in some global sense . Rather, because of the



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emerging properties of each agent and of each CAS, the "goodness" of CAS adaptation to its environment is a moving target . An effective and efficient hospitall at one moment may turn into a dinosaur of a hospital in the next moment . "The structure of the system is not the result of an a priori design nor is it determined directly by external conditions . It is the result of interaction between the system and its environment" (Cilliers, 1998, 91, italics in original) . "Real organisms constantly circle and chase each other in an infinitely complex dance of coevolution" (Waldrop, 1992, 259). Summary of CAS Characteristics When the principal characteristics of complex adaptive systems - agents interconnected in self-organizing, emergent, and coevolving systems - are considered, a major insight is that the behaviors of these systems are fundamentally unknowable . No one is smart enough to figure out where the health care system is going at any level . People continue to probe for the "simple" solution but neither investors nor practitioners have been successful in predicting the future of the health care system or even which of the system's components are likely to prosper in the future . Agents processing local information in response to simple rules can generate unpredictable behavior, even if the system is deterministic (Gleick, 1987, Prigogine & Stengers, 1984) . Patterns of interconnections in CAS are nonlinear and dynamic . CAS self-organize independently of any controlling hand, but as a function of non-linear interactions among agents and patterns of self-organizations are unknowable from any analysis of present system states . Yet, the system emerges in complex and unknowable ways as a function of the self-organization that is taking place . Complexity science and the study of CAS leads us to a deeper understanding of that portion of the universe that is not linear and additive . Health care systems are certainly in that class of things . Understanding the characteristics of CAS leads to the understanding that they are unpredictable in their trajectory but can be understood in terms of their patterns of behavior and their probabilistic nature (Waldrop, 1992 ; Prigogine, 1996) . Agents cannot forecast total system response to their actions and, therefore, agents attempt to improve their own payoffs or fitness, not that of the system as a whole (Kauffman, 1995) . Health Care Organizations as CAS Typically, when we have thought of health care organizations we have thought of them as machines that should be well run (Harris, 1997 ; Blair & Fottler, 1990) . We have relied on Newtonian perspectives of organizations to guide our



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thinking (Zimmerman et al ., 1998 ; McDaniel, 1998 ; Wheatley, 1992) . These perspectives have led to a focus on getting pieces to fit together, on predicting future outcomes of managerial behavior and on controlling behavior of workers to get them to do what we want them to do . The Newtonian perspective is a reductionist perspective where understanding the whole of a system is dependent on understanding its parts . Things must be broken down into their constituent elements in order to understand them . Clockwork is the dominant metaphor and an organization that "ran like a clock' is the desired condition . The more we explored the mechanistic view of health care organizations the more we came to realize that our experiences of health care organizations did not meet our expectations of the machine-like systems we had come to define as the well run organization (Zimmerman et al., 1998 ; McDaniel, 1997 ; Stacey, 1992 ; Anderson & McDaniel, 2000 ; Chirikos, 1998) . One example of attempts to apply reductionist, Newtonian thinking to health care has been in widespread efforts to apply total quality management or continuous quality improvement to improve clinical practice . In particular, it has been used to attempt to improve the delivery of preventive services . This seems like a very straightforward objective but success has not been achieved (Solberg et al., 2000) . In fact a review of efforts to apply continuous quality improvements to clinical practice has generally been unsuccessful (Shortell, Bennett & Byck, 1998) . These efforts all have assumed a machine-like health care system with the key issue in the failures being an inability to move the right levers to effect change. However, this may not be the real issue. The real issue may be a mis-specification of the nature of the system . A review of the characteristics of complex adaptive systems as outlined above, suggests that health care organizations are, in fact, complex adaptive systems rather than machine bureaucracies . There are many, diverse agents (Blair & Fouler, 1990) and the ability to manage these systems of agents creates major concerns (Alexander & Morrisey, 1988 ; Alexander, Fennell & Halpren, 1993 ; Begun, 1985 ; Bloche, 1999) . Relationships and interconnections are critically important (Alexander & Morrisey, 1988 ; Ashmos & McDaniel, 1991 ; Ashmos, Huonker & McDaniel, 1998 ; Thomas & McDaniel, 1990) . Health care organizations have the capacity for self-organization and emergence and they are coevolving (Zimmerman, Lindberg & Plsek, 1998 ; Lewin & Regine, 2000; Anderson & McDaniel, 2000; Kiel, 1994) . As executives seek new insights for managing health care organizations in these troubled times, complexity science offers a way to re-focus attention from creating a better run organization to maximizing the potential for the organization to co-evolve in ways that increase organizational fitness . As managers take complexity science seriously, they discover new strategies for action .



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The health care manager is an agent in the health care organization and not an observer (Stacey, Griffin & Shaw, 2000) . Traditional views of health care administration see the manager as an external controller who manipulates the system in accordance with some well thought out logic . Complexity science teaches us that the manager must first and foremost recognize him/herself as an agent of the system whose patterns of interaction with other agents is part of the overall set of factors that is leading to the dynamic behavior of the system. The manager is within the system and his/her behavior is one of the factors leading to systems behavior but it is only one of the factors . There is nothing the manager can do to manipulate the system in a certain, explainable, predictable way . The manager can act, and his/her actions will affect the organization, but there is no guarantee of what that effect will be . Once begun, the action will be carried through the organization in a way that has no predictable outcome . After all is said and done, the art and science of traditional health care administration has been about control . Improvement efforts in health care management have been focused on better regulation, financial restrictions and punishment of offenders . Traditional views of health care managerial theory have been focused on organizational control and the goal of the management system was to ensure that the organization and its workers did what they were supposed to do. What they were supposed to do was determined by the manager. Complexity science suggests that it is impossible to control, in the traditional sense, health care organizations or the people that work in them because of the self-organizing and emergent properties of CAS and the unknowability resulting from these properties . You cannot control that which you cannot know and you cannot know the form and direction of a CAS because these are always changing . They exist only in the moment and as potentialities, and the manager does not have control over them . This unknowability is fundamental and is not simply a lack of information . With an understanding of the unknowability of the system, the goal of management is to enable the health care organization to emerge and self-organize . The manager cannot know the entire system because the information in the system is dispersed . The whole cannot be captured in any one agent, not even the top executive, as it is impossible for any one agent to see the entire system . Instead, managers must become adept at encouraging things to happen everywhere in the system and to allow these small, local happenings to be dispersed throughout the system . When one understands that health care organizations are complex adaptive systems and that they share the characteristics of these systems then managerial focus shifts . The manager's focus shifts from knowing the world to making sense of the world ; from forecasting the future to preparing the organization to meet an unknowable



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future and from controlling the system to unleashing the system's potential . The next section of this paper details some of the managerial strategies that arise when we take complexity science seriously .

MANAGERIAL STRATEGIES RISING FROM COMPLEXITY SCIENCE Making Sense In complex adaptive systems the problem is not the bounded rationality of decision-makers but the fundamental unknowability of the unfolding dynamic of the system over time. In this circumstance, sensemaking is more important than decision-making and the appropriate managerial strategy is to enhance the sensemaking capabilities of the health care organization (Thomas, Clark & Gioia, 1993) . When faced with nonlinear connections and with emergent properties, people in organizations must develop a collective mind about what the situation is, who we are, why we are here and what is going on around us (Weick, 1995) . Sense making is a social act that requires interaction among agents . But these very interactions create new uncertainties and ambiguities . Sensemaking is enhanced through paying attention and organizational survival is often a struggle for alertness in the face of dynamic co-evolutionary events (Weick & Roberts, 1993) . Because the world is unknowable, meaning comes, not through knowing what is going on but through making sense of what is going on . Agent characteristics of information processing ability, rule following ability and, particularly, ability to connect with other agents, increases organizational capabilities for sensemaking . Managers must create time for agents to pay attention and to interpret the events around them . Managers must also create more different ways of paying attention and interpretation . This means that they must exploit the diversity of agents in the CAS to tease out variety of ways of experiencing and interpreting events (McDaniel & Walls, 1997) . Some ways of thinking about the world see homogeneity as desirable and others see heterogeneity as desirable (Glick, Miller & Huber, 1993) . The characteristics of CAS suggest heterogeneity as the most fruitful managerial strategy for enriching sensemaking in the organization . When homogeneity is the focus then group think and decreased effectiveness result . In an unknowable world, sensemaking is not a matter of doing the best we can because we are limited ; rather it is the best we can do because we are smart. In a world that is constantly emerging, we cannot know the world through planning and predicting ; therefore, the importance of these activities is less than



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we once thought (McDaniel, 1997) . Managers help order emerge in CAS through sensemaking but this order is not a stable equilibrium . Agents continuously create and reenact sense and meaning because the patterns and order in CAS are always changing . Remembering (and Forgetting) History

As health care managers think about the characteristics of CAS they may conclude that the history of the system is unimportant . On the contrary, the arrow of time is a key factor and the nonlinear trajectory of the system is often a function of the time dependent events that occur . Predisposition is a key factor in both enabling and inhibiting health care organizational behavior (Ashmos, Duchon & McDaniel, 1998) . Because the futures of CAS are uncertain (Prigogine, 1997) success comes from capacity to learn and learning replaces control as a key managerial function (Stacey, 1995 ; Senge, 1990) . Critical remembering of history is not in order to know what to do before we take action. Rather we must treat the unfolding of events in real time . As noted by Stacey (1995, 17) "The most important learning we do flows from the trial-and-error action we take in real time and especially from the way we reflect on those actions as we take them" . CAS need to engage in learning processes that enable a pattern of action to emerge as the organization interacts with its environment (Wheatley, 1992 ; Kiel, 1994 ; Bettis & Prahalad, 1995) . Because things in organizations do not recur in repetitive fashion agents must develop skills at learning from samples of one (March, Sproull & Tamuz, 1991) . Included among activities necessary for such careful attention to a history that is unlikely to repeat itself are experiencing events richly and interpreting events broadly . The diversity of agents in the system enhances the system's ability to do these things and organizations need a diverse set of stakeholders to enhance the probability that framebreaking learning will occur (Argyris, 1992) . History is not important because CAS will know what to do next time but so that they will continuously enhance their capabilities to act in the face of an uncertain unfolding of its co-evolutionary space . History informs capabilities . CAS mangers are not expected to know what is going on and then to tell others what to do. Rather the manager develops an environment where people listen to each other and value each other's insights . It is the capacity to learn rather that the capacity to know that enhances CAS functioning (McDaniel, 1997). "Sometimes learning requires courage. It can be difficult for experts, especially, to admit candidly that they could be better at what they do if only they knew more . To become a learner is to become vulnerable . The dilemma is painful" (Berwick, 1991, 841) .



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Thinking about the Future Traditional planning based on feedforward modeling and predictions of future states is not useful in CAS where the dynamic unfolding of the system is uncertain . Because of the emergent nature of CAS, reliance on forecasting and modeling of cause-effect relationships is an inappropriate managerial strategy . This does not mean that managers should not think about the future . But they must think about it in new ways . Scenario planning helps organizations to deal with surprise and it is a technique that has been widely used . The effectiveness of scenario planning in CAS is not a function of how well the manger maps the future or how likely a given scenario is . Rather, the effectiveness of scenario planning is in developing organizational capabilities for dealing with uncertainty . Bricolage, the ability to create what is needed at the moment out of the materials at hand (Weick, 1993), is a valuable way for CAS to think about the future . Traditional managers ask the question, "What do I need to do what I want to do?" while bricoleurs ask the question, "What can I create from what I have?" Bricolage requires knowing existing situations intimately so that new and creative ways to deal with confused and mixed up situations can be invented . In CAS no one knows what is going to happen but some people are better able to create positive outcomes from what emerges . Managers of CAS pay attention to the role of enactment and interpretation in thinking about the future (Thomas & McDaniel, 1990) . CAS are systems of interconnections and they produce or construct through co-evolutionary social processes, a significant part of the environment they face (Weick, 1995) . These choices are often reflected in how agents frame the world as they enact reality through patterns of action (Anderson & McDaniel, 2000) . People call things problems or opportunities, sick people are patients or clients, payers are customers or stakeholders . In each case the CAS maintains capacity to think about the future through framing the future by social interaction . Dealing with Surprise "Uncertainty is an essential ingredient of progress . Surprise drives progress because innovation depends on the sort of knowledge no one can gather in a central place" (Postrel, 2000, 1-3) . The source of surprise in a CAS can be the nonlinear trajectory of the system (Prigogine, 1996), bifurcations, or qualitative changes in behavior resulting from parameter changes (Kaplan & Glass, 1995) or sensitivity to initial conditions (Gleick, 1987) . Mangers of CAS recognize that the self-organization, emergent and coevolutionary properties of CAS ensure that surprise will be a constant companion and the ability to deal with surprise will



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be a key source of competitive advantage . Dealing with surprise requires improvisational behavior. Crossan and Sorrenti (1997, 156) define improvisation as "intuition guiding action in a spontaneous way" . Action is in the moment rather than the future and there is a high use of intuition rather than reliance on detailed analysis or routine habit . As surprise emerges in a CAS managers must encourage agents to respond to unanticipated circumstances through a balance of structure with flexibility (Brown & Eisenhardt, 1998) . Loose-tight coupling and order-chaos-order enable the achievement of temporary advantage in a world characterized by surprise . Dealing with surprise requires innovation and creativity at all levels and in all segments of the organization . Because we cannot always know what resources we have to work with, or what resources we will have to work with tomorrow, we must become good improvisers . There are some trades, jobs, professions, and tasks whose workers come to be good at working with ambiguity . Good scientists are always working just beyond the edge of what they know. They feel their way, trust their instincts, and make frequent leaps of faith . Instead of assuring the workers that the ambiguity and uncertainty will go away once we "get things under control", managers in CAS must teach them to live with ambiguity and embrace surprise. Jazz players are another example of people who are used to living with surprise and they are often seen as role models of improvisational behavior. They know a general musical form or structure and within that they create constant surprise and very complex stuff comes out of a very simple standard form . Bad jazz occurs because one person played something that the others couldn't build on . Note that both the player and the builder have responsibility to create good jazz . It is the responsibility of the whole system not the individual agent - it's about the connections that lead to self-organization . Good jazz players, when they hear a surprise, don't ask, what did you intend to do? They act on what they heard and they create . The surprising note (or phrase or passage) wasn't the right note or the wrong one . It is right if we can use it and the central question is what can I do with what happened? Dealing with surprise involves thinking in terms of how to use whatever happens to further the development of the system . It involves building on emergent characteristics of the CAS to develop patterns of social interaction among agents that gives them confidence in each other, that leads to small wins and that enhance the capacity to learn from surprising events (McDaniel, 1997) . Taking Action When health care managers have traditional beliefs about their systems they are likely to focus on "getting ready to do it right" . However, if they recognize



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the dynamic, nonlinear nature of organizational evolution, they will understand that they need to focus on "taking action as circumstances unfold" (Eisenhardt, 1989 ; Brown & Eisenhardt, 1998) . Action leads to learning and learning leads to the ability to cope with the unpredictable nature of CAS . Action should be focused on small changes that can provide positive feedback to the system . The effects of both small and large inputs can be unpredictable but small inputs provide more room for learning and organizational development (McDaniel & Walls, 1998) . A major component of action in CAS is the creation of connections and relationships (Casti, 1997) . A lot of traditional managerial behaviors have been about reducing connections . Getting everyone in their place, doing their own thing, staying on task . Even typical organizational charts tend to fragment organizations rather than focus on the interdependencies . Managerial practices that isolate workers from each other and attempt to constrain behavior and events through rules and policies will not encourage the self-organization needed to create order. In CAS, the essence of the system is in relationships, not pieces and, therefore, the quality of connections in a CAS is more important than the quality of any one agent. Dialog, then, becomes a major mechanism for collective thinking and organizational learning (Isaacs, 1993) . "Dialog can be initially defined as a sustained collective inquiry into the processes, assumptions and certainties that compose everyday experience" (Isaacs, 1993, 25) . It is not simply a matter of more connections . Increases in complexity are the result of increases in interdependencies rather than increases in number and differentiation . The kinds of relationships that develop are important . Managers of CAS must be careful not to simply focus on tight connections or ties, as these may often be the source of failure (Weick, Sutcliffe & Obstfeld, 1999, 87) . There is, in fact, often strength in weak ties (Granvovetter, 1973) particularly when operating in an environment of uncertainty and surprise . In general, in CAS, agents are guided by information flows in local connections and managers must act to enhance local connections as well as some highly centralized, systems-wide set of connections . Mangers need to develop an understanding that a person's range of influence is very wide even though their range of interactions is small and this influence occurs through overlaps in information domains (Kauffman, 1995) . Structure and form are a function of the patterns of relationships among agents in CAS and interactions of agents with their environment . This suggests that health care managers must pay attention to processes in CASs . When we focus on process rather than simply on form and structure, we reorient the level of analysis for action and there is nothing sacred about the organizational level of analysis (Weick, Sutcliffe & Obstfeld, 1999) . Managers must help agents



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develop skills at paying attention to actions in their local environment. They can not simply look at the environment to see how they should adapt to it, because CAS co-evolve with their environments and the environment will change as a result of actions taken by agents in CAS and vice versa . Participation in decision making is an action tactic that can be effectively used by managers to enhance system functioning in health care organizations (Ashmos, Duchon & McDaniel, 2000 ; Anderson & McDaniel, 1999 ; Ashmos, Huonker & McDaniel, 1998) . When participation is used as a complicating mechanism in CAS, the amount on information brought to the decision table is increased and the sensemaking capacity of the system is increased . Therefore, managers in CAS should be seeking ways to involve a broad range of organizational actors in many kinds of situations . But much of the traditional management analysis has too narrow a view of who should be involved in what activities (Harris, 1997) . CAS can be moved from state to state by the manipulation of control parameters (Mainzer, 1996) and velocity of information flow, connectivity of agents and diversity of information models are three key parameters (Stacey, 1996) . Participation in decision-making is a strategy for managing the control parameters of an organization and, thereby, moving the organization to new states (Anderson & McDaniel, 1999) . Note that imposed teams as a strategy for participation are not the same as emergent networks (Goldstein, 1999) and it is the latter which are most likely to lead to organizational creativity and imaginative problem solving . Developing Mindfulness

Traditional organizational analysis focuses on routines and embedded processes . The belief is that if health care managers can "get it right", develop information systems that reveal the future state of critical variables, and understand critical cause-effect relationships then organizations will function in an efficient and effective manner (Griffith, 1994) . Our understanding of health care organizations as complex adaptive systems suggests that such an outcome is hardly to be expected (Stacey, 1992 ; Wheatley, 1992 ; McDaniel, 1997 ; Miller, Crabtree, McDaniel & Strange, 1998) . Rather the system should be understood in terms of nonlinear dynamics, self-organization, emergence and coevolution . Under these conditions, one can't know what to do, regardless of the amount of previous understandings one has . Organizations must handle unforeseen situations in ways that work. We want them to be reliable and "reliable outcomes now become the result of stable processes of cognition directed at varying processes of production that uncover and correct unintended consequences" (Weick, Sutcliffe & Obstfeld, 1999, 87) .



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The achievement of a stable cognitive process that can enable CAS to operate in a reliable manner and achieve high quality performance requires mindfulness . Mindfulness is the "capability to induce a rich awareness of discriminatory detail and a capacity for action" (Weick, Sutcliffe & Obstfeld, 1999, 88) . Processes that lead to mindfulness include a preoccupation with failure, reluctance to simplify interpretations, sensitivity to operations, commitment to resilience and underspecification of structures (Weick, Sutcliffe & Obstfeld, 1999, 89) . Health care organizations that develop these processes are more likely to be able to deal with the uncertainty inherent in complex adaptive systems . A mindful organization is one that pays attention and managers in CAS must be careful observers of the world as it unfolds (McDaniel, 1997) . Organizational survival is often a struggle for alertness (Weick& Roberts, 1993) . What is needed is, often, not information but attention (Simon, 1994) . Managers often feel that they do not have time to pay close attention to the world around them so they can notice, in a mindful way, important changes that are occurring in their worlds (Senge, 1990 ; Argyris, 1992) . CAS also need more diversity in the way they see and interpret the world (McDaniel & Walls, 1997) . They also need the ability to sense danger at local levels while maintaining the ability to coordinate action (Weick, Sutcliffe & Obstfeld, 1999) . Thus CAS managers must be mindful, and pay attention in real time to the unfolding and coevolving worlds in which they must function . They must do this while keeping in the front of their consciousness the understanding that they are not external observers of the system but are, themselves, agents in the system whose behavior is a fundamental part of the pattern of nonlinear interactions that is causing emergent behavior (Stacey, Griffin & Shaw, 2000) .

RESEARCH QUESTIONS SUGGESTED BY COMPLEXITY SCIENCE Complexity science is offering a host of new ideas for research in organizational science (Anderson, 1999) . Likewise, new research questions arise that are likely to be of particular interest to students of health care administration . Listed below are a few of these. In no way is this list intended to be exhaustive but simply to suggest the range of research questions that emerge when one takes complexity science seriously . (1) How can we maintain trust in health care organizations when the fundamental behaviors of the organization itself are unpredictable? (2) What patterns of interactions among health care professionals is most likely to result in positive self-organization?



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(3) How can health care managers make sense of the constant change implied by complexity science? (4) What are the barriers to rich connections among agents in health care organizations and how can these barriers be reduced? (5) How can health care organizations, which by their very nature want to be high reliability organizations, manage highly uncertain emergent properties in highly reliable ways? (6) What is the appropriate level of interconnections for a well-functioning health care organization? (7) Can stakeholder analysis be used to shed light on the relevant agent population of a health care organization as a CAS? (8) What are the key sources of surprise when one examines health care organizations as CASs?

CONCLUSIONS Issues in the administration of health care are becoming more and more difficult . Traditional views of organizational analysis often seem to have run their course and new ways of thinking about health care systems are constantly being sought. Complexity science is offering new ways of thinking about natural phenomenon as well as artificial systems . Increases in computer power and new computational techniques have opened the door to a richer study of all kinds of systems from genetic to political to economic . These approaches can enrich our understanding of health care organizations as we realize that they are complex adaptive systems and that they share characteristics with other complex adaptive systems . In particular, understanding the agent-based nature of systems, the role of interconnections and the self-organizing, emergent and coevolving dynamics of complex adaptive systems can lead to new insights . We have suggested five specific managerial strategies that seem to rise from complexity science . They are, making sense, remembering (and forgetting) history, thinking about the future, dealing with surprise and taking action . When complexity science is taken seriously, these managerial strategies become the focus of attention . One must offer a word of caution . There is to date no well-developed theory of the complex (Casti, 1997 ; Anderson, 1999 ; Cohen, 1999) . We are just beginning to scratch the surface of the study of complex adaptive systems and research methods are in their infancy . Managerial inferences from current information on general characteristics of complex adaptive systems are coarse at best but they do represent a new point of view that deserves serious attention as we attempt to unravel the nature of health care systems (Begun, 1994) .



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INTEGRATION AS NETWORKS AND SYSTEMS : A STRATEGIC STAKEHOLDER ANALYSIS Grant T. Savage and Alison M . Roboski ABSTRACT Vertical and horizontal integration has transformed the organization and delivery of health services, with hundreds of systems or networks providing a range of services to regional populations by the late 1990s . The advantages and disadvantages of vertical integration are well known in other industries, with most strategists suggesting that it is inherently less competitive than virtual and other arrangements . This paper explores the advantages of conjoining integrated delivery systems (IDSs) with integrated delivery networks (IDNs) . An historical overview of health delivery organization integration illustrates how three external forces - managed care penetration and competitiveness, legislative and reform activity, and anti-trust issues - have determined the various forms of integrated delivery organizations (IDOs) . Empirical research comparing the financial performance of hospitals in system versus network organizations generally favors systems over networks. A strategic stakeholder analysis of both IDN and IDS forms of organizations identifies key stakeholders and their interests ; classifies the relationships of these stakeholders with the IDO ; and assesses the extent to which the array of stakeholder relationships create a benevolent or hostile environment for the IDO . This strategic Advances in Health Care Management, Volume 2, pages 37-62 . Copyright 2001 by Elsevier Science Ltd . All rights of reproduction in any form reserved . ISBN: 0-7623-0802-8

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analysis indicates that networks have more benevolent stakeholder relationships than systems . We discuss the environmental conditions favoring, and the managerial challenges facing, IDOs that embody both systems and networks.

INTRODUCTION An integrated delivery organization (IDO), either in the form of a network or system, may be defined as "an organization that provides or arranges to provide a coordinated continuum of services to a defined population and is willing to be held clinically and fiscally accountable for the outcomes and the health status of the population served" (Shortell, Gillies, Anderson, Erickson & Mitchell, 1996, 7). During the, 1990s, IDOs had remarkable growth . The Managed Care Information Center listed over 850 systems throughout the U .S . in 1999, while the American Hospital Association (AHA) reported in 1999 about 2,238 community hospitals belonged to a health system and 1,310 hospitals belonged to a health network (AHA, 2001) . 1 Policy experts and researchers view IDOs as decreasing health service fragmentation (Ginsburg, 1997 ; Savage et al ., 2000) and better meeting the healthcare needs of targeted populations (Berman, 1999 ; Shortell et al ., 1996 ; Tompkins et al ., 1999) . They also agree that fiscal and clinical accountability is shifting toward healthcare providers (Bazzoli, Chan, Shortell & D'Aunno, 2000a ; Bazzoli, Dynan, Burns & Lindrooth, 2000b ; Bazzoli, Shortell, Dubbs, Chan & Kralovec, 1999b ; Boult & Pacala, 1999 ; Perkins, 1999) . With this shift, IDOs have been urged to focus on the wellness of communities rather than curing individual illnesses (Toomey, 2000 ; Weil, 2000b) . Organizational forms for delivery depend upon the breadth, depth, and alignment of health services (Bazzoli et al ., 1999b), as well as the extent to which IDOs are integrated functionally, clinically, and financially (Shortell et al ., 1996) . On the one hand, recent studies indicate that healthcare providers may be pursuing integration in order to increase their bargaining power with managed care organizations (Bazzoli et al., 2000b ; Bums, Bazzoli, Dynan & Wholey, 2000 ; Kohn, 2000; Okunade & Aronoff, 2000) . On the other hand, they may see integration as a means to add value to patient services (Morrisey, Alexander, Burns & Johnson, 1999 ; Thompson, Sirio & Holt, 2000 ; Weil, 2000a) . Adding value occurs when a fixed quality unit of service is delivered at a lower cost, or when a fixed cost unit of service is delivered with higher quality . Value is a major concern to both internal and external stakeholders of IDOs (Curtright, Stolp-Smith & Edell, 2000) . Both types of stakeholders seek



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advantages from different IDO formations . From an ideal type perspective, IDOs may opt to organize in two different ways : (1) develop a system under unitary ownership, or (2) create a network through strategic alliances with multiple ownership . The Veterans Affairs (VA) Healthcare System exemplifies the strategic alliances inherent in a healthcare network . These alliances allowed better access to scarce resources (Carey, 2000) ; centralized group purchasing power ; provided functional integration in quality management (Kizer, Demakis & Feussner, 2000), information technology (Charles, 2000), and research (Hynes, 2000) ; and reduced service duplication (Biro, 1999 ; Carey, 2000). In addition to these amenities, the 22 VA networks, now referred to as Veterans Integrated Service Networks (VISNs), allow autonomy that strengthens local care delivery . An individual VISN may form stakeholder alliances with non-veteran local stakeholders to improve referral systems, clinical pathways, and outcomes assessment reviews (Halverson, Kaluzny & Young, 1997) . As a result, the VA has been able to rapidly develop its preventive and primary care delivery by forming strategic alliances with other providers (Beason, 2000 ; Robinson, 2000 ; Therien, 2000) . In contrast, Intermountain Health Care is a recognized industry leader in vertically integrating within a multi-hospital system (Bellandi, 2000 ; Lisonbee, 2000) . Like the Veterans Administration, IHC has had a long tradition of non-profit, hospital-based care (Wirthlin, 1990) . This tradition was transformed through strategic visioning and management during the early 1990s (Parker, 1990) . IHC was an early innovator, using smaller hospitals as primary and secondary care centers (Wirthlin, 1990) that feed into tertiary care facilities, providing opportunities for specialized care of pediatric patients (Smith, Price, Stevens, Masters & Young, 1999) . Its centralized operations (Welch, 1999), administration, and information technology infrastructure (Gardner, Pryor & Warner, 1999 ; Peck et al ., 1997) allow IHC to dominate managed care negotiations (1997) . Moreover, IHC has been a leader in viewing both continuous quality improvement (Haug, Farrell, Frear, Blatter & Frederick, 1997 ; Richards, 1994 ; Shaha, 1995 ; Shaha & Bush, 1996) and outcomes-based research (Thompson et al ., 2000) as a strategic investment . These two exemplars combine features of both systems and networks . The VA Health System is the largest system in the U .S . Its movement toward network-based relationships has provided it with a means to address inherent weaknesses while expanding services and improving outcomes (Biro, 1999) . At the same time, IHC coalesced into a system by drawing upon a network of preexisting affiliations (Parker, 1990; Wirthlin, 1990), many of which still remain independent, strategic allies (Lisonbee, 2000) . As these two cases



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illustrate, it may be advantageous for IDOs to merge both system and network forms. Exploring this thesis is the purpose of this paper . The manuscript is divided into three sections . Section 1 provides an historical and evolutionary overview of health delivery organizations integration . It addresses how three external forces - managed care penetration and competitiveness, legislative and reform activity, and anti-trust issues - have determined the organizational forms of IDOs . The section concludes by comparing the financial performance of hospitals in system versus network organizations . Section 2 presents a strategic stakeholder analysis of both IDN and IDS forms of organizations . This analysis identifies key stakeholders and their interests ; classifies the relationships of these stakeholders with the IDO ; and assesses the extent to which the array of stakeholder relationships create a benevolent or hostile environment for the IDO . Section 3 speculates on the trend toward merged forms . We discuss the environmental conditions favoring, and the managerial challenges facing, IDOs that embody both systems and networks, and the implications both for health care executives and policy makers .

AN OVERVIEW OF INTEGRATED DELIVERY ORGANIZATIONS Vertical integration via unitary or multiple ownership may assist health care organizations (HCOs) in achieving major efficiencies . For example, vertical integration may provide a seamless continuum of care, leading to disease management and patient outcome benchmarks that increase the overall wellness of a population (Berman, 1999 ; Boult et al., 1999 ; Lynch, Forman, Graff & Gunby, 2000; Toomey, 2000) and reduce acute care admissions (Baseman & Truxell, 2000) . Via unitary ownership, integrated delivery systems (IDSs) may create economies of scale and scope for applying technologies, deploying human resources, and delivering health services (Ginsburg, 1997 ; Weil, 2000a) . In comparison, integrated delivery networks (IDNs) are IDOs with two or more owners linked through contractual agreements and strategic alliances (Bazzoli et al ., 2000a) . They exhibit fluidity in membership and rapid response to market changes, with key internal stakeholders experiencing high levels of economic mobility and autonomy within the IDNs (Bazzoli et al ., 2000a ; Bazzoli et al ., 1999b ; Bums, 1999) . There is also some evidence to suggest that integrated delivery networks may enhance service provider innovations (Bogue & Hall, 1997a; Bogue, Antia, Harmata & Hall, 1997b) . From an evolutionary perspective, health care organizations may be clustered into four distinct forms or ideal types : cottage, multi-institutional system with



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horizontal integration, multi-institutional system with vertical integration, and community healthcare management system with clinical integration (Charns, 1997) . Additionally, each ideal type may be delineated from the historical perspective of legislative and regulatory changes within the health industry . Although HCOs may be typified by any of the first three types, we focus on multi-institutional systems (or networks) with horizontal and/or vertical integration. Moreover, arguably, the continual evolution of each type seems to have clinical integration as its ultimate goal . Cottage Forms of Organization The cottage type of HCO consists of freestanding hospitals and independent physicians without any formalized lines of group decision-making . In other words, each affiliate manages its own affairs to maximize its own goals (Chams, 1997) . Historically, this type of HCO arose because providers were reimbursed on a cost-plus basis via fee-for-service payments (Robinson, 1999) . The independent hospital is there to serve the needs of the community, and it competes against other hospitals on the basis of reputation and attractiveness to physicians . For this cottage type of HCO, the physicians' role in hospital strategic decision making is not central to its operation nor is the influence of other stakeholders (Chams, 1997 ; Lister, 2000) . Multi-Institutional Organizations with Horizontal Integration Multi-institutional systems made use of horizontal integration techniques in response, first, to the cost containment pressures during the mid-1970s and, second, to the prospective payment system imposed by Medicare in the early 1980s (Robinson, 1999) . Hospitals could no longer prosper with the inefficiencies and duplication of services inherent in their organizations . The multi-institutional system pools interdependence with only minimal functional integration of system-wide rules, procedures, and reporting practices that assist the hospitals' financial standing . Otherwise, the institutions' operation is no different than the cottage type institution . This minimal level of functional integration limits further attempts at clinical integration since financial and clinical issues are separated; moreover, clinical integration is hampered by the lack of a formalized physician organization (Charns, 1997) . However, further clinical integration can be achieved if this horizontal integration assumes a disease rather than institutional focus . One way that has emerged is to create a focused factory (Herzlinger, 1998).



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Focused health care factories exhibit high levels of horizontal integration inherent in multi-institutional systems, but have varied levels of centralization, and low levels of differentiation (Bazzoli et al., 2000a) . This organizational form changes the provider-based structure to a disease-based structure . Supporting this structural change are studies showing that most medical expenditures are spent on a relatively small portion of the population at high risk for chronic diseases and disabilities (Baseman et al ., 2000; Lynch et al ., 2000 ; Tompkins et al., 1999) . The focused factory relies on a multidisciplinary team of healthcare providers who coordinate their services (Herzlinger, 1998) . The multidisciplinary sets of care providers address complex medical problems such as diabetes management . As a team, the care provided is subject to those professionals who focus on this one aspect of the healthcare disease continuum . They become experts in that field, thus encouraging continuous quality improvement of the disease management process (Joshi & Bernard, 1999) . Multi-Institutional Forms with Vertical Integration In response to greater cost control and competitiveness from government programs, i.e. Medicare, and from employers and insurance companies, hospitals began the process of vertical integration because the pooled interdependence of horizontal integration limited cost savings (Nooteboom, 1999a ; Robinson, 1999). This type of integration began to emerge as a trend during the mid-1980s, and it is characterized by greater physician collaboration via medical group practices and through hospital governance structures (Charns, 1997) . Integrated delivery organizations have been and are experimenting with system, network, and hybrid formations in hopes of developing sustainable competitive advantages (Engert & Emery, 1999 ; Etchen & Bouton, 2000 ; Ginsburg, 1997 ; Kohn, 2000 ; Savage et al ., 2000) . Recent studies have found that IDOs show high levels of vertical integration but vary in terms of their centralization and differentiation of hospital services, medical group practices, and insurance products (Bazzoli et al ., 1999b). At the same time, the health care market is providing organizational rewards to those who find cost efficient practice measures, rather than cost inhibitive ones (Robinson, 1999) . External forces shaping IDOs include managed care penetration and competitiveness, legislative and reform activity, and antitrust measures . MCO Penetration and Competitiveness . Recent theorizing (Ginsburg, 1997) and empirical research (Bazzoli et al ., 2000b ; Morrisey et al ., 1999 ; Okunade et al ., 2000) suggests that the market structures for managed care and health care services affect IDO formation.



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Findings from a series of studies by Burns and his colleagues indicate that the intensity of MCO competition has a greater impact on the structure of an IDO than the degree of managed care penetration . Within markets with high degrees of MCO penetration, IDS formation is more likely in highly competitive markets with multiple MCOs than in less competitive markets with a few dominant MCOs (Burns, 1998 ; Bums et al ., 2000) . A straightforward interpretation of these results is that IDS formation serves to increase health care providers' bargaining power when contracting in a markets with multiple MCOs, especially as the MCOs start to consolidate (Burns et al ., 2000) . As a large entity encompassing a continuum from primary through tertiary to post-acute care, an IDS may negotiate greater reimbursement for certain provider services and increase its profitability (Greenberg, 1998) . While IDNs also attempt to negotiate for a wide range of services with MCOs, IDSs have an advantage in the transfer pricing - internal subsidizing - of their bundle of services (Safran et al ., 2000) . For example, IDSs can break even in areas such as primary care, i .e . treat the unit as a loss leader, while seeking profits in higher margin areas such as tertiary care (Christianson, Wellever, Radcliff & Knutson, 2000). The primary care organizations in an IDN, in contrast, cannot remain in business without obtaining a profit . On the one hand, it is difficult for an IDN to compete with an IDS for MCO contracts across a range of health services . In other words, to match the internal subsidizing advantage of the IDS, the IDN's primary care units must be more efficient than the subsidized (loss leader) units within the IDS . On the other hand, there is some evidence that IDSs resist lowering costs enough to thwart competition from highly efficient IDNs (Bazzoli et al ., 2000b), especially if the IDS owns a managed care product or health plan (Bums & Thorpe, 2001 ; Engert et al ., 1999 ; Weil, 2000a) . Legislative and Reform Activity

At the same time, legislative and reform activities are imposing fiscal concerns on all health care providers . The trend towards government imposed cost reductions on health providers is manifested in such legislation as the Health Insurance Portability and Accountability Act (HIPAA) of 1996 and the Balanced Budget Act (BBA) of 1997 . Since the adverse impact of the BBA of 1997 on health providers has been acknowledged and somewhat mitigated by the Balanced Budget Refinement Act of, 1999 and the Benefit Improvement and Protection Act of 2000, we focus on HIPAA . The HIPAA is a wide-ranging piece of legislation that has had a profound impact on fraud and abuse detection and prevention (2000a, b ; Tomes, 1998), electronic communication standards (Anspaugh, 1998), and health information



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security (Hellerstein, 1999). As a result of the HIPAA fraud and abuse regulations, health care providers have had to develop compliance plans for Medicare and Medicaid (Tomes, 1998), imposing new costs on IDOs and their partners (Coles & Babb, 1999 ; Saum & Byassee, 2000) . The administrative simplification portion of the HIPAA, involving electronic communication standards and health information security, also impose substantial costs . On one hand, electronic standards should drastically reduce the cost of paper-driven transactions, improve accuracy, speed the process, and increases the quality of patient services . On the other hand, the initial cost of compliance with these standards will be high for both managed care organizations and health care providers (Moynihan & McLure, 2000 ; Shinkman & Gardner, 2000 ; Tennant, 1999). The Health Care Financing Administration and the Washington, D .C .-based National Committee for Quality Assurance (NCQA) regulate both provider and health plan quality . Their shared goal is to expand care specific data elements of the Health Plan Employer Data and Information Set (HEDIS) . In addition, consortiums of public and private purchasers, for example, the Oregon-based Foundation for Accountability, are joining government actions to release performance measurement sets requiring HCOs to gather and disseminate specific quality-driven data . Moreover, the Institute of Medicine released a report to the nation in December, 1999, claiming that about 100,000 people per year die due to preventable medical errors . These concerns have only increased IDS stakeholders' urgency about health service quality and the accountability of these organizations (Griffith, 2000) . Public disclosure, government reporting, and clinical standardization comes at a cost for both MCOs (Epstein, 1999) and HCOs (Hosler & Nadle, 2000) . In comparison to an IDN, an IDS can obtain economies of scale through administrative centralization and access to capital . Both for physician practices and hospitals, centralization within an IDS decreases the costs associated with governmental legislation, permitting consolidated reporting and standardization (Conrad, Koos, Harney & Haase, 1999), as well as information technology enhancements (Neumann, Blouin & Byrne, 1999) . Antitrust Measures As IDSs integrate in response to regulatory and market pressures, they must carefully navigate the shoals of antitrust stipulations . Vertical integration and provider consolidation is a means of achieving economic efficiencies ; however, the Federal Trade Commission and Department of Justice are more and more likely to view such actions as anti-competitive and monopolistic in nature (Gifford, 1999). Emerging IDSs fit the definition of a monopoly in the following manner : their market share increases, they have superior technology, they have larger size relative to their competitors, they create barriers to entry, their pricing



Integration as Networks and Systems

45

trends change, and they decrease diversity in the marketplace (Heightchew, 1997) . As a monopoly, an IDS would experience fewer constraints from pricing pressures, thus allowing an increase in patient care prices to third party payers (Savage, Taylor, Rotarius & Buesseler, 1997) . In addition, the monopolistic IDS, in contracting or competing with MCOs, may exhibit unfair advantages in negotiations (Greenberg, 1998) .2 Blocking further the growth of some systems and networks are the Stark Laws (I and II) and the Health Care Financing Administration's interpretation of these regulations (Dubow et al ., 1998) . Existing IDSs that have already passed antitrust scrutiny are at an advantage versus IDNs in securing "safe harbor" under both Stark I and II (Johnson, Niederman, Bowman & McCullough, 1998) . Community Healthcare Management Systems The most extensive form of vertical integration is the community healthcare management system that emphasizes clinical integration (Charms, 1997) . Although IDOs may state that they are seeking to achieve this status (Griffith, 2000), few have achieved this level of integration (DeBusk, West, Miller & Taylor, 1999 ; Engert et al ., 1999 ; Weil, 2000a) . This organizational type coordinates the care to any given person over time, and emphasizes the aggregation of this coordinated care to a population (Charms, 1997) . This emphasis is consistent with the trend toward greater accountability of healthcare providers and health plans (Bazzoli et al ., 2000a ; Christianson et al ., 2000; Shortell et al ., 1996) . The key factors that determine the extent of clinical integration include development of physician-system collaboration (Bazzoli et al., 2000b ; Bums et al ., 2000 ; Morrisey et al ., 1999), ambulatory and preventive services paradigm shift (Beason, 2000 ; Berman, 1999 ; Harvey & DePue, 1997b), internal care management strategies (Curtright et al ., 2000 ; DeBusk et al ., 1999 ; Welch, 1999), and a greater integration of financial management and strategic planning (Benoff & Harris, 2000 ; Campobasso, 2000a, b ; Charms, 1997) . Ideally, this organizational form exhibits high levels of integration and differentiation of physician services and insurance products, as well as highly differentiated hospital services, and variable levels of centralization (Bazzoli et al ., 1999b ; Whitelaw & Warden, 1999) . Performance Comparisons among IDS and IDN Forms Bazzoli and her colleagues have developed a taxonomy for IDOs based on the level of their organizational differentiation, centralization, and integration (Bazzoli et al ., 1999b) . IDOs exhibit a range of both contractual (network) and



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GRANT T. SAVAGE AND ALISON M . ROBOSKI

ownership-based (system) integration . For example, IDO-based physicians may achieve economic integration ranging from loosely to tightly coupled (e.g . salary or contractual arrangements) within either , an IDS or an IDN (Bazzoli et al ., 2000a ; Bazzoli et al ., 1999b ; Burns, 1999) . A number of studies indicate that this variation occurs as a response to environmental pressures from managed care organizations, other third-party payers, and competing provider organizations (Bazzoli et al., 2000b ; Burns et al ., 2000 ; Byrne & Ashton, 1999 ; Kohn, 2000 ; Morrisey et al ., 1999 ; Nauenberg, Brewer, Basu, Bliss & Osborne, 1999). Studies by Bazzoli and her colleagues have found that hospitals in IDSs generally have better financial performance than hospitals in IDNs (Bazzoli, Chan & Shortell, 1999a ; Bazzoli et al ., 2000a) . On the one hand, hospitals in highly centralized IDNs had better financial performance than those belonging to more decentralized IDNs . On the other hand, hospitals in moderately centralized IDSs performed better than highly centralized IDSs . Finally, hospitals in IDNs or IDSs with little differentiation or centralization experienced the poorest financial performance (Bazzoli et al ., 2000a) . The lower financial performance of hospitals in highly centralized IDSs may be attributed to reduced market response flexibility, high administrative operating costs, and diminished incentives for key internal stakeholders (Byrne et al ., 1999 ; Weil, 2000a) . Nonetheless, hospitals in IDSs tend to be more leveraged than IDNs, with more current physical plants and infrastructures (Bazzoli et al., 2000a) . To summarize, IDOs have developed in response to market and regulatory pressures from managed care organizations, accrediting bodies, and federal agencies . Both network and system approaches to IDOs are evident, but hospitals in systems with moderate centralization have had the best financial outcomes . Clearly, there are other ways to assess the performance of systems and networks . One fairly comprehensive alternative is to examine the degree of stakeholder support for an organizational form . Stakeholder theory (Freeman, 1984) - or thinking (Nasi, 1995) - focuses on describing and understanding the relationships between business organizations and society (Carroll, 1994) . Stakeholder management attempts to acquire knowledge about stakeholder interests so organizations can anticipate and handle stakeholder actions in a way that satisfies the needs of the organization and the claims of the stakeholders . A primary tenet of stakeholder theory is that an organization cannot continue its existence unless it satisfies the needs of its stakeholders in the long run (Clarkson, 1995 ; Donaldson & Preston, 1995) . This stakeholder approach is explored in the next section .



Integration as Networks and Systems

47

A STRATEGIC STAKEHOLDER ANALYSIS Understanding the interests that key stakeholders have in either the system or network form of integration provides yet another lens for discerning their advantages and disadvantages (Fottler, Savage & Blair, 2000) . From a strategic stakeholder management perspective, IDOs should adopt organizational forms that benefit, or do the least harm, to their key stakeholders' interests (Goodpaster, 1991 ; Harrison & Freeman, 1999 ; Savage et al ., 2000 ; Savage et al ., 1997) . In the following discussion, we conduct a strategic stakeholder analysis by : (1) Identifying key stakeholders and their interests (Agle, Mitchell & Sonnenfeld, 1999; Fottler, Blair, Whitehead, Laus & Savage, 1989; Mitchell, Agle & Wood, 1997) ; (2) Classifying the relationships of these stakeholders with the organization (Blair & Fouler, 1990 ; Savage, Nix, Whitehead & Blair, 1991) ; and (3) Assessing the extent to which the array of stakeholder relationships creates a beneficial or hostile environment for the organization (Savage et al ., 2000; Whitehead, Blair, Smith, Nix & Savage, 1989) . Identifying Key Stakeholders and Their Interests

The trend toward integrated delivery organizations affects internal, interface, and external stakeholders (Savage et al ., 1991). Embodying an IDO are its internal and interface stakeholders . For example, internal stakeholders include affiliated hospitals, affiliated medical group practices and physicians, and affiliated health plans (Savage et al ., 1997) . Interface stakeholders, which have stakes in both the IDO and another organization, include physician, nursing and other health service employee unions, as well as governing boards for the IDO (Savage et al ., 1997) . While both internal and interface stakeholders hold a general interest in the profitable operation of the IDO, their major concern will be whether the IDO's strategic outcomes are congruent with the stakeholders' primary and secondary goals . External stakeholders for IDOs include the consumer as advocate, patient, and taxpayer ; employers as third-party payers ; state and federal governments as purchaser, regulator, and legislator ; durable medical equipment, medical supply companies and pharmaceutical companies ; and local communities (Savage et al., 2000; Savage et al., 1997) . Typically, external stakeholders purchasing from IDOs want health care services that are accessible, affordable,



48

GRANT T. SAVAGE AND ALISON M . ROBOSKI

and of high quality ; those stakeholders that are regulating IDOs want accountability ; and those stakeholders supplying IDOs want competitive market forces (Griffith, 2000 ; Savage et al., 1997) . Table 1 provides a more detailed breakout of key stakeholders for IDOs, specifying the nature of their relationship, the resources they offer, and their primary and secondary interests . Classifying Stakeholder Relationships In addition to their institutional relationship with the IDO, stakeholders can also be classified according to their potential to cooperate with or threaten an organization . On one hand, the potential to cooperate represents the level of interdependence between the stakeholder and the DO, as well as the stakeholder's capacity to expand this interdependence . On the other hand, the ability to threaten captures the stakeholder's relative power and its relevance to the IDO . For this analysis, we use an established diagnostic typology (Blair et al ., 1990; Savage et al., 1991) and modify it so that it classifies stakeholder relationships into four types based on these two dimensions . 3 Supportive stakeholder relationships are high on potential for cooperation but low on threat . Non-supportive stakeholder relationships have high potential to threaten but low potential for cooperation with the IDO . Marginal stakeholder relationships are neither threatening nor cooperative . The last type of stakeholder relationship, a mixed blessing, is the most challenging for DOs . These stakeholder relationships have high potential for both cooperation and threat . Figure 1 shows key stakeholders' potential to cooperate with or threaten an IDN, while Fig . 2 displays their potential to cooperate with or threaten an IDS . Assessing the Array of Stakeholder Relationships The array of stakeholder relationships faced by integrated networks and systems vary most dramatically along the dimension of potential to cooperate, resulting in IDSs facing more hostile environments than IDNs . The specific configurations of stakeholder relationships for both IDNs and IDSs are discussed below . Key Stakeholder Relationships for an IDN As illustrated in Fig 1, IDNs deal with a fairly benevolent array of stakeholder relationships, with most stakeholders relationships classified as either supportive or mixed blessing. The consumer as patient and taxpayer, consumer advocacy groups, the local community, affiliated medical group practices, aligned hospitals, and employers are all likely to have supportive relationships with an IDN . These stakeholders can also influence the large number of mixed blessing

Integration as Networks and Systems

Table 1 .

49

Key Stakeholders for Integrated Delivery Organizations : Relationships, Resources, and Interests .

EXTERNAL STAKEHOLDERS

Nature of Relationship

Resource Offered

Primary Interest

Secondary Interest

Consumer Advocacy Groups

Tax Payers/ Voters

Legitimacy

Cost/ Access

Quality

Consumers

Patients/ Payers

Purchase Compensation

Access Quality

Quality Cost

Durable Medical Equipment & Medical Supply Companies

Suppliers

Equipment Supplies

Profit

Market Share

Employers & Governments

Third Party Payers

Compensation

Cost

Quality

Government : State & Federal

Legislators/ Regulators

Institutional Framework

Access Cost

Quality Quality

Local Communities

Consumers/ Payers

Legitimacy Compensation

Access Cost

Quality Quality

Pharmaceutical Companies

Suppliers

Pharmaceutical Supplies

Profit

Market Share

Unaffiliated Managed Care Organizations

Brokers

Contracted Compensation

Cost

Quality

Unaffiliated Physicians & Medical Group Practices

Competitor/ Contractors

Health Services

Profit

Market Share

Unaligned Hospitals: Acute & Long Term

Competitors/ Contractors

Health Services

Market Share

Profit

INTERFACE STAKEHOLDERS Nursing & Healthcare Professional Unions

Employment Contract

Labor & Knowledge

Salary

Benefits

Physician Unions

Employment Contract

Labor & Knowledge

Salary

Autonomy

INTERNAL STAKEHOLDERS Affiliated Managed Care Organizations

Partner/ Brokers

Payer Contracts

Shared Profit

Sustained Relationship

Affiliated Physicians & Medical Group Practices

Partners

Health Services

Shared Profit

Sustained Relationship

Aligned Hospitals : Acute & Long Term

Partners

Health Services

Shared Profit

Sustained Relationship

GRANT T. SAVAGE AND ALISON M . ROBOSKI

50

StakehoMar's Potential to Threaten IDN Hi h Affiliated MCO Government as Legislator/Purchaser/Regulator Nursing &

High

Stakeholder's Potential to

Low Affiliated Physicians &

Medical Group Practices Aligned Hospitals

HC Professional Unions

Consumers

Physician Unions

Consumer Advocacy Groups

Unaffiliated Physicians & Medical Group Practices

Employers

Unaligned Hospitals

Local Community

Mixed Blessing Stakeholds s

Cooperate

Supportive Staksholdsrs

with IDN DME & Other Suppliers

Low

Pharmaceutical Suppliers

Unaffiliated MCOs

Non-supportive Stakeholders

Fig 1 .

Marginal Stakslmidsrs

Stakeholder Potential to Cooperate with or Threaten IDN .

stakeholders with relationships high in potential both to cooperate with and threaten the IDN . For example, supportive stakeholders may lobby and otherwise influence the government as regulator, legislator, and purchaser to cooperate with IDNs. Similarly, while unaligned hospitals and unaffiliated medical group practices may threaten the IDN through direct competition, they also have high potential to cooperate through strategic alliances with the IDN . Stakeholders with non-supportive relationships with the IDN (low potential to cooperate with but high potential to threaten) include unaffiliated MCOs, durable medical equipment and medical suppliers, and pharmaceutical companies . MCOs attempt to dictate reimbursement rates and access to health care providers . The pharmaceutical suppliers, as large consolidated entities, exert their market power as both large suppliers and by convincing consumers to demand their products directly from physicians, thus implementing a "pull strategy ." In addition, IDNs lose economies of scale if they cannot enter into consolidated purchasing agreements, a pitfall of more decentralized

Integration as Networks and Systems

51

Stakeholdees Potential to Threaten IDS High

Affiliated MCO

Low

Consumers Consumer Advocacy Groups Employers

High

Stakeholder's Potential to Cooperate with IDS

Government as Purchaser Local Community Nursing & HC Professional Unions

Affiliated Physicians & Medical Group Practices Aligned Hospitals

Physician Unions

Mixed Blessing Stakeholders Government as Legislator/Regulator

Supportive Stakeholders

DME & Other Suppliers Low

Pharmaceutical Suppliers Unaffiliated MCOs Unaffiliated Physicians & Medical Group Practices Unaligned Hospitals Non-supportive Stakeholders

Fig 2 .

Marginal Stakeholders

Stakeholder Potential to Cooperate with or Threaten IDS .

organizations (Nooteboom, 1999a) . DMEs and pharmaceutical suppliers do not intend to cooperate with IDNs . They are gaining greater market leverage with consolidation, a simple market strategy (Savage et al ., 2000) . Key Stakeholder Relationships for an IDS

Figure 2 shows that an IDS's supportive stakeholder relationships typically are with affiliated physicians and medical group practices and aligned hospitals . Otherwise, IDSs face a fairly hostile environment due to the large number of internal and external stakeholders who have mixed blessing or nonsupportive relationships with the IDS . Stakeholders with mixed blessing relationships include the consumer as patient and taxpayer, consumer advocacy groups, employers, the local community, unaffiliated medical group practices, unaligned hospitals, the government as purchaser, affiliated MCOs, and physician, nursing and other health service employees' unions .



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GRANT T. SAVAGE AND ALISON M . ROBOSKI

On one hand, the state and federal government as a purchaser may potentially cooperate due to the efficiencies of centralized access to a small number of large systems. On the other hand, as a purchaser, state and federal governments historically have exerted enormous financial pressures in the form of substandard reimbursements . Individual consumers and consumer advocacy groups are limited as to their degree of access and choice through cooperation with an IDS, and as taxpayers, may not benefit from a franchise tax . These limits increase their potential to threaten the system in order to increase the quality of care, access, and choice provided . Employers may not use the IDS in their employee benefits packages and threaten the IDS by contracting elsewhere . Local communities are subject to the unified thought processes that may occur in an IDS, which slows market responsiveness and change . They can threaten by lobbying for governmental regulation over IDS entities, thus minimizing governmental cooperation as purchaser, legislator, or regulator. Moreover, while affiliated MCOs may cooperate based on their contracts with the IDS ; they can dictate reimbursement rates and access, which threatens the IDS's profitability . Similar to IDNs, unionized physicians, nursing and health service workers have high potential to cooperate with and to threaten IDSs. However, when dealing with highly consolidated systems, such as the IDSs, any union action will have a greater effect than it might on more decentralized networks of providers . As a stakeholder with a non-supportive relationship, the government as regulator has a high potential to pursue antitrust investigations as IDSs increasingly approach the definition of a monopoly (Heightchew, 1997) . Therefore, the state and federal governments have the potential to threaten IDSs based solely on these systems' organizational structure, and a low potential to cooperate with IDSs . Similarly, unaffiliated medical group practices and MCOs and unaligned hospitals compete directly with IDSs, and they have a low potential to cooperate with the IDSs . Their relationships are also non-supportive .

TOWARD MIXED SYSTEM AND NETWORK FORMS The strategic stakeholder analysis highlights the potential difficulties IDSs will face attempting to manage numerous mixed-blessing and nonsupportive stakeholder relationships . Conversely, while IDNs face a more benevolent set of stakeholder relationships, with fewer nonsupportive and more supportive stakeholders, these networks have difficulty developing economies of scale and accessing capital . Clearly, both forms of IDOs need to evaluate their internal strengths and weaknesses, external environment, and mission and goals to determine how, and whether, they can and should combine network and system



Integration as Networks and Systems

53

forms . If the mission and goals include forming an integrated delivery organization that has processes in place to facilitate full clinical integration, a mixed-form organizational design may be desirable. Three caveats follow . First, IDOs pursuing mixed-form integration need to understand the environmental conditions under which these two organizational forms are advantageous . Second, executives must recognize that each form of organization requires certain managerial competencies to be successful . And, third, combining these forms places extraordinary burdens on the top executive team . These points are further articulated by drawing upon relevant economic, organizational, and strategic theories of management . Environmental Conditions and Organizational Forms Two questions drive this discussion : (1) Under what conditions are network forms of integration advantageous?, and (2) Under what conditions are system forms of integration advantageous? There have been many recent discussions of the strategic pros and cons of networks (Ahuja, 2000 ; Anand & Khanna, 2000; Baum, Clabrese & Silverman, 2000 ; Doz, Oik & Ring, 2000; Gulati, Nohria & Zaheer, 2000 ; Inkpen, 2000 ; Kale, Singh & Perlmutter, 2000; Khanna, Gulati & Nohria, 2000) . However, perhaps the most intriguing appraisals given the above questions - focus on how networks enhance organizational learning and encourage innovation (Nooteboom, 1999a, b, 2000) . As argued earlier, IDOs may seek to integrate the delivery and contracting of health services in order to produce efficiencies through economies of scale and scope (Robinson, 1999) . There are difficulties in achieving such efficiencies, however, especially economies of scope when vertically integrating the valuechain across entities with very different core competencies (Nooteboom, 1999a) . Hospital-driven IDOs have had particular difficulty integrating both managed care organizations and medical group practices (Bums et al ., 2001 ; Kohn, 2000; Weil, 2000a) . One line of argument suggests that these difficulties arise from the IDOs' inability to transform tacit knowledge into documented knowledge that can be distributed across different divisions within the system form (Nooteboom, 1999a) . Similarly, given this line of argument, radical innovation occurs when there are novel combinations of tacit knowledge (Nooteboom, 1999a, b) . Such combinations are more likely to occur within loosely coupled networks than tightly coupled systems (Nooteboom, 1999b) . Moreover, transaction costs (Williamson, 1975) will be less when an IDO is involved in a network based on trust among partners . Trust-based network ties promote the exchange of superior information, make opportunism more costly, reduce the need for



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GRANT T. SAVAGE AND ALISON M . ROBOSKI

contracting of goods and services, and create value via improved inter-firm coordination (Gulati et al ., 2000) . However, network forms have problems competing if their innovations can be assimilated by systems that use generic technologies to achieve economies of scale (Nooteboom, 1999a, 2000) . There are at least two ways in which network dynamics can affect the competitive ability of the IDO, including "lock-in and lock-out effects" and "learning races" (Khanna, Gulati & Nohria, 1998) . Lock-in and lock-out effects occur because of specific stakeholder actions that form constraints for other stakeholders within the network . This can take place due to limited resources, alternate expectations, inter-firm loyalties, and firm power. Learning races occur when an IDO realizes that the benefits of information sharing outweigh continuance of the alliance with a key stakeholder . The faster entity then disbands the alliance and uses the information to its advantage at cost to the slower entity . These two factors can influence the degree of economic returns IDOs can exact from the network depending on their level of expertise with an alliance, thus the notion of "alliance capability" (Anand et al ., 2000) . Several propositions can be drawn from these observations . One, networks have the advantage of potentially producing radical innovations for delivering health care services . Two, these network advantages are most pronounced when the environment is dynamic and turbulent . Three, systems have the advantage of achieving economies scale through coordination when knowledge is explicit, i .e . documented . Four, these system advantages are most pronounced when the environment is stable and generic technologies can be applied . Five, given the ongoing turbulence within the health care industry in the U . S . and the need for innovation (Keating, 2000), IDOs that form federated structures (Nooteboom, 1999a) - i .e . mixed forms - may be best able to achieve both innovation and coordination . Managerial Competencies and Organizational Structures Recent research and theorizing suggests that IDSs' performance depends on managing polarities among key internal stakeholders (Bums, 1999 ; Savage et al ., 1997), while IDNs' performance relies on forming and managing strategic alliances (Anand et al ., 2000 ; Bogue et al ., 1997b ; Halverson et al., 1997) . The success of each organizational form also requires the strategic leveraging of local and regional market forces (Nooteboom, 2000 ; Robinson, 1999) . For example, disease management represents an emergent technique for strategically leveraging IDO capabilities . Combining these three sets of managerial competencies is necessary, arguably, for the success of mixed-form IDOs .



Integration as Networks and Systems

55

Polarity Management Three key elements provide the "glue" to manage internal stakeholder polarities within IDOs (Bums, 1999) . These include standardization, interpenetration, and culture . Standardization helps to make the functional relationships among physician practices, hospitals, and other entities within an IDS both predictable and efficient ; as such, it is a necessary precursor to integrating clinical services . Interpenetration is developed through matrix-style interdependence among the leaders and managers of the internal stakeholders comprising an IDS . In addition, a shared culture or strong linkage in terms of beliefs and values among differing cultures within an IDS stabilizes relationships among internal stakeholders and allows it to pursue its mission with fewer conflicts and miscues (Savage et al ., 1997) . Alliance Management For health care executives, there is evidence that creating value through alliance management, i .e. creating production efficiencies and reducing transaction costs, has a significant learning curve associated with it (Kiel, 2000 ; van Raak, Paulus, van Merode & Mur-Veeman, 1999) . Strategy management researchers assert that firms vary in their "alliance capability", i.e. ability to create value through relationships within a network of organizations (Anand et al ., 2000 ; Gulati et al ., 2000) . As organizations gain experience in developing and being successful in joint ventures (as compared to licensing agreements) they accumulate more value within and across the networked organizational entity (Anand et al ., 2000) . For example, gaining and maintaining an `alliance capability' clearly is necessary for developing a community care network (CCN) . A CCN is a community-wide partnership of health and social service providers, educators, government officials, business people, and community members that collaborate to improve the health and well being of a local communities (Bogue et al ., 1997a ; Bogue et al., 1997b) . This local community involvement is a way to influence healthcare delivery and services to better benefit the community itself . It also serves to educate the community in preventive and self-care management, as well as nurture and facilitate supportive stakeholder relationships . Disease Management To leverage market forces while facilitating clinical integration with both internal and external stakeholders, the IDO should develop an extensive disease management approach to care . Disease management can add value to consumers and payers by increasing perceived quality through increased patient satisfaction (Harvey et al ., 1997b), improving clinical quality and health outcomes (Joshi



56

GRANT T. SAVAGE AND ALISON M . ROBOSKI

et al., 1999), and decreasing costs (Baseman et al ., 2000) . Its foundation is based on quantitative data useful in developing standards for diverse populations . The four basic elements include disease modeling, patient segmentation and risk assessment, development of clinical protocols, and preventive medicine through wellness and self-care education (Harvey & DePue, 1997a; Harvey et al ., 1997b) . Most models of disease management assume that the DO is a tightly coupled system (Baseman et al ., 2000 ; Gunter, 1999 ; Joshi et al ., 1999) . However, there is growing recognition that coordination among health care providers, third-party payers, and intermediaries is the cornerstone for successful disease management (DeBusk et al., 1999 ; Tompkins et al ., 1999 ; Whitelaw et al ., 1999) . Mixed form IDOs may be particularly well positioned to gain competitive advantage through implementing disease management processes.

CONCLUSION As regulatory and technological change create turbulence in the health care industry, the mixed-form IDO seems best suited to create innovations while enhancing community access, profitability, and competitive sustainability . Nonetheless, the mixed-form IDO creates greater complexity for health care executives to manage since both a system and a network of alliances must be sustained. In developing and managing an IDO that contains both a core system under unitary ownership and a network of strategic allies, healthcare executives must learn to balance key internal stakeholder interests via the three elements of polarity management . At the same time, executives must also balance the complex strategic alliance relationships intrinsic to the networked aspect of the IDO . In addition, the mixed-form [DO must seek to leverage local and regional market forces by engaging in health service delivery innovations such as disease management. Most importantly, as the mixed-form IDO both nurtures network relationships and focuses on internal efficiencies, it becomes closer to achieving a community healthcare management focus (Charns, 1997), emphasizing both clinical integration and the establishment of a community care network (Bogue et al ., 1997a) . It also should better balance stakeholder interests so that the DDO benefits from multiple - internal, interface, and external - supportive stakeholders . The challenge for health care executives is both to concentrate on the vision of, and to master the management skills needed for, this complex and emergent organizational form .



Integration as Networks and Systems

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NOTES 1 . These two categories, as used by the AHA, overlap ; hospitals in a system may also be members of a network and vice versa . The AHA categorizes both multi-hospital and freestanding hospitals as systems so long as they own or lease at least three non-hospital, pre-acute (e .g . medical group practices) or post-acute (e .g . nursing home

or home health agencies) health care organizations, which account for at least 25% of the system . Networks, according to the AHA, include groups of hospitals, medical group practices, insurance companies, and/or community agencies that coordinate and deliver health care services to their communities . 2. There are several structural barriers to entry that aid in the formation of monopolistic power once systems have integrated . Hospital staff privileges are one such barrier . For example, if an incoming physician specialist is not granted privileges to the local IDS, that specialist cannot start a day practice wherein admitting privileges were required . The healthcare system is barring entry of such competition, forcing the specialist out of the relevant market area to practice . 3 . Strategic leadership for medical groups : Navigating your strategic web. San Francisco : Jossey-Bass.

REFERENCES Agle, B . R., Mitchell, R . K., & Sonnenfeld, J . A. (1999) . Who matters to CEOs? An investigation of stakeholder attributes and salience, corporate performance and CEO values . Academy of Management Journal, 42(5), 507-525 . AHA (2001) . Fast facts on U .S. hospitals. Hospital Statistics, Vol. 2001, AHA Resource Center, American Hospital Association . Ahuja, G . (2000). The duality of collaboration : inducements and opportunities in the formation of interfirm linkages. Strategic Management Journal, 21(3), 317-343 . Anand, B . N ., & Khanna, T. (2000) . Do firms learn to create value? The case of alliances . Strategic Management Journal, 21(3), 295-315 . Anspaugh, R . D. (1998) . Back to basics . Healthcare Financial Management, 52(2), 14 . Baseman, S ., & Truxell, R . (2000) . Developing an IDS-based disease-management program for the frail elderly. Healthcare Financial Management, 54(2), 33-36 . Baum, J . A. C ., Clabrese, T., & Silverman, B. S . (2000) . Don't go it alone : alliance network composition and start-ups' performance in Canadian biotechnology . Strategic Management Journal, 21(3), 267-294 . Bazzoli, G. J ., Chan, B ., & Shortell, S . M . (1999a) . Inter-organizational strategies in the health industry : Effects on hospital financial performance . Paper presented at the Academy of Management, Chicago, Illinois . Bazzoli, G. J ., Chan, B ., Shortell, S. M ., & D'Aunno, T. (2000a). The financial performance of hospitals belonging to health networks and systems . Inquiry, 37(3), 234-252 . Bazzoli, G . J ., Dynan, L ., Burns, L . R., & Lindrooth, R. (2000b) . Is provider capitation working? Effects on physician-hospital integration and costs of care . Medical Care, 38(3), 311-324 .



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UNDERSTANDING THE MEANING OF HEALTH CARE MANAGEMENT RESEARCH THROUGH THE USE OF A COGNITIVE MAPPING APPROACH Richard M. Shewchuk, Stephen J. O' Connor, Myron D . Fottler and Hanh Q . Trinh ABSTRACT While both health services and management research have been discussed in different literature streams in recent years, there has been no research on how scholars who conduct health care management research view the research process. How do they conceptualize it : what are the dominant themes? The present study is the first to examine the research process from the perspective of the health care management researcher . Focus group meetings were held during the Health Care Management Division's pre-conference workshop at the 1996 Academy of Management meeting . In these meetings, a nominal group technique method was employed to get participants to generate attributes that were personally salient in terms of what "research" meant to them . Thirty distinct attributes were eventually derived, and these were inscribed onto sets (decks) of thirty index cards .

Advances in Health Care Management, Volume 2, pages 63-90 . Copyright ® 2001 by Elsevier Science Ltd. All rights of reproduction in any form reserved . ISBN : 0-7623-0802-8 63



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Questionnaires were later distributed to 78 health management faculty members and doctoral students. In addition to completing the questionnaire, respondents were also asked to do a card-sort of the thirty research attributes to determine possible underlying dimensions and clusters. Analyzing the card-sorted data via multidimensional scaling and hierarchical cluster analysis resulted in the development of a cognitive map of what "research" means to health management researchers . This map consists of thirty attributes arranged across two dimensions and distributed among seven clusters . The clusters are referred to as ; (1) Theory/Relationships/Problems, (2) Analysis, (3) Research Infrastructure, (4) Emotional Outcomes, (5) Extrinsic Expectations, (6) Social Interaction/Self Concept, and (7) The Actualized Researcher. Implications for research orientation, collaboration, and career pathways are discussed .

INTRODUCTION For several years, there has been a ferment in management research regarding the research process . Where management researchers once prided themselves on following the natural science model of research, it has now become more respectable to be introspective about the research process and to be open to alternative approaches (Blair & Hunt, 1986) . Such introspection, however, raises questions about the underlying assumptions of the research methods used and the implications of those assumptions for common research endeavors . The work of Cummings and Frost (1985) was a milestone in the beginnings of a sociology of organizational and management research which systematically examined the research process itself as a legitimate field of study. This early introspective work served to sensitize scholars to various orientations, methodologies, and approaches to research . One's research orientation can be considered a stylistic framework that influences the way phenomena under investigation are interpreted and the manner in which research is conducted . A research orientation should not be interpreted strictly as personality dimensions, dogmatic assumptions, or conflicting research paradigms . Rather, one's personality, assumptions, or research paradigms may represent a dynamic unfolding complementary set of processes . Despite the importance and usefulness of health care management research, empirical efforts to understand the processes and orientations of such research have been limited . Instead, we have had admonitions to examine the process empirically and determine the effectiveness of various approaches, orientations, and methodologies .



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A CALL FOR A NEW UNDERSTANDING The present paper examines the research orientations of health care management scholars . Although we frequently see various definitions of "health services research" which include specification of areas needing further research, few studies have addressed how the research process actually is perceived by scholars . A recent monograph written by the Committee on Health Services Research formulated the following definition : Health services research is a multi-disciplinary field of inquiry, both basic and applied, that examines the use, costs, quality, accessibility, delivery, organization, financing, and outcomes of health-care services to increase knowledge and understanding of structure, processes, and effects of health services for individuals and populations (Field, Tranquada & Feasley, 1995, 3) .

The Committee went on to outline priority areas for future research including the organization and financing of health services ; practitioner, patient, and consumer behavior; and the health professions workforce . They also specified which institutions should do what in order to produce the quantity and quality of research needed by our society . While the definition and priority research areas are broad enough to include health care management researchers and what they should do, there has been no attempt to "get inside the mind" of health care management researchers to assess how they perceive the research process in a normative context . Scholars have also pointed out that an individual's research orientation may also be a function of the incentives or penalties of the institutional environment of which they are a part (Hunt & Blair, 1987) . If one management scholar is in a department where basic research published in academic journals is valued, while another is in a department where applied research published in practitioner journals is valued, these differences will undoubtedly impact the research orientations of these scholars (particularly those who choose to remain in their respective departments) (Gray & Phillips, 1995) . Hunt and Blair differentiate four archetypes of management scholars : (1) the "involved scholar" who contributes to both content and process in the field ; (2) the "distant scholar" who contributes only to the field's content ; (3) the "association loyalist" who contributes only to process activities ; and (4) the "local" who contributes to neither content nor process activities in the field . The research orientations of each of the four archetypes are expected to vary . First, the involved scholar and the distant scholar are apt to give a heavier weight to research in general than would the association loyalist and the local . Second, the involved scholar and the distant scholar are likely to have different



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or proceedings, the involved scholar is more likely to give greater emphasis to building the field through such activities as editing a scholarly journal, writing a practitioner-oriented book or article, writing a textbook, serving as chair or discussant at a conference session, and reviewing a scholarly article for a journal or conference. Consequently, the two are likely to have dissimilar research orientations . Not only will management scholars' research orientations vary by their institutional environment, but also by their age, career stage, prestige of degree-granting institution, entrepreneurial orientation, and commitment to a specifc research area (Hunt & Blair, 1987) . The aim of the present study is to examine systematically how health care management scholars define and organize what they view as important in their research activities. In particular, this paper will address the following three questions : (1) How do health care management scholars perceive the components of their research activities? (2) How do health care management scholars cognitively organize these components into mental maps that reflect homogenous clusters of activities? (3) How might the cognitive representations that emerge have implications for health care management research?

METHODS Nominal Group Technique Two nominal group meetings were held during the Health Care Management Division's Preconference Workshop at the 1996 Academy of Management meeting . Groups contained 19 and 22 individuals, respectively . Participants included a mix of doctoral students, assistant professors, associate professors, and full professors, with approximately equal numbers of men and women at each level. The Nominal Group Technique (NGT) (Delbecq, Van de Ven & Gustafson, 1975) process was utilized to obtain information (i .e. words, phrases, statements, or criteria) that individuals perceive as personally relevant in response to the question, "What does research mean to you?" Obviously redundant, vague, or idiosyncratic attributes were eliminated to distill the list to thirty distinct attributes (see Table 1) . Card Sort The statements or phrases describing these attributes were inscribed on index cards. A second group of respondents (n = 78), which included participants from

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Table 1 . Attributes generated by faculty members and doctoral student focus groups in response to the question : "Research : What Does It Mean To You?" 1 . Identifying causal relationships . (Causal Relationships) 2 . Problem identification . (Problem Identification) 3 . Establishing a connection between abstract theory and application . (Connections) 4 . Theory development. (Theory) 5 . Discovering commonalties and anomalies . (Commonalties) 6 . Statistical analyses. (Statistics) 7 . Data . (Data) 8 . Measurement. (Measurement) 9 . Research methods . (Methods) 10 . Pragmatics - Research infrastructure . (Research Infrastructure) 11 . Technology and innovations . (Technology) 12 . Discovery - WOW-Ah Ha - Eureka. (Discovery/Eureka) 13 . Opportunities for creativity and innovation . (Creativity) 14 . Courage to pursue the truth. (Courage) 15 . Persistence and hard work . (Persistence) 16 . Willingness to experience lows along with the highs . (Lows & Highs) 17 . PassionBuming in your soul . (Passion) 18 . Fun/Excitement . (Fun) 19 . An academic expectation . (An Academic Expectation) 20. Publications . (Publications) 21 . Funding . (Funding) 22. Tenure . (Tenure) 23 . Effective way to communicate . (Communicate) 24 . Validation of what I do. (Validation) 25 . Colleagues/Collegiality . (Colleagues/Collegiality) 26. Power . (Power) 27 . Polished persuasive writing. (Writing) 28. Research as a basis for policy-making . (Policy Making) 29 . Never-ending process/Incremental activities . (Never Ending) 30 . Producing a product that is relevant and useful to society . (Relevant Product)

the nominal group meetings, was asked to sort the cards by grouping together perceptually similar attributes into the same piles . This required participants to consider the meaning of each of the thirty attributes as they sorted them into perceptually similar groups . Participants in the second group averaged 41 years of age (sd = 8 .97), with slightly more than half being female (55%) . Participants varied in terms of years of experience (mean = 8 .6 years, range = 0 to 30 years), the number of journal articles published, the number of papers presented at conferences, and extent of research funding (Table 2) . Approximately two-thirds of respondents indicated that research was a priority in their academic roles (Table 2) .



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Gender Age

Characteristics of subjects responding to the card-sorting task (N = 78) . Male Female Ave. age:

Field of study/disciplinary focus Organizational Studies Strategic Management Administration/Policy/Management Information Systems Economics/Finance Research/Outcomes Not reported Current position/level

Associate Professor Assistant Professor Full Professor Instructor Doctoral Candidate/ABD PreDoctoral Candidate Post-Doctoral Fellow Non-Academic Public Sector

45% 55% 41 .3 years (Std . Dev. = 8 .9)

40% 23% 19% 1% 4% 8% 5%

14% 21% 10% 1% 32% 19% 1% 1%

Number of published journal articles 0 1-5 6-10 >10

30% 36% 11% 23%

Number of peer-reviewed papers presented at conferences 0 1-5 6-10 >10

28% 29% 9% 33%

Priority rating of research in academics Lowest Priority Fairly Low Priority Average Priority Fairly High Priority Highest Priority

3% 4% 23% 33% 33%



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Cognitive Mapping Multidimensional Scaling and Hierarchical Cluster Analysis A cognitive mapping approach using multidimensional scaling (MDS) and cluster analysis was used to produce a map-like representation of the cognitive structures that participants used to organize their perceptions of research attributes. The data from the card-sort task provided by each participant consisted of a matrix of co-occurrences (i .e. attributes sorted into the same pile) . The co-occurrence matrices were aggregated across all participants to form a group co-occurrence matrix . This matrix indicated the number of times participants sorted each attribute into similar or dissimilar piles . A group co-occurrence matrix provided data that were used by MDS and cluster analysis to generate an aggregated view of the perceived similarities and dissimilarities of all attributes . The group co-occurrence matrix was analyzed with MDS (ALSCAL algorithm) and cluster analysis . MDS techniques essentially attempt to map or model the similarities (or distances) among perceptual attributes by providing an organized structure that is thought to represent the underlying criteria used by participants in making decisions or judgments about the similarity of attributes (Schiffman, Reynolds & Young, 1981) . Additional interpretive insight into the meaning of the MDS map can be obtained by using cluster analysis . In this analysis the coordinates that are generated by MDS to define the spatial position of each perceptual attribute in multi-dimensional space are grouped in terms of their proximity . Generally, the purpose of cluster analysis "is to divide a set of objects into a smaller number of homogenous groups on the basis of their similarity" (Aldenderfer & Blashfield, 1984, 59) . On the other hand, the main concern of MDS is the relative ordering of attributes along each decisional dimension . Although MDS and cluster analysis are computationally sophisticated, they are not based on statistical theory . Consequently, the validity of an MDS and cluster analysis solution is not necessarily sample size dependent, but instead, a function of the representational adequacy of the sample participating in the sorting task (Speece, 1990) . The graphical representation of the combined MDS/cluster analysis map portrays different aspects of perceived similarity of attributes . Pairs of perceptually similar attributes (i .e . those frequently sorted together) are represented as points that are relatively closer on the map than attributes that are viewed as perceptually dissimilar . When MDS and cluster analysis are used together in examining the same data, we are able to discern both the relative ordering of clusters and . the ordering of individual attributes



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We used several criteria in assessing the validity of the map produced by these analyses . At the most basic level, the validity of a map is simply a function of its ability to accurately portray the data in a way that makes sense. From a more formal perspective, the MDS map was evaluated by examining specific goodness-of-fit criteria including S-STRESS and RSQ values . These values indicate the level of correspondence between the observed similarities of the attributes (i .e. data produced from the card sort task) and the estimates of these similarities as indicated by the map of interpoint distances between pairs of perceived attributes . In summary, the goal of an MDS analysis is to derive a spatial configuration that will explain the totality of the relationships between all possible pairs of the perceptual attributes under investigation . The interpretation of an MDS space assumes that the ordering of objects in the space is meaningfully related to identifiable and interpretable characteristics that explain their configuration in space. Kruskal and Wish (1978) liken the difference between MDS and cluster analysis to that which might be observed between one's neighborhood of residence and family affiliation . For example, attribute items may "reside" in the same neighborhood and also have primary "family" affiliations with very different groups of items that reside in other neighborhoods .

RESULTS AND DISCUSSION Using data from the card-sorting task, an MDS alternate least squares scaling (ALSCAL) (Statistical Package for the Social Sciences, 1998) analysis was performed . Results suggested a two-dimensional solution as having the best fit . Because there are no distributional assumptions that are made for the card sort input data used in the MDS, precise statistical tests of fit have not been developed (Kruskal & Wish, 1978) . However, the stress and level of correspondence between the rank ordering of the input similarities and the mapped similarities (or distances) (i .e . the R 2) do provide a general indication of the relative fit of different solutions to the data . These general measures indicated that a two-dimensional solution provides a better model than a one-dimensional solution, and did not appear to be any worse in representing the data than a three-dimensional solution . This finding is in keeping with what other researchers have shown in that satisfactory solutions can usually be obtained with two-dimensional structures (Trochim, 1989) . The map representing the two-dimensional solution (see Fig . 1) positions each attribute on the map in terms of its relative location on each dimension . Specifically, the location of each attribute in this two-dimensional space is defined by a pair

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Table 3 . CLUSTER

1

CLUSTER 2

CLUSTER 3 CLUSTER 4

CLUSTER 5

CLUSTER 6

CLUSTER 7

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Research Attribute Assignment to Clusters .

(Theory/Relationships/Problems) Causal Relationships Problem Identification Connections Theory Commonalties (Analysis) Statistics Data Measurement Methods (Research Infrastructure) Research infrastructure Technology (Emotional Outcomes) Discovery/Eureka Creativity Courage Persistence Lows and Highs Passion Fun (Extrinsic Expectations and Rewards) An Academic Expectation Publications Funding Tenure (Social Interaction/Self-Concept) Communicate Validation Colleagues/Collegiality (The Actualized Researcher/To Be Someone) Power Writing Policy-Making Never Ending Relevant Product

of coordinates representing each dimension . The hierarchical cluster analysis produced seven clusters of attributes (Table 3) . The seven attribute clusters are superimposed on the map (see Fig . 1) . These clusters are indicative of homogenous groupings of research attributes . The map in Fig . 1 depicts the overall cognitive representation of how various attributes of research are understood



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Dimension 1, the horizontal x-axis, can be viewed as a continuum ranging from the processes and conduct of research on the right, to the outcomes of research on the left. Dimension 2, the vertical y-axis, arranges the various research attributes according to their degree of tangibility. The more tangible aspects of research are located in the upper half of the figure, while the bottom half represents the less tangible aspects of research . The hierarchical cluster analysis generated seven distinct clusters to which each of the thirty research attributes were assigned exclusive membership (see Table 3) . The cluster analysis of the coordinates obtained from the MDS solution are also superimposed. Again, because there are no assumptions that can be made about the distribution of the data used in this analysis, well developed and accepted statistical tests for assessing the adequacy of fit have yet to be developed (Aldenderfer & Blashfield, 1984) . A subjective decision was made to interpret a seven-cluster solution . This decision was informed by examining the pattern in the agglomeration coefficients indicating which attributes were joined to form a cluster and by visually inspecting the dendrogram and icicle plot (Statistical Package for the Social Sciences, 1998) . We next turn our attention to the general concept of research, and using the cognitive map described above, further examine how research is conceived by our sample of health care management academicians . How research is defined varies according to who is doing the defining . From a fairly restrictive perspective, legitimate research can be viewed in terms of its precision and scientific principles . That is to say studies that are "systematic, controlled, empirical, and . . . guided by theory and hypotheses about the presumed relations" (Kerlinger, 1973) among phenomena. More expansive views of research see it as involving any inquisitive activity that results in knowledge creation (DePoy & Gitlin, 1994) . Further, DePoy and Gitlin (1994, 5) contend that research is not possessed by any one discipline or profession, but is a methodical "way of thinking and knowing and has a distinctive vocabulary that can be learned and used . . . " They define research as : Multiple, systematic strategies to generate knowledge about human behavior, human experience, and human environments in which the thought and action process of the researcher are clearly specified so that they are logical, understandable, confirmable, and useful (DePoy & Gitlin, 1994, 5) .

The definition of health services research, given earlier, is more focused . It specifies that health services research is multidisciplinary, that it can be basic or applied, and that it should improve our knowledge and understanding of



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Our analysis shows that the meaning of research to health care management academicians is a unique blend of thinking, knowing, behaving, and feeling that is embodied within thirty distinct attributes graphically arranged along two dimensions and within seven clusters . When, going from right to left along the horizontal dimension (x-axis), there is a transition from process-oriented research activities to research outcomes . Similarly, going from the top to the bottom of the vertical dimension (y-axis) depicts movement from tangible elements of research to those that are less tangible . The arrangement of attributes along the vertical dimension suggests a state or static conceptualization of the research attributes . In contrast, the horizontal dimension seems to suggest a process, and thus could be construed as being more dynamic than the vertical dimension . Practically speaking this could suggest that some researchers may prefer the means of research (e.g . theory, data collection, statistical analyses, writing) over the ends aspect (e.g . affective aspects, social interaction, power, publications) or vice versa . Our MDS results indicate that both process and outcome elements are required to convey the overall schema that defines the meaning of research for researchers .

THE RESEARCH ATTRIBUTE CLUSTERS Theory/Relationships/Problems (Cluster 1) Cluster 1 is termed "Theory/Relationships/Problems" and contains five attributes : discovering commonalties and anomalies, theory development, establishing a connection between abstract theory and application, problem identification, and identifying causal relationships . This cluster lies on the right side of Fig . 1 and immediately below the horizontal axis, indicating a research cluster that is process-oriented and somewhat intangible in character . The cluster is concerned with problem identification, abstract theory and concepts, understanding how and why concepts should be related, and climbing the ladder from abstract theory to more concrete application and vice versa . It is from this research cluster that literature reviews, research questions, propositions, and hypotheses emerge . Analysis (Cluster 2) Cluster 2 is termed "Analysis" and consists of four attributes : methods, measurement, data, and statistics . This research cluster also is located farthest to the right on the horizontal dimension in (see Fig . 1), making it the most process-oriented of the research clusters . Research methods embody the design



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and analysis components of research . It is not the end-result of research, but the means of achieving an outcome . The measurement attribute pertains to the way a concept is specified and operationalized (Shi, 1997) . It is a central part of any analysis, and it is with measurement that issues such as validity and reliability are concerned . The data attribute relates to specific facts (e .g. measurement observations, etc .) that are used as the basis for analytic calculations . Two problems related to data concern operational gaps between theory and data and the increasing difficulty of obtaining data from health care providers . Choi and Greenberg (1983) remark that many of the social science methodologies employed in health services research are plagued by operational gaps, or by greater distance between theory and data . Statistics is the fourth attribute associated with this cluster . This attribute pertains to the manipulation, interpretation, and display of quantitative data . Statistical approaches offer ways by which data that researchers measure and collect can be numerically analyzed. Research Infrastructure (Cluster 3) Cluster 3 is termed "Research Infrastructure" and consists of only two attributes : pragmatics - research infrastructure/technology, and lies on the process-side of the process-outcome dimension . This cluster is concerned with the foundation or supportive features that support research activities . Typically, research infrastructure could include elements of financial support, research assistance, statistical and data management cores, availability of journal subscriptions, and office space and furnishings . Another fundamental component of a research infrastructure is technology - especially computer hardware and software . Shi (1997) notes that computer knowledge is critical for health services researchers . Computers serve as a vehicle for researchers to store data (qualitative or quantitative), analyze data, write-up results, and prepare presentations . Internet technology is emerging as an important mechanism for communicating with colleagues . A description of the resources available at the Cecil G . Sheps Center for Health Services Research at the University of North Carolina at Chapel Hill is an excellent example of a comprehensive research infrastructure . The Center's most valuable resources are its faculty research fellows, staff and associates . Over 120 personnel occupy offices in the Center's facility on Airport Road in Chapel Hill. The staff is composed of faculty-level research fellows, research assistants, programmers and data entry personnel, librarians, business office and other support staff, as well as graduate assistants, Robert Wood Johnson Foundation Clinical Scholars, visiting international research fellows and pre- and post-doctoral fellows . Also affiliated with the Center are 150 research fellows representing more than 20 disciplines



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RICHARD M. SHEWCHUK ET AL . Carolina State University in Raleigh and several private and public agencies throughout North Carolina, the United States and other countries . The Center's resources include state-of-the-art communications using state-of-the-art equipment with the UNC-CH Information Technology Services and an intranet of micro-computers used for word and data processing, presentation development and desktop publishing. The Center offers immediate, 24-hour electronic communication with co-workers located throughout the world via its FIP and World Wide Web server sites . An additional, frequently used resource is the Center's specialized library that supplements the University's extensive holdings. The Center supports itself with funds from the State of North Carolina and with contracts and grants from several philanthropic foundations and federal government agencies, most notably the Agency for Health Care Policy and Research (ACHPR) and the National Institutes of Health (NIH), which includes the National Institute of Mental Health, the National Institute on Aging, the National Cancer Institute and the National Institute of Child Health and Human Development (Sheps Center for Health Services Research, 1999) .

Emotional Outcomes (Cluster 4) Cluster 4 is termed "Emotional Outcomes" and consists of seven attributes : fun/excitement, passion/burning in the soul, willingness to experience lows along with the highs, persistence and hard work, courage to pursue the truth, creativity and innovation, and discovery - WOW - Ah Ha - Eureka . These attributes represent the personal and affective components of doing research which are among the most intangible aspects of the research enterprise . The fun and excitement a person experiences when doing research, coupled with a sense of discovery, begin to make one passionate about the work that they do . In describing the "ideal" emotions researchers should possess for their work, Stark and Watson (1999, 727) advocate more sensual qualities and choose descriptors "such as desire, passion, and even eros ." Such passion for research is especially evident among those who openly refer to their work as not only their hobby, but as a calling . Anyone who engages in the process of research will occasionally face rejection . This could include rejected grant proposals, conference papers and symposia, and journal submissions . In a sense, rejection can be viewed as a natural part of research and provide opportunities for growth . For this reason, engaging in research necessitates a certain level of tenacity and even bravery . Individuals acquire and develop courage when faced with perceived threats such as uncertainty (Asarian, 1981), helplessness, lack of control, embarrassment, powerlessness (Finfgeld, 1999 ; Haase, 1995), and rejection . Many examples of the attributes associated with Cluster 4 are evident in Odin Anderson's (1991) book, The Evolution of Health Services Research . In



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particular, his chapter titled "Working in Applied Social Research: A Selective Sample of People and Projects" is replete with biographical vignettes . In reading this chapter, one is struck by the persistence and determination of these researchers in carrying out their work, and in demonstrating the true passion for what they do . In the foreword to this book, James Greenley recounts the life events of Odin Anderson himself . What follows is a brief passage that clearly illustrates a researcher who was persistent, courageous, and willing to experience the lows with the highs in the face of antagonism and on-going rejection . Anderson makes it clear that the Health Information Foundation and the University of Chicago's Graduate School of Business, where he worked, were organizational contexts that could either facilitate or preclude research . For example, the professional context limited the research and results that colleagues would take seriously ; results or interpretations that seemed inconsistent with the predominantly liberal professional bias were commonly ignored, attacked, or rejected . The historical and political contexts, for instance, were evident in the antagonism directed toward Anderson's research on health maintenance organizations by physicians and private insurance companies . The strength and vehemence of these professional and organizational interests created a stressful research environment for Anderson . At one point, he was summarily thrown out of a meeting of the Group Health Association. He had to live with the possibility that some powerful group, conservative or liberal, would take offense at his work and successfully move to cut off his research funding or get him fired. It was risky to publicize research results . At times, he and his research were attacked by the American Medical Association, from the right, and simultaneously by the more liberal Group Health Association (Greenley, 1991) .

Extrinsic Expectations and Rewards (Cluster 5) Cluster 5 is termed "Extrinsic Expectations and Rewards" and consists of both tangible and outcome dimensions of research including tenure, funding, publication, and an academic expectation . Located in the upper left quadrant of Fig . 1, Cluster 5 is high on both the tangible and outcome dimensions of research. These attributes generally represent elements whose value to research is defined by external entities based on perceived research quality . For example, an institutional decision to grant tenure to a faculty member will be based in some part on the research quality and productivity of the individual in question . Likewise, the decision to publish scholarly articles in a peer-reviewed journal indicates that the research reported within the article is well-regarded by the reviewers and the editors . Similarly, research funding represents a tangible outcome associated with higher quality grant proposals . Funding agencies generally take into account the relevance of the research question, the quality of the methodology, and the potential of the grant writers to actually carry out



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Tenure, publications, and funding are research outcomes that are especially sought after by academicians, and fulfill the fourth attribute in this cluster: an academic expectation . Moving from right to left within Cluster 5 ; we can see that an academic expectation comes first, indicating an ongoing background attribute that can be fulfilled by engaging in research . Next, comes publications and funding that are in immediate proximity of one another . These are both outcome indicators of research productivity and quality that serve to verify that the academic expectation is being met . Both publications and funding are strongly . considered in the decision to grant tenure, which lies even further to the left and represents a second-order outcome within this cluster . Social Interaction/Self Concept (Cluster 6) Cluster 6 is termed "Social Interaction/Self Concept" and consists of three attributes : colleagues/collegiality, validation of what I do, and effective way to communicate. This cluster lies just above the x-axis on the left side of Fig . 1 . These attributes can also be viewed as outcomes of research but with a social proclivity . Colleagues/collegiality lies furthest to the left and implies a collegial element of research that can involve developing and maintaining friendships and/or collaborating with others in order to conduct research . This cluster, above all the others, depicts research as a social experience . Although it is observed that collegial affinity and friendship can often make research more enjoyable and fun, this aspect of collegiality is typically not addressed in research methods texts . However, one aspect of the social dimension of research that has received attention is collaboration . Research collaboration is of value (Floyd, Schroeder & Finn, 1994) because it brings diverse contributors to the task, involves, often times, graduate students and younger faculty in a beneficial learning process, provides multiple individuals opportunities for increasing research productivity (Barnett, Ault & Kaserman, 1988 ; Strahan, 1982 ; Zook, 1987), and generally results in higher quality research (Blair & Hunt, 1986) . The attribute, effective way to communicate, lies at the far right of this cluster. It represents an outcome of research, but also embodies some process-like qualities . For example, Shi (1997) notes that research can be communicated through a variety of venues such as refereed scientific journals, professional conferences, working papers, and monographs . All represent outcomes in that they serve to communicate research results . However, because the research is communicated to others (manuscript reviewers, conference attendees, colleagues) with the hopes of obtaining critical feedback from peers, the act of



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communicating the research itself can serve to further improve the research . Feedback from journal reviewers often helps improve the quality of articles that ultimately appear in print . Feedback from colleagues on working papers or papers presented at professional conferences can assist in getting a manuscript ready for journal submission . For these reasons, research as an effective way to communicate can also manifest process-oriented properties . Validation of what I do, is the attribute that lies at the heart of this cluster. It is an outcome that gives meaning to researchers by reaffirming, authenticating, or verifying who they are as academicians . One might expect that on-going validation of one's self as a researcher tends to promote increased levels of self-efficacy (Bandura, 1997) that serves as reinforcement for motivating continuing research efforts . The Actualized Researcherfoo Be Someone (Cluster 7) Cluster 7 is termed "The Actualized Researcher/To Be Someone" and consists of five attributes : power, polished persuasive writing, a basis for policy making, never ending process/incremental activities, and providing a product that is relevant and useful to society . This cluster wraps closely around the right side of Cluster 6 . Clusters 6 and 7 are the only ones that suggest a social interaction, or how a researcher interrelates with others . However, while Cluster 6 is chiefly concerned with how researchers relate to those they know, Cluster 7 is concerned with how they relate to those they do not know . The power attribute is an outcome-oriented attribute of research . Power has been defined as "the probability that one actor within a social relationship will be in a position to carry out his own will despite resistance, regardless of the basis on which this probability rests" (Weber, 1947) . Thus, power is the ability to exercise influence . A research reputation can provide a power base for an individual with respect to colleagues at the local organization and within the broader profession. The strength of one's research reputation can ultimately bestow such things as tenure, journal editorship, a full professorship, or even a named or chaired professorship . Polished and persuasive writing can also serve to influence others and grant power to the writer . According to Shi (1997, 357), the ability to write is a required skill that is critical and essential "to convey the research to potential funders or users ." Many researchers have a self-image of being articulate and lucid writers . They take the process of writing very seriously and do not always take kindly to having someone else substantially re-write or edit their manuscripts . Writing can even furnish a researcher with a level of power that



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transcends life itself . For example, a researcher will eventually die, but his or her books and other writings will continue to "live" on . The policy-making attribute lies at the very center of the horizontal process-outcome dimension . The applied, context-specific, makeup of health management research affirms that it seeks to improve such things as organizational performance, individual and population health status, as well as health policy . This distinguishes it from more "context-free" disciplines that are less concerned with real-world problems and application (Blair & Hunt, 1986) . Previous research by Caplow and McGee (1958), Hagstrom (1965), and Gray and Phillips (1995) indicate that research for practical purposes usually lacks prestige in the academic community. Because health care management is an exception to this generalization, one outcome of health management research is to have the results incorporated into health policy formulation and implementation decisions (Shi, 1997) . One could surmise that the individual having greater power as a result of their research reputation may have greater influence on policy making . Analysis of existing health policy also serves as an important basis for conducting new research. Consequently, health policy formulation and implementation can be the outcome of research, or the catalyst for stimulating the process of research through health policy evaluations and analysis . Again, note the location of the policy-making attribute at the very center of the process-outcome dimension in Fig . 1 . The final two attributes in this cluster (never ending process/incremental activities and producing a product that is relevant and useful to society) reside very close to each other in the two dimensional space . The never-ending/ incremental attribute suggests just that; there is no end point in health care management research . The context of health care continuously evolves in terms of changing organizational structures, social conditions, illnesses and diseases, consumer preferences, organizational stakeholders, technologies, health care workforce factors, reimbursement issues, and government regulations . It is likely that emergent contexts will continue to create new questions, problems, and issues that can be addressed through research . In addition to the need for more research in response to a changing health care context, good research often raises more questions than it answers . For that reason, research usually spurs additional research that builds on itself incrementally . This last point ties the never-ending/incremental attribute to the relevant and useful attribute . Again, note the nearness of these two research attributes to one another in Fig . 1 . Usefulness is generally considered a fundamental characteristic of research. If the knowledge and understanding obtained from a research study is not useful to anyone, it becomes irrelevant . DePoy and Gitlin (1994, 9) describe the usefulness standard as follows :



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Each researcher, consumer, or professional judges the utility of a study based on his or her own needs and purposes . Usefulness is a subjective criterion in that it is based on one's judgment about the value of the knowledge produced by a study. However, the value of a study and the usefulness of knowledge become more widely accepted as the new knowledge increasingly stimulates further research and promotes the testing and verification of new or existing theory and practice .

From this description, we can see how relevance/usefulness closely relates to the attribute of research as a never-ending/incremental process . Moreover, both of these attributes relate to the polished persuasive writing attribute. When one's research is accepted for publication, the research criterion of relevance/ usefulness is being met (DePoy & Gitlin, 1994) .

IMPLICATIONS The research described in this study resulted in the development of a cognitive map that depicts what "research" means to health care management academicians . The map represents the geographic placement of thirty research attributes in a two-dimensional space. Families or clusters of like attributes were also derived and are positioned along this dimensional framework (see Fig . 1) . The vertical axis of the map represents a dimensional contrast of tangibleintangible attributes . The horizontal axis represents a dimensional contrast of process-oriented versus outcome-oriented research attributes . The seven research attribute clusters are referred to respectively as : (1) Theory/ Relationships/ Problems, (2) Analysis, (3) Research Infrastructure, (4) Emotional Outcomes, (5) Extrinsic Expectations and Rewards, (6) Social Interaction/Self Concept, and (7) The Actualized Researcher/To Be Someone . Note that our respondents identified and organized all of the attributes that Sternberg and Gordeeva (1996) found in their analysis of what makes an article influential . In addition, however, our respondents also identified the attributes of Clusters 3, 4, and 5 (research infrastructure, emotional outcomes, and extrinsic rewards), which did not appear in the Sternberg and Gordeeva (1996) paper . This should not be surprising since the attributes in Clusters 3, 4, and 5 do not necessarily correspond to those attributes of what we might consider a finished research project . Research Orientation and Collaboration Many health services research studies, written grant proposals, and journal article submissions are done collaboratively by interdisciplinary teams of researchers . This is not surprising when one considers that the lens of a single "context-free"



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addressing its various problems through research . Instead, health care is viewed as a "context-specific" field that is dependent upon the contributions of multiple disciplines in order to be best understood (Anderson, 1991) . While a multidisciplinary approach to studying health care is necessary and frequently advocated, it is not without its drawbacks (Richards, 1998) . Researchers in different disciplines often have difficulty working together because they have conflicting research orientations . These orientations may vary in terms of their emphasis on theory, methodology, public policy, and practical problems, as well as the different assumptions undergirding different disciplines (Anderson, 1991 ; Choi & Greenberg, 1983) . For instance, researchers who are newer to the health care context and who come from a "deep disciplinary" background, may be more concerned with theory and methods than with creating a relevant product and contributing to policy debates (Anderson, 1991) . In fact, Gray and Phillips (1995, 176) note that a research study "gaining favorable attention in the policy community or the press may make it suspect in disciplinary eyes ." Sensitivity to differences may also be required as researchers in "context-free" and "context-specific" areas consider and evaluate each other's research efforts . In the absence of such sensitivity, there is little understanding, tolerance, or appreciation for different research orientations even within the broader field of management and organizational studies . Blair and Hunt (1986) contend that an understanding and appreciation of different research orientations can help deal with some of the concerns about management research identified earlier (i .e. lack of practical utility and a focus on fads), They also give examples where teams of researchers from different disciplines (including management) and different research orientations (i .e. quantitative vs . qualitative, context-free vs . context-specific) have come together to produce research which is superior to that which could be done by any individual or group of individuals with similar research orientations . Thus, the mental landscape in Fig. 1, depicting what research means to health management researchers, provides insights for anyone seeking to collaborate on a research project . It can help address such questions as "Who might make a good research partner? Should opposites attract?" We next turn our attention to how this information might be utilized to create well-balanced research teams . Constructing the Research Team Before a determination is made as to who should or should not collaborate, the individuals or groups should make some honest assessment as to where their research strengths lie among the clustered attributes in Fig . 1 . Most individuals and groups of researchers do not exhibit strengths or aptitudes in all areas . It



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is in these less developed areas that point to the type of researcher(s) who might complement the present research entity, be it an individual or a team. For example, a person may have strengths in terms of Cluster 2 (Analysis) and Cluster 3 (Research Infrastructure), such as excellent computer skills, statistical abilities, and extensive experience managing primary and secondary data . While such a person demonstrates strengths relative to Clusters 2 and 3, he or she would need to personally cultivate the less developed clusters or be willing to work collaboratively with others in order to complement present skills . The individual or individuals who would complement the above researcher, likely would have excellent working knowledge of the field of health care management and be very familiar with related academic and practitioner literature . Reading voraciously, engaging frequently in discussions with health care scholars and managers, and thinking deeply about theory and practical problems can serve as a fount of new research ideas, questions, hypotheses, and topics . Contributions of this type are those reflected primarily within Cluster 1 (Theory/Relationships/Problems) . If people with these complementary research strengths were to collaborate, it is very likely they would be able to carry out most of the process activities associated with research (Clusters 1, 2, and 3) . However, in order to obtain desirable research outcomes (Cluster 4, 5, 6, and 7) other collaborators might be called upon to provide contributions reflective of the four remaining clusters . Other needed strengths to further complement this team would be (1) an ability to write clearly and suitably for a particular publication outlet, (2) an ability to target appropriate journals or other venues for communication and dissemination of research results, (3) the availability of valued colleagues who would be able and willing to provide critical feedback and commentary, and (4) the motivation and persistence to keep the entire project moving forward toward completion even in the face of obstacles and setbacks . Combining the entire array of strengths and abilities into a collaborative effort will serve to fulfill what research means to health care management researchers . Research Life Cycle The concepts uncovered by our analysis may also suggest a heuristic framework that arguably depicts an idealized academic trajectory . This trajectory, which is a temporal sequencing of the attributes and clusters in Figure 1, can assist in making sense of how research is understood across a general research life cycle . Academicians may find that distinct attributes of their research tend to become more prominent at different career stages, moving to the forefront, and



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As people move along this idealized career trajectory it is conceivable that they will find that their personal values, beliefs, and motives concerning research change over time . Furthermore, it is conceivable that the expectations that others have of a researcher's content, productivity, and output may also change along this trajectory . Borrowing from the work of Levinson (1978), we posit a hypothetical career life cycle framework that depicts the major career changes that might be experienced by health care management researchers in academic settings (see Fig . 2). The life cycle framework that we suggest consists of five distinct career stages (doctoral student, assistant professor, associate professor, full professor, and near retirement) and five transitory periods (doctoral transition, career entry transition, tenure transition, midcareer transition, and late career transition) . Also identified in this hypothetical portrayal of a career trajectory are clusters and attributes that could be expected to figure prominently at each career stage . Research Life Cycle and Career Paths Doctoral Student Stage Individuals entering a doctoral program will likely pass through an intense period of learning ; this includes learning about research, as well as doing research. Generally, in the pre-dissertation phase, students will take a variety of courses including research methods and design, philosophy of science, and a number of statistics courses . In these courses they learn about such things as concepts, theory, conceptual relationships, research designs, quantitative and qualitative approaches, and statistical techniques . During this stage, students often spend a good deal of their time learning about the processes of research as opposed to actually doing it . However, some students may begin to actually engage in research projects on their own or to assist others in conducting research . Perhaps they are only involved in a "piece" of the project, such as data collection or entry, literature review, analysis, or writing of the results . It is at this point when doctoral students may become active doers of research, as opposed to passive learners, and when they begin to experience the emotional aspects of doing research . Eventually, a doctoral student is expected to undertake a process of writing a dissertation . Although this is a process of learning research under the supervision of a dissertation chair and committee, it is also very much doing research . By this stage, a few students may receive research funding and perhaps some will also have made presentations, or even published a journal article. For doctoral students, we suggest that the clusters involved at the learning stage include primarily Cluster 1 (Theory/Relationships/Problems) and Cluster 2 (Analysis) . As the students become involved with research projects



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they will experience and even become part of Cluster 3 (Research Infrastructure) . Until they reach this point, students have engaged in the processes of research, either by learning or by doing . As they become more personally involved in their own or others' research projects, they will likely begin to experience outcomes, such as those in Cluster 4 (Emotional Outcomes) . As doctoral students approach the end of their dissertations, they may go into the academic job market, seeking an entry-level tenure-track position . This is an early career transition period that leads to the next career stage . Assistant Professor Generally, one would expect that the research conducted in this stage would be similar to that done as a late stage doctoral student, with the exception being that it is done largely independently and at an increased volume. During this career stage assistant professors are highly focused on meeting the academic expectations of their institutions and of the discipline at large . These expectations usually require some involvement in the grant submission process, and an increasing rate of publishing . These activities are usually taken very seriously because of their direct link to promotion and academic tenure . At this stage, because personal stakes are high, Cluster 4 (Emotional Outcomes) and Cluster 5 (Extrinsic Expectations) may be more prominent . Clusters 1, 2, and 3 (Theory/Relationships/Problems, Analysis, and Research Infrastructure) may also develop further at this stage . Assistant professors typically begin to communicate their research through publications and conference presentations and develop nascent networks of colleagues while also achieving a sense of research "self-worth" or validation . As these continue to develop, Cluster 6 (Social Interaction/Self Concept) will begin to emerge as more meaningful and operative . Near the end of this stage, the individual will prepare his or her case for tenure and promotion . If the individual is granted tenure and promoted, a third career stage will come forth . Associate Professor By this stage, the heavy expectations of tenure have lifted . Some researchers might see this as an opportunity to engage in more interesting or higher-risk research projects than they would have attempted as an assistant professor . Academic expectations, such as post-tenure review requirements or the elements necessary for promotion to full professor, still exist and can serve as a motivator for research . One would expect that all the clusters are involved during this stage of one's research career, with Clusters 6 (Social Interaction/Self Concept) and 7 (The Actualized Researcher/To Be Someone) emerging in only some researchers . If



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the individual eventually chooses to seek promotion to full professor, Clusters 6 and 7 will likely continue to dominate . Full Professor Once transitioned into this senior level stage, unless he or she is confronted with strict post-tenure review requirements or has a desire to seek employment elsewhere, he or she is not likely to face external demands to conduct research . If the professor gravitates toward Cluster 7 (The Actualized Researcher/To Be Someone) there is likely to be an intrinsic desire to develop or maintain a research reputation that is likely to sustain the motivation to do research . In some sense, a research reputation can serve as a very strong power base for an academician . One way to achieve this level of power is to conduct and communicate research such that it makes an impact in the literature, among health policy makers, and among health management practitioners and scholars . At this level, the health management scholar may be highly sought after and receive the prestigious chaired and named professorships . As individuals transition into this career development stage and move closer to retirement, they rarely face any significant external pressures to continue their research efforts . However, some researchers may think about the impact of their research as a legacy they can leave for others . Senior research professors may think about their own mortality, and how the profession will remember them once they are gone .

CONCLUSION : WHAT RESEARCH REALLY IS In this paper, we have sought to get inside the minds of health care management researchers and find out what research means to them . What is it comprised of and how do they conceive of it mentally? The answer to this question resulted in thirty attributes and seven clusters distributed among two dimensions . We have addressed some implications of these results, particularly in terms of research orientation, collaboration, and career life cycles . Given these results, what really is at the heart of our conceptualization of research? It appears that the flow and processes of research ultimately lead to Clusters 6 (Social InteractionlSelf-Concept) and 7 (The Actualized Researcher/ To Be Someone) . Interestingly, these are the only two research clusters that indicate how we relate to others . While Cluster 6 focuses on how we relate to those we know, Cluster 7 focuses on how we relate to those we do not know . In a sense, it appears that the end goal of doing research, or of a research career, is not only concerned with what we leave behind in written words . but



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our colleagues and the discipline . The actualized researcher is likely to be well regarded by colleagues and often is a polished persuasive writer who has made some real impact on health policy, practice, and scholarly knowledge . He or she has been affirmed and reaffirmed as a researcher who addresses relevant problems making a lasting contribution . Because people functioning at the actualized level are likely to achieve some degree of professional immortality, perhaps this stage could be thought of as "research nirvana ." Directions for Future Research A number of questions arise from the present study that offer directions for future research . These include the following :

• How do the research profiles as revealed through the cognitive maps differ

by gender, age, career stage, disciplinary focus, and one's personal priority rating of research in academics? Although we collected this data for the present study (see Table 2), the sample (N=78) was not large enough to allow for the meaningful creation and comparison of multiple cognitive maps. • Which research clusters and attributes are more important than others? Can we rank or weight the attributes/clusters to determine if some are viewed as significantly more important than others? In addition to card sorts, future research could also incorporate some measure of importance either by ranking each attribute/cluster, or by rating them on a Likert-type scale measure. • Can we derive research archetypes by individuals and institutional setting? Although this would be a difficult task indeed, it could assist people in several ways . First, it could be useful for job seekers hoping to find a natural employment fit by identifying institutional settings that would be likely to select and retain them, and allow them to be successful as researchers . Second, such archetypes could aid in identifying collaborators who could complement a research team . Third, archetypes could assist in the development of individual researchers by showing them a normative developmental trajectory of the life course of a researcher, and from this an individual could draw inferences as to whether they are "on-time" or "off-time" with respect to the developmental trajectory . Finally, it would be interesting to examine the archetypes of individuals and institutional programs that have made significant contributions to health care management, and therefore, who could provide direction and structure for fledgling researchers and research programs .



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REFERENCES Aldenderfer, M . S ., & Blashfield, R . K. (1984) . Cluster analysis. Beverly Hills, CA : Sage Publications. Anderson, O. W. (1991) . The evolution of health services research : Personal reflections on applied social science . San Francisco, CA : Jossey-Bass Publishers . Asarian, R. D . (1981). The psychology of courage : A human scientific investigation (Doctoral dissertation, Duquesne University). Dissertation Abstracts International, 42, 2023B. Bandura, A. (1997) . Self-efficacy: The exercise of control . New York, NY : W . H. Freeman . Barnett, A. H., Ault, R. W ., & Kaserman, D. L. (1988) . The rising incidence of co-authorship in economics: Further evidence . Review of Economics and Statistics, 70, 539-543 . Blair, J . D ., & Hunt, J . G. (1986). Getting inside the health of the management researcher one more time : Context-free and context-specific orientation in research. Journal of Management, 12(2), 147-166 . Burrell, G ., & Morgan, G. (1979) . Sociological paradigms and organizational analysis . London, United Kingdom: Heinemann. Caplow, T ., & McGee, R. (1958). The academic marketplace . New York, NY : Doubleday . Choi, T ., & Greenberg, J . N . (1983) . Health services research : A cross-disciplinary retrospective . In : T . Choi & J. N . Greenberg (Eds) . Social Science Approaches to Health Services Research (pp . 183-207). Ann Arbor, MI: Health Administration Press . Cummings, L. L ., & Frost, P. (1985) . Publishing in the organizational sciences . Homewood, IL : Irwin. Delbecq, A . L ., Van de Ven, A ., & Gustafson, D . H. (1975) . Group techniques for program planning . Glenview, IL: Scott Foresman . DePoy, E ., & Gitlin, L . N. (1994). Introduction to research : Multiple strategies for health and human services . Chicago, IL : Mosby. Field, M . J ., Tranquada, R. E., & Feasley, J . C . (1995). Health services research : Workforce and educational issues . Washington, DC : National Academy Press . Finfgeld, D . L . (1999) . Courage as a process pushing beyond the struggle . Qualitative Health Research, 9(6) : 803-814. Floyd, S . W ., Schroeder, D . M ., & Finn, D . M . (1994) . Only if I'm the first author: Conflict over credit in management scholarship . Academy of Management Journal, 37(2): 734. Gray, B . H ., & Phillips, J . R . (1995) . Medical sociology and health policy : Where are the connections? Journal of Health and Social Behavior, 47(5), 170-182. Greenley, J. (1991) . Forward . In : O. Anderson, (Ed.) The Evolution of Health Services Research : Personal Reflections on Applied Social Science . San Francisco, CA : Jossey-Bass Publishers . Haase, J . E. (1985) . The components of courage in chronically ill adolescents : A phenomenological study. (Doctoral Dissertation, Texas Woman's University) . Dissertation Abstracts International, 46, 1869B. Hagstrom, W. O . (1965). The scientific community . New York, NY : Basic Books . Hunt, J . G ., & Blair, J . D . (1987) . Content, process, and the Matthew-effect among management academics. Journal of Management, 13(2), 191-210 . Kerlinger, F . N . (1973). Foundation of behavioral research, (2nd ed .) . New York, NY: Holt, Rinehart, & Winston . Krawlewski, J . (1991) . As quoted in Odin W . Anderson (1991). The evolution of health services rv.cenrrh- Porcnnnl raflortinnc nn nnnliod cnrinl crionro qnn Frnnricrn rA • Tnccev_Rnec



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MANAGED CARE AND MEDICAL PRACTICE GUIDELINES : THE THORNY PROBLEM OF ATTAINING PHYSICIAN COMPLIANCE Howard L . Smith, Steven Yourstone, David Lorber and Bruce Mann

ABSTRACT Medical practice guidelines are increasingly being used by managed care plans to ensure quality of care while achieving cost reductions . However, it is unclear that physicians are complying with these clinical protocols . This paper reviews pertinent literature to assist in : understanding why physicians encounter different incentives for complying with guidelines ; identifying initiatives that managed care plans can utilize in managing clinical guidelines; and, identifying a research agenda for investigating issues surrounding physician compliance with guidelines .

INTRODUCTION Managed care plans face many financial pressures to control service utilization and costs when delivering capitated health care . While inpatient utilization is

Advances in Health Care Management, Volume 2, pages 93-130 . Copyright • 2001 by Elsevier Science Ltd . All rights of reproduction in any form reserved . ISBN: 0-7623-0802-8 93



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paramount in the cost control frenzy, there are also substantial challenges for containing costs associated with outpatient care . Added to these operating pressures is the continuing need to ensure the delivery of quality care, not only to remain competitive among health insurers and providers, but as well to minimize the incursion of malpractice litigation . Medical practice guidelines, clinical pathways, clinical guidelines, and clinical protocols are several terms referring to the same concept : "systematically developed statements to assist practitioner and patient decisions about appropriate health care for specific clinical circumstances" (Institute of Medicine, 1992) . Most managed care plans have turned to medical practice guidelines in an effort to assure quality care and to reduce costs (Field & Lohr, 1990) . Fang, Mittman and Weingarten (1996) estimate that 87% of physician organizations are adopting clinical guidelines . Nonetheless, it is unclear that physicians and other clinicians are warmly embracing these guidelines . Wolf, Grol, Hutchinson, Eccles and Grimshaw (1999) argue persuasively that a medical practice guideline industry has evolved and in the process has created a massive information overload for practitioners . This is a world-wide phenomenon with prevalent use of clinical guidelines evident in the United Kingdom, the Netherlands, Finland, Sweden, France, Germany, Italy, Spain, Canada, the United States, Australia and New Zealand (Carmine, 1996) . Commercially produced protocols are increasingly being adopted by managed care plans for benchmarking physician performance . Physicians have expressed concern about the incursion of these guidelines and metrics on the practice of medicine (Brook, 1989 ; Lomas et al., 1989) and recent analyses suggest that professional behavior may be subtly undermining the adoption of guidelines in clinical practice (Feder, Eccles, Grol, Griffiths & Grimshaw, 1999) . Early studies of physician practice behavior under clinical protocols suggest that practitioners do consider altering their behavior, but many practitioners are unable to correctly identify all the steps of protocols prevalent in their specialty (Lomas, Anderson, Domnick-Pierre, Vayda, Enkin & Hannah, 1989) . This problem has been compounded by the proliferation of practice guidelines and revisions in existing guidelines . Managed care organizations face the thorny problem of attaining physician compliance with clinical guidelines . The purposes of this paper are to understand why physicians encounter different incentives to comply with clinical guidelines ; to identify strategies or initiatives that managed care plans utilize in managing medical care guidelines ; to examine significant factors influencing physician compliance with medical practice guidelines ; and, to identify a research agenda for the future that will help to address issues surrounding physician compliance with clinical guidelines .



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THE CONTEXT OF CLINICAL CARE GUIDELINES Medical practice guidelines comprise only one part of a complex puzzle surrounding the direction of medical practice . Significant incentives for change in health care delivery were initiated by the shift from fee-for-service reimbursement to prospective reimbursement accompanying diagnosis related groups (DRGs) in acute care settings . Prospective reimbursement gradually spread beyond hospital walls to ambulatory settings and eventually to how patients were insured . Prepaid and capitated reimbursement soon became the model for health insurance . Managed care represents the latest evolution in a system of incentives linking provider, patient and payment . With fixed insurance payments based on the patient instead of the episode, providers encountered a clear economic rationale to keep the costs of service delivery in check . Unfortunately, the financial incentives also brought the issue of quality of medical care into question since limiting service delivery might adversely influence patient care outcomes . This battle in trade-offs continues to this day . Managed Care Processes Managed care processes, designed to influence the cost of health care delivery costs and to assure the delivery of high quality care, plus the structure of the managed care environment have combined to significantly squeeze medical practice as shown in Fig . 1 . Managed care processes (shown visually on the left hand side of Fig . 1) essentially represent attempts by health plans to maintain the quality of care delivered along with resource investments in care delivery (Reinke, 1995) . These processes may assume various forms ranging from physician report cards (Hofer, Hayward, Greenfield, Wagner, Kaplan & Manning, 1999) and profiles (Greene, Barlow & Newman, 1996 ; Tucker, Weiner, Honigfeld & Parton, 1996) that capture efficiency and effectiveness dimensions of practice such as number of visits, number of procedures, adverse outcomes and referrals (e .g . time devoted to a visit; cost of procedures versus revenue generated ; total cost of care per patient) to outcomes or evidence-based studies and reports that guide clinical practice (Edelman Lewis, 1995 ; Radosevich, 1997) to specific protocols for disease management (Ernster, 1997 ; McFadden et al ., 1995) . Structure of the Managed Care Environment The structure of the managed care environment (shown visually on the



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produces varying incentives for care delivery . The type of financial arrangement between a health plan and group or network of providers partially establishes the incentive for how physicians and other clinicians practice . However, the configuration of the practice - group or staff model versus network model - also affects resource utilization and risk sharing (Gold, Hurley, Lake, Ensor & Berenson, 1995) . Additionally, geographic location of the provider rural versus urban setting - presents unique service delivery challenges relative to productivity, cost and quality, although these outcomes have similar importance to all providers . The end result of these forces is a medical practice environment which significantly constrains practice behaviors and decisions . Physicians no longer have the freedom to practice with relatively complete autonomy . Their practice behaviors and decisions are squeezed by many constraints . The squeeze on medical practice has created a turbulent milieu for physicians which presents demanding care delivery incentives, restrictions and emphasis on outcomes . Risk-sharing by managed care plans has developed to the point that physician incomes are increasingly linked to curtailed services (Woolhandler & Himmelstein, 1995) . By limiting care and attracting more patients to a plan, physicians often can derive significant rewards through bonuses and other incentives (Gold, Hurley, Lake, Esnor & Berenson, 1995) . Risk-sharing also influences patient referral patterns (Franks, Zwanziger, Mooney & Sorbero, 1999 ; Hillman, Joseph, Marby, Sunshine & Kennedy, 1990) . This can threaten the quality of care ; a development that concerns physicians and managed care plan administrators alike (Hillman, Pauly, Kerman • Martinek, 1991) . Care delivery restrictions have become increasingly commonplace as managed care plans attempt to control resource utilization and to improve outcomes . The use of primary care physicians as gatekeepers is a prevalent methodology employed by health plans to control use of specialists, expensive diagnostic services and inpatient services (c .f. Feldman, 1998 ; Halm, Causino • Blumenthal, 1997 ; Volpintesta, 1998) . Gatekeeping produces a number of dysfunctional results including more paperwork, limited access to specialists, less freedom for clinical decisions, and time spent with patients, while adversely affecting overall quality of care and appropriate use of inpatient and laboratory services . Variations in treatment or practice patterns have provided additional rationale for managed care plans to pursue care delivery restrictions (Medical Economics, 1997) . Many examples are apparent in the literature . Health plans located outside of the West and Northeast where coronary artery bypass grafts are lower will



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benchmark . Plans in the Rocky Mountain states and the Northwest will try to establish care restrictions to achieve lower back surgery rates being attained in the Northeast and upper Midwest . Clinical guidelines will be created to reduce the number of unwarranted diagnostic tests that primary gatekeepers order in the course of their practices (Browner, 1998). Research has shown that only 30% of diagnostic tests for digoxin and gentamicin levels were appropriate (Bates, Boyle, Rittenberg, Kuperman, Ma'Luf, Menkin, Winkelman & Tanasijevic, 1998) because physicians ignore Bayesian reasoning in clinical practice (Reid, Lane & Feinstein, 1998) . Inefficient care delivery behaviors such as these ultimately lead to practice restrictions . Physician profiling (i .e . provision of objective data on practice behaviors and outcomes) has risen as a methodology for both managed care plans and providers to be vigilant about service delivery processes and outcomes . Considerable debate has surfaced in the literature regarding the validity of profiles and report cards (cf. Bindman, 1999 ; Lied, 1999) . Representative studies of physician profiling (cf. Hendryx, Wakefield, Murray, Uden-Holman, Helms & Ludke, 1995) demonstrate positive results from providing profiling information to clinicians not only in lower costs, but also favorable health care outcomes . Physician profiling can be improved through proper design and implementation strategies which address physician resistance (Bell, 1996) . The Squeeze on Medical Practice Figure 1 indicates that the squeeze on medical practice has created an emphasis on outcomes physician productivity, cost of care and quality of care . This has translated to systems that measure outcomes and that feed back data to providers, patients and insurers in order to inform decisions (Steinwachs, Wu & Skinner, 1994) . Whether preventive services for older patients (Burton, German & Shapiro, 1997), emergency care (Brook, 1998), public mental health outpatient programs (Hendryx, Dyck & Srebnik, 1999), or nursing care (Heacock & Brobst, 1994; Lichtig, Knauf & Milholland, 1999), outcomes measurement is increasingly prevalent . Several authorities argue that quality of care and provider performance reports should focus on improving consumer health, not simply on cost control or enhancing quality to score well on National Committee for Quality Assurance measures (Galvin, 1998 ; Sennett, 1998 ; Their & Gelijins, 1998) . It has been argued that outcomes programs enable providers to select the most efficient disease management methodology producing the best health outcome while delivering highest value to patients and insurers (Ortmeier, 1997) . Thus, as suggested in Fig . 1, important care delivery outcomes - provider



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productivity, cost and quality of care - become the focus of planning for patient care (Adams & Wilson, 1995) and the creation of systems recognized for delivering exemplary care . Outcomes programs have also been touted because they enable providers to gain greater understanding about how the organization of care in their delivery system ultimately shapes clinical outcomes (Aiken, Sochalski & Lake, 1997) . In contrast to these benefits, pervasive variations in treatment services and outcomes associated with care delivery are well-documented whether involving office-based treatment of diabetes (Weiner, Parente, Garnick, Fowles, Lawthers & Palmer, 1995), pneumonia (Whittle, Jeng Lin, Lave, Fine, Delaney, Joyce, Yound & Kapoor, 1998), low back pain (Carey, Garrett, Jackman, McLaughlin, Fryer & Smucker, 1995) or other conditions . Additionally, practitioners are not always receptive to interventions that attempt to guide their practices (Hargraves, Palmer, Orav & Wright, 1996) . Epstein (1995) indicates that medical practice guidelines which flow from outcomes studies possess many problems including incomplete measures which only partially report on care delivery ; tendencies for physicians to increase "upcoding" of suspected conditions in order to minimize risk; over-emphasis on specific care delivery processes for which publicly disseminated information conveys the quality of a plan/provider ; and, operational impediments (e .g . small sample sizes for some conditions) which render measures incomparable . Evidence-based Medicine and Practice Guidelines Another term for outcomes focused care delivery is evidence-based medicine which implies that physicians utilize the best information available to make decisions about patient care (Medical Economics, 1999) . Outcome studies generate new information about the best clinical practices which in turn establishes a basis for the development of new standards (Leape, 1995) . This information is folded into clinical guidelines and made available to physicians for disease management (Ellrodt, Cook, Lee, Cho, Hunt & Weingarten, 1997) . Data create a platform for successive refinement of care delivery (Ebert, 1995 ; Grimshaw & Russell, 1993 ; Pronovost, Jenckes, Dorman, Garrett, Breslow, Rosenfeld, Lipsett & Bass 1999 ; Randolph, 1999), but problems remain in physicians correctly using the guidelines (Barratt, Irwig, Glasziou, Cumming, Raffle, Hicks, Grey & Guyatt, 1999 ; Hayward, Wilson, Tunis, Bass & Guyatt, 1995 ; Wilson, Hayward, Tunis, Bass & Guyatt, 1995) . There are literally thousands of clinical guidelines available to physicians, many of which have been created by professional specialties and subspecialties.



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(Santos, Cifaldi, Gregory & Seitz, 1999), breast symptoms (Barton, Elmore & Fletcher, 1999), cervical cancer screening (McFall, Warnecke, Kaluzny & Ford, 1996 ; Melnikow, Nuovo & Paliescheskey, 1996), cesarean sections (Bums, Geller & Wholey, 1995), laparoscopic surgery (Colegrove, Winfield, Donovan & See, 1999), prostrate cancer treatment (Potosky, Merrill, Riley, Taplin, Barlow, Fireman & Lubitz, 1999), arthritis (Keller, Majkut, Kosinski & Ware, 1999), alternative medicine (Spencer & Jonas, 1997) and health profiles (Ware, Kosinski, Bayliss, McHorney, Rogers & Raczek, 1995) represent a few of the clinical areas health services researchers have studied that ultimately add significant information to prevailing medical practice guidelines . The challenge for physicians is to keep abreast of the continual flow of new information about diagnosis and treatment regimens. This is not a new problem as physicians have always faced the problem of integrating new information within their practices . What is new, however, are the implications of managed care plans adopting medical practice guidelines as a standard for assessing physicians' performance (Flamm, 1999) .

Initiatives for Increasing Compliance Managed care providers, physicians, and medical societies have been searching for promising initiatives that will encourage medical staff members to comply with practice guidelines. Although the health services and medical literatures are addressing current issues of medical guideline compliance, a rich literature on compliance and influence is also available in psychology . Kelman (1961), for example, proposed different processes of influence which are applicable to medical practice guidelines . Physicians might comply with guidelines because they have to as a result of organizational or professional expectations . Alternatively, they might comply as a means of identification ; that is, they follow them because they want to fit within their medical community . Physicians may also comply due to internalization ; that is, they follow them because they believe in their efficacy . Recent behavioral research in business settings has greatly extended the empirical and theoretical foundations upon which the health services and medical disciplines can draw in understanding physician compliance with medical practice guidelines (cf. Chatman, 1989 ; Chatman & Barsade, 1995 ; Jehn & Chatman, 2000 ; O'Reilly, Chatman & Caldwell, 1991 ; Tusi, Egan & O'Reilly, 1992) . Above all, the health services and medical literatures suggest that providers must demonstrate creativity in their approaches at increasing compliance . As medical practice guidelines become institutionalized in practice and as medical schools expose students to basic guidelines underlying care, a more auspicious environment will be developed



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from which compliance should flourish . Until these events occur, managed care organizations will need to develop innovative strategies to raise compliance. Table 1 provides an overview of several leading initiatives that have been tested in clinical settings. Improving Access In order for physicians to utilize medical practice guidelines they should be readily accessible . Furthermore, mechanisms should be available to update the guidelines as new information is reported . Unless these two design features accompany a managed care provider's guideline information system, it will be difficult for physicians to keep abreast of the guidelines and this may encourage them to fall back on traditional practice behaviors that ignore the guidelines . Physicians face a daunting challenge in accessing guidelines because the number of guidelines has rapidly expanded . Simply because there are many guidelines surfacing in the respective disciplines and subdisciplines does not mean that physicians will take the time to ascertain which guidelines are prevalent in their area of expertise, or how these guidelines fit within the structure of guidelines adopted in their practice . One example of the challenge facing primary care physicians is illustrated by the choice of compendiums on providing preventive care . Weingarten (1999) identified four compendiums of preventive practice guidelines : Clinician's Handbook of Preventive Services, National Guideline Clearinghouse, Clinical Practice Guidelines Director and U.S. Preventive Services Task force Guide to Clinical Preventive Services . Which compendium is the best? Which compendium should practitioners utilize in understanding medical practice guidelines? Which compendium integrates the last evidence and expert interpretations? Which compendium offers the easiest referral? These are significant questions that Weingarten (1999) raised in the course of reviewing the primary sources . For the most part his research indicates that the compendiums vary in screening criteria ; integration of evidence-based findings ; focus on preventive services ; and, explanations regarding why guidelines conflict . He observes that in order for practice guidelines to have meaning for physicians, the guidelines must be easily accessible as a means for answering basic clinical questions . Given the conflicting nature of many guidelines, the proliferation of guidelines and the inability of managed care plans to deliver guidelines into the hands of physicians in a timely and informative manner, it is clear that there are significant problems surrounding accessibility . Technoloev could provide the answer to many of these questions and



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computerized information systems and the presence of the internet are strong facilitating factors which could assist in raising compliance by physicians in integrating guidelines within their practice behaviors . Lobach and Hammon (1997) reported the results of a six-month study of computerized clinical guideline use at a primary care clinic . The clinic adapted the American Diabetes Association's guidelines for patients with chronic diabetes mellitus . Medical staff members used a consensus-based approach for defining the clinic's protocol in order to ensure buy-in by staff members . After the guideline was defined, a computer-assisted management protocol was developed to assist physicians in managing care . Compliance with the protocol was ascertained by laboratory test summaries and audits of medical records. Thirty physicians participating in the trial were compared to 28 physicians who had minimum exposure to diabetic care . Compliance for the physicians who had access to the computerized management algorithm was 32% versus 15 .6% for the control group . These results support the contention that accessible medical practice guidelines can enhance compliance . The study also underscores a high level of investment necessary to operationalize clinical guidelines . Peer Review Professionals are inherently motivated to seek the approval of other professionals within their respective fields . This characteristic of medical professionals can be used to great advantage in achieving compliance with medical practice guidelines. The issue for managed care organizations is establishing a peer-based system that maintains participation and that is inexpensive to implement. The best form of peer review is one that is not forced on professionals, but that evolves naturally out of a consensus attempting to achieve well-embraced professional goals . Simultaneously, professionals must take ownership in designing and implementing a peer-based system if commitment is to be achieved . Medical practice guidelines offer a perfect opportunity to build on professional values and goals . Only physicians can ultimately agree on the content and precise elements underlying any clinical protocol . In the final analysis they are the basis for creating practice guidelines and the system for their application within care delivery. Goebel (1997) reported a study of peer review feedback that helped to promote compliance with medical practice guidelines in an ambulatory care clinic . Residents at the Marshall University School of medicine were introduced to nine preventive care service guidelines for use in an ambulatory care clinic . Every eight weeks the residents received four medical records for patients who received care from another resident . The peer review entailed reviewing notes



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for the most recent office visit and completing a quality assurance form . The record and completed quality assurance form are then returned to the resident physician caring for the patient. This resident then develops a care plan for the patient's next visit . An attending physician provided oversight on this peer review process . The results of this trial indicated a consistently higher delivery of four preventive care services outlined in the clinical protocols . Physicians who are immersed in high volume care delivery associated with managed care may doubt that such interventions can be developed outside the medical school setting. They would have to sacrifice some patient care in order to review colleagues' charts . This concern overlooks the important finding from the Goebel (1997) study. It may be that consistent, low-level peer monitoring is sufficient to encourage practitioners to follow clinical guidelines . If a physician knows that his/her patient care delivery has a reasonable probability of being scrutinized, it is likely that they will devote more attention to following guidelines . The issue then evolves into determining the frequency of review and extent (i .e . number) of patient records sampled. It remains for physicians and managed care organizations to design innovative peer review systems that are not overly obtrusive, do not raise expenses, and yet encourage effort toward compliance by all medical staff members . Reminders and Feedback

With the massive number of patients that some physicians serve, and considering the wide variety of conditions that patients present to physicians, it is understandable that medical practice guidelines may be overlooked in the care delivery process . Offering reminders and feedback on service delivery represent another initiative for improving compliance with medical practice guidelines. The key questions surrounding this intervention are : when to deliver the reminder or feedback; how to best convey the information ; and, how often to review compliance to ascertain whether the system is working . The use of feedback and reminders also presents a challenge of maintaining the interest of physicians - delivering information of value without judgment while reinforcing the importance of following clinical protocols . Reminder/feedback systems are susceptible to becoming a bureaucratic artifact that is easily forgotten or ignored after the novelty wears off. The value of reminders was demonstrated in a study by Weingarten and colleagues (1994) involving practice guidelines for patients with chest pains who are at low risk for complications . Patients with chest pains have traditionally been admitted to the coronary care unit . This practice was intended



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HOWARD L. SMITH ET AL.

experience of coronary care units has typically indicated that a significant percentage of patients (on order of greater than 70%) do not have acute myocardial infarction (Fineberg, Scadden & Goldman, 1984 ; Pozen, D'Agostino, Mitchell, Rosenfeld, Guglielmino, Swartz, Teebagy, Valentine & Hood, 1980) . Remaining in the coronary care unit has also shown to have deleterious effects on patients who do not present conditions of myocardial infarction (Falk, 1979 ; Hackett, Cassem & Wishnie, 1968 ; Sykes, Evans, Boyle, Mcllmoyle & Salathia, 1989). In the Weingarten (1994) study, physicians received both written and verbal reminders about practice guidelines for patients who presented low risk for acute myocardial infarction. A physician utilization review coordinator contacted physicians whose patients remained in the hospital longer than 24 hours after admission and for whom there were low risks for an acute condition. A significant increase in practice guideline compliance was observed as well as a significant decrease in the length of stay (Ellrodt, Conner, Riedinger & Weingarten, 1995 ; Weingarten, 1993) . Tierney, Hui and McDonald (1986) investigated the use of concurrent reminders and delayed feedback about preventive care guidelines in an effort to increase compliance . Eleven preventive care protocols were identified as having low compliance at a clinic . The clinic added two protocols . Monthly the clinic's information system searched through medical records of patients who had received care and had an indication for preventive care delivery, but who had not received the service(s) . This written feedback was then sent to the attending physician . Written reminders were also tested as a strategy for increasing compliance with clinical protocols . The night before scheduled visits, reminders were placed in patients' charts along with suggested preventive care guidelines . Although there was a statistically significant increase in the use of protocols, the level of use still remained modest . Reminders had a greater impact on compliance with medical practice guidelines than did feedback. Stabilize Guidelines Compliance with medical practice guidelines may be adversely affected by their inherent instability as new medical evidence is incorporated and practice experience indicates revisions to improve the guidelines . Physicians may tend to interpret this instability as a reason to ignore guidelines . Managed care organizations are challenged to remove this convenient rationale for overlooking sound medical practice protocols . Evidence from a . number of studies suggests that sound organization and management practices in managed care organizations can contribute substantially to compliance by physicians (cf.



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Other authorities have postulated that managed care organizations are more likely to have designed and implemented programs which encourage the use of medical practice guidelines . Thompkins, Bhalotora, Garnick and Chilingerian (1996) reviewed the literature on physician profiling and concluded that higher profiling use occurs in medical groups that develop sound management practices and policies. Medical management tools, such as clinical protocols, enable groups to transmit important practice information to medical staff . Managed care organizations are also more likely to establish quality assurance mechanisms that motivate physicians to follow practice guidelines essential in maintaining health . Klabunde, O'Malley and Kaluzny (1997) studied the rate of compliance of physicians with a new guideline for mammography developed by the National Cancer Institute . They observed that physicians tended to ignore the new guideline and expressed negative reactions to the revised guideline . Managed care providers demonstrate an enhanced ability to integrate revised guidelines within their system of medical practice patterns . Educate Providers

Table 1 indicates that another strategy for attaining compliance involves educating providers about medical guidelines and their use . Training in this sense should include not only the content of guidelines and their application, but also the technology that supports guidelines . Physicians with busy practices may not have the time to monitor guidelines despite repeated efforts from managed care plans to keep them informed. The matter is made worse when a physician is networked with several managed care plans. In this situation there may be more opportunities to become confused if the plans recommend different guidelines . This may leave physicians in the position of ignoring all of the guidelines, or applying the guideline of preference, due to the confusion. Multiplicity of guidelines can be compounded when the technology for accessing guidelines presents a barrier. Not every physician is user-comfortable or familiar with the compendiums containing practice guidelines . The computerized guidelines may present an additional challenge in access for those physicians who are not networked with a computerized system of practice guidelines . Access to the computerized guidelines may be difficult in some geographic areas (e .g . rural areas) . O'Conner, Quiter, Rush, Wiest, Meland and Ryu (1999) conducted a study of hypertension guideline implementation in primary care settings . Physicians received training for consistent hypertension treatment, standardization of blood pressure measurement, documentation of blood pressure readings, improved



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patient recall system to issue patient reminders . The results of these interventions indicated a 15% increase in the proportion of patients with hypertension meeting the care guideline. The authors observed that this increase should be viewed as significant in view of the large percentage of adults who present indications of hypertension, but who do not have their blood pressure clinically controlled . Education served as an intervention to achieve greater compliance . Similar findings surfaced in a study by Katz (1999) when examining medical practice guidelines for unstable angina and patient care . Katz discovered that knowledge-based factors and organizational inefficiencies often preclude the proper implementation of clinical guidelines for unstable angina . In addition to educating physicians, providing support through clinical algorithms and guidance on using the algorithms can help to raise compliance . Factors Affecting Clinical Protocol Compliance As suggested in Fig . 2, four primary factors influence the extent to which physicians embrace clinical protocols when delivering services including the current status of practice guideline implementation in their clinical setting ; initiatives for improving the management of practice guidelines ; practice setting characteristics ; and, medical profession autonomy on the part of physicians . Figure 2 suggests that if a managed care plan or medical group wants to encourage physicians to comply with clinical protocols, it must attend to each of these four sources of influence . However, there is insufficient research on practice guideline compliance to predict which of these factors is strongest in any given setting, and insufficient research explaining how the factors interact (together) in affecting clinical protocol compliance . Status of Practice Guidelines The current status of practice guidelines within a managed care plan or medical group is a contextual factor setting a base for improvement in the consistent use of guidelines . Sound organization and development of guidelines creates a climate where more sophisticated applications are possible (Harris, 1995) . Managed care providers, especially staff model health maintenance organizations, may design and implement better structures for medical practice guidelines than in other settings . A health maintenance organization has many incentives for establishing a rational and efficient structure for clinical protocols . The use of guidelines standardizes care and in the process creates a foundation for lowering costs and maintaining high quality care (Keslin, Jarrell & Gregory, 1999) . The guidelines are also valuable in attaining accreditation standards as



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well as in documenting performance . Consequently, it is not surprising to observe that managed care plans often attempt to maintain a well-organized system of clinical practice guidelines . Physician incentives to comply with the guidelines represent another structural factor associated with the status of guideline implementation . Lagoe and Aspling (1996) discuss the complex incentives and disincentives at play from the perspective of physicians . Physicians may tend to view practice guidelines as reducing quality of care because they encroach obtrusively into the exam room, not unlike other intrusive influences of managed care (e .g . gatekeeping, prior permission, etc .) . The guidelines can increase risk if the physician decides that a course of treatment outside the guideline is warranted, and if an adverse result arises there is greater probability that this failure to strictly follow the guideline can be used in litigation . The reverse situation can also occur - where the physician follows the guideline to the letter and yet an adverse result implies that another course of action should have been taken . Physicians may perceive that practice guidelines reflect an obsession with cost control that has diminished the quality of medical practice . This is a significant disincentive for complying with clinical guidelines . Practice guidelines are symbolic of the larger effort within the health care system to control costs . The beneficiary of this control is not the physician necessarily, but employers, insurers and consumers . In this regard, clinical guideline use may be perceived as an attempt by insurers and health care institutions (such as hospitals) to pass on the pain associated with cost control . It is not too surprising that some physicians associate their practice income loss with these efforts to standardize care . Thus, the guidelines are seen in a negative light as hindrances to medical practice . While some physicians resist compliance with clinical practice protocols due to quality of care, cost control and litigation reasons, many others see the erosion of the art of medicine as the primary disincentive for compliance (Scott, 1995) . The delivery of high quality care cannot be assumed within the boundaries of clinical algorithms . Sound medical practice balances both science and art . Thus, physician judgment is critical in determining diagnosis and treatment plans . A medical practice guideline may be useful in some primary care situations, especially involving preventive services . However, the guidelines become less relevant in situations where complex considerations (involving biological, mental, genetic and similar factors) confuse the choices available to providers and patients . It can be argued that the control of medical practice represented by clinical guidelines is simply inappropriate to the profession - that medical care cannot be automated. Thus, the art of medicine and its practice is a significant consideration for any physician when faced with the imperative to



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follow clinical guidelines (Haycox, Bagust & Walley, 1999) . Resistance to following guidelines represents a form of retaliation and strategy to undermine a bureaucratic system perceived as destroying professional autonomy . Balanced against the disincentives for compliance are many compelling reasons recommending that physicians strictly adhere to the guidelines . Most guidelines are the products of professional societies and associations ; that is, an end product from the community of medical specialists and subspecialists (Paniello, Virgo, Johnson, Clemente & Johnson, 1999) . In this respect, peers establish many clinical guidelines . This is a strong rationale for physicians to adopt clinical guidelines. Physicians typically want to follow the latest and best practices that their profession has identified . A related incentive for adhering to clinical guidelines stems from evidence-based medicine (Cook, Greengold, Ellrodt & Weingarten, 1997) . By gathering data on care delivery processes and outcomes, evidence-based algorithms incorporate scientific findings that guide clinical judgment. Physicians logically want to follow the most scientific reasons for delivering care in the interest of practicing the best care . There are numerous side benefits from using evidence-based medicine with a significant positive benefit resulting from decreased exposure to malpractice liability (Hyams, Shapiro & Brennan, 1996) . Evidence-based medicine may also integrate cost and quality trade-offs which provides explicit guidance for practitioners and simultaneously helps to minimize costs . Another factor to consider is the status of practice guideline implementation . The burden normally falls on the physician and the medical record to trace the status of preventive care and adherence to prevailing algorithms . In the future it is possible that the health care system may come to expect a more accountable role from patients . Managed care should not assume a one-way relationship where the patient is always on the receiving end . If consumers are able to assert their rights for health care, then they should also demonstrate responsible behavior . In this regard, patients can actively participate in collaborating with physicians and other providers in the delivery of care . This may imply providing patients greater access to the clinical guidelines that a managed care plan supports . An educated and active partner in care delivery - the patient - is one which may facilitate following the best practice exemplified in medical practice guidelines . Strategies for Managing Practice Guidelines Given the status quo for a health care provider's use of medical practice guidelines, physician compliance can be influenced through numerous strategies



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organization and coordination of clinical protocols, providers should devote attention to numerous avenues that can positively affect physician compliance . First, access is a key for raising compliance . Unless physicians are attached to a single managed care plan, there is a high probability that they are flooded with information about clinical protocols from the panels on which they serve and from their specialty or subspecialty . The problem is not a shortage of information, but an extraordinary flood of information . The problem is compounded because the guidelines are seldom stable (Czaja, McFall, Warnecke, Ford & Kaluzny, 1994) . New information from medical research and practice results in alterations in even the most fundamental practice guidelines . For physicians who serve on several panels or networks, the problem is exacerbated . Each plan may specify different protocols for the same diagnosis and treatment . Thus, compliance can be influenced by the manner in which physicians receive, file and update information on practice guidelines. Providers must design strategies that drive physicians to, rather than away from, protocol use . Second, the implementation of practice guidelines can be enhanced through peer review of compliance . Simply providing guidelines to physicians does not ensure that they will be followed. Unless there is some sort of monitoring, there is no guarantee that providers will consistently utilize guidelines, especially when the use of protocols leaves the impression of encroaching on professional prerogatives . Peer review is a promising strategy for raising protocol use . However, this initiative must be balanced by cost considerations . If clinical control excessively raises costs, the incentive for the managed care provider to utilize guidelines in the first place can be lost . Third, practice guideline implementation can be improved by offering physicians immediate and post-care reminders . By alerting physicians to guidelines that may be applied for forthcoming patient visits, the physician is better able to access the guideline and to apply it. Again, this strategy can raise costs unless the system of reminders is carefully managed . Compliance can also be increased by post-care reviews which represents consistent feedback . Fourth, physician compliance with medical practice guidelines improves when an effort is made to stabilize and organize the guidelines in an intelligent way that supports practice (Bergstrom, 1997 ; Stason, 1997). Managed care plans can be accompanied by constraining policies and programs . While this has certain dysfunctional effects, it can also promote a more efficient system of guidelines that is updated constantly ; that offers providers easy access ; and, that educates them on significant changes in their specialties and subspecialties . The goal is to create systems that are user-friendly and that result in physicians seeking information on guidelines as a normal aspect of their care to patients . Fifth, Fig . 2 indicates that educating physicians about guidelines - their content and application - is a



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promising way to improve compliance . Simply providing guidelines to physicians is not sufficient . The guidelines should be accompanied by continuing education in the proper application in order for the pro to have maximum benefit . Practice Setting Characteristics Staff Versus Network Models The characteristics of a practice setting will influence physician compliance with medical practice guidelines . Figure 2 indicates that at least three characteristics influence physician compliance. First, the type of practice setting - staff model versus network model - affects the structure, organization and coordination of practice guidelines ; the physician incentives for compliance ; and the extent to which patients collaborate in guideline implementation . These variables in turn influence physician compliance . Table 2 depicts hypothesized relationships between type of managed care setting (i .e . staff model versus network model) and practice guideline implementation . A staff model organization usually retains physicians as staff members . Network models affiliate with physicians who serve as quasi staff members that are loosely coupled with the providers . Preferred provider organizations, independent practice organizations and point of service plans are typical network models. As Table 2 indicates, despite their increasing prevalence, network models are less favorable for implementing clinical practice guidelines . Staff model managed care settings are predicted to have a positive impact on practice guideline structure, organization and coordination whereas network Table 2 .

Staff versus Network Models and the Implementation of Medical Practice Guidelines . Managed Care Setting

Practice Guideline Implementation

Staff Model

Practice Guideline Structure, Organization & Coordination • Access via Networked Computers • Process for Updating Guidelines • Systematic Assessment of Guideline Efficacy • Process to Educate Providers Physician Incentives for Compliance Patients' Collaboration in Implementing Guidelines

+ + + + -

`+' = Medical practice guidelines are facilitated in the practice setting

Network Models (PPOs, IPAs, POS)



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models do not generally facilitate practice guideline management. The network model will require more effort and resources to achieve the same level of practice guideline according to Table 2 . Staff model arrangements have a propensity to offer better structure for information and computer systems . This can provide easier access to clinical guidelines through networked computers . Admittedly, network models can offer a similar arrangement via the internet, but not within the context of the host organizations' local server . The staff model physician can access a single electronic source whereas the network model physician may have to access several sets of practice guidelines depending upon who the patient is and from which insurer the patient receives coverage . The staff physician may also address several types of insurers across patients, but the host organization can bundle practice guidelines, can reduce conflicts among the guidelines and can provide a more integrated information system . Staff model organizations are more likely to develop a process for updating practice guidelines and for ensuring that the guidelines are readily available to staff members . Network models will also make every effort to keep their guidelines current and to ensure that physician members are cognizant of the guidelines . However, physician members of the network may not immediately recognize changes in guidelines if they are following other guidelines associated with other plans . The staff model provider is better able to reduce redundancies in guidelines and to maintain efficiency by which the guidelines are managed and communicated to physicians . In effect, the staff model sets a platform from which change and improvement are more seamless . Network models can achieve these same goals, but usually at greater expense . Both staff model and network model practice settings pursue the systematic assessment of guideline efficiency ; that is, strategies to streamline medical protocols that better inform physicians and that enable physicians to comply with the guidelines . However, staff modes have a better basis for systematically assessing the extent to which guidelines are properly implemented . Communication and access are easier for the staff organization because of the direct connection with physicians and the presence of administrative staff who are responsible for maintaining the system of guidelines . Similarly, staff models should possess processes and systems that efficiently and effectively deliver continuing education to clinicians. The staff organization is more likely to manage physician education due to the grouping of physicians at common clinic sites . This relieves staff models of the additional coordination challenges facing network models . Table 2 suggests that neither staff models nor network models have an advantage in offering incentives for compliance . If a physician in either setting fails to comply with a guideline the consequence is essentially the same . A



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significant pattern of noncompliance in either the staff or network situation calls for intervention . The primary advantage that a staff model possesses relative to the noncompliant physician is to terminate employment . However, the network model can also terminate the relationship with the offending physician . In either case the incentive for the physician is to maintain the relationship . Beyond the incentive of termination, both staff and network models can offer the same incentives to facilitate compliance by staff physicians . The staff model may have additional ability to implement incentives, but for most purposes the type of incentives are not unique in these managed care settings . Patient collaboration in implementing practice guidelines does not appear to be unique for either staff or network model . The key to capturing patient compliance relates to the length of the association between the patient and the managed care plan . The longer that a patient is associated with a provider, the more likely they will be exposed to care delivery interventions surrounding medical practice guidelines . This is not unique to the arrangement for physician staffing . Both staff and network models have the same ability to encourage patient collaboration in the use of guidelines . Both staff and network models rely on physicians to assist in implementing patient-oriented programs . Rural Versus Urban Milieu

The geographic location of a medical practice can influence medical practice guideline implementation and compliance . A study of care for diabetes mellitus among rural Medicare recipients in Minnesota indicated the need for an additional 30,000 hours of primary care physician services and a concomitant increase in the number of primary care physicians serving the population (Yawn, Casey & Hebert, 1999) . These findings relate to one practice guideline . Given the thousands of guidelines that exist, the actual application of clinical protocols across rural populations could result in a staggering demand for health care services in rural areas . In part, this finding is an indictment of the rural health delivery system . There is insufficient care available in many rural locations within the United States . The application of a standard or benchmark such as a clinical guideline demonstrates how rural populations can be truly undeserved . It is staggering to consider the resources that are needed to bring these populations up to the minimum specified in any medical practice guidelines . Although the Yawn, Casey and Hebert (1999) study focuses primarily on the effects of practice guidelines on the need for services, the research also has numerous implications for physician compliance with guidelines . Rural areas are often underserved . Practitioners must focus on delivering services in a situation that is often less than ideal . Physicians may not have the necessary



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basic clinical guidelines . In a few instances, some care is better than no care, even if this means that the specific requirements of a guideline are not met . Rural clinics can be substantially limited in their access to information . Although internet capabilities exist to facilitate access to clinical guideline compendiums for both urban and rural providers, rural communities may not have requisite communications capabilities such as those that exist in urban settings to support medical practices . If rural physicians cannot access fundamental information from the internet (or other technological support for medical practice), then it will be extremely difficult for them to implement guidelines . Finally, rural physicians may already have busy practices due to the tendency for rural areas to be underserved . The additional time that it may take to keep abreast of the latest practice guidelines may be traded-off for more time spent in delivering care . Guidelines become an ideal that should be pursued, but realistically can seldom be achieved without sacrificing care delivery . The situation is aggravated by the lack of managed care penetration into rural areas . Managed care plans are more likely to have established a set of clinical protocols for physicians within a network . Yet, rural physicians may not have equivalent access as urban physicians to managed care plans that have invested significantly in information systems support . Thus, the rural physician faces a comparably greater challenge in accessing medical practice guidelines and in maintaining a current file of guidelines that has been updated . The situation is even less conducive to physician compliance in using guidelines due to the lack of managed care coverage for patients. Many managed care plans invest considerably in educating patients about preventive care services . This patient education enables them to collaborate with physicians in the delivery of care and adherence to clinical protocols . Admittedly, even in urban areas this collaborative effect may be limited to preventive services . Nonetheless, it is a basis for development that rural physicians and patients cannot participate in at this time . Depth of Managed Care Figure 2 also indicates that the depth of managed care within communities can affect physician compliance with medical practice guidelines . Communities which have greater managed care penetration and which have more sophisticated managed care arrangements are more likely to observe greater compliance with clinical guidelines by physicians . Higher managed care penetration implies a higher probability of competition for enrollment . Plans must distinguish their services, and quality of care becomes a dominant factor for differentiating themselves from competitors . The ability to provide impressive reports for following National Committee on Quality Assurance standards is one means to convey the ability to deliver higher quality of care . Competition on the standards



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raises the bar of performance when there is greater depth of capitation within a community . There is also a greater likelihood that a community with greater depth of managed care will have utilized medical practice guidelines over a longer period of time . Thus, physicians in the community are more conversant in the guidelines ; have worked out the problems in accessing the guidelines ; have incorporated the guidelines within the normal course of their practices ; and, understand the rhythms for updating by specific plans . Medical Profession Autonomy A fourth factor influencing physician compliance with medical practice guidelines according to Fig. 2 is medical practice autonomy . Historically, physicians have experienced very powerful professional socialization . This process has dissipated in recent years . Nonetheless, there are still remnants of professional expectations and norms that dominate the field . The physician has significant autonomy in caring for patients ; autonomy that is respected by law and society . The result of this perquisite is an intense belief in rugged professional individualism . Many physicians do not mesh well with organizations because they are trained to think independently and to challenge assumptions about organizational authority . Smith, Piland and Discenza (1990) have theorized that many trade and professional workers achieve an elevated state of independence due to unique skills, knowledge and economics . They postulate that those individuals who possess relative independence in the work setting can take on the characteristics of free agents ; that is, employees can behave like free agents . It is clear that the concept of free agents applies to physicians as a whole and individually . For the most part, physicians tend to: be committed to their profession ; perceive that most medical care organizations are alike ; act in self-interest; are willing to change organizational affiliations with little encouragement ; develop limited loyalty to medical care organizations ; and, perceive substantial differences in reciprocity between what they invest in an organization and what the organization returns to them . Each of these characteristics of autonomy will be examined in turn because they are predicted to influence physician compliance with medical practice guidelines as shown in Table 3 . Commitment to the Profession Physicians, as free agents, are predicted to be more committed to their profession than they are to a medical group, managed care organization or other health care institution . They identify themselves as members of the medical nrofes-



118 Table 3 .

HOWARD L . SMITH ET AL .

Professional Autonomy of Physicians and the Implementation of Medical Practice Guidelines. Influence on Implementation of Medical Practice Guidelines

Professional Autonomy Manifested as Free Agent Attributes Commitment to the profession rather than to an organization (e .g ., a managed care plan) Organizational equality (i .e ., managed care plans are viewed as essentially equal) Self-interest (i .e., physicians' sense of self-interest overrides concern for an organization) Willingness to change affiliations (i .e ., physicians are willing to associate with many insurers) Short-run loyalty (i .e., physicians are not indelibly bound to a managed care plan) Inequality in reciprocity (i.e ., physicians perceive that they invest more in a managed care plan than vice versa)

Staff Model

Network Model

+/+ +/+ +

+' = Medical practice guidelines are facilitated in the practice setting. -' = Medical practice guidelines are not facilitated in the practice setting .

physicians are not favorably disposed to complying with medical practice guidelines championed by any particular managed care plan . If anything, physicians will support clinical guidelines that are established by their specialty or subspecialty . But, they are reluctant to let an organization dictate the correct or preferred steps in care delivery . By upholding the preeminence of the profession, physicians experience a sense of freedom to practice without deep regard to their clinical affiliation . Primary care can be delivered in a variety of settings (e .g . rural referral center, community health center, hospital, etc .) and for a wide array of organization types (e .g. private clinic, multispecialty group practice, etc .) . Table 3 predicts that this free agent attribute is detrimental to facilitating compliance with clinical protocols in network model managed care organizations because physicians are not closely linked to the network . Staff model managed care plans are more likely to establish a close relationship which may counterbalance physician autonomy ; but, physicians may still act independently thereby undermining clinical practice guidelines . Organizational Equality

As free agents, physicians are predicted to view most medical care organizations as the same . One managed care plan may have a few redeemable attributes



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over another, but these positive attributes are seldom significant enough to overcome the tendency of physicians to function mentally as free agents . By equating managed care organizations, physicians set the stage for noncompliance with managed care plan prescribed clinical protocols . The correct medical practice protocol for any given situation is that which the physician has personally adopted, not the guideline set by a managed care organization . This line of thought is especially prevalent for physicians practicing in network model health care plans . They are reluctant to follow medical practice guidelines which some organizational authority has deemed appropriate . In contrast, physicians in staff model health maintenance organizations are more likely to follow the clinical protocols adopted by their organization because they have a greater knowledge of the medical leaders who helped define the protocols ; they may have participated in the formation of the protocols ; and, they understand and buy into the organization's plans and efforts to deliver care . Self-interest Physicians are predicted to place their self-interest over that of the organization(s) for which they provide care, and therefore act as free agents. A free agent is most concerned with self and how to achieve personal goals. Non-free agents tend to view their personal goals within the context of the organization where they are employed . Personal goals are achieved within the context of the organization . Thus, the individual must sacrifice some progress toward personal goals in order to function effectively within the organizational context . In network model managed care plans, physicians' concern for self-interest overrides their concern for the organization . In these cases physicians are less likely to comply with clinical protocols unless physicians see that the protocols are contributing to the accomplishment of personal goals . The same phenomenon applies in staff model settings, but to a lesser extent. Physicians who are members of staff model group practices will also pursue their self-interest, but they recognize that what is good for the group is also good for them personally . Hence, they are more likely to follow medical practice guidelines than physicians in network models . Willingness to Change Affiliations Free agents are willing to change affiliation at a moment's notice if they perceive that their personal position is enhanced . If an organization offers them more money or better work environment, they will change affiliations . In the case of physicians, health care organizations may try to lure them to a better practice setting in terms of equipment and staffing . They may be offered more vav or



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HOWARD L'. SMITH ET AL.

susceptible to switching from one organization to another in the interest of fulfilling their personal and professional goals . The fact that physicians are willing to change affiliations adversely affects compliance with clinical protocols for those physicians who are members of network model managed care organizations . If the guidelines become too obtrusive to medical practice, these network physicians may simply move to another set of relationships with managed care organizations . As Fig . 2 suggests, physicians in staff model managed care organizations are less likely to be influenced by the phenomenon of affiliation change. They have self-selected out of the quest for a frequent change of affiliations in favor of stability . Consequently, they are willing to accept some of the constraints that their managed care organization has established in the way of practice behaviors . They are more likely to follow medical practice guidelines . Short-run Loyalty

Free agents not only display a willingness to change affiliations, but they also possess short-run loyalty to any organization . Free agents are more likely to question what an organization has done for them lately . Physicians still possess tremendous flexibility in where and for whom they practice medicine . Physicians are not indelibly bound to any particular organization . Thus, they can often change affiliations as they choose . The managed care environment has created greater constraints as far as this mobility is concerned, but physicians are still able to consider many geographical settings and types of organizations in their quest for the best practice environment. This freedom adversely affects compliance with medical practice guidelines in both the staff model and network model settings. Willing to change affiliations and with limited loyalty to the present medical care organization, physicians are less likely to comply with what they perceive to be obtrusive medical practice guidelines (especially those that they view as incorrect given their training and experience) . Inequality in Reciprocity

Finally, Fig. 2 indicates that free agents tend to perceive an inequality in reciprocity . Free agents believe that they give more to organizations than they receive from organizations . In the case of physicians, it is predicted that they may perceive they are providing a managed care organization with a unique gift - their medical practice gifts . Yet, the organization hardly reciprocates . Physicians receive remuneration and a setting in which to practice their profession, but this hardly equates with their contribution . Physicians are predicted to view themselves as giving more to a managed care plan than that which the managed care plan gives back to them . Managed care organizations



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establish all sorts of barriers that make it very difficult for them to actually practice medicine. As a result, physicians in network model managed care plans are less likely to comply with medical practice guidelines . In contrast, physicians in staff model practices have already accepted a difference in reciprocity . They have acknowledged that the managed care organization meets several of their needs (e .g . coverage for call after hours, a sound retirement plan, stability in paycheck, etc .) which warrants complying with clinical protocols in order to assist the organization . By helping the organization, physicians in staff model groups are helping themselves .

A RESEARCH AGENDA Physician compliance with medical practice guidelines presents a thorny problem for managed care organizations (Davis, 1996) . Many different sources are responsible for formulating clinical protocols and usually these authorities rely on physicians to create the guidelines. Even though a medical professional society or association may recommend a particular standard, clinical guidelines are often adapted to the local practice setting in order to account for the unique characteristics of that setting including the patient population. With several managed care organizations in any given community requesting physicians to utilize often modified versions of nationally formulated protocols, there is an inevitable confusion among physicians about which guideline to follow . New medical evidence recommends updating the existing guidelines . With these forces in place, it is to be expected that compliance will be difficult to attain . Several strategies have been identified in the medical field for improving compliance despite these constraints . There are a number of issues that can be resolved in the future in order to improve the management of medical practice guidelines in managed care . Following is a research agenda that can guide applied research which may help managed care organizations improve physician compliance with clinical guidelines . A Conceptual Model

Figure 2 presented a conceptual model of factors influencing physician compliance with medical practice guidelines . A fruitful first step in research will focus on testing the contribution of each factor (and interrelational combination of factors) to physician compliance with clinical guidelines . In this regard, research could test the relative contribution to attaining compliance by practice setting characteristics, physician autonomy, status of practice guideline implementation, and new initiatives for practice guideline implementation .



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Which factor(s) is most important in explaining variances in compliance? Where should health care managers address attention, effort and resources in attempts to raise compliance levels? Which factor(s), if any, is beyond the control of health care managers in the ability to shape and influence promising levels of compliance? Are there other factors which have significant influence on physician compliance? How do these factors affect the proposed conceptual model? As the medical field continues to gain experience with clinical practice guidelines and their implementation, do any of the variables in the conceptual model become less important from a managerial perspective? These are a few of the issues about compliance that should be addressed in future research . Management Strategies This review of the literature has surfaced a broad representation of strategies or initiatives that are being tested, and in some cases institutionalized, in the efforts to increase compliance . No single source has integrated these strategies together for consideration by managed care providers. Nonetheless, there is much experimentation and adaptation occurring in practice (Frances, Kahn, Carpenter, Frances & Docherty, 1998 ; Gregory, Cifaldi & Tanner, 1999) . Compliance is a continuing problem that faces managed care plans . As NCQA and other accreditation standards evolve in the health care field, compliance will grow in importance . If managed care plans cannot achieve and document exemplary performance in care delivery, then they may lose accreditation, or at least become less competitive due to a lower quality of care . Medical practice guidelines are designed to achieve basic standards of care which in total lead to managed care and health maintenance . It is imperative that managed care plans attain physician compliance in order to survive and thrive in the competitive environment . As this literature review has suggested, physicians are often not warmly embracing protocols because they infringe on the autonomy of their practices . Thus, health care managers face a difficult predicament when attempting to encourage physicians to comply with a professional expectation where such efforts can often be interpreted as coercion . Paradoxically, if physicians do comply then they not only help to improve the health of their patients, but also the financial health of the organizations which provide physicians with financial support . Research can profitably be directed toward understanding which strategies for compliance have general applicability across medical disciplines, specialties and subspecialties . Are there specialties or subspecialties for which the most promising compliance strategies are ineffective? What are the causal factors that undermine these initiatives? What modifications are required to ensure that



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these constraining factors are minimized? What lessons can be learned from these modifications for improving compliance in other practice settings? In the final analysis, answers to these questions will help to identify the most optimal set of approaches for encouraging physician compliance with clinical protocols . It is unlikely that a single approach to gaining compliance is optimal . More likely a core of common strategies are most conducive to attaining compliance . Research can identify this core of strategies and thereby help to focus health care managers' efforts in modifying compliance strategies to the needs and peculiarities of specific managed care environments . Integrated Guidelines Most studies of medical practice guidelines focus on a single clinical protocol (e .g . diabetes mellitus) or a set of protocols (e .g . preventive care guidelines) . Further research is needed in integrating guidelines within medical specialties and subspecialties . What are the best pathways for achieving comprehensively integrated guidelines? How can health care managers assist physicians in this effort within a managed care setting? What forms of technological support are needed to achieve integration? What resources are needed to support integration and, once achieved, what resources are needed to update and maintain the guidelines? Research on integration can also begin to answer the complex question of duplication and conflicting guidelines . Physicians who practice in network model settings are more likely to receive several sets of guidelines. They are faced with the decision of following one, all, or none of the clinical protocols . Research could be directed to reducing this ambiguity from the system. Health care managers can benefit from evidence-based findings indicating the adverse effects on compliance by mixed messages from competing guidelines . Health care managers can also identify collaborative methodologies that network model managed care plans utilize to reduce redundancy and duplication for physician staff members . Practice Setting Effects The type of practice setting - staff model versus network model - is a powerful variable affecting physician compliance with medical practice guidelines . As Tables 2 and 3 suggest, practice settings can influence the success of guideline implementation and the extent to which physicians view the guidelines as coercive . Research should be undertaken to test the predicted relationships in Tables 2 and 3 as a means for better understanding the effects of staff versus network model impact, and possible strategies for managing this impact . As



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Table 2 predicts, staff model settings are more conducive to supporting guideline compliance due to access via networked computers, processes for updating guidelines, systematic assessments of guideline efficacy, and processes for educating providers . Research should focus on how to achieve similar results in network model settings . Table 2 also predicts that neither staff nor network models are positively associated with incentives for compliance or patient collaboration in implementing guidelines . Are these predicted relationships correct? If so, research should ascertain how to positively influence physician incentives and patient collaboration in managed care settings . Physician Autonomy Table 3 predicts that physician autonomy will influence implementation of medical practice guidelines . Are these predicted relationships functional in practice? Table 3 suggests that staff model practice settings are more likely to mitigate the autonomy of physicians compared to network settings . Research can ascertain whether these relationships are, in fact, functioning . If network models are less likely to overcome physician autonomy as a constraining factor on clinical protocol compliance, additional studies should investigate the appropriate strategies that might be used in network model settings to overcome the adverse effects of free agent behavior by staff physicians . Managing Information Compliance with medical practice guidelines will remain difficult as long as medical research and experience continue to shape standards of care . Physicians are confronted by an incredible explosion of knowledge about medical care that is difficult enough without the complexities of continually revised clinical protocols . Research should examine how to update clinical guidelines and how to best inform physicians when these guidelines have been revised . Health care managers can benefit from studies that analyze how clinical guidelines can be integrated within existing clinical databases so that practice, patient record and clinical protocols are considered simultaneously in a seamless system . Research is also needed in the optimal avenues for including practitioners' input on what they believe to be the appropriate protocols for their unique settings and needs of their patients . The Prospects for Compliance Physician compliance with medical practice protocols is very significant for managed care and all of medical practice . While many forces are reshaping



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medical practice, which makes implementation of clinical protocols a challenge for health care managers, there remains a promising perspective that should not be forgotten. Amid the struggle to standardize care, to raise the quality of medical practice, and to deliver best cost care, medical practice guidelines have evolved as a promising direction and important guiding principle of managed care . The struggle by health care managers to achieve improvements in obtaining physician compliance with these guidelines is worth the effort and cost because in the final analysis the ultimate beneficiaries will be patients and our system of health care delivery .

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MANAGED CARE AND DRUG TREATMENT PRACTICES : A MODEL OF ORGANIZATIONAL RESPONSE TO EXTERNAL INFLUENCE Christy Harris Lemak and Jeffrey A . Alexander ABSTRACT We draw upon and integrate two organizational theory perspectives to develop a conceptual model of how managed care influences the treatment practices of outpatient drug treatment providers . First, using resource dependence theory, we suggest that treatment practices will vary as a function of an organization's dependence on managed care and the scope and stringency of oversight mechanisms used by managed care firms . Second, we apply institutional theory to suggest that the expectations of the professional staff and sources of legitimacy will also directly influence treatment practices. Finally, we draw upon previous integrative frameworks and argue that institutional factors will also indirectly influence treatment by moderating the negative effects of managed care dependence and oversight.

Advances in Health Care Management, Volume 2, pages 131-159 . Copyright ® 2001 by Elsevier Science Ltd . All rights of reproduction in any form reserved . ISBN: 0-7623-0802-8 131



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INTRODUCTION In response to the high costs associated with substance abuse and mental health services in the United States, there has been rapid growth of managed care in this sector over the past several years . It is estimated that by the end of 1999, the mental health and substance abuse benefits of nearly 177 million people were included in managed behavioral care programs, a 23% increase from the previous year (Findlay, 1999) . In the public sector, nearly every state has implemented managed care programs for mental health and substance abuse conditions (Manderscheid & Henderson, 1995) . There is intense debate regarding the problems and benefits of managed care for substance abuse and mental health care (Institute of Medicine, 1997) . Managed behavioral care programs have the potential to dramatically alter cost, access and quality of mental health and substance abuse treatment practices by influencing the practice patterns of providers (Mechanic, Schlesinger & McAlpine, 1995 ; Wells et al ., 1995 ; Gold et al ., 1995) . Much of the controversy surrounding the spread of managed care in behavioral health stems from the fact that many of the oversight requirements and utilization mechanisms of managed behavioral care specifically target for change those treatment practices commonly associated with effective care (e.g . length of treatment, provision of supplemental services) . Thus, the type and degree of provider response to managed care requirements may be particularly problematic . The central goal of this paper is to develop a conceptual model for understanding the relationships between managed care and outpatient substance abuse treatment (OSAT) organizations . The model suggests that the treatment practices of OSAT organizations are established in response to interdependence with managed care firms, as well as in response to direct and indirect influences of institutional pressures from professional treatment staff and other sources of organizational legitimacy . The proposed model represents an integration of two organizational theory perspectives : resource dependence theory and institutional theory . The paper makes a contribution to the existing research in two ways . First, despite the rapid growth of managed care in the behavioral health sector and the controversy surrounding its potential impact on treatment practices, there is limited understanding of the effects of managed care on drug treatment providers (Institute of Medicine, 1997 ; Beinecke, Goodman & Lockhart, 1997 ; Beinecke & Lockhart, 1998 ; French et al ., 1996 ; Alexander & Lemak, 1997a, b, c) . Most studies of managed care and drug treatment have been largely descriptive and atheoretical . The unique features of addiction and the special characteristics of drug treatment providers call for new conceptual models that may help us



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understand the joint relationship between managed care requirements and the organizational practices of treatment providers . Second, the environmental and organizational characteristics of drug treatment organizations present an opportunity to apply and extend organizational theory. Specifically, OSAT organizations are typically small organizations operating within complex environments . Many drug treatment units are highly dependent upon other organizations such as managed care firms, general acute care hospitals and community agencies for client referrals and revenues . At the same time, OSAT units must continuously respond to various advocacy groups, licensing bodies, accreditors and other professional standards involved in specifying appropriate and "best" treatment practices . This complex network of private and public, technical and institutional influences offers an opportunity to apply and integrate institutional theory and resource dependence perspectives . We review the research literature in these areas and develop a conceptual model that melds these two organizational theory perspectives in order to enhance the understanding of how managed care affects drug treatment organizations .

BACKGROUND We begin with a brief description of OSAT organizations and the treatment practices that are most directly linked to client outcomes (duration, intensity, medical and social services) . Next, we present a descriptive profile of managed care in this sector, with an emphasis on the existing empirical research regarding the ways that managed care firms attempt to influence these and other treatment practices . Finally, we present and discuss our proposed conceptual framework . Key Treatment Practices of OSAT Organizations Research supports the general notion that substance abuse treatment can be effective (McLellan et al ., 1997) . It is generally accepted by the scientific community that positive treatment outcomes are strongly associated with : (1) the length of time clients spend in treatment, (2) the intensity of treatment received, and (3) the availability of specialized services for medical and social problems of clients (Institute of Medicine, 1997 ; McLellan et al ., 1997) . Treatment duration is the most important predictor of various post-treatment outcomes, including reduced drug use, fewer arrests, improved employment outcomes and fewer subsequent readmissions . This association holds for clients with a wide range of addiction problems receiving treatment in all substance abuse treatment modalities (McLellan et al ., 1997 ; McKay et al ., 1994 ; Moos, Finney & Cronkite 1990 ; DeLeon, 1984 ; Bell, Richard & Feltz, 1996 ; Ershoff, Radcliffe &



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Gregory, 1996 ; Hoffmann & Miller, 1992 ; Hoffmann et al ., 1989 ; Simpson & Savage, 1980) . Recent studies suggest that the effect of longer treatment on improved post-treatment outcomes is due in large part to the frequency and intensity of treatment, as well as the range of services that clients receive when they have longer treatment stays (Simpson et al ., 1997 ; Hoffman et al ., 1994 ; McLellan et al., 1993 ; Shoptaw et al ., 1994; Simpson et al ., 1995) . There is evidence that more intense treatment improves abstinence in outpatient settings (Campbell et al., 1997) ; improves outcomes for cocaine dependent clients in outpatient treatment (Higgins et al ., 1993) and other modalities (Hoffman et al ., 1994 ; Kang, Kleinman & Woody, 1991) ; and makes methadone maintenance more, effective (Simpson et al ., 1995) . Finally, the quantity and range of treatment services provided within a program, including counseling, physician care, referral for employment, housing and family therapy are important factors in explaining the variability in effectiveness among treatment programs (McLellan et al ., 1997, 30) . Most clients in substance abuse treatment have one or more significant problems in the following areas : medical status, employment and self-support, family relations and psychiatric function (Weisner et al ., 1996) . Studies over the past decade have shown that specialized medical and social services focusing on these addiction-related problems can be effective in improving treatment results (McLellan et al ., 1997) . While there is scientific consensus that the outcomes of outpatient substance abuse treatment are linked to treatment duration, treatment intensity and the availability of medical and social services, considerable variation exists in the approach to and outcomes of treatment across various provider organizations . Much of this variation can be attributed to uncertainty surrounding the interpretation and implementation of these treatment practices . This uncertainty stems from different aspects of the diagnosis and treatment process . First, there is often uncertainty in the diagnosis of addiction disorders, with increased need to obtain complex, sensitive information about potential non-addiction issues that may affect selection of the appropriate treatment program, such as information on multiple drug use, coexisting mental health disorders, patient financial and social surroundings . For example, some clients may start and stop treatment several times before successfully remaining in treatment . In other cases, mental health conditions and social factors such as a lack of family support cannot be immediately determined . These and other complexities make it difficult to identify the most appropriate treatment plan at the time of initial diagnosis . Second, there is a lack of consensus among treatment providers about precise levels of treatment duration or intensity that are most appropriate for diagnosed



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addiction disorders. This may be related to the existence of multiple ideologies and approaches within the substance abuse treatment system (e .g., 12-step versus medical models) (D'Aunno, Sutton & Price, 1991) . It may also be related to the considerable variation in the settings and modalities of treatment that are available, including for example, small independent providers, halfway houses, large outpatient facilities, "intensive" outpatient programs and employee assistance programs. The treatment staff and specific treatment approach may vary across settings, with treatment provided by recovering addicts, certified substance abuse treatment counselors, psychiatrists, Ph .D.-trained psychologists and others . This creates a complex, varied system of care with no single, "best" approach . Profile of Managed Care and Drug Treatment Organizations As drug treatment organizations work to provide appropriate, effective treatment to clients, they must also contend with external influences on organizational operations . In recent years, managed care has played an increasingly important role in the environment of drug treatment providers, with the potential to shape treatment practices and other aspects of care . Managed care for drug treatment and mental health services are typically grouped together and defined as managed behavioral care. Along with its rapid growth in recent years, this industry has become increasingly complex, with public and private programs organized in a variety of forms (Findlay, 1999 ; Jeffrey & Riley 2000 ; Croze 2000 ; SAMHSA 2000) . For example, substance abuse treatment and mental health services often are provided through separate "carve out" arrangements with specialty managed care organizations (Frank & McGuire, 1998 ; Hodgkin, Horgan & Garnick, 1997) . Other organizations, including large employers and state governments, choose to "carve-in" behavioral health care services and develop their own managed care programs and treatment systems, often integrating them with general acute care insurance initiatives (SAMHSA, 2000) . Outpatient substance abuse treatment units represent a central component of the drug abuse delivery system, accounting for nearly 70% of those in treatment (Substance Abuse and Mental Health Services Administration, 1995) . Managed care firms often prefer outpatient treatment services due to lower costs relative to inpatient and residential settings and because outpatient care is often the least restrictive alternative for clients (Institute of Medicine, 1997) . The trend toward outpatient settings has continued in recent years, supported also by the absence of definitive research that indicates that better outcomes are achieved in inpatient versus outpatient settings (McLellan et al ., 1997) . In 1995, about 38% of OSAT units were involved in managed care, with, on average, 46% of their revenues from managed care arrangements (Alexander & Lemak, 1997 ; Alexander et al .,



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1998). OSAT units are most dependent on private managed care arrangements which constitute 26% of revenues, compared with 12% from Medicaid managed care and 8% from other public managed care programs . OSAT units have an average of 6 .7 contractual managed care arrangements, out of a total 8 .8 arrangements . Further, 12% of OSAT units have no contractual managed care arrangements and 20% have contracts accounting for less than half of all managed care arrangements . On the other hand, 23% of the units report that 100% of their managed care arrangements were contractual (Lemak, 1998) . The most common form of managed care oversight involves limiting the number of visits received by clients . On average, 73% of OSAT managed care clients are subject to some type of visit limits from the managed care firm . Managed care firms also dictate the nature of the utilization review process . Specifically, 34% of OSAT managed care clients were subject to requirements that at least some of the utilization review correspondence be in writing, as compared with telephone calls to the managed care organization . Further, for over 56% of the managed care clients, managed care firms specify that utilization review correspondence must occur with a member of the treatment staff and not with clerical or administrative personnel assigned to such activities (Alexander & Lemak, 1997) . Managed care firms are also involved in the specification of the nature and types of treatment to be reimbursed . On average, managed care firms specify the content of treatment plans for 37% of managed care clients and require follow-up with clients after discharge for 30% of all managed care cases . The use of sanctions was less prevalent among the 1995 NDATSS respondents . Managed care firms disallowed claims after treatment ended for an average 31 % of managed care clients (Alexander & Lemak, 1997) . Finally, the degree of strictness or stringency of the oversight by managed care is often expressed as limits on the numbers of visits that are authorized for payment . There is variation in the number of visits authorized, from a few to several visits. On average, 19% of OSAT managed care clients had no visit limits, 39% had more than 20 visits authorized, 30% had 11-20 visits authorized, 11% had 6-10 visits authorized and 5% of the clients had the most stringent visit limits, with 5 or fewer OSAT visits authorized (Lemak, 1998) . Does Managed Care Target Specific Treatment Practices? It is clear that the role and extent of managed care have increased dramatically in the drug treatment sector in recent years . The mechanisms used to influence and control provider behavior represent an integral element of most managed care programs . Despite its importance, few studies have examined how managed care firms influence, control, or otherwise "manage" drug treatment practices



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(Institute of Medicine, 1997 ; SAMHSA, 2000). We have summarized the empirical research on the oversight practices of managed care firms in the drug treatment sector in Table 1 (found in the Appendix) . These studies represent a foundation of research regarding managed care and substance abuse treatment practices . Several problems, however, characterize this research . First, there are few comprehensive studies that focus specifically on managed care activities and effects in outpatient settings . Thus, there is no clear understanding of how managed care may influence treatment practices in this integral part of the drug treatment delivery system . Second, those studies that focus on the organizational effects of managed care have included either a small number of case studies or a single state managed care initiative . The findings to date may therefore be biased by the specific attributes of a few managed care programs or a single state Medicaid system. Finally and most importantly, the research to date in this area has been largely descriptive, with little conceptual or theoretical foundation . This results in an inadequate conceptualization of how OSAT organizations must handle the potentially competing demands of managed care and multiple sources of organizational legitimacy . Further, the uncertainty surrounding addiction diagnosis, treatment and recovery make potential conflicts between meeting best practices and efforts to control costs or increase efficiency particularly relevant to research in this field. To our knowledge, no existing research has considered how treatment providers simultaneously address institutional pressures (e .g . from accreditors and professional staff) and technical demands (e .g . from managed care firms) . For example, the lack of evidence-based precision regarding levels of treatment duration and intensity may give managed care organizations greater opportunity to reduce care by limiting covered visits more stringently . Alternatively, however, this uncertainty may give treatment professionals more leverage in their attempts to obtain approval for more visits, more intense treatment and other services on behalf of managed care clients . We suggest that, with few exceptions, research on drug treatment organizations has not been driven by theory, with a notable absence of organization theory perspectives . In this paper, we develop a conceptual model that integrates resource dependence theory and institutional theory, thus providing a theoretically grounded framework for future research on the effects of managed care on drug treatment organizations .

CONCEPTUAL MODEL We develop a conceptual model with three components . First, using resource dependence theory, we suggest that treatment duration, treatment intensity and



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the provision of medical and social services will vary as a function of an OSAT unit's dependence on managed care, as well as the scope and stringency of oversight mechanisms used by managed care firms . Second, we apply institutional theory to suggest that the expectations of professional staff and sources of legitimacy will also directly influence treatment practices . Finally, we draw upon previous frameworks that integrate resource dependence and institutional perspectives and argue that institutional factors will also indirectly influence treatment by moderating, or constraining the negative effects of managed care dependence and oversight . This final portion of the model is important because it provides a new way of integrating resource dependence and institutional theory . The model is shown in Fig . 1 and discussed in detail below . Resource Dependence Explanations Resource dependence theory (Aldrich, 1976 ; Pfeffer & Salancik, 1978) is helpful in understanding why and how OSAT organizations respond to managed care firms . Resource dependence theory maintains that, in order to survive, organizations must obtain resources from the environment . When there is a limited or uncertain supply of resources, organizations must find ways to ensure a stable and steady flow of them, including securing resources through transactions with other organizations . In essence, resource dependence theory describes the development and nature of interorganizational power and the way such power affects the activities of organizations (Pfeffer & Salancik, 1978) . Specifically, resource dependence theory has two major components . First, it describes how organizations are constrained by other organizations that control critical resources . Next, it suggests the ways in which organizations respond to external influence . Most studies of resource dependence theory emphasize the latter component and describe activities of organizations to reduce dependence on other organizations in order to acquire increased autonomy (Pfeffer, 1982) . In the next sections, we review the resource dependence literature in order to apply both components of the theory to OSAT organizations and managed care. Organizations that control key resources have power over the structure and behavior of other organizations that depend on those resources for survival (Pfeffer & Salancik, 1978) . This component of resource dependence theory has been researched and empirically supported in different sectors . For example, increased dependence on government funding was found to be associated with organizational pursuit of policies favored by the government, including various human resource policies (Greening & Gray, 1994 ; Pfeffer, 1982) . Also,

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dependence upon various external organizations was predictive of innovation activities in nursing facilities (Banaszak-Holl, Zinn & Mor, 1996), contract management decisions of hospitals (Alexander & Morrisey, 1989), buffering activities of large firms (Meznar & Nigh, 1995), the composition of hospital boards of directors (Pfeffer, 1972), joint venture activities (Pfeffer & Nowak, 1976), nursing home participation in managed care (Zinn et al ., 1999), various organizational structures (Dastmalchian, 1984, 1986 ; Wheeler, Mansfield & Todd, 1980), the strategic orientation of oil industry firms (Little, Li & Simerly, 1995), and, ultimately, the survival of organizations (Sheppard, 1995) . Resource dependence theory offers a way to understand the relative importance of the resource providers of a given organization . In this case, it provides a set of conditions that may explain why some OSAT units are more dependent on managed care than others and therefore, why units alter treatment practices in response to managed care . Few studies have considered the entire set of conditions predicted to explain compliance (Pfeffer, 1982) . In fact, the theory does not suggest how organizations respond when they are faced with multiple external organizations of near equal importance . The second component of resource dependence theory posits that organizations seek to manage uncertainty in their environment in order to achieve greater autonomy . Pfeffer and Salancik (1978) suggest a range of responses that organizations may take when faced with conditions of asymmetrical dependence, including : (1) avoiding influence ; (2) managing and avoiding dependence ; (3) altering organizational interdependence ; and (4) adapting or complying to the demands of key resource providers . Given that OSAT organizations depend on a variety of exchange relationships to secure a steady flow of clients and revenues, they must constantly make decisions regarding organizational structure and treatment practices, including whether and how to respond to managed care organizations' demands . This paper argues that OSAT organizations will choose the latter - adapt and conform to the requirements of managed care firms by changing treatment practices . Organizations may change their structure or behavior to comply with the demands of other organizations in order to secure a stable flow of resources (Pfeffer & Salancik, 1978) . Though they may prefer to remain autonomous, OSAT units may have little choice but to respond to managed care firms. This response - compliance with managed care demands - is of theoretical importance for several reasons . First, most of the theoretical discussion and empirical tests of resource dependence theory focus on the processes by which organizations either : (1) alter the conditions of interdependency ; (2) proactively manage the demands of the environment; or (3) both (Pfeffer, 1982 ; Sheppard, 1995 ; Banaszak-Holl, Zinn & Mor, 1996 ; Alexander & Morrisey, 1989) .



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More specifically, studies have shown that organizations facing dependency have greater board interlocks (Boyd, 1990) ; seek administrative control over resource providers (Dastmalchian, 1984) ; suppress technological developments as a way to increase organizational autonomy (Dunford, 1987) ; and seek a variety of environmental linkages (Gargiulo, 1993 ; Pfeffer, 1972 ; Provan, Beyer & Kruytbosch, 1980) . Very little attention is given to situations in which actions to reduce dependence and alter environmental conditions are not viable alternatives for organizations . There are no studies that describe situations in which organizations are constrained to the extent that strategies that increase organizational autonomy are not feasible . Pfeffer and Salancik discuss the problems of organizational conformance, but do not offer examples of studies of this response (1978) . Compared to many other health services providers such as hospitals, OSAT units are smaller, less differentiated and have a smaller proportion of administrative and clerical staff. These organizations with simple structures may be more vulnerable to the demands of the environment (Flynn, 1993) . For example, Topping and Calloway found that resource scarcity was an overriding factor in the environments of small mental health service organizations in rural communities in the South . The authors specifically identify how these small service providers have few opportunities to proactively plan for and address environmental changes, leading to the development of informal, often ineffective mental health delivery systems in rural areas (Topping & Calloway, 2001) . In general, larger organizations are more likely to have greater degrees of specialization and a larger administrative component (Child, 1972 ; Pugh, Hickson & Hinings, 1969 ; Blau, 1970) . These attributes provide and support a wider range of alternatives, including diversification and environmental influence, that can increase organizational autonomy . Cook and colleagues found support for a theoretical model in which organizations such as hospitals respond to environmental uncertainty along hierarchical, time-ordered sequences or paths (Cook et al ., 1983) . In this model, adaptation occurs at three organizational levels - institutional, managerial and technical - and follows a systematic sequence whereby organizational changes are made first at the institutional level and last when they involve any activity that relinquishes decision control at the technical level . Carter suggests that small organizations have only two levels - managerial and technical and asserts that in small firms the responsibility for interpreting and responding to the environment rests with the manager/owner (Carter, 1990) . This study did not, however, consider how organizations respond when environmental demands deal specifically with attributes of the technical core of the organization .



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Our model applies resource dependence theory in a situation where relatively small and powerless organizations (OSAT facilities) comply with the demands of other important organizations (managed care firms) in their environments . We present the following specific research propositions . First, the importance or essentiality of a resource refers to the organization's need for the resource in order to function, operate, or provide services . This dimension incorporates elements of substitutability and criticality (Jacobs, 1974 ; Aldrich, 1976 ; Pfeffer & Salancik, 1978 ; Provan, Beyer & Kruytbosch, 1980) . In general, resource dependence theory posits that, all else being equal, organizations will respond to the demands for resources that constitute a greater proportion of total organizational inputs or outputs (Pfeffer & Salancik, 1978) . OSAT units depend upon a steady flow of clients and revenues in order to function effectively and survive . When a greater percentage of these resources are under external influence, OSAT providers are more likely to respond to the demands of managed care firms . There is great variation in the extent to which OSAT clients and revenues are covered by managed care arrangements, thus suggesting : Proposition 1 : The percentage of total revenues covered by managed care will be negatively associated with treatment duration, treatment intensity and the provision of medical and social services . Second, Pfeffer and Salancik argue that power accrues to those organizations that have a greater ability to determine the allocation or use of key resources (1978) . There are varying levels of discretion regarding clients and treatment practices among the many types of managed care arrangements held by OSAT units . For example, some managed care arrangements involve contracts, in which specific rules are set regarding client treatment and reimbursement for services . Other managed care arrangements are informal, ad hoc arrangements between an OSAT provider and an insurer that are established when a client initiates treatment. When managed care arrangements are more formalized, managed care firms have more discretion over the allocation and use of clients and funds and thus, treatment providers have less power to resist their demands regarding treatment . We suggest : Proposition 2 : The number of contractual managed care arrangements will be negatively associated with treatment duration, treatment intensity and the provision of medical and social services . Third, the dependence of one organization on another also derives from the concentration of resource control, or the extent to which input or output



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transactions are made by a relatively few, or only one, significant organization (Pfeffer & Salancik, 1978) . The important question is not how many suppliers or purchasers are in the market, but rather, whether the focal organization has access to the resource from additional sources . Dependence on one supplier is less to the extent that alternative sources are available (Cook, 1977) . Greater managed care penetration in the market means that OSAT organizations have fewer, non-managed sources of clients and revenues . We, therefore, suggest: Proposition 3 : The degree of managed care penetration in the market will

be negatively associated with treatment duration, treatment intensity and the provision of medical and social services .

Fourth, as organizations seek to achieve greater control over key environmental resources, they may dictate how other, less powerful, organizations must behave in order to gain access to those resources . Thus, less powerful organizations must conform with externally imposed requirements in order to gain access to resources controlled by more powerful firms . For example, managed care firms use a variety of controls to insure that substance abuse services provided in OSAT units are consistent with their own objectives . These managed care oversight mechanisms typically serve to control access to care and/or regulate the amount, type, or quality of care (Wells et al ., 1995 ; Institute of Medicine, 1989) and can include various forms of utilization review, treatment planning, pre-certification, or limits on the number of visits that may be provided . These oversight requirements represent the management or control of treatment practices away from the actual site of service delivery and, as such, are the mechanisms by which managed care firms influence OSAT providers that are dependent upon them. When the bureaucratic influences of powerful external actors apply to a greater proportion of organizational resources or reach a larger proportion of the activities of the firm, they are more likely to be effective in changing organizational practices . This is because, in situations where external demands are greater in scope, the focal organization is left with a smaller proportion of resources and practices over which they have complete control . In other words, there are fewer opportunities to establish practices that are consistent with their own objectives, rather than those of external actors . Thus, the scope of managed care oversight may be defined as the extent or reach of oversight mechanisms in place at an OSAT organization . There is variation in the degree to which different managed care firms use oversight activities across different treatment providers . In some units, managed care oversight activities may affect only a small proportion of total clients . In other units, however, oversight activities must be dealt with for a large proportion of the client base . When more clients are covered by managed care oversight,



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OSAT units have fewer opportunities to set and maintain treatment practices without external influence . We suggest : Proposition 4 : The scope of managed care oversight will be negatively associated with treatment duration, treatment intensity and the provision of medical and social services . Finally, the stringency of external oversight refers to the strictness or severity of the oversight mechanisms used by key external actors . When powerful external actors place stringent rules and requirements on other organizations, these organizations have fewer alternatives regarding their responses to the requirements . When oversight is less strict, however, the targeted organization has more opportunities to define compliance with demands and, therefore, maintains more autonomy in responding to the external requirements . For example, managed care firms may have limits on the number of visits that are authorized for payment. There is variation, however, in the number of visits authorized, from a few to several visits . When managed care oversight is more stringent, OSAT units are provided with fewer alternatives regarding treatment practices and therefore OSAT units will respond to managed care demands to a greater degree, suggesting : Proposition 5 : The stringency of managed care oversight activities will be negatively associated with treatment duration, treatment intensity and the provision of medical and social services . Institutional Theory Explanations Thus far, this paper suggests how and why outpatient substance abuse treatment processes may be influenced by external demands . OSAT organizations are embedded in "a complex network of state and federal agencies, professional associations and advocacy groups and licensing and funding sources" (D'Aunno & Vaughn, 1995, 38) . In order to survive, treatment providers must obtain the legitimacy and support that comes from conforming to the expectations of these constituents. These external expectations may, therefore, have a strong influence on treatment duration, treatment intensity and medical and social services provided to clients. Further, the uncertain nature of substance abuse treatment means that treatment practices are determined to a great extent by the treatment staff (Hasenfeld, 1992 ; D'Aunno, Sutton & Price, 1991). The treatment staff of OSAT units is often composed of professionals, including those with masters degrees, doctorates, or special training in substance abuse and mental health treatment



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(D'Aunno, 1996) . Individuals who have training and experience as professional treatment providers also manage many OSAT organizations . The staff of OSAT units may, therefore, dictate treatment practices based largely upon their beliefs and the norms and standards of their professional training, affiliation and experience. As managed care firms seek to control the costs of substance abuse treatment; they often impose requirements on substance abuse treatment that may conflict with the norms and standards of professional treatment staff and the expectations of licensure and accreditation bodies . Shore and Beigel noted that the activities of managed behavioral care "pose aggressive challenges to features of the treatment of mental disorders that have been accepted for nearly half a century . . . [including] the definition of mental illness, the nature of professional accountability, the ethics of practitioners, the organization of practice and the allocation of professional resources" (1996, 116) . Institutional theory posits that organizational decisions are influenced by environmental factors, and, that organizations exist within multiple environments (Meyer & Rowan, 1977 ; DiMaggio & Powell, 1983 ; Scott, 1987). Technical environments are those within which a product or service is exchanged . Organizations are rewarded by the technical environment for effective and efficient control of the work process . Within the technical environment, OSAT organizations must be cost-efficient so that they are attractive to potential clients and, most importantly managed care firms . In addition, they must respond to the task contingencies of varied client needs and expectations . These technical environmental pressures may affect organizational decisions about treatment duration, treatment intensity and the medical and social services provided to clients . Institutional environments include the elaboration of rules and requirements to which organizations must conform in order to receive legitimacy and support (Meyer & Rowan, 1977) . The institutional environment or context, therefore, includes a set of understandings and expectations of appropriate organizational form and practice (Tolbert, 1985 ; Zucker, 1987). Organizations responding to the same environmental conditions take on similar characteristics, becoming isomorphic with each other . There are different mechanisms of isomorphic change in organizations, including political, mimetic and coercive pressures (DiMaggio & Powell, 1983 ; Scott, 1987) . Institutional pressures may influence OSAT practices . For example, political influence and government regulations may result in coercive isomorphism among OSAT facilities . Thus, OSAT units may experience pressure from government agencies regarding length of treatment, treatment intensity, or the medical and social services provided for clients . When there is uncertainty in



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the environment, organizations may imitate other successful organizations through mimetic processes . Further, as described above, the power of professions and the taken-for-granted notion of appropriate treatment practices may shape organizations through normative pressures . OSAT units must respond to these institutional forces from accreditation bodies, sponsoring organizations and the professionals as they determine treatment practices . Conforming to institutional environmental rules may be difficult for these organizations, as they face fragmented environments in which multiple groups make uncoordinated, often conflicting demands (Meyer & Rowan, 1977) . Research Propositions from Institutional Theory We suggest the following research propositions from institutional theory . First, the traditional stance of professional substance abuse treatment professionals is to serve as an advocate for the client, arranging for or providing whatever treatment is deemed necessary, without regard to cost (Shore & Beigel, 1996) . For many of these treatment professionals, working with insured clients in a pre-managed care, fee-for-service environment or under well-funded government programs supported this stance . Professional treatment staff, due to their increased education and training may be more aware of the treatment evaluation research that provides evidence that longer, more intense treatment that addresses non-treatment problems with medical and social services can be more effective (McLellan et al ., 1997) . OSAT units with a greater proportion of professional treatment staff are therefore less likely to accommodate managed care demands regarding treatment . We suggest : Proposition 6 : The proportion of total treatment staff who are professionally trained will be positively associated with treatment duration, treatment intensity and the provision of medical and social services . Second, OSAT organizations have a variety of opportunities for licensure and accreditation, including by federal agencies such as the Joint Commission on Accreditation for Health Care Organizations (JCAHO), state mental health and substance abuse treatment agencies, state Medicaid programs and county and local governmental bodies (D'Aunno, 1996) . In general, the expectations of these organizations are developed from treatment evaluation research findings regarding effective treatment practices . We suggest : Proposition 7: The number of licenses and accreditations will be positively associated with treatment duration, treatment intensity and the provision of medical and social services .



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Theoretical Convergence

There is growing interest among organizational theorists to explore the complimentarity of resource dependence and institutional theory (Oliver, 1991 ; Tolbert, 1985) . Generally, both theories acknowledge the role of the wider environment in creating demands and pressures to which organizations must respond if they are to survive. Both theories "emphasize the importance of obtaining legitimacy for the purposes of demonstrating social worthiness and mobilizing resources" (Oliver, 1991, 150) . The theories differ, however, in regard to the nature of organizational response to external pressures . Institutional theory holds that organizations isomorphically conform to societal expectations, while resource dependence argues that organizations exercise a wide range of active choices when confronted with externally-induced demands . Oliver suggests that convergence of the theories allows for the accommodation of "interest-seeking active organizational behavior when organizational responses to institutional pressures are not assumed to be invariably passive and conforming across all institutional conditions" (Oliver, 1991, 146) . In other words, Oliver's integrative framework combines the determinism of institutional theory with the strategic choice of resource dependence . She proposes a model of varying responses to institutional pressures, ranging from passive conformity to proactive manipulation . The nature of organizational response will vary depending on the pressures applied, who is applying them, how they are applied and the nature of the environment in which they occur . Previous research has simultaneously considered resource dependence and institutional influences . Greening and Gray found that institutional and resource dependence explanations are distinct but complementary with regard to issues management. Specifically, they suggest that institutional pressures create a context within which managers exercise discretion, given particular dependencies and other issues (Greening & Gray, 1994) . Goodstein suggests that organizations evaluate the degree to which conformity to institutional pressures enhances or constrains their likelihood of obtaining key resources from the environment . Further, as adoption of certain organizational practices becomes more widespread in an organizational field, expectations for compliance with the practice escalate . Organizations that do not respond to these norms risk their ability to acquire resources and legitimacy, thus reducing their competitive advantage in the marketplace (Goodstein, 1994) . Ingram and Simons concluded that organizations respond in a systematic, calculated manner to institutional pressures regarding work-family issues . Specifically, they demonstrate that strategic response was determined by both institutional pressures and the demands of key external exchange partners



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(Ingram & Simons, 1995) . Using a simpler framework with hypotheses from both resource dependence and institutional theory, Blum, Fields and Goodman found that both perspectives were helpful in understanding the organizational level determinants of the percentage of women in management positions in medium and large private sector firms (Blum, Fields & Goodman, 1994) . Zinn, Weech and Brannon showed that both rational adaptive and institutional factors were associated with Total Quality Management adoption in nursing homes (Zinn, Weech & Brannon, 1998) . Similarly, Sleeper and colleagues found that HMO choice of capitation was linked to both technical and institutional factors (Sleeper et al ., 1998) . Goodrick and Salancik also provide an integrated perspective of resource dependence and institutional theory (Goodrick & Salancik, 1996) . They suggest that organizational interests and dependencies play a role in selecting practices, but in addition to the constraint established by prevailing institutions, rather than as an alternative to them. In' a study of hospital Cesarean birth rates, they found that uncertainty in institutional norms provided discretion for decisionmakers . Their integrative framework suggests three conditions that contribute to "incomplete institutionalization" of practice norms or standards . These conditions include : (1) when the institutions concern goals while the means to achieve the goals are unspecified ; (2) when the knowledge base for practices is not clear cut; and (3) when institutional values themselves are uncertain, such that beliefs about legitimate purposes are in conflict or even contradictory (1996) . Thus, organizational interests interact with institutional uncertainty to produce variations in organizational structures and practices . Thus, one model integrating resource dependence and institutional theory suggested by Oliver (1991) and supported by others (Greening & Gray, 1994; Goodstein, 1994 ; Ingram & Simons, 1995) suggests that organizations make strategic choices among institutional and resource dependence factors in the determination of organizational structures and practices . Alternatively, another integration of the theories (Goodrick & Salancik, 1996) suggests that institutional processes and particularly, uncertainty in the degree to which they are institutionalized, set the bounds or limits in which organizational, or resource dependence, interests may influence organizational structure and practice . Both frameworks underscore the importance of considering both institutional and resource dependence influences on organizational practice . Research Propositions from Integration of the Theories This paper applies and extends the previous integrative perspectives for resource dependence and institutional theories by suggesting that institutional factors not



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only directly influence treatment practices, but also indirectly influence treatment by moderating or constraining the effects of managed care dependence and managed care oversight . The proposed direct influences of institutional factors on OSAT duration were discussed in the previous section . The proposed indirect influences of professional staff and sources of legitimacy are described below . Organizations will be less willing to conform with environmental pressures when these pressures or expectations are not compatible with internal norms and standards . Oliver (1991) suggests that organizations will choose defiance or manipulation strategies when the level of consistency between external demands and the normative standards of internal staff is low . In this paper, the proportion of professional treatment staff is expected to constrain the responses of OSAT units to the demands of managed care firms . Specifically, professional accountability may be challenged by the mechanisms used by managed care firms to influence treatment practices . A defining principle of professionalism is that professionals are held accountable only to their peers (Shore & Beigel, 1996) . Managed care oversight activities such as prior authorization and utilization review may violate this notion . OSAT units with a greater proportion of professional staff are more likely to resist accommodation to managed care demands, thus constraining the negative relationships between managed care and treatment duration, treatment intensity and the provision of medical and social services . Proposition 6a : The greater the proportion of total treatment staff who are professionally trained, the less negative the association between unit dependence on managed care and treatment duration, treatment intensity and the provision of medical and social services . Proposition 6b : The greater the proportion of total treatment staff who are professionally trained, the less negative the association between the scope of managed care oversight and treatment duration, treatment intensity and the provision of medical and social services . Proposition 6c : The greater the proportion of total treatment staff who are professionally trained, the less negative the association between the stringency of managed care oversight and treatment duration, treatment intensity and the provision of medical and social services . Organizations will be more likely to resist external pressures when there is a greater degree of constituent multiplicity (Oliver, 1991) . Organizations must respond to a variety of external laws, regulations and expectations . According to Oliver, "the collective normative order of the environment is not necessarily unitary or coherent : organizations often confront multiple, conflicting pressures



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that bound the ability of organizations to conform" (1991, 162) . The multiple bodies that issue licenses and accreditation place requirements on OSAT organizations with regard to treatment practices . Thus, organizations that obtain licenses and accreditation from more organizations will be more likely to resist managed care demands regarding treatment practices, thus constraining the negative relationships between managed care and treatment duration, treatment intensity and the provision of medical and social services . Proposition 7a : The greater the number of licenses and accreditations, the less negative the association between unit dependence on managed care and treatment duration, treatment intensity and the provision of medical and social services . Proposition 7b : The greater the number of licenses and accreditations, the less negative the association between the scope of managed care oversight and treatment duration, treatment intensity and the provision of medical and social services . Proposition 7c: The greater the number of licenses and accreditations, the less negative the association between the stringency of managed care oversight and treatment duration, treatment intensity and the provision of medical and social services .

CONCLUSIONS The model presented here focuses on organizational compliance with the external demands of key resource providers . The model draws upon resource dependence and institutional theory to suggest that organizations may have distinct responses to institutional and organizational, or resource dependence pressures from the environment . It may therefore help us understand the various ways that organizations may respond . For example, in some cases, organizations may respond isomorphically to normative institutional pressures and in other cases respond to the demands associated with external dependencies with managed care firms, or some combination of these responses . Further, tests of this model will provide an opportunity to examine possible moderating effects of institutional pressures on resource dependence responses . Specifically, institutional pressures may moderate or limit relationships between managed care and treatment practices, through the power of professional treatment staff and sources of organizational legitimacy . In this way, the framework allows for consideration of more complex relationships between



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institutional pressures, the consistency of these norms, the multiplicity of external constituents and the relative dependence of the unit on various external actors . Finally, there are unique attributes of OSAT units that make this application of resource dependence and institutional theory particularly interesting and important . First, OSAT units are relatively small, simple organizations facing conditions of great dependence . Second, OSAT units rely on a variety of sources of clients and revenues and face a variety of potentially conflicting demands regarding their practices. These features provide an interesting and appropriate context to examine how resource dependence and institutional factors independently and jointly influence organizational action . Finally, the uncertain nature of the means (treatment practices) and ends (treatment effectiveness) of OSAT units provides a unique opportunity for a study of external control of organizational action . While such uncertainty suggests variation in treatment practices that may be explained through a conceptual model based in resource dependence and institutional theory, it may also limit the generalizability of study results to other organizations that face similar degrees of uncertainty . Finally, this framework introduces a line of research that specifically considers how compliance (or any external control) is achieved . While the mechanisms of external influence are included in resource dependence theory, they are most often studied by considering characteristics of the management team or governing body of the focal organization . Empirical testing of this model may contribute to the literature by determining whether and how direct behavioral control influences organizational practice. Finally, the current model raises questions about potential systematic variation of dependence and oversight mechanisms, which has not previously been considered in theoretical and health services research models . The model presented here may therefore increase our understanding of how treatment organizations respond to the external influences of managed care . In addition, the conceptual model provides a rich foundation for future research on the effects of managed care on different types of health and human services organizations .

ACKNOWLEDGMENTS An earlier version of this paper was presented at the 1999 Academy of Management Annual Meeting (Health Care Division) . The authors wish to thank Tom D'Aunno and Jane Banaszak-Holl for their helpful suggestions . This research was supported by grants 5R01-DA03272 and 5R01-DA087231 from The National Institute on Drug Abuse .



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THE STRATEGIC IMPORTANCE OF OPEN ACCESS FOR HMOs IN A COMPETITIVE ENVIRONMENT Marjorie L . Icenogle, John E . Gamble, Norman B . Bryan and Daniel A. Rickert ABSTRACT Competition in the managed care industry has intensified as the industry has reached maturity. The current competitive environment of the industry and an increasing industry-wide emphasis on cost containment have resulted in declining profits, lower levels of member satisfaction, and increasing member disenrollment. Many health maintenance organizations (HMOs) have begun to reorient their approach to competitive advantage in the industry by offering their members open access to specialists . HMO executives believe that open access will reduce the degree of differentiation achieved by fee-for-service (FFS) plans and thereby will allow HMOs to attract additional employers and members away from FFS plans and to improve overall member retention . Unfortunately, there is no empirical evidence to support this assumption . This study is the first empirical test of the strategic importance of member autonomy and open access in a

Advances in Health Care Management, Volume 2, pages 161-185 . Copyright C 2001 by Elsevier Science Ltd . All rights of reproduction in any form reserved . ISBN : 0-7623-0802-8 161



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managed care environment . The study expands the model of consumer satisfaction with a health care system proposed by Luft (1981) and tested by Mummalaneni and Gopalakrishna (1997), and incorporates Porter's (1980) theory of competition in mature industries . The model utilized in this study assesses the relative importance of autonomy in selecting specialists (open access), service convenience, value/pricing, and HMO resources on member satisfaction with care and intentions to remain with the HMO. Results show that all four factors significantly influence satisfaction and that subsequently, satisfaction influences intentions to remain enrolled in the plan. In addition, the importance of autonomy is demonstrated by significant direct and indirect paths to intentions to remain in the plan.

INTRODUCTION Since the Health Maintenance Organization Act of 1973 was signed into law, managed care has grown to account for the largest portion of U .S . health care plans. By the end of 1997, 85% of all U .S . employees participating in employer provided health plans were enrolled in managed care plans, with health maintenance organizations (HMOs) accounting for approximately 30% of the market (Bell, 1998) . HMOs originated as an attempt to control rising health care costs, while improving the quality of patients' long-term health . The HMO concept is designed to ensure that every patient has a primary care physician who is responsible for managing all aspects of that patient's care, with a focus on prevention rather than treatment . Mitka (1998) notes that Paul Ellwood, M .D ., an early advocate of managed care and the physician that created the name, "health maintenance organization," claims that during the early years of managed care, power was successfully shifted away from physicians to large group purchasers of medical services. The increased power of purchasers helped reduce the growth of health care expenditures by approximately $500 billion, but failed to meet original expectations for improved quality and competition in the health care industry (Ellwood in Mitka, 1998) . Reinhardt argues that HMOs have become private health care regulators, rather than health maintenance organizations because HMO participants do not remain in plans long enough for the managed care plan to improve patients' long-term health (Mitka, 1998) . Under conditions of short membership duration, it is not economically viable for the HMO to make up-front investments in each new member to minimize long-term health maintenance costs (Mitka, 1998).



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As the managed care industry reaches maturity, Ellwood's prediction that the industry is in for another power shift in which consumers and patients gain power by exercising their rights to enroll in plans that offer the highest quality and value (Mitka, 1998), is consistent with Porter's (1980) theories of competition in mature industries . Evidence of this shift is seen as the increasing emphasis on cost containment has led members to demand improvements in the quality and breadth of managed care services and has resulted in high disenrollment rates for many managed care plans . Managed care executives identified member retention as the key challenge to the long-term success of managed care plans and believe that the importance of retention will increase as the managed care environment becomes more saturated (Wood, 1998) . Efforts to improve retention have primarily focused on member satisfaction with care based on the assumption that satisfaction translates into intentions to retain membership . Research has shown that members enrolled in managed care plans are consistently less satisfied with certain facets of care than members of fee-for-service (FFS) plans (Mummalanei & Gopalakrishna, 1997) . One of the facets of satisfaction where the greatest variance exists between FFS plans and HMOs is members' access to specialist physicians . HMO executives have begun to recognize that as markets have matured, consumers have greater knowledge of health care issues, have high expectations for medical services, and the desire to select their providers in the same way that they make other important purchases (Gemme, 1997) . As a result, some HMO executives have initiated new strategies to address changes in the competitive environment and buyer preferences . One strategy receiving attention from industry observers is the introduction of open access managed care products that eliminate the HMO gatekeeper function of primary physicians . This strategy is directed toward improving member satisfaction and retention (Halm, Causino & Blumenthal, 1997 ; Klein, 1997 ; Kreier, 1996) . Although it is intuitively appealing to believe that open access will improve satisfaction and retention, this assumption has no empirical support . The purpose of this study is to test this assumption in a field study . Other studies have investigated the factors that influence member satisfaction with health care delivery (e .g . Gabbott & Hogg, 1995 ; Mummalaneni & Gopalakrishna, 1997) ; however, these studies did not include autonomy in selecting health care providers . This paper reports the first phase of a longitudinal study designed for an HMO in the Southeastern U .S . to determine if open access to specialists influences member satisfaction with care and intentions to continue enrollment in the plan . The study tests a model of member satisfaction and intentions to remain in the plan, which includes the exogenous variables of autonomy, HMO resources, convenience, and pricing .



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THEORETICAL FOUNDATIONS Competition in the Health Care Industry HMO legislation of the 1970s resulted, in part, as a strategy to help reduce rising Medicare-related health care costs . The growth of HMOs was limited until the 1980s when U.S . employers faced increases in medical insurance costs that exceeded 10% annually . Consequently, managed care plans gained acceptance and by 1997 their collective market share grew to 85% (Mitka, 1998). As managed care has increased its penetration of the U .S . health care industry, it has entered a mature stage, which presents new competitive challenges (Kertesz, 1997 ; McDonald, 1997 ; Mitka, 1998) . Declining Industry Profitability Porter (1980) suggests that declining industry profitability is consistent with industry maturity . The managed care industry shows signs of maturity as industry margins have declined in recent years . Jacob (1998) notes that in 1994 industry net profit margins averaged 2 .4% with 90% of HMOs achieving profits, but in 1997 the industry average net profit fell to -1 .2% with only 47% of HMOs recording profits . The poor industry profitability was attributed to increased medical costs, rising prescription drug costs, and industry maturity-bred price competition . Medical costs increased by 3% in 1996 and by an estimated 3% to 5% in 1997 while premiums increased by only 0 .5% in 1996 and 2% to 4% in 1997 (Jacob, 1998 ; Katz, 1998) . Some HMOs increased premiums by as much as 9% during 1998, but these increases only modestly bolstered industry profitability, as medical costs and prescription drug costs also grew (Jeffrey, 1999) . Competition in Mature Markets In mature and saturated markets, historical growth rates are more difficult to achieve so managers are likely to aggressively attempt to lure customers away from rival firms (Porter, 1980) . McDonald (1997) suggests that competition in managed care is occurring primarily along two fronts ; managed care plans are striving to entice members away from FFS plans, as well as away from other managed care plans . Porter (1980) cautions that competitive battles for market share in mature markets are accompanied by high cost consequences. He suggests two alternatives that may be more cost-effective than recruiting new members : (a) increasing sales to existing customers, and (b) retaining current customers . The importance of member retention in managed care is widely recognized, especially since disenrollment increases costs and reduces



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revenue (Wood, 1998) . In addition to the loss of premiums, plans should consider the cost of member acquisition and reacquisition which ranges from half a month's to two months' premiums, and the marketing and sales costs to overcome the negative comments of members who left the plan (Wood, 1998). Expectations of Direct and Indirect Buyers of Healthcare Plans Researchers have consistently recognized that the cost advantage of HMOs continues to be an attractive feature in selecting a health care plan (Luft, 1981 ; Mummalaneni & Gopalakrishna, 1997) . However, as members' experience in a plan continues, other aspects of health care, such as convenience, availability of resources, and access to care become increasingly important to member satisfaction (Kertesz, 1997 ; Luft, 1981 ; Mummalaneri & Gopalakrishna, 1997) . The limitations of some managed care plans, may lead to consumer frustration and provide motivation to look for alternatives that allow more autonomy and fewer restrictions (Gemme, 1997 ; Kertesz, 1997) . HMO members are the consumers of healthcare services but because of their indirect buyer status they have little direct leverage over managed care organizations (MCOs) (Porter, 1980 ; Savage, Campbell, Patman & Nunnelley, 2000) . A change in employment may be an individual's only approach to changing health plans other than to express their dissatisfaction with their healthcare coverage to their employer. Until very recently most employers placed little weight on employee satisfaction with healthcare coverage in selecting a health plan since a change in employment would typically be viewed by most employees as a high switching cost from one health plan to another. However, as the job market has tightened employers are beginning to modify a variety of management practices, including compensation and benefits, to retain their employees . Even though cost is still a major consideration, more employers are considering such "responsible purchasing" criteria as geographic coverage and member satisfaction when selecting a health plan (Lo Sasso, Perloff, Schied & Murphy, 1999) . Private employers and federal, state, and local governments are the direct buyers of services provided by MCOs, and unlike their employees, employers have very low switching costs from one health plan to another (Savage et al ., 2000) . As a result of their low switching costs and volume purchases, employers have considerable leverage in negotiating with MCOs (Porter, 1980) . Klein (1997) notes that not only do employers recognize that employees prefer health plans that offer greater choice, but many employers have begun to find that HMO gatekeeping restrictions forces employees to miss more time at work because of the need for multiple office visits for a single illness .



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Relationship Between Cost and Access As increasing competition squeezes industry profit margins and buyers begin to exert greater leverage on sellers, managers must address the opposing challenges of reducing overall costs and adding differentiating features to lure demanding buyers . These contradictory objectives have led some HMO managers to choose between two strategies. One strategy involves reducing costs by restricting access to health services and limiting referrals to specialists . Kertesz (1997) found that HMO members in mature managed care markets reported declining levels of satisfaction and a reduced likelihood of continuing enrollment in the plans due to restricted access (Kertesz, 1997) . Other approaches aim to increase retention by utilizing strategies designed to improve member orientation programs, improve access to health and administrative information, or improve access to preferred primary providers and specialists (Wood, 1998) . All of these strategies are based on the assumption that overall satisfaction with health care leads to intentions to retain membership in the health plan. In order to develop a model that will adequately test these assumptions, previous studies of member satisfaction are reviewed in the following section . Studies Examining Member Satisfaction One of the first comprehensive efforts to identify the dimensions of patient satisfaction with medical services was conducted by Ware, Snyder, Wright and Davis (1983) . Their research ultimately identified six widely accepted dimensions of patient satisfaction : availability of resources, access to care, costs, continuity of care, interpersonal manner of the care provider, and the technical quality of care . Subsequent studies have included these dimensions . A recent study by Mummalaneni and Gopalakrishna (1997) presented what they believe to be the main elements of a model of consumer satisfaction with a health care system, based on Ware et al. (1983) . Their model proposed that satisfaction is influenced by consumer costs, access to health care, and abundance of resources in the delivery system . The analysis compared the satisfaction levels of members enrolled in fee-for-service (FFS) plans to members enrolled in HMOs to show that FFS consumers have higher satisfaction ratings than managed care consumers on a variety of satisfaction indicators . They also utilized regression analysis on the entire sample of FFS and HMO members, in which the independent variables were comprised of several single items and three scales and the dependent measure was satisfaction with care . Although the regression analysis presented interesting results, their analysis did



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not include a structural analysis of the causal relationships among all the constructs in the model . Satisfaction with HMO Resources The availability of HMO resources such as hospitals, medical specialists, and family practitioners has been shown to be related to overall satisfaction with health care (Mummalaneni & Gopalakrishna, 1997 ; Ware et al., 1983) . Mummalaneni and Gopalakrisha (1997) found that the availability of family doctors and availability of medical specialists, were both significant predictors of overall satisfaction with health care coverage . Satisfaction with Cost to Consumer The cost of health care coverage has been suggested to be associated with overall satisfaction of care in managed care plans (Kertesz, 1997 ; Luft, 1981 ; Mummalaneni & Gopalakrishna, 1997) . Mummalaneni and Gopalakrishna (1997) and Kertesz (1997) agreed that HMO consumers were significantly more satisfied with cost of medical care than FFS consumers . Mummalaneni and Gopalakrishna (1997) also found that for members of both FFS plans and HMOs, the cost of the plan to the member was significantly related to overall satisfaction with health care . Satisfaction with Access to HMO Resources Mummalaneni and Gopalakrishna (1997) noted that it has been argued that access-related factors are associated with overall satisfaction with health care coverage . Their study found that the following variables are significantly related to overall satisfaction of the health care plan : satisfaction with .office hours, availability of emergency care, waiting time at medical offices, and the convenience of medical care . FFS and HMO consumers did not hold significantly different satisfaction levels with all access-related variables with the exception of waiting times, parking facilities, and convenience of medical care, with HMO consumers having significantly greater satisfaction with waiting times and FFS consumers having significantly greater satisfaction with the parking and convenience . Autonomy in Selecting Providers The role of patient autonomy in selecting health care providers has not been empirically evaluated, but has been suggested to have an important role in improving the overall satisfaction of HMO members . Jones (1997) argues that health care consumers' levels of self-sufficiency and empowerment in selecting a health care plan contribute to overall satisfaction with their health care



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coverage, and that access to health plan providers is a third key facet of satisfaction. He cautions that none of these three components of HMO satisfaction are typically included in managed care satisfaction instruments . The managed care gatekeeper approach which limits member access to specialists is viewed unattractively by HMO members, physicians, and paying employers (Halm, et al ., 1997 ; Klein, 1997) . Klein (1997) notes that many employers that contract with HMOs to provide health care coverage for their employees have found that gatekeeping forces employees to miss more time at work because of the need for multiple office visits for a single illness . Also, Klein (1997) notes that under the best case scenario, the gatekeeper process is viewed neutrally by consumers and employers, but when the gatekeeper process becomes inefficient, consumer and payer satisfaction declines . Increasingly HMOs are considering allowing open access to specialists to satisfy the demands of consumers . Open access reportedly benefits all involved parties . The primary care physician saves time and effort in completing referral paperwork and the HMO saves administrative costs in enforcing that referrals are obtained (Halm, et al ., 1997) . The patient saves time by making only one visit directly to the specialist, and the employer gains productivity because employees do not have to miss work for the referral visit to the primary care physician (Klein, 1997) . The increased convenience and freedom of choice for members is assumed to increase satisfaction of care and intentions to remain enrolled in the health care plan (Jones, 1997 ; Kreier, 1996) . Relationship Between Satisfaction and Intention The view that member satisfaction and member retention are linked is consistent with Cronin and Taylor (1992) who found that consumer satisfaction has a significant effect on purchase intentions . This view is supported by Klein (1997) who observed that member and employer dissatisfaction tends to precede disenrollment. Jones (1997) posits that dissatisfied HMO customers will be motivated to change plans and that stable HMO membership is necessary for the long-term viability of the managed care plan . Wood (1998) disagrees that satisfaction and retention are close correlates by pointing to industry statistics that reflect that some managed care plans achieve high average satisfaction ratings, but still suffer from high member attrition rates . However, Wood (1998) agrees that member retention is critical to an HMO's success because of lost premiums, high member enrollment costs that range between one and two months premiums, and administrative costs of disenrollment such as copying or transferring records .



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Proposed Model

Based on the previous studies of member satisfaction and observations of the managed care industry's competitive environment, the following model is proposed to measure members' satisfaction with care and intentions to remain in the HMO health plan. This model is adapted from the model presented by Mummalaneni and Gopalakrishna (1998) who suggested that customer satisfaction studies should focus on administrative variables over which the health care plan has some control, rather than uncontrollable factors such as a physician's interpersonal skills . It is proposed that members' overall satisfaction with health care is influenced by members' perceptions of autonomy in selecting providers, fairness of the health care plan's pricing, adequacy of HMO resources, and convenience of care . Given that observers suggest that member dissatisfaction precedes disenrollment (Klein, 1997), and that satisfaction has been shown to affect purchase intentions (Cronin & Taylor, 1992), the model proposes that high levels of satisfaction with care will influence decisions to remain in the HMO . The proposed model is shown in Fig . 1 .

Fig. 1 .

Proposed Path Model of the Facets of HMO Member Satisfaction with Care and Intentions to Remain in the Managed Care Plan .



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METHODOLOGY Procedures The health plan organization in the study has approximately 90,000 members in two southern states and offers multiple product offerings . The managers were interested in conducting an open access pilot program to determine if open access to specialists would increase member satisfaction with care and improve retention . Since the purpose of this study was to establish benchmark measures of the importance of open access on overall plan satisfaction, this study was completed before the change to open access was announced to the members . The results of the initial study have established baseline measures for members' perceptions of overall satisfaction with the plan, intentions to remain in the plan, satisfaction with the HMO's resources, satisfaction with pricing, convenience, and autonomy in selecting providers . The HMO identified one employer, a regional university, as the test site for open access . The university, which has 4,100 employees enrolled in the HMO, employs 2,400 in association with the university and employs 2,500 at four teaching hospitals in a single metropolitan area . Data were collected using telephone interviews in which the interviewers recorded the responses in a computer database as the interviews were conducted . The population dataset included all the employees of the organization who were enrolled in the HMO. A computer program that automatically dialed phone numbers from the population dataset randomly selected subjects . The interviewer asked to speak with the employee (member) . When the employee answered, the interviewer informed the member that she was conducting a survey about the HMO health plan and would like to ask a few questions about the member's satisfaction with his health care coverage . Members were told that their participation was voluntary and that their responses would be confidential, unless the member requested that his name be included with the responses . Respondents were also informed that they could refuse to answer any question . Members who stopped the interview before completing the entire questionnaire were dropped from the study . Sample The researchers followed Bollen's (1989) recommended sample size of at least five observations for each free parameter . This rule of thumb suggests a minimum sample size of 260 (52 parameters x 5 respondents per parameter = 260 respondents) . In order to ensure adequate sample size, given the



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possibility of missing values, the researchers set the minimum number of responses at 400. Interviewers continued to call members until 400 completed response sets were obtained . Because several interviewers were calling members simultaneously, completed response sets were recorded for 404 members . To obtain 404 response sets, 2,756 calls were placed. Six hundred thirty-six members refused to participate . The remainder of the calls that did not result in a response set included : no answer (n = 808), busy (n = 34), wrong numbers (n = 140), lines not in service (n = 408), answering machines (n = 235), call answered by computer modem or fax (n = 68), and ineligible members (n = 23) . Twenty-eight of the respondents were eliminated from the sample because they answered one or more questions in the measurement model with "I refuse to answer." The median age of respondents was 43 .35% and 69% were female . Respondents were employed in the following areas : 35% by the university (12% faculty, 4% administration, 19% staff), 47% were employed by the university's hospitals (35% medical staff and 12% non-medical staff), and 14 .5% were employed by the College of Medicine (6 .2% faculty and 8 .3% staff) . Measures The study conducted by Mummalaneni and Gopalakrishna (1997) provided the basis for the items which measure the following four factors : convenience, price, availability of resources, and overall satisfaction . These items were adapted from the Patient Satisfaction Questionnaire (PSQ) originally developed by Ware et al . (1983) . All of the items in the measurement model used a five-point, five-anchor Likert-type response format with anchors ranging from strongly agree to strongly disagree . The items developed or adapted for the model in this study are listed in Table 1 . The questionnaire also contained the following demographic items : age, gender, and employment classification . Convenience of Care Mummalaneni and Gopalakrishna (1997) identified five aspects of convenience which are important to health care : location, emergency care, providers' office hours, parking facilities, and waiting time at the place of care ; however, based on the PSQ, they labeled this factor "access ." Gabbott and Hogg (1995) distinguished between two components of accessibility : physical accessibility and treatment accessibility . For clarification, we chose to label the physical accessibility factor "convenience" because the items in this scale measure the convenience of physical access . The survey included five convenience items : availability of emergency care, convenient locations, convenient office hours



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MARJORIE L . ICENOGLE ET AL. Table 1 . Scale Items Used to Measure the Constructs Included in the Model of HMO Customer Satisfaction and Customer Retention .

Customer Autonomy Autonomyl Autonomy2 Autonomy3 Autonomy4

Under the _ health plan, I have significant freedom in selecting my primary physician When my primary care physician decides I need to see a specialist, I can decide on my own which specialist to visit. I have considerable independence in selecting specialists when I have a specific health problem. Under the health plan it is easy for me to obtain care from physicians outside the plan's network .

Availability of Resources Resources I Resources2 Resources3 Resources4 Resources5 Resources6

There are enough family doctors in the health plan network . There is a shortage of family doctors in the - health plan network.(R) There are enough specialist doctors in the - health plan network . There is a shortage of specialist doctors in the health plan network .(R) There are enough hospitals in the _ health plan network . More hospitals are needed in the _ health plan network .(R)

Satisfaction with Pricing Pricing 1 Pricing2 Pricing3 Pricing4

The The The The

monthly fee charged by the _ health plan is fair . amount I am charged for my - health plan coverage is reasonable. co-pay charged by the _ health plan for office visits is fair . co-pay charged by the _ health plan for prescriptions is fair .

Convenience of Care Convenience1 With - health plan, it is easy to get medical care quickly in a medical emergency. Convenience2 My primary physician has office hours that are convenient for me . Convenience3 The specialists I see have office hours that are convenient for me. Convenience4 Places where you can get medical care under the - health plan are conveniently located . Convenience5 I am usually kept waiting a long time when I am at the doctor's office .(R) Overall Customer Satisfaction Overall Satl Overall Sat2 Overall Sat3 Overall Sat4

I am satisfied with the medical care I receive through the _ health plan . I am fully satisfied with the care I receive from the doctors in the _ health plan . Given the monthly fees that I pay for coverage, I am satisfied with the medical care I receive under the _ health plan . There are things about the medical care I receive under the health plan that could be greatly improved.(R)



The Strategic Importance of Open Access for HMOs in a Competitive Environment

Table] .

173

Continued .

Intention to Remain Remain1 Remain2 Remain3 Remain4 Remain5

If - offered additional health care plans, I would consider switching my health coverage to another plan .(R) I would change my health insurance provider if it were possible .(R) I am not interested in looking for coverage with another health insurance plan . I would consider changing employers to obtain better health care coverage.(R) I intend to look for another health insurance plan within the next six months .(R)

(R) Indicates reversed scored item .

for physicians, and specialists, and one item to measure waiting time in the primary physician's office . The parking convenience item included in the Mummalaneni and Gopalakrishna study was not included, because all of the hospitals in the geographical area of the study have adequate parking that is free to patients and visitors . Availability of Resources Based on items included in the PSQ, six items were adapted to measure satisfaction with resources, two each to measure the availability of primary physicians, the availability of specialists and the adequacy of the number of hospitals . Fairness of Pricing Researchers have consistently recognized that the cost advantage of HMOs continues to be a most attractive feature in selecting a health care plan (Luft, 1981 ; Mummalaneni & Gopalakrishna, 1997) . Therefore, the cost of premiums and co-payments are both likely to be important to overall HMO satisfaction . The questionnaire contained four items to measure fairness of pricing ; two items measure fairness of monthly premiums and one item measures fairness of co-payments for office visits and another measures fairness of co-payments for prescriptions . Autonomy in Selecting Providers The gatekeeper concept in HMOs ensures that the primary care physician is responsible for granting access to specialized medical treatment . In order to measure the importance of autonomy in selecting providers, four items were developed following the format of the self-determination items developed by Spreitzer (1995) . Two items measure autonomy in selecting a primary physician, while two items measure autonomy in selecting specialists .



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Overall Member Satisfaction with Care Three of the four items measuring overall satisfaction the health care received were adapted from Mummalaneni & Gopalakrishna (1997) . One additional item was created for this study, "Given the monthly fees that I pay for coverage, I am satisfied with the medical care I receive under the - health plan ." Intentions to Remain in the Health Plan Five items were developed to measure intentions to remain in the health plan. These items were patterned after items measuring employee intentions to leave their current employers (Aquino, Griffeth, Allen & Horn, 1997) . Data Analysis The responses were subjected to various analytic procedures, including the calculation of means and standards deviations and the determination of skewness and kurtosis . In order to assess participation bias, the demographic characteristics of the sample were compared to the demographic characteristics of the population . Analysis revealed that the sample characteristics matched the characteristics of the HMO members of this employer . To ensure that the items measured the intended constructs, the items analyzed in the subsequent measurement model were subjected to a principal components analysis with a promax rotation to facilitate interpretation of the factors (SAS Institute, Inc ., 1985) . From the exploratory principal components analysis, scales were developed and then the internal consistency of the scales was assessed using Cronbach's alpha. Data were entered into PRELIS 2 prior to input into a structural equations program (LISREL 8) . PRELIS computed the covariance matrix used in the subsequent structural equation analyses and examination of the results from the PRELIS analyses suggests that problematic levels of skewness and kurtosis are not present in the data . Both the measurement and structural aspects of the model were assessed before and during the analyses to ensure the model's identification . Structural models that are identified have a unique solution for the parameters in the model (Bollen, 1989) . Global identification was assured with a combination of identification rules, namely the t-rule, which is a necessary but not a sufficient condition for identification, and the two-indicator rule which is a sufficient, but not a necessary condition for identification . All of the constructs had three or more manifest indicators except price/value, which had two indicators . Local identification was assured with the calculation of the inverse of the information matrix . Thus, the model under consideration is assumed to be identified.



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A two-step procedure suggested by Anderson and Gerbing (1988) was used to assess the hypothesized model (see Fig . 1) . The two-step procedure ensured that the latent measures of the hypothesized model were theoretically and statistically acceptable prior to assessing the structural relationship among these latent constructs . First, the measurement model was assessed to determine the viability of the factor structure of the six latent constructs . Fit statistics such as global, incremental (i .e . incremental type 2 and 3 fit statistics), and residual type fit statistics suggest that the measurement model for this research is acceptable for subsequent structural analyses (GFI = 0 .92, NNFI = 0 .92, CFI = 0.92, RMSEA = 0 .05, RMR = 0 .04) . Next, a series of nested models was tested to determine the viability of the structural relations of the hypothesized model . First, the saturated model was compared to the hypothesized model by examining the relative fit indices and incremental indices . Next, the modification indices were examined to revise the hypothesized model, after which the relative fit indices and incremental indices of the revised model were compared to the hypothesized model . Results The means, standard deviations, and covariances of the items included in the structural equation analyses are reported in Table 2 . The principal components analysis resulted in six factors, with each factor representing the constructs in the proposed model ; however, only 19 of the 28 items had significant loadings on only one factor. The other nine items either had no significant loading on any factor (minimum loading of 0.50 required) or had high cross factor loadings and were consequently eliminated from the study . The two items measuring the adequacy of the number of hospitals did not load on the availability of resources scale . The two items measuring fairness of the co-payments did not load on the pricing factor. In the convenience scale, the items measuring convenience of locations and the item measuring waiting time in the doctor's office did not have significant loadings . The fourth item in the satisfaction with care scale, "There are things about the medical care I receive under the - health plan that could be greatly improved," was removed due to an insignificant loading. Two of the items in the intention to remain scale were eliminated : (a) "I would consider changing employers to obtain better health care coverage ;" , and (b) " I intend to look for another health insurance plan within the next six months ." Table 3 presents the item loadings computed from the principal components analysis, with a promax rotation on the 19 variables of interest . Results support the suspected factor groupings for the 19 items, with the six factors representing approximately 65% of the variance . Cronbach's alpha coefficients for each of



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the subsequent scales used in this analysis are also reported in Table 3 . All scales had an alpha reliability of 0.70 or higher with the exception of one, convenience of care, which had a reliability of 0 .62 . The structural analysis, like the measurement model analysis, was conducted using the maximum likelihood estimation procedure. The standardized solution for the final revised model is displayed in Table 5 . The models were assessed by both absolute and incremental fit measures, in addition to reviewing error terms and the standardized residuals of the fitted covariance matrix . The results of the error term and standardized residual analyses are mixed, but overall the analyses are positive and encouraging. There were no negative error terms ; however, there were a small number of standardized residuals greater than 2 .58. The median standardize residual was 0 .00, but the fitted covariance matrix underestimated the covariance of Q3 (There are enough family doctors in the Health Plan network .) and Q18 (There are enough specialist doctors in the Health Plan network .) (9 .93) ; the covariance of Q18 and Q23 (There is a shortage of specialist doctors in the Health Plan network.) (7 .44) ; and the covariance of Q20 (The amount that I am charged for my Health Plan coverage is reasonable .) and Q33 (Given the monthly fees that I pay for



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The Strategic Importance of Open Access for HMOs in a Competitive Environment

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Table 5 . Standardized Solution of Revised Model . Lambda Y Q27 Q32 Q33 Q9 Q28 Q29 Lambda X Q2 Q14 Q16 Q17 Q3 Q13 Q18 Q23 Q6 Q20 Q4 Q25 Q26

Satisfy 0 .74 0.60 0.59

Autonomy 0.70 0.65 0 .58 0 .76

Intent

0 .63 0 .80 0.65 Resource

0.67 0.63 0.71 0.69

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0.34 0.46

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0 .70 0 .68

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0 .52 0 .54 0 .57

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coverage, I am satisfied with the medical care I receive under the Health Plan .) (6 .08). Similarly the fitted covariance matrix overestimated the relationship between Q18 and Q13 (There is a shortage of family doctors in the Health Plan network.) (-5 .26) ; Q6 (The monthly fee charged by the Health Plan is fair.) and Q33 (-4 .45) ; and Q3 and Q13 (-4 .44) . From this analysis it appears that the manifest indicators posing the greatest problems are Q13, Q18, and Q33 . Therefore, subsequent analyses in the second phase of this research will determine if these relationships are the result of sampling fluctuations or perhaps non-linear relationships among the variables, or both . Results of the structural analysis suggest that the saturated model fit the data better than the hypothesized model (0X 2 = 33, df = 4, p < 0.05) . Although the



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fit statistics appear to be very close for the two models, two fit statistics compel acceptance of the saturated model as the preferred model . For the hypothesized model (see Fig. 1) Hoelter's (1983) Critical N (CN) falls below 200 (CN = 196) and the Expected Cross-Validation Index (ECVI) is higher (1 .20 versus 1 .13) . Given that the present research is mainly exploratory (see Joreskog & Sorbom, 1993 for a brief discussion on the acceptability of using structural equation methodology in an exploratory mode), the modification indices were consulted, which suggested freeing a path from autonomy to intention to remain. The rational for freeing this path is supported in the discussion section of the paper. The revised model is shown in Fig . 2 . The nested tests of the revised model with the saturated and hypothesized models (see Table 4) reveal that the revised model does differ from and fits the data better than the hypothesized model, but does not differ from the saturated model . However, the revised model is preferred over the saturated model mainly due to its parsimony (saturated model PNFI = 0 .69, revised model PNFI = 0.71) and the lack of theoretical justification for the saturated model. Various fit statistics (e .g . NNFI = 0 .90, CFI = 0.92, IFI = 0.92, RMR = 0.04) attest the adequacy of fit of the revised model to the data . The revised model shown in Fig . 2 shows the relationships among the structural variables . The maximum likelihood parameter estimates, which are reported for

* p < 0 .05 ** p<0 .01 ***p < 0 .001

Fig. 2 .

Revised Path Model of the Facets of HMO Member Satisfaction with Care and Intentions to Remain in the Managed Care Plan .



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the revised model, indicate that a one-unit change in an independent variable will increase the value of the dependent variable by the estimated amount . All four constructs hypothesized to affect satisfaction with care are significant . Autonomy and convenience show the strongest relationships, however, resources and price are also significantly related . As predicted, the model shows the direct affect of satisfaction with care on intention to remain in the plan . The only difference in the revised and hypothesized models is the direct path from autonomy to intention to remain in the plan . Autonomy in selecting one's physicians and specialists indirectly affects intentions to remain through satisfaction, but also directly affects intention to remain in the plan . This direct path from autonomy and intention has the largest parameter estimate in the model .

DISCUSSION The results of this study are consistent with previous studies that have examined the satisfaction of health care consumers (Luft, 1981 ; Mummalaneni & Gopalakrishna, 1997 ; Ware, Snyder, Wright & Davis, 1983) . Yet, this study improves the understanding of customer satisfaction in an HMO environment since the sample was comprised exclusively of HMO members . The hypothesized relationships in the structural equations model of the variables that influence HMO satisfaction with care and member intentions to remain in the plan were supported by the results of the study . Each of the four exogenous variables, fairness of pricing, convenience of care, adequate availability of providers, and autonomy to choose one's care providers all had significant positive relationships with overall member satisfaction with care . And, satisfaction with care was shown to influence intentions to remain in the plan . Interestingly, the researchers were somewhat surprised by the strong direct relationship between autonomy to choose providers and intention to remain in the plan. The model also shows that satisfaction mediates the relationship between autonomy and intention to remain in the plan . The mediated relationship is consistent with studies that have suggested facets of the health plan directly affect overall satisfaction with a health care plan . The direct path from autonomy to intention is also consistent with Wood's (1998) argument that even plans with high levels of member satisfaction may experience high disenrollment rates . If high satisfaction does not always lead to retention, then other variables must directly affect intentions to remain in or leave the plan . Further theoretical support for the direct link between autonomy and intention to remain link is provided by other experts who have suggested that sophisticated consumers are unwilling to rely on the gatekeeper for access to medical services that they perceive as necessary (Gemme, 1997) .



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The researchers noted that as the managed care industry matures, HMO executives are increasing open access to specialists in order to eliminate a competitive disadvantage relative to their FFS rivals . The results of the structural equations model support this shift in strategy, suggesting that autonomy in selecting providers is likely to improve HMO member retention . Porter (1980) argues that as industries evolve from an emerging state to that of maturity, decision makers must devise new strategies that meet the demands of the industry environment . Porter's (1980) theories of competition in mature industries are supported by the study results. HMO consumers have become more sophisticated purchasers of health care services since the infancy of the industry and subsequently have placed greater demands on the providers of health care services. HMOs that have failed to adapt their strategic approach to advantage have experienced declines in member satisfaction and have been plagued with unacceptably low member retention rates (Jones, 1997 ; Klein, 1997) . The introduction of open access products where members have freedom to schedule appointments with specialists without a referral from a primary physician has the potential to dramatically improve retention rates in the managed care environment and allow HMOs to survive industry saturation and increasing competition . High member retention rates are critical to the long-term success of managed care plans since the cost associated with losing customers is high and the cost to attract new customers away from rivals is becoming greater . The constant churning of new customers drives a variety of non-value adding HMO administrative costs and puts further downward pressure on company profit margins . Companies must pursue strategies that minimize activities that yield low value, especially in mature industries . High member retention rates are also vital for allowing HMOs to retain the central philosophy of improving patients' long-term health through prevention rather than treatment . When HMOs retain members for extended periods of time, then HMOs can afford to invest in members' long-term health . In the long run, preventative care could yield substantial health care cost savings (Mitka, 1998) . This study supports the use of open access products from the standpoint of satisfying consumer expectations and improving member retention, but this study has not considered the cost impact of such programs . A follow-up study will be conducted after the pilot plan has been in place for one year . The second study will allow examination of the degree that consumer utilization of specialist services impacts the HMO's cost structure . Some HMO executives have stated that open access plans have had little impact on their costs . However, some HMOs have experienced runaway costs after open access programs were introduced (Blecher, 1998) . Regardless of the nature of an industry's competitive environment, the effect of new strategic actions on the HMO's cost position,



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as well as purchaser and member satisfaction and loyalty must be evaluated . In addition, the results of the follow-up study will offer the opportunity to determine if the relative importance of open access to specialists endures as members become accustomed to open access to specialists . The generalizability of the results of this study may be limited due to the sample upon which the study was based. This study included members of only one HMO in a single metropolitan area . To ensure the generalizability of the results, the study should be replicated in other geographic locations, and should include the members of several HMOs . The study should also be replicated using mailed questionnaires, as Hall (1995) suggests that written questionnaires may reduce bias in feedback regarding health care services . Future studies should also strive to develop more comprehensive measures and investigate additional antecedents, of overall customer satisfaction with health care plans and intentions to remain in the plan . In summary, open access to specialists appears to be an important determinant of health care consumers' overall satisfaction with care and intentions to remain with the HMO . Managed care plans that attempt to - restrict access to specialists to minimize medical costs risk losing additional competitive strength in the industry as their member retention rates decline and cost of attracting new members becomes a larger percentage of total operating costs . As the industry continues to mature, likely industry survivors will be the managed care plans that carefully match cost-cutting efforts with efforts to improve customer satisfaction and intentions to remain in the plan .

ACKNOWLEDGMENT Funding for this research was provided by the University of South Alabama Research Council .

REFERENCES Anderson, J. C., & Gerbing, D . W . (1988) . Structural equation modeling in practice: A review and recommended two-step approach . Psychological Bulletin, 103, 411-423 . Aquino, K ., Gnffeth, R . W., Allen, D . G ., & Hom, P. (1997) . Integrating justice constructs into the turnover process : A test of a referent cognitions model . Academy of Management Journal, 40(5), 1208-1227 . Bell, A. (1998) . Managed care enrollment surged last year. National Underwriter Life & Health Financial Services Edition, 102(4), 1-2. Blecher, M. B . (1998). Choice words on open access . Hospitals & Health Networks, 72(6), 54-57. Bollen, K . A . (1989) . Structural equations with latent variables. New York : Wiley.



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Cronin, J . J ., & Taylor, S . A. (1992) . Measuring service quality : A re-examination and extension . Journal of Marketing, 58(July), 55-68 . Gabbott, M ., & Hogg, G . (1995). Grounds for discrimination : Establishing criteria for evaluating health services . The Service Industries Journal, 15(1), 90-101 . Gemme, E. M . (1997) . Retaining customers in a managed care market . Marketing Health Services, 17(3), 19-21 . Hall, M. F. (1995) . Patient satisfaction or acquiescence? Comparing mail and telephone survey results. Journal of Health Care Marketing, 15(1), 54-61 . Halm, E . A., Causino, N ., & Blumenthal, D. (1997). Is gatekeeping better than traditional care? A survey of physicians' attitudes . The Journal of the American Medical Association, 278(20), 1677-1681 . Hoelter, J. W . (1983) . The analysis of covariance structures : Goodness-of-fit indices . Sociological Methods & Research, 11, 325-344 . Jacob, J . A . (1998) . Rising medical costs cut '97 HMO profits ; '98 may be better . American Medical News, 41(15), 5 . Jeffrey, N. A . (1999) . Aetna, Oxford, Humana post results that meet or beat analysts' forecasts . The Wall Street Journal, July 30, B7. Jones, K . C . (1997). Consumer satisfaction : A key to financial success in the managed care environment. Journal of Health Care Finance, 23(4), 21-33 . Joreskog, K. G., & Sorbom, D. (1993) . Lisrel 8. Hillsdale, NJ: SSI . Katz, D . M. (1998). Big employers see four percent health benefit cost hike . National Underwriter Property & Casualty - Risk & Benefits Management, 102(4), 15 . Kertesz, L. (1997) . Trouble for HMOs? Modern Healthcare, May 12, 48-51 . Klein, R . F . (1997) . Gatekeeper referrals impede productivity. National Underwriter Life & Health Financial Services Edition, 101(17), 12-13 . Kreier, R . (1996) . HMOs without gatekeepers . American Medical News, 39(29), 1-4 . Lo Sasso, A. T ., Perloff, L., Schied, J ., & Murphy, J . J. (1999) . Beyond cost: "Responsible purchasing" of managed care by employers . Health Affairs, 18(6), 212-223. Luft, H. S . (1981). Health maintenance organizations : Dimensions of performance . New York: Wiley. McDonald, L . (1997). Half the battle is holding on . Best's Review - Life-Health Insurance Edition, 98(5), 8. Mitka, M . (1998). A quarter century at health maintenance . The Journal of the American Medical Association, 280(24), 2059. Mummalaneni, V., & Gopalakrishna, P . (1997) . Access, resource, and cost impacts on consumer satisfaction with health care : A comparison across alternative health care modes and time . Journal of Business Research, 39, 173-186 . Porter, M . (1980) . Competitive strategy: Techniques for analyzing industries and competitors . New York: The Free Press . SAS Institute Inc . (1985). SAS® User's Guide : Statistics. (5th ed .). Cary NC: SAS Institute Inc . Savage, G . T ., Campbell, K. S ., Patman, T ., & Nunnelley, L . L . (2000). Beyond managed costs. Health Care Management Review, Winter 2000, 25(1), 93-109. Spreitzer, G. M . (1995). Psychological empowerment in the workplace : Dimensions, measurement, and validation. Academy of Management Journal, 38(5), 1442-1465 . Ware, J. E ., Jr ., Snyder, M . K., Wright, W . R., & Davis, A . R. (1983) . Defining and measuring patient satisfaction with medical care . Evaluation and Program Planning, 6, 247-263 . Wood, S. D. (1998) . Strategies for improving health plan member retention . Healthcare Financial Management, 52(12), S1-S6 .



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APPENDIX A Health Plan Questionnaire Script

Hello, my name is and I'm calling from (polling organization) for (Health Maintenance Organization) . May I speak with `member name'? (If the correct person is on the phone, continue . Otherwise, get the correct person on the phone, go through the opening statement again then continue . We are conducting a survey about the (HMO) and would like to ask a few questions about your satisfaction with coverage . The information you give us will help us learn how we can improve the coverage that the plan provides . For quality control purposes, this call may be monitored . Your answers are kept strictly confidential . Unless you request it, your name will not be kept as part of the survey data . You may refuse to answer any question and you may stop the survey at any time . Please tell us whether you strongly agree, agree, disagree, or strongly disagree with the following statements .

RESHAPING HEALTH PROFESSIONS IN THE NEW MARKETPLACE James W . Begun and Roice D . Luke

ABSTRACT Professions are loose aggregations of practitioners and professional associations that are involved in dynamic and often conflictual relationships with buyers, regulators, teachers/researchers, substitutes, and suppliers. Professions manage their adaptation to environmental change through these linkages . Health professions in the past two decades have been challenged to show resilience and adaptability, particularly in their new, closer interdependence with buyer organizations . As organizations manage the production processes of professionals in new ways, professions are both reshaped and reshape the organizations with which they work . Those organizations that balance organizational and professional interests are likely to be more effective in the new marketplace.

INTRODUCTION For some, the relation between professions and their work is simple . There is a map of tasks to be done and an isomorphic map of people doing them . Function is structure. But the reality is more complex ; the tasks, the professions, and the links between them change continually . To some extent, these changes arise beyond the professional world . Technology, politics, and other social forces divide tasks and regroup them . They inundate one profession with recruits while uprooting the institutional foundations of another . . . (Abbott, 1988, 35).

Advances in Health Care Management, Volume 2, pages 189-213. Copyright ® 2001 by Elsevier Science Ltd . All rights of reproduction in any form reserved . ISBN : 0-7623-0802-8 189



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Change has been a constant reality throughout the health care sector for the past two decades . While mightily anchored in licensing laws, social norms, and power relations, the division of labor in health care has also been affected by change . New specialties within professions have emerged, such as the hospitalist or intensivist physician . Power relations within professions, as between generalist and specialist physicians, have shifted . Subordinate professions have seized turf traditionally held by more powerful professions, as nurse practitioners have accomplished in the field of primary medical care . New technologies, such as magnetic resonance imaging, have led to newly differentiated categories of workers . Within existing professions and specialties, the content of work has been altered . The increased power of health care purchasers has diminished the decision-making scope of many clinicians . And the rapid consolidation among hospitals and the growth in large group practices, especially at the local level, has shifted the balance of power between organizations and health professional workers . Standardization and industrial routinization in the form of clinical pathways and guidelines have made less indeterminate the task domain of a host of clinical professions. Looking ahead, improvements in biotechnology and genetic engineering, and advances in consumer access to health information, signal even more monumental shifts in the health care division of labor . Quantum advances in self-diagnosis, self-treatment, self-medication, and even self-surgery are on the near horizon . In this chapter, a framework is presented for understanding the recent shifts in relationships among and within health professions, as well as the relationships between professions and their stakeholders . The issues of deprofessionalization and of "trust" between clinicians and consumers are addressed in light of the framework . Generally, we find that the concept of profession is a resilient one, and that professions are renegotiating relationships in light of environmental change . A key relationship in flux is that between health professionals and the organizations in which they commonly work . Much of the labor of multiple professions and specialties is coordinated, managed, and marketed within organizations . Organizations are the settings for intra- and interprofessional conflict and politics . Changes in both organizations and their professional workers are noted. While professions are accommodating pressures to rationalize their work in formal organizations, organizations are learning to accommodate professional autonomy, assist in the development of professional identities, and respect professional practice . Finally, implications for researchers are presented . Organization theory needs to be infused with theory about occupations and professions, particularly in the health care sector .



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PROFESSIONS AND PROFESSIONALS IN SOCIETY : A FRAMEWORK Professions can be characterized as loosely coupled collectives of individual practitioners and professional associations (Begun & Lippincott, 1993) . Drawing on frameworks presented in Abbott (1988), Burrage, Jarausch and Siegrist (1990), and the industrial economist Porter (1980), these collectives of practitioners and their associations interact with five major sets of social actors : substitutes, teachers and researchers, buyers, suppliers, and regulators . These social actors may be individuals, groups, or organizations. Figure 1 depicts the key relationships in which individual professionals and their collectives are embedded . Individual professionals, as well as collective professions, interact with these sets of social actors, and individual professionals interact with the professional collectives to which they belong . The structural attributes and activities of the collectives influence the individual professional's relationships with other social actors . For example, if the collective maintains the supply of professionals at a level below demand, the individual professional's bargaining power with buyers is enhanced . Or, larger and better organized collectives are more able to generate resources for influencing laws and regulations in ways that accrue benefits to individual members of the profession . Thus, the framework is meant to encompass both relationships of individual professionals and those of their professional collectives . It is within the context of this ecology of relationships that we can speak of a social order negotiated between professionals and society . For example, Strauss and associates (1963)

Teachers/ Researchers A Buyers

Substitutes

Suppliers Fig. 1 .

Key Relationships of Professional Collectives .



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portray the hospital as the setting for continuous negotiation and renogotiation among social actors, including different professions, administrators, and patients . The bases for social order in the hospital are reconstituted continually, against a backdrop of formal and informal agreements, contracts, rules, assumptions, and structures . In the same way, the societal relationships established by professions and professionals both generate order and are subject to change . Professions, in contrast to members of other occupations, enjoy significant power in their relationships with substitutes, teachers and researchers, buyers, and regulators . The balance of power in these relationships has important consequences for a host of variables . Professional control over these relationships, for example, makes it easier for individual professionals to procure status, job security, income, and work satisfaction . Professional control affects consumers of professional services in direct ways, with professionals assuming important social roles in controlling access to resources and enforcing norms . In the medical field in the U .S . for instance, professionals can designate consumers as "sick" enough to deserve services reimbursable by insurers, or "insane" enough to require involuntary commitment to mental hospitals . At the collective level, professions can accumulate status and public policy influence by virtue of their control over their relationships with other social actors . Having introduced a framework for viewing relationships between professionals and society, we turn to a more detailed description of its components . The Professional Collective

Practicing professionals and their associations are loosely coupled in a network that resembles a natural system, "whose participants are pursuing multiple interests, both disparate and common, but recognize the value of perpetuating the system" (Scott, 1998, 26). The loose coupling among individual professionals is based on their shared goals, such as income, prestige, or service to society, and on their shared formal education . The shared formal education creates bonds on the basis of both socialization experiences and the common knowledge base that is possessed only by members of the profession . The shared goals of individual professionals are pursued by formal organizations . In some professions, most practitioners belong to one primary professional association. In others, the primary association may generate only weak affiliations from most practitioners . A large number of associations of subgroups within the profession may emerge as well, particularly around specialties. Of course, professional associations develop goals of their own, including survival, which may not directly flow from the interests of members .



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Surrounding the core of the professional collective are regulators, educators, researchers, and their organizations . These sets of social actors may be internal or external to the professional collective, or at its interface, depending on the degree to which they share a common knowledge base and goals with the practitioners in a profession . More clearly classified as external social actors are the profession's substitutes, and its buyers . Substitutes Professionals claim the ability to perform a set of tasks that should be performed solely by members of the profession . But this task domain space usually overlaps with that of other occupations and professions, at least at the margins . This is true even for professions that have highly effective task domain monopolies, such as medicine and dentistry in the United States. Medicine shares its domain with a host of therapists and nurses ; dentistry with dental hygienists and assistants, oral surgeons, and denturists. Professionals also face challenges from substitutes other than members of other occupations and professions . Clients may learn to supply a professional service themselves, for example, by writing their own will instead of using a lawyer or searching health-related sites on the Internet. Ultimately, new knowledge that renders a professional service unnecessary or obsolete is a form of substitution. New knowledge that allows prevention of disease, for instance, creates a substitute for a professional's services to treat the disease . Buyers Buyers of professional services include direct consumers of services and employers of professionals, as well as third parties that reimburse the cost of professional services . Inclusion of employers in the category of buyers reflects the significant power professionals enjoy relative to the organizations within which they work . Such power and the independence that flows from it vary greatly across categories of professionals, as between physicians and nurses who work within hospitals . It also varies within professional groups . Physicians perhaps exhibit the widest range of relationships with the organizations in which they work . In some cases, their work is arranged through privileges, in others by employment, and in still others, they are simultaneously owners and employees . In all cases, they retain high levels of independence in the conduct of their professional tasks. They also engage in the kinds of negotiations with their "employing" organizations over contracts, rules, structures and other parameters of work that might be expected of external sellers of services . To the extent that a professional's services are only



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available by referral, referral sources also become the indirect buyers of some professional services . Buyer-professional relationships are obviously crucial to the professional's ability to maintain a livelihood . These relationships also affect the working conditions of the professional . If employers of professionals are profit-seeking entities, their control of this aspect of the buyer-professional relationship can have important consequences . Large for-profit corporations may establish incentives for professionals to create higher profit margins in the delivery of services, for instance . Some would offer that for-profit corporate control of professional work erodes the ability of professions to respond to consumer needs (Krause, 1996) . On the other hand, if employers are non-profit entities, professional work may become less responsive to some consumer interests, such as demands for timely service . Teachers and Researchers Key actors on which the professional collective is dependent are the suppliers of new entrants - teachers and academic institutions - and the suppliers of new knowledge - researchers and research organizations . Teachers and researchers are grouped together here because the major occupant of this category, the academic institution, often houses both sets of social actors . Most professions integrate teachers and researchers into the core professional collective, by requiring that they receive credentials similar to those of practitioners . But teachers and researchers may not share the same goals as practitioners . For example, academic programs may strive to maintain or increase the size of their programs to achieve greater power and prestige within their university or peer group, while practitioners may support a decrease in the size of the profession in order to control competitive forces . Or, researchers pursuing "truth" may derive research findings that do not coincide with the interests of practitioners . Regulators Individuals and organizations that regulate professionals are primarily in the governmental sphere . Governments also may serve as buyers of professional services, through their role as a third party reimburser or direct purchaser of services on behalf of citizens . But a uniformly critical role for governments is their role in formally legitimating occupations as professions through state approbation . Licensure, certification, registration, and accreditation of educational programs are typical ways that governments are involved in regulating entry to and practice in the professions . The judicial branch of government often settles disputes over regulatory issues . In addition



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to governments, voluntary organizations, often controlled by practicing professionals, are involved in the regulatory control of professionals . A final group of social actors, less significant in most professions and therefore not emphasized here, is the suppliers of materials used in the production of professional services . In professions such as pharmacy and medicine, suppliers of the products processed and distributed by the professionals assume an important role . To the extent that supplier firms are for-profit entities, their influence on professional practice may diverge from consumer interests . Forprofit pharmaceutical firms encourage the prescribing of their brand-name drugs by physicians, for example, in order to maximize revenues . To the extent that supplier firms are global in scope, their impact on professions around the world can be far-reaching . Because many pharmaceutical and medical equipment suppliers are huge global corporations, their effect on the health professions and professional practice is extensive . The five sets of social actors identified in the framework are interdependent . For example, buyers may appeal to regulatory agencies if their needs are not being met by professionals . Calls for ending restrictions on advertising by professionals in the United States, for instance, emanated in part from consumer groups . Similarly, buyers sometimes can shift their business to substitutes if buyers are dissatisfied with the services of a given profession . Or, substitutes can attempt to use the teachers and researchers of a competing profession in order to acquire skills to expand into the competing profession's task domain. Conflict and Change

The potential for conflict among the five sets of social actors, and between each set and individual professionals, is manifest in the different preferences held by each group. Even within the professional collective, different segments likely will have differing goals, creating the potential for internal conflict . Professions are cleaved horizontally by specialty, practice setting, and other characteristics, and vertically by degree of education and position in organizational hierarchies . This fragile aspect of professions was underscored by Bucher and Strauss (1961, 326) in their depiction of professions as "loose amalgamations of segments pursuing different objectives in different manners and more or less delicately held together under a common name at a particular period in history ." Other sources of conflict impinge from outside the professional collective . Substitutes potentially are in direct conflict with the focal profession over access to buyers . Buyers generally seek improvements in quality, lower prices, and greater access . Government regulatory goals often conflict with the autonomy and peer governance interests of professionals .



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In addition to underscoring the possibility of conflict, a useful framework should highlight the omnipresence of change . One might argue that professions, and thus professional-society relationships, are among the most stable of social institutions . With rare exceptions, professions do not disappear, and their entrenched and pervasive power has been the target of many social analysts (e .g. Brint, 1994 ; Collins, 1979 ; Derber, Schwartz, & Magrass, 1990) . As noted earlier in this chapter, professionals have a degree of control over relationships with external actors that other workers do not . Increasingly it is evident, however, that none of the relationships between professionals and society are stable. Figure 1 does not identify the many sources of change that eventually affect the relationships depicted in the figure . The demographic composition, values, needs, and demands of populations shift over time, whether from natural disasters, immigration trends, religious beliefs, genetic mutations, or other sources . Governments, legislatures, and judicial rulings change, with implications for relationships with professionals . Another significant source of change in professional-society relationships is the discovery of new knowledge and technology, which affects professionals' relationships with teachers, researchers, and buyers . There is wide potential for variation and change in the professional's relationships with other social actors, even in the face of relative stability in the profession's position at the societal level . As summarized by Rueschemeyer (1983, 47), "In a long-term historical and comparative perspective . . . the pattern of professional self-control is only one of several different forms of the social control of expert services and it is by no means the pattern toward which others converge in a long run process ." Professionals and their collectives have no guarantees of hegemony and longevity .

HEALTH PROFESSIONALS IN THE UNITED STATES Thus far, we have presented a general portrait of the key relationships in which professionals and professions are engaged . Relationships with researchers and teachers, substitutes, regulators, buyers, and suppliers have been highlighted. Within professions, the nature of relationships may vary across internal segments . We should be able to trace the interactions of professionals, their collectives, substitute occupations and professions, educational and research programs, regulators, and buyers over time, to identify patterns of change and differences among professions . To illustrate this, we analyze health professionals in the United States . Health professionals in the United States are undergoing a significant degree of change despite their high levels of control over many important relationships .



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As an operational definition, we consider as professions those occupations for which higher education about a specific task domain is a prerequisite to employment in particular positions (for similar definitions, see Brint, 1993, 263 ; Freidson, 1986, 59 ; Hofoss, 1986, 202) . If college-level educational programs of at least two years of length are defined as "higher education," health professionals in the U .S . include chiropractors, dental hygienists and dental lab technicians, dentists, dietitians, medical technologists, registered nurses and advanced practice nurses, occupational therapists, optometrists, pharmacists, physical therapists, physician assistants, doctors of osteopathy, doctors of medicine, podiatrists, psychologists, radiologic technologists, recreational therapists, respiratory therapists, medical social workers, speech-language pathologists and audiologists, and a variety of more specialized and/or supportive practitioners . Relationships between health professionals and society in the modem U.S . have been quite favorable to the professionals . Members of the health professions have accumulated power, wealth, job security, and status, to a far greater degree than members of typical occupations in the U .S . All of the health professions listed above have grown not only in absolute size, but relative to population, since 1950 (Begun & Lippincott, 1993, 6) . Steady population growth and increasing governmental, business, and private expenditures for health care have fueled demand for health professional services over the past few decades. Health professionals have developed significant control over relationships with substitutes, buyers, teachers and researchers, and regulators . But these relationships currently are undergoing considerable change . The health professions in the U .S . are subject to significant changes in their knowledge base, with concurrent routinization of many tasks and new discoveries of highly specialized and complex new tasks . Many professional services that formerly were delivered in the hospital can be delivered at home or in outpatient clinics . Changes in client needs have created demands for more services directly at the elderly, racial and ethnic minorities, and those with chronic diseases, such as cancer, arthritis, and AIDS . State and federal government intervention to slow the rise in health care expenditures, which grew from approximately 5% of gross domestic product in 1960 to about 14% in 1998 (Anderson, Hurst, Hussy & Jee-Hughes, 2000), has accelerated . Businesses have become more prudent purchasers of health insurance and health professional services on behalf of their employees . Organizational providers of services, such as hospital systems and health maintenance organizations, increasingly employ formerly independent professionals and more stringently monitor the quantity and quality of services rendered . Taken together, these changes have had significant effects on relationships between health professionals and other groups .



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Historically, substitute professionals have been legally "marginalized" by dominant health professions through the use of licensing laws that restrict task domains to selected providers . In 1990 some 115 different health occupations were licensed in one or more state in the U .S ., and the explosion of new knowledge and technology in health care guarantees the continuous emergence of new, would-be professions . However, the primary delineation of turf in the health care task domain was completed by the early 1900s through the licensure of a few professions . Doctors of medicine (M.D .s) and dentistry (and in the field of animal health, veterinarians), along with pharmacists, were able to demarcate wide task domains for their exclusive practice . Other professions that emerged or were merely "late to the licensure table" were forced to agree to hierarchical control by the dominant profession in order to practice (as in the case of nurses, most allied health professions, and dental hygienists), or were ceded control over less desirable segments of the dominant profession's task domain (as in the case of optometrists [non-M .Ds], who were allowed to perform eye examinations, but not to use drugs or perform surgery) . The carving up of the health care task domain meant that substitute occupations and professions functioned only with the sanction of dominant professions . This created a high degree of stability (and inflexibility) in the system of health professions . But today, health professionals increasingly find themselves in competition with practitioners from substitute occupations and professions, with consumer self-help (greatly enhanced in recent years by the Internet), and with other forms of substitutes . Incentives for discovery of self-treatments and preventive measures for health problems have grown . The primary tasks of some professions, such as drug preparation and dispensing by pharmacists, have been largely routinized or automated . Governments and the judiciary have become less receptive to the strategy of professional monopoly of task domains . Regulators are granting substitutes for physicians, such as nurse practitioners and physical therapists, direct access to patients or to reimbursement that previously was available only on physician approval or under physician supervision . Regulators are more receptive to encouraging substitution and overlap among task domains, as in the case of new laws allowing optometrists to prescribe and apply drugs to the eye . Large employers of health care professionals, in attempts to manage costs, are more likely to hire costeffective substitute professionals and to cross-train workers across task domains . The trend toward greater substitutability among health professionals has differential effects on the professions, shifting the balance of power among health professionals . Those professions in the most dominant positions, such as



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medicine and dentistry, are losing some of their ability to control relationships with substitutes . Historically-dominant providers are sharing their task domains and settling for less hierarchical control, particularly in bureaucratic settings where an administrative hierarchy supplants or complements the clinical hierarchy . Benefiting from these shifts are historically-subordinate professions, such as nursing, occupational therapy, physical therapy, and medical technology . For professionals whose task domain has been routinized, substitutes have moved into the task domain, causing the affected professionals to redefine their task domain . For example, in the profession of pharmacy, the substitute occupation of pharmacy technician has caused many pharmacists to claim expertise as clinical pharmacist consultants . Control over these substitute occupations and professions is a critical issue in most of the health professions . In the case of pharmacy, technicians are being trained outside of the traditional professional collective, under the sponsorship of large retail pharmacy chains . In the case of most health professions, however, the new substitutes are being retained within the professional collective, hierarchically under the control of the sponsoring profession . Examples are occupational therapy assistants in occupational therapy, and physical therapist assistants in physical therapy . Within different clusters of professions and across different settings, both cooperative and competitive responses to substitution can be observed . In some settings, cooperation is mandated by large organizational providers of care, such as health maintenance organizations . The organizations specify "gatekeeping" rules for processing patients, which delineate referral procedures . For example, optometrists (non-M .D .s) may be designated as the primary care provider to screen for vision problems, rather than ophthalmologist (M .D.s) . In less formalized settings, competitive relationships between optometrists and ophthalmologists are common . In many newer arenas of health service, such as health promotion or marital counseling, competition among substitutes is keen because strict legal monopolies have not been created by any one set of practitioners . The tradition of rigid and stable task domain boundaries is giving way to a more flexible and active system of substitution . Buyers

Control over buyers has been an important source of power for health professionals . Information asymmetry between buyer and professional gives the professional wide latitude to affect buyer demand and to charge a premium price . The U.S . system of individual responsibility for health insurance has kept clients from organizing into powerful buyer groups . Another important force in the control of buyer relationships is the supply of health professionals, which



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most professions have been able to influence such that supply does not exceed demand . Under these conditions, it is likely that professionals have a ready supply of patients, and that cost-effectiveness of services is not a major concern of professionals. Historically, employers of health professionals, due to information asymmetry and a cost-based reimbursement system, have been unable or reluctant to intervene in professional practice ; indeed, many health professionals have been able to work independently or on a contractual rather than employment basis with hospitals and other provider organizations . Beginning in the 1970s and accelerating in the following decades, power dramatically shifted away from professionals, toward the buyers of professional services (Light, 2000 ; Starr, 1982) . Traditionally independent practitioners progressively are becoming affiliated with larger and larger bureaucracies, whether as part-owners, contractors, or employees . In the past decade, physicians sold practices to hospitals, local combinations of hospitals, for-profit hospital chains, and physician practice management corporations . While there is now a distinct trend away from physician practice acquisition, including, in many cases, a selling off of acquired practices, physicians now work in much larger organizational forms than was true a decade ago. The growing emphasis on cost control amplifies the power of administrators of delivery organizations, and employers and third party payers are attempting to influence the work processes of health professionals through the use of clinical protocols, guidelines, and pathways, and hospital pre-admission permission requirements . Bureaucratic controls are supplanting professional control over the delivery of services . Governments, under pressure from rapid budgetary growth in government-funded services, increasingly are pressuring professions to deliver care more cost-effectively . If professional service supply does not meet demand, buyers can more easily turn to substitute services . The growth of buyer power is empowering some professions or segments of professions, while disadvantaging others . Within medicine, primary care providers are being rewarded for their ability to provide more cost-effective treatment than specialists, as third party reimbursement schedules are being adjusted upward for primary care services. Cost-effective substitute professions have become more attractive to buyers as costs have soared, contributing to the popularity of such groups as nurse practitioners and nurse specialists and physical therapists . To those professionals who can demonstrate cost-effectiveness and efficacy of services, the expansion of buyer power can be a boon . To some extent, the shifting of power away from professionals to powerful groups of buyers has disenfranchised the end-user or ultimate buyer, the consumer of health services . Some have argued that there is less "trust" in the professional-consumer relationship as a result (Mechanic, 1996 ; Mechanic &



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Rosenthal, 1999) . Ironically, the buyers themselves, especially managed care companies, have come under attack for the tactics they have used to reduce health care costs . Concerns over loss of choice and seemingly arbitrary restrictions in use of services may have reversed the gains in power of payors and strengthened the hand of provider systems and health professionals . Such shifts in position with the public attest to the delicate balance in which the power of health professionals hangs within the current, rapidly restructuring and often unpredictable health care environment . One change in the work settings of health professionals deserves special note . Work settings have become more technologically complex, as the expansion of specialized knowledge and sophisticated technologies continue . This dynamic has produced new categories of technicians, such as those administering new imaging technologies (Barley, 1996), which may or may not be supervised by the traditionally dominant professional groups . Lacking the requisite technical expertise, the latter may simply be unable to assert control over the emerging workers and technologies . Similarly, as technologies for care change, so will the relationship between professions and their work settings . Some changes have already led to an unbundling of services and their separation from established institutions, especially hospitals (e .g . the growth in outpatient surgeries) . However, because of the often high capital costs associated with service restructuring, hospitals, hospital systems and large physician groups have successfully pulled many such services back under their control (even if they remain outside the hospitals per se) . Indeed, the need for capital has emerged as a powerful counterweight to the outflow of technologies from organized systems of care, an important consequence of which is a continued shift in power away from professionals toward the organizations within which they work . Another significant development affecting the relationship between buyers and professionals is the rapid expansion of the Internet . On the one hand, this has opened the floodgates to consumers seeking information about the etiology, diagnosis, and treatment of their health conditions . Consumers of services, and their organizations, increasingly have the ability to examine for themselves the knowledge base of professionals, as well as information on the outcomes of their recommended therapies. More and more, patients confront physicians with handfuls of printouts on their illnesses, which information the doctors find increasingly difficult to ignore . Again, we can expect that professionals will adapt to this change as well, moving their services into areas of higher "indeterminacy," and stressing their role as coach and coordinator in addition to diagnostician . On the other hand, rising concerns over privacy and confidentiality as well as voracious capital requirements have placed great demands on established provider organizations to build systems that secure the



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flow of information on and to patients . In addition, these organizations see the Internet as a vehicle for "bonding" clinicians to their institutions . A number of systems (e .g. Scripps in San Diego) are investing heavily in very sophisticated intranets that link physicians and institutions, a direct consequence of which is the internalization of patient information and physician exchange . Interestingly, this appears to be having the effect of re-institutionalizing the informal structures that historically had bound health professionals, especially physicians, into powerful self-controlling colleague networks . Thus, despite their gaining control over the Internet and related information system technologies, the larger employing organizations appear to be providing a technological fix to the otherwise fragmenting professional communities . The ebb and flow of the Internet ocean could in the end have a dramatic effect on balancing power among professionals, employing organizations and consumers . Teachers and Researchers The health professions generally have been successful in integrating teachers and researchers into the professional collective, facilitating coordination of the quantity of new entrants, the content of educational curricula, educational socialization, and the development and application of new knowledge . In most health professions, teachers of new entrants are members of the profession, and educational facilities are accredited by a professional organization, ensuring a high degree of standardization . Standardization of entry education is incomplete in such professions as registered nursing, however, where three different routes (diploma, associate degree, and baccalaureate degree) to the registered nurse credential are possible . Another source of conflict is that some goals of the educational community, such as specialization and lengthening of the curriculum, may not be shared by practitioners . In the research arena, health professions have striven to develop a cadre of doctorally prepared researchers who share the basic values of the practitioners . Until the profession develops its own doctoral programs, doctoral degrees may be attained in fields outside the profession, as, for instance, the Ed .D . was commonly pursued by nurse researchers. Health professions also sponsor their own research journals, to further the dissemination of research findings within the profession's research paradigm . New pressures on the researcher-professional relationship are reshaping that association . Most professions are ill-equipped to assess the cost-effectiveness of their services, because researchers have concentrated on developing the core scientific knowledge of the profession independent of its impact on the cost of services . As a result professions are forced to draw on the services of "outside"



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researchers to conduct cost-effectiveness or treatment outcomes research . Payers and providers have created their own multidisciplinary research teams to assess cost-effectiveness and develop treatment protocols . In addition, research dissemination in many fields has become global rather than national, complicating the efforts of professions to control the flow of new knowledge and technology into the profession . Many of the same new forces are affecting the teacher-professional relationship. Educational content on cost-effectiveness and treatment protocols is entering curricula, often with the input of teachers from outside the profession . Payers and providers are demanding that educational programs be more efficient and effective, under the threat of developing their own educational programs. Cozy relationships between accrediting bodies and professions are being challenged . In the case of the profession of law, for instance, the U .S . Department of Justice recently has charged that educational accreditation requirements have been used to artificially inflate the salaries of educators. Educational programs are more likely to be held accountable for the quantity and specialty of their graduates, as noted earlier . A national commission has declared that health professional education programs have neglected important design parameters, such as commitment to community health, accountability to the public, pursuit of cost-effective care, appropriate use of technology, and emphasis on prevention (O'Neil, 1993 ; Pew Health Professions Commission, 1995) . All of the health professions are being affected by new requirements that education and research be more responsive to buyer needs . However, some health professions historically have been more responsive to societal demands for efficient and cost-effective production of providers, with nursing a notable example . Registered nursing's inability to raise entry barriers to the baccalaureate level, while lamented by many nursing leaders, preserved nursing's ability to be responsive to demand for more nurses . In contrast, physical therapy, which recently elevated entry level requirements from the baccalaureate level to the master's level, faces charges of artificially creating a shortage of providers . Similar issues cloud the movement to raise pharmacy's entry-level requirement from five years to six years of college education . Regulators As noted in the discussion of substitutes, health professionals in the United States commonly are regulated by state licensing statutes . Malpractice liability laws also apply to the practice of most health professionals . Federal government agencies, such as the Department of Health and Human Services and the Federal



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Trade Commission, issue regulations affecting selected aspects of professional practice . The judicial branch of government participates in regulatory control through its role in interpreting laws and regulations . Also contributing to professional regulation are voluntary accrediting agencies for health care delivery organizations, such as the Joint Commission on the Accreditation of Healthcare Organizations ; educational program accreditors, such as the Liaison Committee on Medical Education ; and professional certification programs, such as the American Board of Nursing Specialties . Historically, the health professions have been very successful at co-opting regulatory organizations . Regulation has largely functioned to protect professional rather than buyer interests (Begun & Feldman, 1990 ; Gross, 1984 ; Jost, 1997) . Most state licensing boards are dominated by members of the profession, for instance . As a result, relationships between most professionals and regulators have been quite stable and cooperative . Instances of sanctioning of practitioners are relatively rare, even through the mechanism of malpractice suits . Accrediting of educational programs allows the profession to control the quantity of programs and therefore new entrants to the profession . Regulation has been a key to the inertia of the health care industry relative to "disruptive" innovation (Christensen, Bohmer & Kenagy, 2000) . As is the case with other external social actors, however, regulators of health professionals are becoming more demanding and interventionist . State licensing systems are being revised to expand consumer participation and oversight of professional competence . In some states or provinces of Canada, the traditional licensing system is being radically altered by the licensing of particular acts or tasks, rather than professions per se (see, for example, Bohnen, 1994) . Accrediting organizations are being challenged to justify their existence and to be inclusive rather than exclusive in their accreditation decisions . In addition, regulators are more likely to demand appropriate supplies of professionals. Current efforts to increase the proportion of new physicians entering primary rather than specialty care are an example . All of these changes reflect growing regulatory efforts to better control the quantity, price, and quality of health professional services. The historically-subordinate professions have benefited from the less cooperative relationship between professionals and regulators. As discussed earlier, regulators such as the government, Federal Trade Commission, and judiciary are more reluctant to enforce professional monopolies . Their actions have enabled substitutes to compete more effectively for buyers . Changes in the regulatory sphere also have an interesting impact on new health professions . New professions find it more difficult than older professions to achieve licensure and institute stringent accreditation criteria, and new



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professions might seem to be disadvantaged as a result . But in the longer run, the rigidity introduced by licensure and rigid accreditation likely is harmful to professions' adaptability and openness to change . Flexibility and openness to change are strengths of the newer, unlicensed professions . The Professional Collective

How have the health professions as collectives changed in recent decades? As we have noted earlier, health professions generally have grown in size. They have grown in vertical differentiation by educational level ; in horizontal differentiation by setting, as many health care services formerly delivered in the hospital have moved to outpatient settings ; and by specialty, as the numbers of specialized fields within single professions have expanded dramatically . Differentiation in task domains has been accompanied by the proliferation of professional associations to represent the numerous specialized segments of professions . As a result, in the larger professions, such as nursing and medicine, specialty organizations have assumed an increasingly important role in governance of the collective. Over 100 national associations exist to represent segments of nursing . In medicine, strong specialty groups such as the American College of Physicians have usurped much of the political power of the historically-dominant American Medical Association (AMA) . Moving away from a centralized, primary professional association model, the larger health professions have become more decentralized and federational in collective structure. In smaller or newer professions, however, internal differentiation is less pervasive and much more manageable, and internal cohesion has been easier to maintain. Occupational therapy, physical therapy, optometry, and podiatry, for example, have been able to maintain strong affiliation between individual members and a single primary professional association . An important relationship of individual professionals is membership and activity in professional associations . In general, professional associations in health care have pursued typical goals of professions, such as establishing codes of ethics, strengthening entry barriers, and lobbying for income-enhancing legislation . While there is variation among the professions, the associations largely have reacted sluggishly and defensively to the changing demands of buyers, regulators, and substitutes . In selected instances, however, individual professional associations have responded in new ways . The AMA has abandoned its control over the accrediting of allied health educational programs . Several powerful physician organizations support extensive national health reform, in defiance of the AMA . Many professional associations have joined in efforts to



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promote more cost-effective care and are participating in the development of clinical treatment guidelines . A final attribute of professional collectives in the health care industry is that their professional associations have had enormous impact on public policy formation, particularly at the state and federal levels . Health professional groups are constantly among the top contributors to political campaign funds, and their associations have been quite effective in achieving desired legislative outcomes (Feldstein, 1988) . The effectiveness of certain associations, such as the AMA, appears to be waning, however, while the effectiveness of others, such as the ANA, appears to be increasing, in concert with new directions in public policy brought about by growing pressures to control costs and increase access to care . Conflict and Change

The different relationships in which professionals are embedded not only have independent effects on professionals, but can work in combination or in opposite directions . In the health professions, a number of professional groups are either being helped or hurt by new knowledge and technology . On the one hand, new technology can have the effect of reinforcing professional control over established relationships . For example, cardiologists have been able, over the past several decades, to draw on an almost dizzying array of new surgical, monitoring, and diagnostic techniques that have enhanced and expanded their control over the treatment of heart disease. Other health professions, on the other hand, have faced loss of power in relationships with buyers due to technological innovations . In such instances, technology produces substitutes for their work, as in the case of pharmacists whose roles have been marginalized as the pharmaceutical industry has produced innovations in the areas of drug testing and the manufacturing, distribution, packaging, and handling of prescription and over-the-counter drugs . General surgeons are another example of a professional group whose position is being challenged by new knowledge and technology developed outside of their own professional group . General surgeons face threats to their client base from the growing use of non-invasive scanning and imaging technologies, laser and computer-supported surgical techniques, and increased technological complexities, spawning a growing demand for more highly specialized surgical professionals . Clearly, new knowledge and technology can both reinforce professional control over buyers or, alternatively, introduce or enhance substitutes that have the potential of eroding established professional control . In today's environment, the pace at which new knowledge and technology is introduced in professional practice is very much interdependent with other forces that affect the professions . As health care purchasers or clients have become more



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cost-conscious and the institutional settings within which many health professionals work more dominated by management experts, greater priority has been given to those technologies that are cost-effective and, in many cases, offer less costly substitutes for expensive health professionals . The forces emanating from the buyer side also interact with the efforts of the professional collectives to mount a cohesive response as the collective faces a newly powerful managerial elite. Pressures for cost control are arming health care purchasers and employers of professionals with the leverage they need to exact their own discipline over individual health professionals, despite the best efforts of the professional collectives . In their relationships with buyers and employers, individual professionals are less able to count on their professional collectives for help . On the other hand, as discussed earlier, the emergence of intranets could serve to counterbalance the growing power of the buyer, as new and highly integrated colleague networks emerge, albeit around established institutions of care . And there are important interactions between the teachers and researchers of health professionals and the professional collectives . As pressures to control costs have grown, the demand for many health professionals has slowed and, in some professional areas, it is expected to fall over the next several decades . This is especially true for specialist physicians, who are widely viewed as being in excess supply . Historically, educators and researchers contributed to the excess supply of specialist physicians . Not only have they have constructed an expansive system of technical and advanced medical education, but they continue to pour still more specialists into the field of practice, thus exacerbating the threats facing incumbent specialist physicians . Related to the interdependence of the five key social actors and their differential effects is the observation that within groupings of similar professions (e .g . the health professions) exists a diverse and changing set of occupations and segments of occupations, each interwoven in a distinctive way with society . As such, many generalizations about professions need to be tempered or conditioned, as they may apply only to selected professions or segments of professions . Within general patterns of change, the experience of each profession or segment of each profession is unique . This particularly is true in larger and more differentiated professions . A final point is that changes within and among the five forces have consequences for the positions of individual professionals, their professions, and consumers. Professionals are a powerful and dominant force in most societies, and the consequences of their control, both for the professions themselves and for society, have been the subject of controversy for decades (e .g. Begun, 1986 ; Illich, 1980 ; Krause, 1996 ; Rueschemeyer, 1986) . Professional control often is accompanied by higher income and status for professionals, increased rigidity in the division of labor, higher prices, and



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decreased access to services . This has led many analysts to call for constraints on the relative power of professionals . On the other hand, professionals are the purveyors of formalized, expert knowledge in society, and as such society has benefited enormously from advances in knowledge and application of knowledge in the professions of medicine, science, architecture, engineering, etc . In part, these contributions no doubt derive from the professions' ability to attract "the best and the brightest" and from the insulation of the professions from many external pressures . Powerful professional associations, and control over relationships with buyers, teachers/researchers, regulators, and substitutes, generated for health professionals a high level of status, income, job security, and work satisfaction . To the extent that these historical relationships are changing, health professionals will lose some of the individual benefits of professional control . To the extent that professional control has allowed or motivated professionals to pursue high quality practice and service to society, and has attracted highly qualified recruits, these positive consequences of professional control may be eroded as well, leading some to be alarmed about the intense criticism that professions have undergone recently (Freidson, 1994) . As we have seen, however, understanding this dynamic is not so simple. Across and within professions, the effects of changes will vary . After the current period of change, some professions or segments of professions will find their relationships with buyers and regulators enhanced . New professions will emerge to meet new demands, and existing professions may alter their task domains and create new relationships with buyers, regulators, and other social actors. Finally, new changes and challenges will arise to ensure that professional society relationships remain in perpetual motion. In summary, we conclude that the concept of professions and professionals is a strong and resilient one . Discussions of deskilling, deprofessionalization, and proletarianization illustrate that the system of professions undergoes changes in the direction of less professional control for particular segments of workers at particular times, under particular conditions . But professions and professionals adapt as well . The process of change is better depicted as one of adaptation or transformation of the concept of professions rather than demise of the concept.

MANAGING WITH PROFESSIONALS : THE NEW PROFESSIONAL ORGANIZATION The reshaping of professionals in health care has been undertaken in concert with the reshaping of the organizations in which most of them work . Organizations are the sites in which the labor of multiple professions and specialties is



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coordinated, managed, and marketed . They are the settings for intra- and interprofessional conflict and politics as well as evolving, technologically-based network structures . Management influence over the division of health labor is constrained by the nature of professions themselves and by relationships among professions . Professions form strong identity groups within organizations, described by Van Maanen and Barley (1984) as "occupational communities ." But the communities themselves are subject to change . Professionals are adapting to change by expanding their range of skills (Eve & Hodgkin, 1997). In addition to clinical competence, they increasingly are :

• financially competent ; • able to work within teams, which requires greater interpersonal skills and a deeper understanding of other professionals' roles ; and

• proficient in the art of management, delegation, negotiations, and liaison . As the professions adapt to change, so must the organizations that utilize them . Bacharach, Bamberger and Conley (1991) describe the relationship between administrators and professionals as a "see-saw," with power differentials shifting over time and varying by labor market conditions and technological processes within the organization . In the health care organization, multiple see-saws are in play, as each professional group differs from the others . In relating to professionals, administrators need to be nimble and flexible across professions and across time . Broadbent, Dietrich and Roberts (1997) delineate three challenges for organizations :

• to accommodate the need for professional autonomy relative to the organization's need to develop strategic control ;

• to assist in the development of a professional identity rather than simply the development of organizational identity ; and

• to respect professional practice compared to the need to ensure change in that practice .

As noted earlier, health care organizations must accommodate multiple identities . For instance, certainly the professional identities of nurses and physicians vary significantly from each other, as do segments within medicine and nursing . The enrollment of professionals in the interests of organizations, and the enrollment of organizations in the interests of professionals, is a necessary accommodation to the existence of professions . As a result of adaptive, interdependent action by organizations and their professionals, professional organizations today have become more "business-like"



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(Brock, Powell & Hinings, 1999) . The language of business - market share, efficiency, profit - is increasingly the norm in professional organizations . There is widespread adoption of new management structures and methods such as performance appraisal systems, marketing and new business development . Relationships among professionals are being formalized and standardized, and individual rewards are being incorporated to "incentivize" health professionals . Such a merging of professional and organizational interests is illustrated in proposals for the "new" physician organization (Shortell, Waters, Budetti, & Clarke, 1998) . In such an ideal type organization, physicians are accountable to the organization as well as the profession, performance criteria are developed by the profession and other stakeholders, trust is based on data and evidence, teams rather than individual professionals are responsible for patient care, and the individual physician is responsible for the organization's patient base, not just his/her individual patients . Such models again exemplify the growing mutual accommodation of organizations and professions . In presenting the concept of "conjoint" professional organizations in 1982, Scott noted that the conjoint form " . . . describes a possible rather than an existing model of professional organization" (Scott, 1982, 230) . In the conjoint model, professional participants and administrators are roughly equal in the power that they command and in the importance of their functions ; they coexist in a state of interdependence and mutual influence. The field seems to be moving, incrementally and through trial and error, on the path toward making the conjoint model a reality .

RESEARCH ON THE HEALTH PROFESSIONS Organization theory needs to be infused with theory about occupations and professions, and vice versa, particularly in the changing health care sector . Organizations and professions are coevolving, and it is increasingly invalid to study developments in one independent of the other . But do the extant conceptualizations of professionals provide sufficient understanding of this interplay, especially in the context of the changing environment? Professions traditionally have been conceived as amorphous, informal networks of independent practitioners that are fundamentally discordant with bureaucratic structures and mechanisms of control . As we have seen, however, health care professionals are increasingly functioning within complex organizational, market, technological, and regulatory environments . And yet, they seem to be adapting well and, for the most part, maintaining powerful positions within their ever more organized systems of delivery . Clearly, we need a better understanding of how professional stature and power are retained in the face of the multitude of forces that would otherwise be expected to undermine



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collective behaviors and structures . This requires studying the mechanisms professions adopt to preserve their power, independence and networking . Special attention needs in particular to be given to the impacts of information technologies . These may be the new arteries that weave the vital interconnections among professionals within the tissue of complex organizational structures . Research into the ways that organizations and health professions are adapting to each other would be useful to administrators and researchers alike . How have organizations been transformed when they employ or affiliate more tightly with large numbers of professionals? How do organizations and professionals develop "identification" with each other and commitment to each other? What dynamics occur when the boundaries between profession and organization begin to blur (Barley & Tolbert, 1991, 3)? How is the "see-saw" played out over time by professionals and administrators? Are those organizations that balance organizational and professional interests, for example, through greater participation of professionals in organizational decisionmaking, more effective in the new marketplace? Are clinical professionals who have balanced clinical competence with organizational skills more satisfied with their worklife? The emergence of new professions and the redesign of existing professions are inevitable as knowledge and technology create new opportunities for the development of formal expertise . How do existing organizations and professions promote, resist, or accommodate new professions? How can organizations and professions become more receptive to such changes, while being true to their "missions"? As the health professions continue to be reshaped in the changing environment, a wealth of research opportunities will exist . Greater understanding of the dynamic between professions and their stakeholders can lead to greater appreciation of the role of the professions in helping the industry meets its future challenges .

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Jost, T . S . (Ed .) (1997) . Regulation of the healthcare professions . Chicago: Health Administration Press . Krause, E . A. (1996). Death of the guilds: Professions, states, and the advance of capitalism, 1930 to the present. New Haven, Conn . : Yale University Press . Light, D . W. (2000) . From professional dominance to countervailing power : Theretical and policy issues facing the medical profession . In : C . Bird, P. Conrad & A . Fremont (Eds), Handbook of Medical Sociology . Englewood Cliffs, N .J . : Prentice-Hall. Mechanic, D. (1996) . Changing medical organization and the erosion of trust . Milbank Quarterly, 74(2), 171-189 . Mechanic, D., & Rosenthal, M . (1999). Responses of HMO medical directors to trust building in managed care. Milbank Quarterly, 77(3), 283-303 . O'Neil, E . H. (1993). Health professions education for the future : Schools in service to the nation . San Francisco: Pew Health Professions Commission . Pew Health Professions Commission . (1995) . Critical challenges : Revitalizing the health professions for the twenty-first century. San Francisco : UCSF Center for the Health Professions . Porter, M . E. (1980) . Competitive strategy : Techniques for analyzing industries and competitors . New York : Free Press . Rueschemeyer, D . (1986) . Power and the division of labor . Stanford, Calif. : Stanford University Press . Rueschemeyer, D. (1983). Professional autonomy and the social control of expertise . In : R. Dingwall & P . Lewis (Eds), The Sociology of the Professions : Lawyers, Doctors and Others, (pp . 38-58) . New York : St. Martin's Press. Scott, W. R. (1982) . Managing professional work : Three models of control for health organizations . Health Services Research, 17(3), 213-240 . Scott, W . R. (1998) . Organizations : Rational, natural, and open systems. Englewood Cliffs, N .J . : Prentice Hall. Shih, Y. T . (1999) . Growth and geographic distribution of selected health professions, 1972-1996 . Journal of Allied Health, 28(2), 61-70 . Shortell, S . M ., Waters, T . M ., Clarke, K . W . B ., & Budetti, P. P. (1998). Physicians as double agents : Maintaining trust in an era of multiple accountabilities . Journal of the American Medical Association, 280(12), 1102-1108 . Starr, P. (1982). The Social Transformation of American Medicine . New York: Basic Books . Strauss, A., Schatzman, L., Ehrlich, C ., Bucher, R., & Sabshin, M . (1963) . The hospital and its negotiated order. In : E. Freidson (Ed.), The Hospital in Modern Society, (pp . 147-169) . New York : Free Press. Van Maanen, J., & Barley, S . E . (1984). Occupational communities: Culture and control in organizations. In: B . M. Straw & L. L. Cummings (Eds), Research in Organizational Behavior, (pp. 287-365) . Greenwich, Conn. : JAI .

PHYSICIAN EXECUTIVES : THE EVOLUTION AND IMPACT OF A HYBRID PROFESSION Kathleen Montgomery ABSTRACT In this paper, I review the many research contributions that have advanced our knowledge about the role and impact of physician executives during the recent era of managed care . The interpretive framework for this review is guided by Freidson's restructuring thesis, which posits that physician executives - the administrative elite of the medical profession - represent the segment of the profession whose role will be to balance the needs of the organization with the desires of the medical profession . Although substantial research supports the proposition that physician executives are well positioned, prepared, and willing to undertake such boundaryspanning responsibilities, there is only minimal research specifically addressing the effectiveness of this hybrid profession . In this void, I suggest that another approach to assessing effectiveness is to focus on the process of trust building and maintenance, since trust is central to achieving the primary responsibilities of physician executives . A model of the process of trust development is presented as a guide for future research, along with discussion about particular challenges to physician executives in gaining trust from clinicians and non-physicians .

Advances in Health Care Management, Volume 2, pages 215-241 . Copyright ® 2001 by Elsevier Science Ltd . All rights of reproduction in any form reserved . ISBN : 0-7623-0802-8 215



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BACKGROUND Interest in physicians as high-level health care managers has grown steadily since the mid-1980s, intensifying -in tandem with the spread of managed care as the dominant mode of health care delivery and financing during this period . During the past 15 years, health care scholars and leaders alike have focused on this hybrid profession as a potentially pivotal group of professionals who can facilitate the integration of managerial imperatives into clinical decision making . In this paper, I will trace the development of research about physicians who have become managers and executives during the managed care era, illustrating the themes that have evolved and highlighting areas in need of further study . Forerunners to the Study of Physicians in Management Studies of the occupational specialty of physician executives are grounded in several streams of research, much of which comes from sociological theories of professions and organizations . For example, we draw on contributions from the sociology of professions to help understand the development of professional subgroups, such as medical specialties, as well as the ability of professions to gain and maintain control over their own work and that of other occupational groups. Among the many scholars who have written on the rise of professionalism, Larson (1977) and Abbott (1988) are widely recognized for their theories pertaining to the development of professions in general and the way certain professions and their subgroups have succeeded in creating a niche or labor market shelter for their work . During much of the 20th century, the medical profession has been treated as the prototypical model of professionalization, and as such has been well studied by scholars interested in developing general theories about professions . Among these is the work of Freidson (1970a, b, 1982, 1985, 1986, 1994), who is known for his seminal development of the theory of professional dominance, which many use to explain the position of autonomy and self-regulation that the medical profession has established over its own work, as well as control over the work of other health care occupations . We also draw on foundational work by organizational theorists to understand how various organizational structures may facilitate or impede the work of professionals and the emergence of new occupational subgroups . In particular, theories of bureaucracy, epitomized by the classic work of Weber and more recent work by DiMaggio & Powell (1983), are useful for appreciating the constraints imposed on its members by the structures and processes of large complex organizations . Cognizant of the autonomy that has characterized the



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work of professionals, scholars have long been interested in the potential conflicts of control that are generated when professionals do their work within large-scale organizations . Again, the medical profession has been used as the prototypical model of professions, leading to scores of studies of physician-hospital relations in the past fifty years . The potential clashes were succinctly described by Smith (1955) as the hospital's dilemma of "two lines of authority ." Subsequent studies have focused on analyses of various approaches to dealing with the organizational dilemma of managing professional work, typified by Scott's (1982) proposal of three models of control of health organizations . While the importance of these classic contributions cannot be underestimated, an in-depth review of their foundational work is beyond the scope of the present paper . For a more detailed summary of this background, see Montgomery (1997) . Factors Contributing to Interest in Physicians in Management Scholarly and practitioner interest in relations between physicians and health care organizations has intensified during the recent period of dramatic turbulence and reorganization in the U .S . health care delivery system . Referred to as the "corporatization" of American medicine (Starr, 1982), or more broadly, the age of administered medicine, these changes have introduced fundamental shifts in the way health care treatment is determined (e .g . from decisions based on physicians' individual experience and practice to decisions guided by clinical protocols and evidence-based medicine), accessed (e .g . from patient selfreferrals to HMO membership rolls and gatekeeping via primary-care providers), organized (e .g . from physicians in solo practice to physicians employed by or networked with large multi-specialty group practices), monitored (e .g. from self-regulated professional codes of ethics to system-imposed utilization review), paid for (e .g . from fee-for-service to capitated prospective payments), and financed (e .g. from individual patients and private indemnity plans to employer-sponsored managed care plans and health maintenance organizations) . As many have noted, each of these changes necessitates a greater layer of managerial involvement in the delivery of health care . In so doing, they challenge the traditional levels of dominance and autonomy that the medical profession has enjoyed during most of the 20th century and provoke new questions about the balance of power between the medical profession and health care organizations . The changes, and their potential impact on the medical profession, have been carefully documented by Fennell and colleagues (Fennell & Alexander, 1993 ; Flood & Fennell, 1995 ; Leight & Fennell, 1997 ; Leight, Fennell & Witkowski, 1995), Hafferty & Light (1995), Light (2000), Mechanic (1996), Scott (1993), among others .



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Some observers have predicted a dramatic decrease in the prestige and

decision-making power of the medical profession, through proletarianization

(Oppenheimer, 1973 ; McKinley & Arches, 1985) or deprofessionalization

(Haug, 1973 ; Havighurst, 1986 ; Ritzer & Walszak, 1988) . Others have made more cautious observations about a wholesale power shift away from physicians, emphasizing instead the development of a "field force" of countervailing powers

(Light, 2000; Mechanic & Light, 1991), and the functional restructuring of the medical profession (Freidson, 1985, 1986) . While the work reviewed here has

focused on issues facing the medical profession in the U .S ., similar concerns about a diminished level of power and autonomy for physicians have been

expressed outside the U .S . (see, for example, Barnett, Barnett & Kearns, 1998, for a study of physicians in New Zealand ; and Calnan & Williams, 1995, for

a study of general practitioners in the U.K .) . Taken together, these studies suggest developments both internal and external to the profession that may alter, but not necessarily diminish in any substantial way, the role and voice of the medical profession in an era of managed care . The functional restructuring of the profession suggests that the traditional

intraprofessional divisions based on clinical specialties may be less relevant

during the managed care era than a new tripartite distinction among the physicians

who deliver clinical care (the "producers"), those who conduct research and

medical education ("the knowledge elite"), and those who assume the managerial

functions of coordination, oversight, and planning (the "administrative elite") .

Freidson articulated the importance of this last group of physicians as follows : Those in administrative positions . . . balance the necessity to carry out the collective ends of the governing board [or] firm against the needs and desires of those who do the medical work, thereby buffering the practice of medicine against the political and economic pressures of the environment (1985, 30) . (italics added) .

A FRAMEWORK FOR REVIEWING RESEARCH ON PHYSICIAN EXECUTIVES It is not farfetched to say that the body of subsequent research on physicians

in management - the "administrative elite" of health care - tests the assertions from Freidson's restructuring thesis, either explicitly (Montgomery, 1987, 1992 ; Hoff, 2000) or implicitly . In order to do this, it can be useful to think of the research on physicians in management as a set of propositions or hypotheses,

which together form a testable model about the roles and positioning, ability and motivations, and outcomes of physicians in management.

The first set of hypotheses addresses antecedents and would posit : (a) that

physicians in management are holding positions that would provide them with



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sufficient responsibility and authority to address the needs and demands of both the organization (i .e . the firm or governing board) and clinicians, and (b) that physicians who enter management will have the background and motivations to carry out these expectations . The second set of hypotheses addresses the outcomes and - assuming the first set of hypotheses is supported - would posit that physicians in management will be successful in : (a) carrying out the needs and demands of the organization, while (b) buffering the practice of medicine against the political and economic pressures of the environment . In the following sections, I will trace the development of research on physicians in management as it sheds light on these hypotheses . It is interesting to observe that research on physicians in management has unfolded, more or less, in a sequential fashion that mirrors the model proposed here . That is, most early studies were designed to examine the roles and responsibilities assumed by physicians in management and to document their numbers . At the same time, early research focused on background descriptors of physicians in management, with particular attention to their education and experience in management and clinical work, along with an assessment of their motivations for entering management and attitudes about their responsibilities in this hybrid position . A focus on the outcomes of physicians in management, in terms of their effectiveness both as managers and as allies on behalf of the medical profession has occurred much more recently . Hypothesis Set One : Antecedents The physician in management is not really a new phenomenon, since physicians have long held administrative positions as hospital chiefs of staff and the like . However, these positions were customarily held on a part-time, rotating, voluntary basis . Following a relatively brief tenure in such positions, physicians would return to full-time clinical work, many relieved to leave their administrative tasks behind. A large number of today's physician executives, in contrast, are holding positions that are newly created, such as Medical Director and Vice President for Clinical Affairs, or that are substantially expanded versions of previous clinical chief roles (Montgomery, 1992) . Estimates of the total number of physicians involved in management are not easily generated, however. One traditional indicator is the classification system used by the American Medical Association of all licensed physicians on the basis of self-reports about major professional activity . This measure indicates that fewer than 5% of the total number of active physicians list management as their primary professional activity, and that this number has not changed



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much in recent years . In contrast, however - and perhaps a more accurate reflection of the current interest among physicians for a career path into management - is the rapidly growing membership reported by the American College of Physician Executives (ACPE), the only professional association explicitly and exclusively for physicians in management . In 1975, 64 physicians established the American Academy of Medical Directors (AAMD), the forerunner to the ACPE . By the end of the 1980s, membership had grown steadily to 5,000 (Montgomery, 1992) . Membership took off in the 1990s, reaching over 14,000 by the end of the decade (Hoff, 2000) . Since membership in ACPE is voluntary, these numbers may overstate (or understate) the actual numbers of physicians holding positions in management . One explanation for the disparity between the AMA figures and those from the ACPE membership roles is that the latter may include physicians who are not yet functioning in management as their primary professional activity, while the former may not accurately reflect recent career shifts from well defined specialty clinical work to less codified roles such as physician manager (Scott et al ., 2000) . Roles and Responsibilities

Most studies of physician involvement in management have emphasized physician participation in hospital decision making and governance from the perspective of how to encourage practicing clinicians to take an interest in management issues . This is true both for early studies (see, for example, Guest, 1972 ; and Schulz et al ., 1976), as well as for many contemporary investigations examining physician-organizational integration (see, for example, the work of Shortell, 1991, and Shortell & colleagues, 1995, 1996 ; Ashmos & McDaniel, 1991 ; Davidson, et al ., 1996 ; Morrisey et al., 1996 ; and Zuckerman et al ., 1998) . By the 1980s, with the growing visibility of the American College of Physician Executives, scholars began to recognize that a distinct group of physicians was emerging in pursuit of new career paths in health care management. But, aside from self-studies prepared by the ACPE (then known as the AAMD), there was little systematic information about the management responsibilities these physicians were assuming. Betson (1986 ; Betson & Pedroja, 1989) was among the first to address this void, in a study of the tasks undertaken of physicians holding full-time formal management positions in hospitals, obtained through a survey of the membership of the ACPE (then AAMD) . Over three-quarters of respondents reported that they were responsible for three broad categories of tasks : (1) quality assurance (through the design of programs and procedures for clinical oversight, efficiency, and accreditation) ; (2) communication links between the medical staff and the administration (via attending meetings and issuing reports to both groups) ; and (3) conflict medi-



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ation (among physicians, and between physicians and non-physicians) . Neither financial resource management nor strategic planning appeared as a major responsibility for the majority of respondents . (For similar reports, see also Kindig & Lastiri-Quiros, 1989 ; Nash & Hillman, 1986 ; Ruelas & Leatt, 1985 .) Subsequent studies show that physician managers continue to assume the three categories of responsibilities reported by Betson and others . However, the job has become more complex in the last decade, reflecting the intensified involvement of managed care models of health delivery and the new demands they place on health care organizations . In particular, heightened competition for patients and resources, widespread concern among the general public about the quality of managed care, and complex financial arrangements between physician groups and health care organizations, all lend themselves to an expanded role for physician managers . For example, while Schneller (1991) emphasizes the central responsibility of conflict management as part of the job of physician managers, he adds that physician managers have the potential to become "champions of clinical integrity" and "public interpreters of hospital performance," thereby helping to assuage the concerns of the community that quality issues would not take a backseat to managerial efficiency imperatives . He further predicts the new role of negotiator with patient-agent organizations, such as health plans and employers . Schneller's later review (Schneller et al ., 1997) and that by Dunham et al . (1994) both highlight the importance and expansion of the negotiator role . Indeed, this is confirmed in Bodenheimer & Casalino's (1999b) study of managed-care medical directors, many of whom spend the majority of their time creating and maintaining networks of providers . The core task of such responsibilities involves negotiation among physicians and organizations . Guthrie also focuses on the negotiator and communicator roles in his observation that "Many of the issues confronting healthcare organizations require physician involvement and understanding, and the physician executive is a tool to achieving physician participation" through physician-organization "goal alignment" and team development (1999, 3) . Some recent observers have added that physicians in high levels of management are taking on a larger role in strategic planning and capital decision making (Bodenheimer & Casalino, 1999b ; Kirschman, 1996 ; Lauer, 1998 ; Scherer, 1999), yet even in these reports it appears that the hybrid or boundary-spanning roles of quality assurance coordinator, communicator, and mediator/negotiator between physicians and the organization predominate . Interestingly, along with the increased visibility of the position of physicians in management, has been a shift in the term applied to this hybrid profession, from "physician administrator" to "physician manager" to "physician



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executive." Schneller & colleagues (1997) note this change and comment as follows : We propose that the term physician executive be applied to individuals who: (1) are employed in formal managerial positions to design, manage and sustain systems of care (including networks and alliances), clinical work teams, clinical environments, (2) provide advice to nonclinical and clinical constituents (including payers, purchasers, and patients) regarding the implications of managerial decisions for clinical processes and outcomes, and (3) negotiate or contract for settlements that sustain the profession's role to 'reconcile, integrate, or choose among conflicting applications of a solution' within the context and culture of a given delivery system (1997, 93) .

In summarizing the roles of physician executives by the end of the 1990s, LeTourneau & Curry state the following, "The basic set of responsibilities has not changed much, but the environment in which the duties are discharged would be barely recognizable to the medical director of the past" (1997, 18) . Preparation for the Career of Physician Executive The first set of hypotheses in our interpretive framework imply that physicians in management not only must be appropriately positioned to address needs and demands of both the organization and the profession, which the preceding discussion supports, but also that they must be prepared to do so . Many have expressed curiosity about what kind of physician would be interested in shifting to a management career, and why . Those who pose this question assume that the many years of education and training necessary to practice medicine are counter-intuitive to a career path into management . In the past, popular belief assumed that physicians who entered management were those who were only marginally successful as clinicians . However, Montgomery's (1987, 1990) study revealed little difference between physician managers and a comparative group of clinicians in the quality of their medical education, their residency training, or their specialty board certification status . Although not direct measures of clinical ability, these are useful indicators of potential for success as clinicians . More recent studies confirm the consistently high level of clinical specialty board certification held by physicians in management, keeping pace with that of practicing clinicians, in ranges of 90 to 95% (Grebenschikoff, 1997 ; Scherer, 1993). In terms of clinical experience, Bodenheimer and Casalino (1999a) report that the average number of years spent in clinical practice before entering medical management was eight years in 1997 . Although this figure is down from an average of 20 years in 1985, it may understate the extent of clinical experience, since it is not uncommon for physician executives to continue a part-time clinical practice . It is not surprising, therefore, that these indicators tend to reflect the imperative, articulated by



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Kindig (1997), Weil (1997b), and Scherer (1999), among others, that physician executives should be, first and foremost, outstanding clinicians with substantial clinical experience . Measures of preparation for management roles are more ambiguous, because there is no standardized body of knowledge for physicians in management (Montgomery, 1990) ; hence, no institutionalized management education path has become the norm . To the contrary, there has been substantial disagreement about the appropriate context for graduate management education for clinicians (Kindig, 1997 ; LeTourneau & Curry, 1997 ; Lyons, 1999 ; Weil, 1997a; Guthrie, 1999), with some favoring a generic MBA and others favoring a healthcare-specific degree such as an MHA, MPH, or the newly designed master's degrees in medical administration or administrative medicine . Even today, estimates are that only one-quarter of physicians in management hold a graduate management degree of any kind, generic or healthcare-specific (Grebenschikoff, 1997 ; Hoff, 2000) . Physicians aren't eschewing management education but are participating instead in non-degree management training, through a wealth of workshops and seminars offered by universities across the country, as well as by the ACPE . The variability in managerial training and education has been troubling to some observers, in particular to those who are interested in formalizing a specialty in medical management, along the lines of other clinical specialties recognized by the American Board of Medical Specialties . Despite ACPE's efforts during the last fifteen years to achieve such distinction, this has not happened (Bodenheimer & Casalino, 1999a) . As predicted a decade ago, "Without a more systematic effort at defining this professional segment and the core curriculum required to train physician managers adequately, the prospects appear slim that the American Board of Medical Specialties can be convinced to embrace this group" (Montgomery, 1990, 194) . In the interim, the ACPE developed its own independent credentialing arm, the American Board of Medical Management, and bestowed Fellowship on a subset of its members . Today, however, a new approach is underway by the American College of Preventive Medicine. One of its first tasks is to articulate a set of core competencies, performance indicators, and curriculum design for physicians in medical management (Halbert et al ., 1998 ; Lane & Ross, 1998 ; Schwartz et al ., 2000) . This movement remains in the nascent stages, however, with fewer than 10% of physician executives surveyed in 1997 certified by the American Board of Preventive Medicine (Halbert et al ., 1998) . This review suggests that, while physician executives hold strong credentials as clinicians, their preparation as managers is less systematic and hence not as easily assessed .



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Motivations, Identities and Commitments of Physician Executives Perhaps more relevant even than preparation is willingness to act as a boundary spanner on behalf of both the medical profession and the organization . Several avenues of inquiry can inform this issue : the reasons provided by physician executives for choosing a career path into health care management, their self-identity, and their relative commitments to the organization and to the profession . Montgomery reports from a survey of the membership of the ACPE that only a small percentage of physicians in management chose this career path because they were disgruntled with medical practice, though there was greater dissatisfaction among the most recent cohort of physicians to enter management . Nevertheless, across all cohorts, over three-quarters of respondents report being satisfied with practice (Montgomery, 1989) . Thus, they were not "pushed" into management by dissatisfaction from practice ; instead, data indicate that they were "pulled" into management by the attractions of holding a position of leadership and authority, and the opportunity to have a policy-making voice and an impact on large number of people (Montgomery, 1992) . In a more recent survey of ACPE members, Hoff (1998) reports similar findings of attraction to management, noting that both younger and older cohorts of physician executives view their management position as an interesting and challenging career. Guthrie concurs, from his own and others' experiences, that "physicians who make this transition do so because they are attracted to the challenges, the differences, the difficulties, and the newness of the problems to be solved" (1999, 12) . These studies cited above indicate that the career path into management is certainly willingly embraced . It is also relevant to consider whether members of this hybrid profession enlarge their self-identity to include management along with clinical practice, or if they replace their original clinical identity with one emphasizing management . For the most part, the former appears to be true. Montgomery (1990) reports that two-thirds of physician-manager respondents consider their primary professional identity to be as a physician or as both a physician and a manager . Even among those who spend 75% of more time on management, the majority still retain "physician" as their primary identity, either exclusively or as both a physician and a manager. In his study of ACPE respondents, Hoff (1998) reports similar findings of a dual identity, and that expressions of this duality are more likely among those who still practice medicine at least half the time . In another study of managed-care medical directors, Bodenheimer and Casalino report that for these physician executives, "the distinction between the suit and the white coat is negligible" (1999b, 2031) . In addition to self-identity, physician executives' goals and values can be important signals of their willingness to function on behalf of both the



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organization and clinicians, as our interpretive framework posits . Again, we have insights from several studies of physician executives . First, in terms of groups to whom physician managers should feel their greatest obligations, Montgomery (1992) found that physician executives report giving equal (and highest) priority rankings to physicians in their organization and to the organization at large ; there was no significant difference in these figures when controlling for percentage of time spent on management . Hoff (2000) also found high scores on a measure of professional commitment, and no significant difference when controlling for number of years spent on management tasks . It is notable that Hoff's sample of ACPE respondents was restricted to those working in managed care settings (whereas Montgomery surveyed the entire ACPE membership), and over half no longer engaged in clinical practice. Thus, even within an intensified managed care environment, physician managers today appear to maintain a solid commitment and sense of obligation to the medical profession . Second, these and other studies provide further attitudinal evidence for the way this hybrid profession will balance the needs and demands of both constituents . For example, Montgomery (1992) reports that nearly half the physician managers in her study disagree with the statement that matters of medical policy should be dealt with only by physicians, in contrast to less than 20% of practicing physicians who disagree with the statement . Hoff (2000) reports that, while physician managers appear to hold strong beliefs toward maintaining professional self-regulation, their beliefs in maintaining professional autonomy are less strongly held . In a study of hospital adoption of AIDS-related policies, Montgomery and Oliver (1996) found that the presence of a physician executive is significantly associated with the hospital's likelihood of adopting policies that balance the interests and prerogatives of multiple constituents, instead of policies that protect the rights of one group at the expense of another . The implications of each of these studies are that physician executives are not exhibiting a reflexive tendency to favor either clinician demands and expectations or those of the organization . Rather, taken together, they suggest that physician managers are inclined to allow room for non-physicians to participate in areas that in the past were the exclusive province of clinicians . At the same time, however, there is no evidence for a wholesale shift by physician executives from clinical to managerial priorities or commitments . The foregoing summary of positioning and intentions of physicians in management indicates support for the first set of hypotheses : namely, that physician executives are assuming pivotal roles that enable them to span the boundaries between management and clinical work, and that physician managers are willingly assuming these roles, even in the absence of significant formal



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management education. In so doing, they are enlarging their self-identity to incorporate a managerial identity, while not abandoning their clinician identity . Moreover, they are approaching their hybrid profession with attitudes that suggest their continuing interest in balancing the needs and demands of both the organization and the medical profession . Given that the first part of our interpretive framework has garnered reasonable support, we turn next to the literature for evidence to support the hypotheses regarding outcomes and effectiveness of physician executives . Hypothesis Set Two : Outcomes The second set of hypotheses posits that physicians in management will be instrumental in : (a) carrying out the needs and demands of the organization, while (b) buffering the practice of medicine against the political and economic pressures of the environment . Hence, two sets of outcomes need to be examined here : those that address the interests of the organization and those that address the interests of the medical profession . These interests need not be in conflict, but they do imply different outcome measures . Outcomes Related to Organizational Needs Betson (1986) concluded her exploratory study of physician-manager roles with a call for comparative studies of health care organizations that employ physician managers and those that do not, as one way to ascertain the wisdom of moving to greater use of physician managers . Yet, our information about the organizational outcomes associated with physician executives remains sparse . Dunham et al . (1994) report a study of the perceived value of physician executives to their employing organizations . While this study does not include objective measures of effectiveness, it is informative in providing comparative rankings by physician executives and non-physician executives in their perceptions of the value of physician executives to meeting organizational objectives . They report few differences between the two groups' rankings . Both groups see physician executives as most effective at improving quality assurance activities and physician education for quality ; ensuring effective relations with medical staff ; helping to clarify goals, priorities, and directions ; evaluation of practice patterns for efficiency ; and communicating with the board . It is revealing that these tasks are consistent with those first reported by Betson ; namely, quality assurance, communication, and conflict mediation . Dunham et al . (1994) also found little difference in these responsibilities when controlling for type of health care organization . Most of the empirical studies on organizational outcomes, however, do not specifically measure the outcomes identified by Dunham et al . (1994) . For



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example, several studies have analyzed the effects of hospital-physician integration on organizational outcomes such as financial performance and operational efficiency (e .g . Alexander & Morrisey, 1988 ; Ashmos et al ., 1998 ; Molinari et al., 1993 ; Succi & Alexander, 1999) and market position (Goes & Zhan, 1995) . Two studies that look more closely at outcomes related to the responsibilities of physician executives concern quality improvement efforts (Weiner et al ., 1997) and physician-hospital conflict (Burns et al ., 1990) . However, while several of these studies refer to "physician participation in management and governance," none offers a separate independent measure of the presence of physician executives, such as that defined by Schneller et al . (1997, quoted above), to distinguish it from clinician participation on hospital boards . Thus, is it difficult to disentangle these two forms of physician leadership . Even with the combined measure, "empirical studies have failed to provide consistent evidence that physician participation in hospital management and governance improves hospital efficiency or other performance outcomes" (Succi & Alexander, 1999, 33) . By the end of the 1990s, Kindig observes, "Is it possible to isolate a physician executive's independent effect on organizational performance, after taking into account all the other factors that can affect such an outcome? It would be important to know the answer to this question someday, but the lack of information on the specific components of the physician executive's role, as well as on assessing organizational performance, makes it empirically impossible at the current time" (1997, 41) . Without specific reference to physician executives, Zuckerman et al . (1998) also note the great difficulty in defining and implementing performance indicators for physician-organization alignment . Thus, despite assertions that physician executives are important in helping organizations meet their operational and performance goals, such statements are not based on solid data. We return to a discussion of this difficulty later in the paper . Outcomes Related to Professional Needs

The second set of outcomes in our interpretive framework targets the role of physician executives in helping to protect the practice of medicine from political and economic pressures of the environment. Such environmental pressures would challenge the position of professional dominance, with its accompanying claims of autonomy and self-regulation, traditionally held by the medical profession . Examples of appropriate outcome measures, therefore, would be indicators that physician executives have been associated with the profession's maintenance of autonomy and self-determination, in the face of pressures to reduce these prerogatives . There is a similar dearth of empirical data directly measuring this set of outcomes, with just a few studies offering some insights . Montgomery and



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Oliver's (1996) study of hospital-wide policies and procedures suggests that the presence of physicians in the hospital's formal administrative structure reduces the likelihood that the hospital will adopt HIV-testing policies that constrain professional autonomy in patient-care decisions . Mueller (1998) presents a case study demonstrating how physician administrators were instrumental in raising the visibility and enhancing participation of community clinicians in the context of treatment research on AIDS . Both these studies offer suggestive evidence that physician executives may play a role in maintaining the strength of the medical profession. Yet, this is far from a comprehensive or compelling body of evidence in support of the second part of this interpretive framework . Summary of the Restructuring Thesis Evidence

The research reviewed above provides incomplete support for the restructuring thesis introduced earlier. First, in terms of antecedents, physician executives are assuming responsibilities that allow them to address the boundary-spanning needs and demands of both the organization and the medical profession, though the evidence is less convincing that physician executives are positioned to affect the strategic-planning needs of organizations or the profession . Physician executives appear to have strong clinical backgrounds and a moderate amount of management education, reflecting the uncertainties of how that management training should progress . They appear eager to embrace this hybrid profession, and they demonstrate attitudes related to identity and commitment that suggest they will indeed bring a "balancing" approach to their work . However, in terms of outcomes, evidence regarding the effectiveness of this hybrid profession, on behalf of the organization and/or the medical profession, is scant at best . Thus, fifteen years after Freidson proposed the restructuring hypothesis, it is still premature to draw conclusions about its accuracy . Nevertheless, the promise and potential of physician executives continue to be described in glowing terms, with physician executives hailed as a "change agent for new models of health care delivery" (Lyons, 1999, 38) . Data suggest that health care organizations are responding to these optimistic predictions with attractive compensation packages for physician executives that meet or exceed compensation for clinicians, especially those in primary care (Bodenheimer & Casalino, 1999b ; Grebenschikoff, 1997 ; Health Care Financial Management, 1997 ; Health Care Strategic Management, 1996, 1998, 1999) . Thus, many organizations are apparently willing to move forward with this strategy and to overlook the paucity of studies directly measuring outcomes associated with physician executives .



Physician Executives : the Evolution and Impact of a Hybrid Profession

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For those who are uncomfortable without stronger outcomes data, the following section provides an alternative, or supplementary, approach to studying the effectiveness of physician executives .

THE NEXT GENERATION OF STUDIES ON PHYSICIAN EXECUTIVES: BRINGING "PROCESS" INTO "OUTCOMES" In the place of compelling evidence of effectiveness in terms of traditional outcome measures are efforts that examine process issues as "ingredients that foster success" (Lyons, 1999, 40) . This emphasis is especially salient for a hybrid profession, where the process of interacting within two spheres may be especially challenging . In particular, the process of building trust simultaneously with clinicians and managers recently has been identified as critical to the success of physician executives (Bodenheimer & Casalino, 1999a ; Guthrie, 1999 ; Hoff, 1999b ; Kindig, 1997 ; LeTourneau & Curry, 1997 ; Lyons, 1999 ; Montgomery, 1996 ; Scherer, 1999) . However, while several scholars recently have examined trust relations between physicians and patients (Mechanic, 1996, 1998 ; Shortell et al ., 1998) and between physicians and health care organizations (Shortell, 1991 ; Succi et al ., 1998 ; Zuckerman et al ., 1998), we know very little about the particular difficulties of establishing trust among physician executives, clinicians, and non-physician managers (though see Hoff, 1999b, for a study that addresses trust among physician managers themselves) . Recent theoretical developments of trust in an organizational context can serve as useful guides for examining the trust-building process confronting physician executives, and we turn now to that task . Defining Trust and Its Antecedents

Trust has been characterized as perhaps the single most important variable influencing interpersonal behavior (Golembiewski & McConkie, 1975) . Organizational scholars make similar claims about the centrality of trust to smooth intra- and inter-organizational relationships (e .g. Hosmer, 1995 ; Jones & George, 1998 ; Ring & van de Ven, 1992) . As Shortell reports in his study of effective hospital-physician relationships, "[E]veryone interviewed agreed that it was trust that made everything possible" (1991, 93) . Trust is especially important under conditions of uncertainty, and a unifying theme among various writers on trust is the element of voluntary risk taking and vulnerability . In keeping with these elements of trust, Mayer et al. define trust as



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the willingness of a party to be vulnerable to the actions of another party, based on the expectations that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party (1995, 712) . Trust, therefore, is a precursor to action that leads to a willingness to engage in "risk-taking in relationships" (Mayer et al ., 1995), precisely because of the

inability to control or monitor the actions of another. In the current

hyperturbulence of the health care environment, where uncertainty and

ambiguity are widespread, such risk-taking in relationships has become a

necessity . It is thought to facilitate collaboration, coordination, communication, and negotiation - all central activities of the role of physician executives .

Hardin points out that much of the literature on trust is actually about

trustworthiness, and states, "the best device for creating trust is to establish and

support trustworthiness" (1996, 29) . Along this line, we can interpret the theoretical literature on bases of trust as antecedents that relate to perceptions

about the individual to be trusted (see Mayer et al ., 1995, and Bigley & Pearce, 1998, for reviews of this literature) . Several antecedents that consistently appear

in the literature can be categorized as competence, benevolence, and integrity .

Competence concerns the perceived ability of the trustee (in this case, the physician executive), as measured by indicators such as education or credentials, experience, and reliable past role performance .

Benevolence concerns the extent

to which the trustee demonstrates care and consideration toward others with whom he or she interacts .

Integrity concerns the degree to which the trustee is con-

sidered to perform with honesty, fairness, and consistency of actions and words .

In addition to characteristics about the trustee, scholars have identified the

importance of the trustor's a priori propensity to trust, described as a general willingness to trust others (Mayer et al., 1995) . Two aspects of the trustor-

trustee relationship are also relevant : background similarity between the trustor and trustee (Zucker, 1986) and interaction frequency (McAllister, 1995 ; Ring & van de Ven, 1992), since trust may intensify or be eroded with recurrent interactions (see also Shortell, 1991) .

Figure 1 presents a model of the process of trust, incorporating the

characteristics and variables reviewed here .

Challenges to Physician Executives in Conveying Trustworthiness As noted, trust has been identified as a central component necessary for

physician executives to be effective in their primary roles as communicators, coordinators, and negotiators ; at the same time, the hybrid boundary-spanning nature of this professional segment makes it especially challenging for physician executives to earn the trust of the groups with whom they interact .



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For example, Wicks et al . (1999) emphasize the importance of the context within which the trustor and trustee are embedded . Assessments of competence are particularly vulnerable to variations by context, since a person may be perceived as competent in one context but not in another (readily seen by the exchange, "Do you trust him/her?" "Trust him/her to do what?") . Thus, a physician may be deemed highly competent as a cardiologist, but this does not automatically construe on the same individual an assessment of high competence as a health care executive . This is because competence-related indicators for clinical work include specialty certification and experience, while competence-related indicators for managerial work include graduate management education and experience . Further, perceptions of competence may differ depending on the orientation of the trustor. Clinicians may emphasize a physician executive's indicators of clinical competence, while non-physician managers may be more impressed with a physician executive's management-related competence indicators . As a result, achieving a balance of these two sets of competence indicators poses a serious dilemma for physician executives, cogently described by Hoff as the "paradox of legitimacy" (1999a) . He points out that maintaining credibility among clinicians requires physician executives to continue part-time clinical practice, while achieving credibility among managers requires physician executives to emphasize time spent on management and to pursue graduate management education . He observes that a physician executive is hard-pressed to achieve and maintain both aspects of credibility simultaneously, because of time pressures and also because what is valued by one group may be unappreciated or even discounted by the other. Anecdotal evidence (Montgomery, 1987) reveals that some physician executives deal with this dilemma by using "selective signaling" (Jones, 2000) to highlight different aspects of their credentials, depending on the group with whom they are interacting at the time . Although much attention is focused on this aspect of credibility (see, for example, Guthrie, 1999 ; Kindig, 1997 ; LeTourneau & Curry, 1997 ; Lyons, 1999 ; Scherer, 1999 ; Weil, 1997b), the model of trust suggests that competency-based credibility is only one of several important elements of trustworthiness . Moreover, most of these other factors are not as context-specific as competence . For example, a physician executive can be perceived to have high levels of benevolence and integrity in any context. Benevolence is a sense of caring, consideration, and concern for others. Benevolence can be exhibited through everyday expressions of genuine consideration and respect for all individuals and groups with whom the physician executive interacts (Kane & Montgomery, 1998) . It also often connotes an altruistic component, to



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distinguish benevolent behavior from egocentric caring behavior (Mayer et al ., 1995) . Given the altruistic motive traditionally associated with the medical profession, physician executives may undertake the responsibilities of this hybrid position with a high store of perceived benevolence, particularly if they have had substantial clinical experience . Perhaps the main challenge to physician executives regarding benevolence-based trustworthiness is to avoid sending the message that their motive for entering medical management was primarily driven by financial interests . Integrity is somewhat more complex than benevolence and may also pose some special challenges for physician executives . Integrity has several components, each of which illustrates a form of congruence . That is, honesty reflects congruence of the trustee's word and actions with the truth ; follow-through reflects congruence of the trustee's actions with his or her promises ; and fairness reflects congruence of the trustee's actions with the trustor's values of fairness . The first two are straightforward, but the last fairness - is the source of potential difficulty for physician executives . This is because interpretations of what fairness means often vary, epitomized by the debate about allocation of resources in health care that pits micro-level definitions of fairness for individual patients (commonly adopted by clinicians) against macro-level definitions of fairness for populations of patients (commonly adopted by managers) . Because these definitions of fairness imply different resource allocations and policies, they constitute the source of much conflict between clinicians and managers . As a result, in order for the physician executive to be perceived as trustworthy on fairness-based integrity, these two concepts of fairness must be confronted . Indeed, it is here that the physician executive's boundary-spanning talents at negotiation, communication, and conflict mediation may be put to the greatest test . The remaining antecedent factors in the trust model refer to the trustor and to the trustor-trustee relationship . They also are likely to influence the perception of the physician executive's trustworthiness, but in different ways . First, the trustor's a priori propensity to trust may be particularly relevant for the physician executive's relationship with clinicians . For reasons often reflecting a sense of threat from environmental changes in health care, clinicians may have a predisposition not to trust a physician executive . Thus, the physician executive undertakes the responsibilities of this hybrid role from a disadvantaged position on this factor . Second, the trustor's perceptions of background similarity between the trustor and the trustee is thought to construe a sense of community and common bond . Although most studies of this variable emphasize race/ethnicity and gender, a common experience can also be an indicator of background similarity . This antecedent, then, is likely to contribute to a stronger



23 4

KATHLEEN MONTGOMERY

sense of trustworthiness from clinicians toward the physician executive (i.e . both began their careers as clinicians and experienced the professional socialization of extensive medical education) than that between the nonphysician executive and the physician executive . The Balancing Act of Trustworthiness

It is important to keep in mind when reviewing the potential challenges facing physician executives in building and maintaining trust that the model's antecedent factors can vary independently of one another, although none is thought to be a complete substitute for another (Mayer et al ., 1995) . That is, the antecedents of trustworthiness can be considered separate continua, such that a physician executive can be assessed relatively high on one or more, helping to compensate for a somewhat lower assessment on another . For example, although a physician executive may experience difficulty in achieving perceptions of high competence-based credibility from all constituents, this need not preclude perceptions of credibility or trustworthiness based on the remaining factors . A physician executive with little formal management education may be able to compensate for this weaker competence indicator by very strong competence indicators in clinical work . In fact, this is exactly the basis on which many physician executives began their hybrid roles . Further, strong clinical credentials, coupled with a strong perception of benevolence and honesty-based integrity, may help to compensate for questions from clinicians about the physician executive's fairness-based integrity when making macro-level decisions . Similarly, a clinician's a priori propensity to (dis)trust the physician executive may be overridden by other strong indicators of the physician executive's trustworthiness, especially following repeated interactions . Most importantly, trust is a dynamic process . That is, the clinicians and the nonphysician executives receive feedback from interactions with the physician executive ; and the more frequent the interactions, the more feedback . Perceptions of trustworthiness are therefore continually updated through a constant exchange of information, similar to the feedback and equilibrium processes in a cybernetic system (Oliver & Montgomery, 2001) . As Shortell notes, "[T]rust must be earned and re-earned every day . Every encounter, situation, or problem is an opportunity to repair, reinforce, or enhance trust" (1991, 104) . The foregoing discussion of antecedents to clinician and manager trust in physician executives suggests several hypotheses that can be tested within the framework of the model in Fig. 1 . This is not a trivial task and is likely to require a multi-stage investigation of antecedents and outcomes of trustworthiness



Physician Executives: the Evolution and Impact of a Hybrid Profession

23 5

assessments over a substantial period of time to investigate both the development and the maintenance of trust . Nevertheless, the contribution of such empirical studies to our understanding of the process of trust involving physician executives would be enormous .

DISCUSSION AND CONCLUSIONS In this paper, I have traced the development of research on physician executives : who they are, why they have chosen this career path, what they do, and how effective they are at it . The review has been framed principally within Freidson's restructuring thesis that posits a central place for physician executives in balancing the needs and demands of health care organizations with those of the medical profession during the era of managed care . Yet, despite a number of studies since the mid-1980s examining these issues, there remain many unanswered questions, and the restructuring thesis can be neither confirmed nor rejected. While we know quite a bit about the roles and responsibilities of physician executives, and a fair amount about their attitudes, our knowledge about their actual contribution to organizational effectiveness and/or the medical profession's strength remains sparse . To be sure, this lack of evidence does not mean that physician executives are not making important contributions to health care organizations and the profession . Instead, as Kindig suggests (1997) the lack of outcomes data may simply reflect the difficulty of conducting research to determine the separate contributions of this professional group and in specifying the appropriate outcomes to measure . In light of these difficulties, the paper also examines another approach to the study of physician executive effectiveness, which shifts the focus from outcomes to process . This approach is based on the assumption that the key objectives of the physician executive role will be facilitated when the physician executives are trusted by both clinicians and non-physicians . A set of antecedents to trust is described and depicted in Fig . 1, followed by a discussion of the special challenges to physician executives in fostering a perception of trustworthiness among those with whom they interact. The model also depicts outcomes of high and low levels of trust. A dynamic model of trust development offers a number of testable hypotheses that may produce a richer portrait of physician executives' potential and actual effectiveness than we have to date . Implications for Practice

The foregoing analysis indicates that physician executives are becoming an established component of the management structure of many health care



2 36

KATHLEEN MONTGOMERY

organizations . As members of a hybrid profession, they are uniquely positioned to bring their expertise and insights from the clinical side of medicine to the complex issues facing today's managed health care delivery systems . It is no surprise, then, that they appear to be highly valued as potential contributors to the management teams of major health care organizations, even in the absence of formal data demonstrating their effectiveness in this role . In order for organizations to realize the full potential of these professionals, however, it seems incumbent on organizations not to use physician executives merely as symbolic window dressing appointed to convince skeptics that quality of clinical care remains important in a managed care environment . Rather, it behooves organizations to assure not only that physician executives are given meaningful responsibilities associated with merging clinical interests with managerial ones, but also that such responsibilities are accompanied by sufficient discretion and autonomy to enable physician executives to function as effective representatives and leaders of powerful multiple constituencies . At the same time, it is to the advantage of the individuals assuming positions as physician executives to do what they can to enhance their effectiveness in this hybrid profession by assuring that they are adequately prepared for their new responsibilities and that they conduct themselves in a manner that fosters a reputation of trustworthiness in the eyes of their multiple constituents . For both of these objectives, advanced management education and credentials figure importantly . Yet, as discussed above, many questions persist about what kind of formal management education and credential are appropriate for physician executives . Despite efforts on several fronts to articulate a unique or standardized body of knowledge and credential appropriate for this hybrid profession, no consensus has yet been reached . As a result, these professionals may receive ambiguous signals about what direction to pursue for further education, and they subsequently may send ambiguous signals about their competence in the managerial aspects of their hybrid roles . Given the reliance on accreditation and credentialling as indispensable signals of quality in health care organizations and professions, questions about how best to obtain, measure, and signal physician executives' competence and expertise will continue to loom large.

CONCLUSION There can be no doubt that health care researchers, managers, practitioners, and policymakers share a deep concern for how best to organize, manage, and deliver health care of excellent quality, that is affordable and accessible . The use of physicians executives has a strong appeal as a key strategy enabling the merger



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of clinical priorities with the organizational and systemic realities of limited resources. Thus, as with any organizational strategy, it is imperative that we carefully examine the impact of this strategy, to determine whether it leads to substantive or merely symbolic outcomes (Zajac & Westphal, 1995) . Despite the many research contributions reviewed here, there remains much more to learn .

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Schwartz, R . W ., Pogge, C. R., Gillis, S . A ., & Holsinger, J . W . (2000) . Programs for the development of physician leaders : A curricular process in its infancy . Academic Medicine, 75, 133-140 . Scott, W . R . (1982). Managing professional work: Three models of control for health organizations . Health Services Research, 17, 213-240 . Scott, W . R. (1993) . The organization of medical care services : Toward an integrated theoretical model . Medical Care Review, 50, 271-302. Scott, W . R ., Reuf, M ., Mendel, P. J ., & Caronna, C . A . (2000) . Institutional change and healthcare organizations . Chicago : University of Chicago Press . Shortell, S . M . (1991). Effective hospital-physician relationships. Ann Arbor MI: Health Administration Press. Shortell, S . M., O'Brien, J . L ., Carman, J ., Foster, R. W ., Hughes, E. F. X ., Boerstler, H., O'Connor, E . J ., & Gillies, R . R. (1995) . Physician involvement in quality improvement . Issues, challenges, and recommendations . In : D . Blumenthal & A. C . Scheck (Eds), Improving Clinical Practice : Total Quality Management and the Physician . San Francisco : Jossey-Bass . Shortell, S . M., Gillies, R., Andersen, D ., Morgan-Erickson, K., & Mitchell, J . (1996) . Remaking health care in America . San Francisco : Jossey-Bass Publishers . Shortell, S . M ., Waters, T. M ., Clarke, K . W ., & Budetti, P . P . (1998). Physicians as double agents : Maintaining trust in an era of multiple accountabilities . Journal of the American Medical Association, 280, 1102-1108 . Smith, H . L . (1955) . Two lines of authority are one too many . Modern Hospitals, 84, 59-64 . Stan, P. (1982) . The social transformation of American medicine . New York: Basic Books . Succi, M. J ., & Alexander, J . A . (1999) . Physician involvement in management and governance : The moderating effects of staff structure and composition . Health Care Management Review, 24, 33-44. Succi, M. J., Lee, S . D ., Alexander, J . A ., & Kelly, J . (1998) . Trust between managers and physicians in community hospitals: The effects of power over hospital decisions. Journal of Healthcare Management, 43, 397-415 . Weil, T . P. (1977a). Which degree should you choose? The Physician Executive, March: 4-7. Weil, T . P . (1997b). Physician executives: Additional factors impinging on their future success. Frontiers of Health Services Management, 13, 33-37 . Weiner, N ., Shortell, S . M., & Alexander, J. A . (1997) . Promoting clinical involvement in hospital quality improvement efforts : The effects of top management, board and physician leadership . Health Services Research, 32, 491-510 . Wicks, A. C ., Berman, S . L., & Jones T . M . (1999) . The structure of optimal trust : Moral and strategic implications . Academy of Management Review, 24, 99-116 . Zajac, E . J ., & Westphal, J . D. (1995) . Accounting for the explanations of CEO compensation: Substance and symbolism. Administrative Science Quarterly, 40, 283-308 . Zucker, L. G. (1986) . The production of trust : Institutional sources of economic structure, 1840-1920 . In : B . M. Staw & L. L. Cummings (Eds), Research in Organizational Behavior, 8, (pp . 55-111) . Greenwich, CT : JAI Press. Zuckerman, H . S ., Hilberman, D . W., Andersen, R . M., Burns, L. R ., Alexander, J . A., & Torrens, P. 1998. Physicians and organizations : Strange bedfellows or a marriage made in heaven? Frontiers of Health Services Management, 14, 3-34 .

UNDERSTANDING PHYSICIANS' INTENTIONS TO WITHDRAW FROM PRACTICE : THE ROLE OF JOB SATISFACTION, JOB STRESS, MENTAL AND PHYSICAL HEALTH Eric S . Williams, Thomas R . Konrad, William E. Scheckler, Donald E . Pathman, Mark Linzer, Julia E . McMurray, Martha Gerrity and Mark Schwartz ABSTRACT Health care organizations may incur high costs due to a stressed, dissatisfied physician workforce. This study proposes and tests a model relating job stress to four intentions to withdraw from practice mediated by job satisfaction and perceptions of physical and mental health . The test used a sample of 1735 physicians and generally supported the model. Given the movement of physicians into increasingly bureaucratic structures, the clinical work environment must be effectively managed .

Advances in Health Care Management, Volume 2, pages 243-262 . Copyright ® 2001 by Elsevier Science Ltd . All rights of reproduction in any form reserved. ISBN : 0-7623-0802-8 243



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INTRODUCTION Until recently, it was widely perceived that physicians had good jobs, even if they were difficult, challenging, and, at times, stressful . They were perceived to be socially useful, and medicine, as a profession, was accorded high esteem by the public . Physicians were seen as surrounded by accommodating subordinates, respectful colleagues, and trusting patients . They were held up by occupational sociologists as representing the consummate example of professional dominance: they had clinical autonomy, power to determine working conditions, considerable financial rewards, and job security (Freidson, 1970). Things have changed since the golden age of medicine, and the sources of change are numerous and well documented (Scott, 1993 ; Stan, 1982). Financial, technological, and delivery system changes have been important, but more directly affecting physician job satisfaction and stress levels have been changes in the actual organization of the medical workplace . Many observers have suggested that the autonomy of physicians is being constrained (Navaho, 1988), as purchasers, employers (McKinlay & Stoeckle, 1988), and consumers (Haug, 1988 ; Haug & Lavin, 1983) exercise countervailing power (Light, 1993). Physicians' reactions to these changes have been documented in various sources . Newspapers chronicle the woes of a medical career, linking surging disability claims to job dissatisfaction (Altman & Rosenthal, 1990 ; Hall, Roter, Milburn & Daltroy, 1996 ; Hilzenrath, 1998) . Similarly, research journals have reported links between satisfied physicians and patient compliance (DiMatteo et al ., 1993) and patient satisfaction (Linn et al ., 1985), and go further to suggest that dissatisfied physicians may have riskier prescribing profiles (Melville, 1980). Associated with this decrease in satisfaction is a corresponding increase in perceived levels of stress, which may lead to such outcomes as burnout, mental health problems, or even suicide (Arnetz et al ., 1987) . Equally important is the linkage of stress with disruption of work performance, including absenteeism, turnover, poor job performance, accidents and errors, and alcohol and drug abuse, documented in a recent review of the general stress literature (Kahn & Byosiere, 1992) . Taken together, these findings suggest that distress and dissatisfaction have significant costs not only to physicians, but to patients and health care organizations as well. Buchbinder, Wilson, Melick and Powe (1999) estimated that the cost of primary care physician turnover ranged from $236,383 for a family practitioner to $264,345 for a general pediatrician . These findings and their costs will become even more important as increasing numbers of physicians practice in organized settings . In looking for insights on how to manage these issues, the physician job satisfaction and job stress literatures should be investigated . However, these



Understanding Physicians' Intentions to Withdraw from Practice

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literatures are subject to two critical limitations . The first is that they are chiefly devoted to description and prescription . From this, we have a rather good conceptual picture of what job satisfaction and job stress mean to physicians, in addition to some nascent theorizing on the causes and consequences of stress and satisfaction . Many articles make recommendations that are often based upon common sense or intuition rather than empirical evidence . The second limitation is that most of the empirical studies in both literatures focus on predicting the causes of job satisfaction and job stress for physicians . Relatively few studies look at the effects that these two variables have on the physicians themselves, their patients, or their health care organizations . The purpose of this study is to provide empirically-based evidence upon which recommendations can be made to physicians, managers, and policy makers . The following section presents a conceptual model of physician stress that explores its relationship with job satisfaction, physical and mental health, and four types of withdraw intentions . Conceptual Model The conceptual model (Fig . 1) is based on two well-known job stress models (Ivancevich & Matteson, 1980 ; Lazarus & Folkman, 1984) . Both are composed of



Perceived Stress

, Intention to Quit

Global Job Satisfaction

Intention to Decrease Hours

Mental Health

#4 Physical Health

6r

Intention to Change Specialty Intention to Leave Patient Care

Note : Correlation among the two sets of endogenous latent variables have been omitted for clarity as have the error variance of all variables .

Fig. 1 .

Conceptual Model .



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four phases : Stressors, cognitive appraisal, short-term outcomes, and long-term outcomes . Stressors are those elements of the person (e.g . values, personality, abilities), the work itself (e .g . routinization, task significance), the organizational environment (e.g . role ambiguity, intergroup conflict, organizational culture), or the extra-organizational environment (e .g . family relations, economic problems) that may induce stress . Cognitive appraisal is the process by which an individual considers the match between the demands imposed by the stressors and his/her ability to meet those demands . Stress is perceived when the stressors tax or exceed the person's ability to cope (Lazarus et al ., 1984). The short-term outcomes are both physiological (e.g . blood pressure) and behavioral (e.g . job satisfaction, performance, or absenteeism) . The long-term outcomes occur after continued exposure to stress . Ivancevich et al . (1980) calls these diseases of adaptation which include coronary heart disease (Johnson & Hall, 1988) and exhaustion . Stress The relationship between job stress and job satisfaction has been proposed theoretically (Ivancevich et al ., 1980 ; Kahn et al., 1992 ; Lazarus et al ., 1984), tested empirically (Kemery, Bedeian, Mossholder & Touliatos, 1985 ; Lee & Ashforth, 1993), and subjected to meta-analysis (Sullivan & Bhagat, 1992) . The results support the idea that when people experience stress on the job, it often manifests itself in negative feelings about the job (job dissatisfaction) . For example, one study, in developing an integrated model of burnout, tested and supported an inverse relationship between role stress and job satisfaction (Lee et al ., 1993) . The relationships of job stress with physical and mental health have also been included in theoretical models in the stress literature (Kahn et al ., 1992) . In fact, most of the early stress literature focused on the relationship between stress and various physiologic responses . One work found a relationship between stress and three types of physiological reactions : Cardiovascular, biochemical, and gastrointestinal (Freid, Rowland & Ferris, 1984) . Another found a relationship between high job strain (stress) and high blood pressure (Light, Turniver & Hinderliter, 1992) . For mental health, many studies have looked at the effect of stress on such mental health outcomes as anxiety (Billings & Moos, 1982), depression (Revicki, Whitley & Gallery, 1993), and burnout (Gaines & Jermier, 1983) . Revicki et al. (1993) examined organizational characteristics, work stress, and depression among emergency medicine residents and found that work stress was highly related to reported depression . Therefore, we propose the following three hypotheses :



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24 7

Hl : Job stress is inversely related to job satisfaction . H2 : Job stress is inversely related to perceptions of good mental health . H3 : Job stress is inversely related to perceptions of good physical health . Satisfaction Theoretically, dissatisfaction is thought of as a short-term outcome of stress, while mental health is a result of chronic stress and dissatisfaction . For physicians, several studies have confirmed this reasoning . Cooper, Rout & Faragher (1989) using a sample of English physicians, found that job satisfaction was strongly inversely related to depression and anxiety . Taking advantage of a controversial new labor contract between the English National Health Service (NHS) and its physicians, Sutherland and Cooper (1992) examined satisfaction, stress, anxiety, and depression of NHS physicians before and after the implementation of the contract. As they hypothesized, physicians subject to the new contract reported less satisfaction, and more stress, anxiety, and depression . The literature supporting the relationship between job satisfaction and intentions to quit is extensive (Mobley, Griffeth, Hand & Meglino, 1979 ; Steel & Ovalle, 1984) . This terrain has been equally well explored for physicians with a distinct focus on understanding retention of rural physicians (Pathman, Williams & Konrad, 1996) These literatures support the notion that job satisfaction is strongly related to intention to quit . The literature exploring alternatives to exiting an organization has received less attention . One exception is the Exit-Voice-Loyalty-Neglect (EVLN) model developed by Hirschman (1970) and extended by Rusbult, Farrell, Rogers & Mainous (1988) which presents four alternative reactions to job dissatisfaction . Exit is, of course, the act of leaving the organization. In the present study, intention to leave represents this alternative . Voice, the next alternative, represents the expression of job dissatisfaction by "speaking out" or taking some action such as unionization . This aspect of the EVLN model has been played out as some physicians attempt to unionize . The loyalty and neglect concepts are often considered together. Conceptually, both involve staying with the organization, but they diverge in their reaction to job dissatisfaction. Loyalty involves an active role in changing the causes of job dissatisfaction where neglect takes a more passive role . The three other withdraw intentions (decrease hours, change specialty, leave direct patient care) represents the loyalty/neglect part of the EVLN model . Parenthetically, changing specialty could be discussed as an exit reaction, but few physicians actually retrain . More likely, the change will be in clinical emphasis



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in addition to surgery and as he/she ages might practice more general medicine than surgery . Likewise, physicians, when faced with job dissatisfaction, may change their "specialty" via a change in practice emphasis . Therefore, we add five additional hypotheses to the three proposed earlier : H4 : H5 : H6 : H7 : H8 :

Job satisfaction is positively related to perceptions of good mental health . Job satisfaction is inversely related to intention to leave the organization . Job satisfaction is inversely related to intention to decrease hours of work . Job satisfaction is inversely related to intention to change specialty . Job satisfaction is inversely related to intention to leave direct patient care . Mental Health

The relationship between different aspects of mental health such as anxiety, depression, and burnout, and intentions to quit has not been explored in any depth in the literature. The stress literature treats mental health and intentions to quit as outcomes, but posits no relationship among them (Kahn et al ., 1992). However, again drawing on the EVLN model, it can be argued that the withdraw intentions represent several methods for coping with perceived poor mental health . H9 : H10 : H11 : H12 :

Mental health is inversely related to intention to leave the organization . Mental health is inversely related to intention to decrease hours of work . Mental health is inversely related to intention to change specialty . Mental health is inversely related to intention to leave direct patient care . Physical Health

The work relating physical health to withdraw intentions is limited . In fact, only the relationship of physical health with intention to quit has been explored in any depth . Several articles (Beehr & Newman, 1978 ; Schuler, 1982) have theorized that physical health is negatively related with intention to quit . Kemery, Mossholder and Bedeian (1987) investigated this relationship in 890 university employees, and found that physical health had a significantly negative relationship with intentions to quit, though the relationship between job satisfaction and intentions to quit was much stronger. While the relationships between physical health and the other three withdraw intentions have not been explicitly explored in the literature, we can extrapolate from the EVLN model . Specifically, it can be argued that perceptions of poorer physical health should be related to thoughts about withdrawing because they represent a viable alternative to totally withdrawing from the job . For example, older physicians who perceive their health as declining might be more likely to consider reducing



Understanding Physicians' Intentions to Withdraw from Practice

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their hours of clinical practice or to leave direct patient care for other clinical activities (medical education or administrative positions) . Therefore, the following four hypotheses are proposed : H13 : H14 : H15 : H16 :

Physical health is inversely related to intention to leave the organization . Physical health is inversely related to intention to decrease hours of work . Physical health is inversely related to intention to change specialty . Physical health is inversely related to intention to leave direct patient care .

METHODS Sample A sampling frame was constructed from the American Medical Association's Physician Masterfile, a listing of all allopathic and most osteopathic physicians trained and/or practicing in the U .S . Our target population consisted of more than 171,000 clinically active civilian MDs working primarily in patient care in office or hospital settings as family physicians, generalist internists, subspecialist internists, generalist pediatricians, or subspecialist pediatricians . This sampling frame excluded all surgeons, those who had not identified a clinical specialty or who called themselves general practitioners, and other non-generalists (e .g . radiologists, pathologists, anesthesiologists) . To assure representativeness along key dimensions, the frame was stratified into geographic regions of high and low participation in managed care (Simon & Born, 1996), non-Hispanic white versus non-white ethnicity, and into the five targeted specialty groups. Applying disproportionate sampling fractions to the 20 resulting strata allowed us to maximize the precision of estimates for each stratum while permitting national estimates to be constructed . From this frame, a sample of 5704 was drawn . Four mailings, accompanied by individually addressed cover letters from the investigators and medical society officials, resulted in 2325 usable responses . The sample used for the analysis was reduced in two ways . Because we wanted to focus on clinically active physicians, we removed 236 physicians working fewer than 25 hours per week on direct patient care . Additionally, 354 physicians over 56 years of age were eliminated . This was done because we wanted to examine the various withdraw behaviors of physicians in the years prior to typical retirement . Because our withdraw measures focused on behavior up to five years in the future, we drew a conservative cut point at 56 years of age . After these two reductions, our sample totaled 1735 physicians .



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After the last mailing, 10 non-respondents selected randomly from each stratum (n = 200) were telephoned to determine if we had their correct addresses . This analysis suggested an 18% non-contact rate . Adjusting for non-contact and ineligibility, the response rate was estimated to be 52% (CASRO, 1982) . To assess non-response bias, we searched for trends between survey variables and the time until the survey was returned, calculating Spearman correlation coefficients . Of 140 items, only four had coefficients greater than 0 .10 in absolute value, suggesting only a modest potential impact of late (or non) response . Measures Global Job Satisfaction and Perceived Stress . The conceptual development of the global job satisfaction measure has been documented (Konrad et al ., 1999) . This five-item measure manifested good reliability (a = 0 .88) and face, content, convergent, and discriminant validity (Williams et al ., 1999) . The perceived stress measure was a 4-item version of the Perceived Stress Scale . Cohen, Kamarck and Mermelstein's (1983) test of this measure found a reliability of 0 .72 ; correlations of 0 .37 and 0.48, with two accepted measures of anxiety ; and a correlation of 0 .39 with smoking behavior . Its reliability was 0 .75 in the present study. Physical and Mental Health Measures The physical health measure was worded, "In general, I would say that my health is . . . " The 5-point response scale used poor, fair, good, very good, and excellent as anchors . The mental health measure was a composite of three single item measures of anxiety, depression, and burnout (a = 0 .78) . The depression measure was worded, "I felt sad or . depressed much of the time in the past year" and the anxiety measure was worded, "I felt anxious or nervous much of the time in the past year" . Both measures used a 5-point frequency scale for responses. Our single-item burnout measure had previously been used to study group practice physicians and was found to predict intended turnover (Schmoldt, Freeborn & Klevit, 1994) . Intention to Withdraw Measures . All four intention to withdraw measures were scaled on a five-point likelihood scale that the respondent would take each of the four actions within a specified time period. The intention to turnover measure asked the respondent the likelihood of leaving their "current practice situation within two years" . The intention to decrease work hours measure asked the likelihood that the



Understanding Physicians' Intentions to Withdraw from Practice

25 1

respondent would decrease work hours in the next five years . The intention to change specialty asked the respondent the likelihood of changing specialty within five years . The final question asked the respondent the likelihood of "leaving the practice of direct patient care within five years" . Analysis Structural equation analysis with latent variables was used to test the model as represented in Fig . 1 . This procedure was selected over regression due to its ability to test structural models with mediating variables . Further, structural equation analysis features sophisticated measurement modeling where measure reliability is taken into account in separating true from error variation in relating observed variables in the measurement model to latent variables in the structural model . LISREL 8 was the analytical package used (Joreskog & Sorbom, 1996) . Because of the non-normality commonly associated with questionnaire data and the use of ordinal variables, the weighted least squares (WLS) procedure was used. As required by WLS, a polychoric correlation matrix and an asymptotic covariance matrix were calculated by PRELIS 2 for analysis with LISREL 8 . Multiple indicators were used for the perceived stress, job satisfaction, and mental health scales . Single indicators were used for the physical health and withdraw intention variables . Following Williams & Hazer (1986), the error variance of each single indicator was set equal to its variance multiplied by one minus the scale's reliability (assumed to be 0 .90) . Treatment of Correlations Because of the typical moderate level of correlation between each of these variables, correlations between the disturbance terms for physical and mental health, and among the four intention to withdraw variables were modeled. Thus, while we did not want to model causal relationships within these variable sets, we wanted to specify a model that would statistically control for these known relationships (Bollen, 1989 ; Hayduk, 1987) . Finally, we should note that no extraneous or "garbage" parameters (such as correlated errors) were estimated to inflate model fit (MacCallum, 1986) . Treatment Because of variables use means adversely

of Missing Values the large number of variables in this dataset and the fact that several had meaningful numbers of missing values (up to 10%), we chose to to replace missing values . To ensure that this procedure did not impact the analysis, we examined the correlation matrix of study



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variables before and after replacement and found the pattern of correlations to be substantially similar. Assessment of Overall Model Fit To examine model fit, the Non-normed Fit Index (Bender & Bonnet, 1980) (NNFI), the Goodness of Fit Index (Bollen, 1989) (GFI), the Adjusted Goodness of Fit Index (Bollen, 1989) (AGFI), and the Root Mean Square Error of Approximation (Steiger, 1990) (RMSEA) were employed . The NNFI is derived from the Tucker-Lewis Index (Tucker & Lewis, 1973) which compares the theoretical model with the absolute null model . The GFI reflects the relative amount of the variances and covariances predicted by the model matrix, while the AGFI adjusts the GFI for the model degrees of freedom relative to the number of variables . The RMSEA is derived from the population discrepancy function and its error of approximation (conceptually similar to standard error) . The RMSEA measures the model's discrepancy per degree of freedom . As RMSEA approaches zero, the fit function of the model better represents the population fit function . Finally, with respect to the NNFI, GFI, and AGFI, it should be known that the 0.90 or higher convention first suggested by Bender et al . (1980) has become the de facto standard in the field (Medsker, Williams & Holahan, 1994) . Brown and Cudeck (1989) suggest that values below 0.05 for RMSEA indicate a reasonable error of approximation. Assessment of Individual Parameters Parameter estimates are conceptually similar to regression coefficients and reflect the strength of the relationship between two variables . The significance of these estimates is determined by a standard t-test .

RESULTS Demographics The sample was 66.7% male, 65 .8% non-Hispanic white, and averaged 43 .7 years of age . Family physicians comprised 23 .3% of the sample, general internists 19.3%, pediatricians 24 .3%, internal medicine subspecialists 17 .6%, and pediatric subspecialists 15 .4% . They were employed in a variety of practice situations including solo practices (15 .6%), small group practices (2-9 physicians ; 36.7%), large group practices (10 or more physicians ; 19 .5%), Group/Staff HMOs (9 .6%), and academic practices (12 .1%) . Table 1 shows the means, standard deviations, and intercorrelations of the study variables . The level of perceived stress averages 2 .39 on a five-point scale

Understanding Physicians' Intentions to Withdraw from Practice

Table 1.

Mean, Standard Deviations, and Intercorrelations . Mean

I Perceived Stress 2 Job Satisfaction 3 Physical Health 4 Mental Health 5 Intention to quit 6 Intention to decrease work hours 7 Intention to change specialty 8 Intention to leave direct patient care

253

SD

1

2

3

4

5

6

2.39 3 .67 4.17 3 .68 2.05 2.47

0.69 0.81 -0.54 0.90 -0.35 0.75 -0.67 1 .14 0.26 1 .19 0.13

0 .26 0 .56 0.31 -0 .44 -0.12 -0 .30 -0 .25 -0 .11 -0 .21

0 .31

1 .38

0.73

0.18

-0 .29 -0 .18 -0 .24

0.32

0.29

1 .79

0.98

0.19

-0 .34 -0 .13 -0 .29

0.34

0.45

7

0 .46

n = 1735 r > 10.051, p < 0 .05 r > 10.061, p < 0 .01 r > 10.071, p < 0 .001

which is below the midpoint (3) . However 25 .1% of the respondents were above the scale mid-point which seems to indicate that some respondents were experiencing meaningful levels of stress . The overall satisfaction level of 3 .67 seems to indicate a moderate level of satisfaction . Again, however, 21% of the sample fell below the scale midpoint (3) indicating a significant minority of dissatisfied physicians . Self-reported physical health seemed good with fully 94 .9% of the sample reporting their health as good, very good, or excellent . In some contrast, only 79 .3% reported positive perceptions of mental health (defined as above the midpoint of (3) . Related to the moderate level of job satisfaction, only 25 .4% of the sample perceived a moderate or greater likelihood of leaving their current practice situation within two years . Perhaps more interesting is the finding that 40.3% of physicians had a moderate or greater likelihood of decreasing work hours within five years . One action physicians were not too likely to take was to change specialty with only 3 .1 % reporting a moderate or greater likelihood of this . They, however, are more likely to leave direct patient care with 18 .5% expressing a moderate or greater likelihood of leaving direct patient care . These demographics paint a picture in which some dissatisfaction, distress, and mental health issues may lead some physicians to leave their job, decrease work hours, or leave direct patient care, but not change specialty . Structural Model

The overall fit of the model was good . The GFI, AGFI, and NNFI were 0 .99, 0.98 and 0 .99, respectively which were above the 0 .90 criteria for good model



25 4

ERIC S . WILLIAMS ET AL.

fit . The RMSEA of 0 .05 was at the 0 .05 threshold for good model fit. The significant individual parameter estimates are shown in Table 2 . Ten of the sixteen parameters estimates were significant . The influence of perceived stress (Hl - H3) was well supported, showing strong associations with job satisfaction and perceptions of good physical and mental health . The strength of these associations is evidence of the important role that stress plays in shaping these perceptions . Similarly, the role of job satisfaction with mental health and all four withdraw intentions was confirmed (H4 - H8) . Physicians who were satisfied with their jobs were likely to also report good mental health . Likewise, these same satisfied physicians were also less likely to intend to leave their practices, decrease work hours, change specialty, or leave direct patient care . The role of perceptions of mental health with the withdraw intentions received considerably less support (H9 - H12) . Poorer mental health was associated with Table 2 . Supported and Non-supported Hypotheses . Independent Hypothesis Variable

Dependent Variable

HI H2 H3 H4 H5 H6

Perceived Stress Perceived Stress Perceived Stress Job Satisfaction Job Satisfaction Job Satisfaction

H7

Job Satisfaction

H8

Job Satisfaction

H9 HIO

Mental Health Mental Health

H11

Mental Health

H12

Mental Health

H13 H14

Physical Health Physical Health

H15

Physical Health

H16

Physical Health

Job Satisfaction Mental Health Physical Health Mental Health Intention to Leave Intention to Decrease Work Hours Intention to Change Specialty Intention to Leave Direct Patient Care Intention to Leave Intention to Decrease Work Hours Intention to Change Specialty Intention to Leave Direct Patient Care Intention to Leave Intention to Decrease Work Hours Intention to Change Specialty Intention to Leave Direct Patient Care

*p<0.05, **p<0 .01

Hypothesized Relationship

Supported?

Parameter Estimate

Yes Yes Yes Yes Yes

-0.88** -0.83** -0.59** 0.18** -0.60**

Yes

-0.21**

-

Yes

-0.31**

-

Yes No

-0.26** NA

-

No

NA

-

No

NA

-

Yes No

-0.27** NA

No

NA

-

Yes

-0.21**

-

No

NA

+ -



Understanding Physicians' Intentions to Withdraw from Practice

25 5

greater intentions to leave direct patient care, but unrelated to intentions to quit, decrease work hours, or change specialty . The results for the influence of physical health were much the same (H13 - H16) . Only an association between reports of poor physical health and greater intentions to change specialty was supported. Physicians with self-reported poorer physical health expressed no greater likelihood of quitting their current practice, decreasing work hours, or leaving direct patient care than their peers with perceptions of better physical health .

DISCUSSION These findings, in large part, support the conceptual model and the theories of Lazarus et al. (1984) and Ivancevich et al . (1980) . Clearly, the cognitive processing of stressful stimuli results in perception of stress and these perceptions of stress influence several types of withdraw intentions . This influence seems to come from three different paths . The first path is through job satisfaction . Specifically, higher perceived stress is associated with lower satisfaction levels that are related to greater intentions to quit, decrease work hours, change specialty, or leave direct patient care . One can see here the powerful effect of the combination of job stress and dissatisfaction . So powerful, in fact, that some of these highly trained, committed professionals may leave their practice situations while others cope by decreasing work hours, changing practice emphasis or leaving direct patient care. The second proposed path also received limited support . The only relationship supported is between mental health and leaving patient care . Physicians experiencing burnout, anxiety, and depression seem to deal with these problems by leaving patient care in some way, rather than quitting their jobs, decreasing work hours, or changing specialty . Some may deal with this by retiring . Another path, however, may be taking an administrative role within the practice organization . For example, an internist who becomes depressed after many years of patient care may continue in practice by becoming a medical director or practice manager . Another option that is less permanent is the sabbatical . In a larger group practice, physicians experiencing excessive stress and dissatisfaction may be allowed to take a period of time off from patient care . A sabbatical may also be used as a preventive measure . Regardless of the actual option, it seems that physicians experiencing mental health issues seem to prefer less patient contact as they work through their problems . The third path of influence of job stress on intentions to withdraw through physician physical health received only limited support. It was found that higher levels of perceived stress result in poorer perceptions of physical health, which



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links with greater intentions to change specialty . Thus, it seems that one way physicians might deal with health problems caused by high levels of job stress could be to change their medical specialty . However, given that only 3 .3% of the sample indicated that they were at least moderately likely (three or greater on a five point scale) to change specialty within five years, it appears that this is not a viable option for most physicians . A more reasonable interpretation of this finding may be that physicians when faced with mounting job stress and declining physical health may choose to change the emphasis of their practice . For example, some family practitioners perform obstetrical deliveries as part of their practice. If this aspect of their practice becomes too taxing, the physician might discontinue deliveries and focus on caring for children or seniors . In that way, physicians, particularly those in solo or small group practices, might be able to deal with physical health concerns . The implications of these findings suggest that both satisfaction and stress must and can be managed . Satisfaction, of course, is the more visible, and thus, the more likely to be managed . However, the real challenge is in the management of stress . The effect of stress is subtle and pernicious . It can affect physical and mental health and job satisfaction . These variables, in turn, affects withdraw intentions as well as a host of other variables . Fortunately, both the stress and satisfaction literatures are replete with strategies for managing this state of affairs . Space considerations preclude a fuller discussion of this ; thus, we will confine ourselves to a few specific comments . One useful frame for this discussion is the demand-control model of job stress proposed by Karasec, Baker, Marxer, Ahlbom and Theorell (1981) . They proposed and supported the idea that having control over various aspects of the job moderated the relationship between job demands and coronary heart disease . Tetrick and LaRocco (1987) investigated job control in a sample of nurses, dentists, and physicians and found that the greater the level of perceived control, the less stress influenced satisfaction . Traditionally, physicians have had almost complete control over their practice . However, as third parties (managed care plans, traditional insurers, and employers) exert more influence in the practice of medicine, there is a danger that the moderating effect of high levels of job control will dissipate, exposing physicians to greater stress than they already experience . To redress the "control" part of the equation, organizations may return the most critical parts of physicians' jobs to their control . Because physicians and other clinical professionals are the operating core of any organization, a key component of a manager's role should be to make it possible for clinicians to provide high quality, cost effective patient care . Towards this end, managers might work with their clinical colleagues to reduce the "hassle factor" which comes from third party influence in the clinical



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process . Managers might work to design health care organizations that buffer their clinical personnel from direct interaction with the bureaucratic machinery employed by third parties . One route is to work with third parties to craft contracts which recognize the interest of the insurer while preserving physician autonomy . Another route involves using some type of liaison between the physician and third party . A nurse, not surprisingly, would be well placed to be a liaison given their clinical experience . Regardless of what is done, the key is enhancing the physician's control over often difficult job demands . On the "demand" side of this equation, one of the most frequently mentioned workplace concerns of physicians is increasing workload and time pressure. Mainous, Ramsbottom-Lucier and Rich (1994) found that 49% of rural physicians sampled were dissatisfied with their workload . Not surprisingly, their study also found a very strong association between dissatisfaction with workload and intentions to leave . However, an objective measure of workload was not correlated with satisfaction with workload . Another study (based on the same dataset as the present study) found that a measure of perceived time pressure was strongly related to both global job satisfaction and seven of ten facet satisfaction measures (Linzer et al ., 2000) . A fascinating paper reviewed the relationship between visit length and various outcomes and concluded that "visit rates above 3 to 4 per hour may lead to sub-optimal visit content, decreased patient satisfaction, increased patient turnover, or inappropriate prescribing (p . S36)" (Dugdale, Epstein & Pantilat, 1999) . For managers, evidence that time pressure and heavier workloads on their clinical personnel result in a variety of poor outcomes critical to the cost and quality of care should serve as a virtual call to arms . Can an organization whose core workforce is dissatisfied and stressed deliver cost-effective quality care? Will such organizations survive in an increasingly competitive market? The answer to both questions is probably no . Thus, it is incumbent on management to find to solutions to these problems . One potential solution is to more fully embrace the concepts of continuous quality improvement (CQI) . CQI has been part of the medical lexicon for the last ten years and quality assurance (QA) for far longer . However, many QA and CQI efforts have not achieved their goals for various reasons (Boerstler et al ., 1996) . Be that as it may, the central logic of CQI remains very persuasive - that a thorough understanding of the process of care can help to achieve lower cost and higher quality through better control of the process of care . For example, when a clinic has problems with long waiting times and clinicians who feel that they are running all day, the normal temptation is to add personnel . However, CQI teaches us to first examine the process of how patients move through the clinic . It is quite possible that this examination will uncover bottlenecks in the process of caring for patients which cause long waiting times and time pressed clinicians . One prime example of a bottleneck is the use of wave



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scheduling where successive waves of patients are scheduled at specific times throughout the clinical day . These waves often ripple through the practice causing an alternating cycle of rushing and waiting . Clearly, the current dynamism in the health care environment requires looking at patient care through a different lens. One of the most exciting developments in healthcare is the increasing collection and use of data to better measure physician and health care organization performance (e .g . HEDIS) . One step further removed is the collection of data on the various attitudes (job satisfaction, intention to leave the organization, perceived job stress, etc.) and health status of the health care workforce . Such a human resources information system could be used in the manner that financial data are now used, to better understand and manage the "psychological health" of the health care workforce . This approach has the advantage of bringing a solid empirical base to bear on questions about the management of human resources in the health care environment. It is also possible that a well-conceived human resources information system could lead to a quantum leap in the ability to manage important clinical and operational talent. Such a system could be a very real competitive advantage . Limitations Our main limitation is the use of cross-sectional data. While cross-sectional data have their role in research, without the use of longitudinal studies, we cannot hope to understand and model the causal relationships that occur over time . This is particularly true since job satisfaction and job stress are both part of a complex cognitive appraisal process that yields different reactions (psychological, behaviors, physiological) at different points in time . To explore this rich tapestry of relationships adequately, longitudinal research with well-conceived theory and strong samples must be conducted .

CONCLUSIONS The image of the physician as the lone professional is not merely historically obsolete ; actually, at the beginning of the 21st century, it may be misleading . The age of the organizational physician has arrived ; not only because more physicians work in organizational settings, but because the institutional environment in which these organizations themselves function has also changed. We have some understanding of how physicians function as "employees" or as "managers" in these organizations ; it is reasonable to presume, as Eliot Freidson's paraphrase of Orwell does, that some will be more equal than others (Freidson, 1989) . More research within professional service organizations like



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the new medical groups is clearly needed . However, our real challenge, as researchers, is to understand how well physicians will function as physicians in such settings . Management can - whether it wears an MD, MHA, or MBA hat - foster a culture where primary care clinicians are recognized as patient advocates and encouraged to provide appropriate, effective, and timely access to specialty services for their patients . If they do, then clinical quality in the care of patients can flourish . On the other hand, if the managers of these organizations choose to employ utilization review and financial incentives as a tool for reducing costs either by imposing labor discipline on a salaried medical workforce, or by encouraging physician shareholders to collude with owners to withhold services, the outcomes are likely to be less healthy for physicians and their patients .

ACKNOWLDGEMENTS This study was supported by grants from the Robert Wood Johnson Foundation (027069) and the National Research Service Award Training Program of the U .S . Agency for Health Care Policy and Research (5-T32-PE141001 and 5-T32-HS000032-07) .

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TOTAL QUALITY MANAGEMENT IN HEALTH CARE: A GOAL SETTING APPROACH Liane Soberman Ginsburg

ABSTRACT Deficiencies in the theory and practice of Total Quality Management (TQM) and challenges to its successful implementation in healthcare organizations are examined in the context of TQM's strict systems-level focus . Theoretical and empirical work in organizational behavior is offered as a means to improve healthcare management practice in the area of Total Quality Management. Research on goal setting and, specifically, the use of proximal learning goals is offered as a way to address the gap created by motivational inadequacies in TQM theory . Finally, evidence of the lack of technical TQM knowledge in healthcare organizations is presented and goal-setting theory is applied to that particular challenge in TQM practice .

INTRODUCTION Within the last decade or two, quality has emerged as an important issue for many organizations in major sectors such as industry, government and healthcare . Yet, as a management phenomenon, the philosophy and practice of Total Quality Management (TQM) has not been explored by management theorists Advances in Health Care Management, Volume 2, pages 265-290 . Copyright ® 2001 by Elsevier Science Ltd . All rights of reproduction in any form reserved . ISBN : 0-7623-0802-8 265



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(Dean & Bowen, 1994) . Until recently, the TQM literature has been directed largely at managers and practitioners while management theory has remained within the purview of researchers and academics . Because TQM has penetrated organizations over the last two decades and a primary aim of performance measurement, one of the more recent trends in healthcare, is quality improvement, a strong argument exists for practitioners and management researchers to align themselves more closely in this area . This paper seeks to further this alignment by applying goal-setting theory to TQM practice in healthcare organizations . The definition and boundaries of Total Quality Management are somewhat ill defined ; even the architects' definitions and emphases are not precisely the same . Broadly, TQM represents a management philosophy that focuses on the customer as well as process monitoring and improvement . For some, process and quality control are the central features of the theory . Just as there is variation in the key components of TQM, so is there variation in the name attached to the phenomenon . In the context of healthcare, for example, the term Continuous Quality Improvement (CQI) is often used instead of TQM . Throughout this paper, I am using the term TQM with the understanding that it includes both clinical quality/CQI initiatives (McLaughlin & Kaluzny, 1999) as well as broader quality management endeavors . The idea for this paper emerged as I began to delve into some of the key motivational theories in organizational behavior, such as goal setting, at the same time as witnessing, firsthand, front-line healthcare managers' and practitioners' difficulties with TQM practice . As I saw nurses and managers struggle : (1) to understand the basic quantitative customer feedback they were receiving ; and (2) to incorporate it into improvement efforts, it struck me that certain individual level motivational techniques, like goal setting, might be useful for helping these people understand and undertake quality improvement initiatives . However, writings by the initial proponents of TQM seemed to reject such practices as setting numerical goals (Deming, 1986) . This paper thus began as an attempt to reconcile goal-setting theory and TQM, but a careful look at the TQM literature reveals that the two ideas are, in fact, quite compatible despite never having been integrated . There is compelling evidence to suggest that the use of goal setting in TQM is not only viable, but offers benefits for both the theory of goal setting and the philosophy of TQM by : (1) improving the effectiveness of TQM, (2) embedding TQM in the theoretical frame of goal setting, and (3) providing future tests of goal-setting theory in an important area of practice . This paper promises to contribute to TQM as a management theory and to management practice in healthcare by arguing that the use of proximal learning and performance goals



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can successfully address some of the shortcomings in the philosophy and practice of TQM in healthcare organizations . I will first provide the theoretical background and review the relevant literature on TQM and goal setting . Because most of the TQM literature is practitioner oriented and not empirically focused, I will concentrate on the more scholarly discussion of TQM theory and practice and draw on the stronger empirical papers that look at TQM in healthcare . Section two situates goalsetting theory in the macro context of TQM . Finally, section three outlines how goal setting might be effectively integrated into Total Quality Management to address some of the practical technical challenges healthcare organizations face when implementing it .

THEORETICAL BACKGROUND Total Quality Management TQM is a systems-level philosophy that, according to one of its founders, W . Edwards Deming, seeks to fundamentally alter management techniques . In Out of the Crisis, Deming states that "The aim of this book is transformation of the style of American management . Transformation of American style of management is not a job of reconstruction, nor is it revision . It requires a whole new structure, from foundation upward" (Deming, 1986, preface) . While the question of whether TQM represents simple modification to an existing work system or the fundamental alteration of an organization's culture has been debated, the existence of TQM as a unique philosophy is strongly supported (Hackman & Wageman, 1995) . Undoubtedly, the impact of TQM has been felt throughout healthcare, industry and many other organizational sectors . The philosophy of TQM has a set of principles, practices and techniques defined clearly by Dean and Bowen : Its three principles are customer focus, continuous improvement, and teamwork, and most of what has been written about TQ is explicitly or implicitly based on these principles . Each principle is implemented through a set of practices, which are simple activities such as collecting customer information or analyzing processes . The practices are, in turn, supported by a wide array of techniques . . . (1994, 394) .

It is important to look more closely at the central assumptions of the philosophy as they highlight some of the shortcomings of TQM and are important to the discussion of what goal setting can offer TQM . Four assumptions are central to TQM and are espoused by the founders : W. Edwards Deming, Joseph Juran and Kaoru Ishikawa . They are assumptions about : (i) quality, (ii) people, (iii) organizations, and (iv) senior management .



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Hackman and Wageman (1995) summarize these assumptions nicely . Quality is considered critical because it costs less than poor workmanship and is deemed necessary for an organization's long term survival . People are central to the philosophy of TQM insofar as they are seen as naturally motivated to achieve quality as long as they have adequate training and a supportive atmosphere; this requires the removal of elements of fear or punishment for poor performance . The third assumption is about organizations and emphasizes the importance of using cross-functional teams . Finally, assumption four relates to the strong role of senior management in TQM . In this respect, TQM is very much a top-down philosophy . Senior leaders are responsible for putting the organizational systems in place that facilitate quality, and employee effectiveness is viewed as a direct function of the systems senior leaders put in place as well as the commitment to quality they demonstrate . Consistent with others (Hackman & Wageman, 1995), I will argue that assumptions two and four (about people and the top-down nature of TQM) pose serious challenges to the practical implementation of TQM, particularly in healthcare settings . First, overly optimistic assumptions about people in TQM theory raise questions about the motivational impetus in TQM that lead to problems for its implementation. Second, the top-down nature of TQM clashes with the multitude of cultures that characterize healthcare (on the broadest level, this refers to professional/clinical culture(s) and administrative cultures). I will further argue that these problems with two of the central assumptions of TQM theory as well as evidence of practical obstacles faced by healthcare organizations implementing TQM highlight the need to more fully address issues of individual motivation to participate in TQM . Problems with the "People" Assumption As noted, in TQM there is an assumption that people are intrinsically motivated and naturally inclined to strive for quality so long as the environment is supportive. This same assumption has been made with respect to quality circles (Phillips, Duran, Blair, Peterson, Savage & Whitehead, 1990) . Little else is offered to explain this complex phenomenon of individual behavior motivation in the writings of TQM founders . That, as a philosophy, TQM fails to adequately address the issue of what motivates workers to `do quality' has been alluded to (Hackman & Wageman, 1995 ; Waldman, 1994), but has not been fully investigated . Hackman and Wageman (1995) show how the founders' approach to TQM accounts for motivation : TQM provides people with opportunities to learn and develop their skills in an open, challenging environment geared toward continuous improvement. They make the point, however, that the founders do not have a place for



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other key motivational tactics found to enhance performance in the organizational literature such as goal setting, work redesign and performance-contingent rewards . By studying work performance in the context of TQM, Waldman (1994) emphasizes the importance of situational or systems related factors and dispositional factors (such as knowledge, skill and motivation) to a theory of work performance . By highlighting the significance of the situation-disposition debate in relation to work performance, Waldman lends support to the argument that the individual is in a position of relative unimportance in the context of TQM and needs to receive more attention in order to make the theory more complete . Zbaracki, studying the rhetoric versus the reality of TQM implementation, challenges the notion that institutional structures cannot be reduced to individual behaviors when he writes : "the evidence from this research demonstrates that the forces leading to the promulgation of TQM are indeed quite personal and firmly rooted in social psychological forces" (1998, 632) . While Hackman and Wageman (1995) and Waldman (1994) acknowledge the lack of attention given to individual motivational issues within TQM, and Zbaracki (1998) finds empirical support for this proposition, other academics studying TQM omit individual level issues of motivation and focus solely on organizational level issues . For instance, Spencer looks at bridging the gap between TQM practice and management theory, but she does so by using organizational models of management theory (mechanistic, organismic and cultural models of organizations) and does not consider individual theories of behavior motivation . She does, however, recognize their importance when she states that TQM is a systems approach "requiring changes in organizational processes, strategic priorities, individual beliefs, individual attitudes, and individual behaviors" (emphasis mine, 1994, 448) . The lack of attention given to motivating individuals in TQM is also apparent in the writings of the founders of TQM . Deming (1991) argues against the use of extrinsic sources of motivation such as performance rewards because he believes they serve to undermine intrinsic motivation . Assuming performance rewards exogenous to the job are what Deming is arguing against, one can find support for his reasoning in Condry (1977) . However, Deming, and indeed the philosophy of TQM, needs to go one step further to include mechanisms for sustaining and enhancing the intrinsic motivation he presumes to exist naturally . Deming's view of the importance of intrinsic motivation is evident in the writings of later proponents of TQM as well . According to Joiner, "To optimize the organization as a whole, intrinsic motivation works far better than financial rewards or punishment" (1994, 246) . However, like Deming, later



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quality advocates do not venture beyond this limited explanation of motivation, nor do they fully acknowledge its importance as an antecedent of the very philosophy they seek to extend . Both Juran's (1988) and Ishikawa's (1985) explanations of the impetus for individual level motivation are also insufficient . Ishikawa discusses "respect for humanity" as a management philosophy . When management engages "with people in the center" instead of profit, Ishikawa argues that people : have their own wills and do things voluntarily without being told by others . . . Management based on humanity is a system of management that lets the unlimited potential of human beings blossom . . . One of the basic ideas that motivates QC [quality control] circle activities in the workplace is to create a `workplace where humanity is respected' (Ishikawa, 1985, 112) .

Such an explanation is reminiscent of McGregor's (1960) Theory Y conception of human motivation which assumes that people are able and motivated to perform well at work and do so on their own . In line with his own argument that managing through respect for humanity promotes motivation, Ishikawa argues that voluntarism is also an essential component of quality control circles, and having people participate voluntarily in Quality also facilitates individual level motivation . There are two problems with this argument leaving the question of what drives individual level motivation to `do quality' unanswered . First, Ishikawa is referring initially to voluntarism of organizations or quality circles as a whole and argues that, ultimately, when an organization or department undertakes quality processes, the principle of voluntarism can no longer exist. Instead, all relevant members must participate . Second, he attempts to resolve the paradox of a system that purports to be both voluntary and imposed in the following way: so many companies forget that voluntarism is the key to success . They may command that everyone join QC activities . Under certain circumstances commands may be necessary, but once the activities are at the takeoff stage, this policy of command must be quickly changed . Unless employees can feel that they are participating in the activities of their own free will, they cannot succeed. (Ishikawa, 1985, 141) .

However, the question that emerges is : where is the motivation for an employee to sustain his/her commitment to a process that was initially imposed once the coercive force is removed? Having outlined what I consider to be a shortcoming of TQM theory namely, its failure to properly address the issue of behavior motivation - we now turn to a discussion of some of the problems with the top-down nature of TQM. This will help demonstrate the need to more fully address the subject of behavior motivation .



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Problems with the Senior Management Assumption The third dilemma in TQM identified by Hackman and Wageman surrounds the issue of how to achieve continuous learning while dictating what it is that front-line workers will learn about . They note that the top-down structure of TQM and the goals/standards set by the senior leaders in the organization permeate quality activities throughout the organization, but front-line workers "are not invited to reflect on the purposes their work serves" (1995, 337) . In this type of top-down structure, it is possible that workers and management in any industry will differ in their beliefs about the purposes of their work . In the healthcare context, differences in training, the presence of dual lines of authority (clinical and managerial) and the fact that most professional accountability lies outside the organization mean that it is not only possible, but highly probable, that there will be differences between staff/clinicians' views and management's views about the purposes their work serves . In turn, this raises the possibility that front-line workers will choose not to engage in certain quality improvement activities because they fundamentally disagree with the aims of senior leaders . As an example, think of nurses or front-line managers who subscribe to a traditional medical model . Under such a model, the locus of decision making resides largely with the provider and there is little support for the belief that patients can direct their own care . However, if the organizational philosophy is patient-focused care, the top-down nature of TQM dictates that all quality efforts will be designed to reflect that philosophy . While these nurses may be invited to participate in the quality activities designed to enhance patient-focused care, they are not invited to comment on or challenge the very philosophy upon which those quality activities are based . Literature on the relationship among value congruence, organizational commitment, and motivation suggests that the type of incongruency of beliefs between front-line workers and senior management that was just described will adversely affect an organization's ability to motivate individuals to successfully implement these TQM activities . The degree of congruence between employee and organizational philosophy affects attitudes about people's connection to the organization (Vancouver, Millsap & Peters, 1994 ; Vancouver & Schmitt, 1991) . In turn, there is a relationship between certain types of organizational commitment and motivation (Hackett, Bycio & Hausdorf, 1994) . In a study of over 2,000 nurses, Hackett, Bycio and Hausdorf looked at the relationship between the motivational portion of Campion and Thayer's (1985) Multimethod job design questionnaire (MJDQ) and Meyer and Allen's (1991) three component model of organizational commitment. They found a positive correlation between motivation and affective organizational commitment (an employee's emotional



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attachment to, involvement in and identification with the organization) and between motivation and normative commitment (an employee's feeling of obligation to stay with the organization) and a negative, albeit weak, correlation between the motivational scale and continuance commitment (commitment based on the perceived costs associated with leaving the organization - a utilitarian perspective offered initially in 1961 by Etzioni) . Future studies might examine the degree to which the type of organizational commitment acts as a moderator of employee motivation to engage in TQM activities . For instance, it might be argued that front-line workers and managers with high affective commitment and goals that are congruent with the organization (and low continuance and normative commitment) will be intrinsically motivated to engage in TQM activities because the activities are a direct reflection of the organization's philosophy that is agreeable to them . Conversely, front-line workers and managers with high continuance or normative commitment to the organization (and low affective commitment) may not be intrinsically motivated to engage in TQM activities because they do not identify with the organization and are therefore not committed to pursue its goals . Waldman also points to the importance of having individual values dovetail with an organization's philosophy . He proposes that "work performance will be maximized when the norms and values of individuals are congruent with the cultural norms and values of the organization" (1994, 526) . Anderson, Rungtusanatham and Schroeder also suggest that the higher the agreement between individual and organizational values, the more "an employee would be motivated to expend energy on organizational tasks and to provide high process, product, and service quality to satisfy the organization's customers" (1994, 489-490) . That it is possible for a gap to exist between employees' beliefs and the philosophy of the organization means that, inevitably, we find people in organizations who may not entirely agree with the organization's philosophy (or, as described by Vancouver et al . (1994), where there is a lack of organizational goal congruence) . The dual hierarchy and strong professional allegiances unique to healthcare organizations (Gann & Restuccia, 1994 ; Bigelow & Arndt, 1995) likely increase the prevalence of this incongruence in the healthcare setting. The relationship between organizational commitment/goal congruence and the likelihood of participation in TQM activities, while interesting, is secondary to this paper and awaits further study . However, what is important for the argument being advanced here is that, because TQM is a top-down philosophy, it is possible, if not probable, that employees who are expected to participate in TQM activities may disagree with the distal goals of the organization, i .e. they



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may have low affective commitment to the organization or there may be goal incongruence . In these cases, a more complete theory of TQM, one that explicitly addresses the issue of individual motivation to participate in TQM, will help to overcome resistance to TQM that stems from goal incongruence and foster TQM's implementation in healthcare organizations . Obstacles to the Implementation of TQM in Healthcare Settings If one turns to empirical work on the obstacles to TQM implementation in healthcare organizations it becomes even more evident that behavior motivation in TQM practice is an issue requiring attention . In their review paper, Shortell, Levin, O'Brien, and Hughes (1995) identify a number of obstacles to furthering TQM in healthcare, among them the need to align performance reward systems with TQM, the need to overcome resistance of middle managers to TQM, and the lack of senior level commitment to TQM . Clinician resistance to TQM is also well documented elsewhere in the literature (Weiner, Shortell & Alexander, 1997 ; McLaughlin & Kaluzny, 1990 ; Bigelow & Arndt, 1995), while the difficulty of influencing physician behavior, particularly when physicians are not remunerated for their time, is another significant barrier for the implementation of TQM in healthcare (Blumenthal & Kilo, 1998 ; Huq & Martin, 2000; McLaughlin & Kaluzny, 1990 ; Weiner, Shortell & Alexander, 1997) . These obstacles, along with the crisis orientation of most healthcare organizations (Shortell et al ., 1998), the fact that TQM is often perceived as an added responsibility divorced from people's daily work (Ovretveit, 2000 ; Shortell et al ., 1995 ; Zbaracki, 1998), and the absence of medical education on quality improvement methods and tools (Baker, Gelmon, Headrick et al ., 1998), all suggest that practices need to be employed that encourage or motivate participation in TQM. The kind of "natural" motivation envisioned by the founders does not occur on its own . Blumenthal and Kilo (1998) argue that TQM has been slow making inroads into healthcare, particularly into clinical areas . They suggest that the magnitude of the changes required if an organization is going to truly embrace TQM is so immense that, in the absence of marked pressure or the threat of organizational failure, organizations (and presumably individuals) will avoid embarking on any monumental changes . In terms of factors that promote quality improvement activity, Weiner et al ., (1997) found that motivational techniques such as transformational (House & Baetz, 1979) or path-goal (Evans, 1993) styles of leadership are significant factors, suggesting that there is value in addressing motivational issues in TQM practice. Zbaracki (1998) identifies "technical complexity" obstacles to TQM implementation and found that "ignorance and intimidation" prevented people from carrying out the critical technical aspects of TQM in the



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organizations he studied . His findings are important as they highlight the fact that even if organizations are able to overcome resistance to TQM and align the goals of their members, proper implementation of TQM remains a complex and challenging process . I will return to this issue in the last section when we consider a particular area of TQM where goal setting might best be applied . Goal Setting In the last thirty years, a large body of literature on goal setting has been amassed. Goal setting is a motivational intervention designed to enhance performance. Being central to a theory of task motivation, goal setting has implications and relationships to a host of motivational concepts such as self-efficacy, attributional tendencies, and feedback . These connections will be elaborated to provide a link between TQM and goal setting . As a theory, goal setting focuses on the question of why some people perform better on work tasks than others . If they are equal in ability and knowledge, then the cause must be motivational. Goal setting theory approaches the issue of motivation from a first-level perspective ; its emphasis is on an immediate level of explanation of individual differences in task performance (Latham & Locke, 1991, 213) .

Although the extent to which participation, feedback, and goal commitment are significant moderators of the relationship between goal setting and task performance is unclear, the robust nature of the relationship between the setting of specific and difficult goals and enhanced performance on non-complex tasks is attested to in the literature, If there is ever to be a viable candidate from the organizational sciences for elevation to the lofty status of a scientific law of nature, then the relationships between goal difficulty, specificity/difficulty, and task performance are most worthy of serious consideration (Mento, Steel & Karren, 1987, 74) .

Goals can be assigned or participatively set . The empirical support for participation as a moderator of goal setting and enhanced task performance is tenuous and depends on whether participation is limited to the setting of the goal, whether it results in more difficult goals being set, and whether participation is extended to strategy development for goal attainment . Latham, Winters, and Locke (1991) found that participation only enhanced performance when it involved task strategy development . Goals that are participatively set lead to enhanced goal commitment, but not enhanced task performance (Latham, Winters, & Locke, 1991) . Assigned goals operate differently . Assigned goals (using the tell and sell method) can serve to enhance self-efficacy because the



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very fact that the goal is assigned by a respected authority suggests that the goal is attainable (Latham & Locke, 1991, 219) . Although the relationship between goal setting, feedback and performance is not fully understood (Latham & Locke, 1991), there is strong empirical support for the notion that feedback is a moderator of the relationship between goal setting and performance and that goal setting and feedback together are more effective for enhancing task performance than either one separately (Latham & Locke, 1991) . As described by Social Learning Theory, feedback operates as part of the self-regulatory processes set in motion when individuals accept a goal and work towards attaining it (Bandura & Cervone, 1983) . Personal standards we set for ourselves along with feedback about our performance have a motivational impact . Personal standards are translated into goals . When we work towards a goal, feedback provides us with information about the degree to which we have attained that goal . Depending on our level of self-efficacy and the attributions we make, discrepancies between the goals we set and our performance either sustain motivation or cause us to abandon the task (Bandura & Cervone, 1983 ; Evans, 1986) . Consider a nurse manager trying to learn about the statistical tools of TQM . He completes a series of exercises designed to show him how well he is grasping the techniques . If feedback shows that his performance is well below the goal that he set for himself (e .g. demonstrate mastery of pareto diagrams), he may attribute his failure to a lack of ability which would, in turn, lower his level of self-efficacy and/or cause him to abandon the task altogether . Conversely, were he to attribute his failure to a lack of effort or to a bad teacher, his self-efficacy would not decrease nor would he be likely to abandon the task . Finally, attaining the difficult goal he set for himself would, in all likelihood, lead to enhanced self-efficacy and to setting even higher performance goals (Evans, 1986) . The distinction between proximal and distal goals is also important for this paper. Proximal goals are more immediate and may act as "sub goals" of broader distal goals . In the above example, strong performance on a series of exercises represents the proximal goal, while learning TQM methods is the distal goal . Proximal goals are effective self-regulators of performance, and having a proximal in addition to a distal goal leads to higher self-efficacy ratings than having a distal goal alone : Mentally `breaking down' the task appeared to make it manageable which in turn enhanced the person's perception that she was capable of performing it effectively (Latham & Locke, 1991, 238) .

Attaining sub-goals enhances people's self-efficacy of achieving larger goals and leads to higher satisfaction and longer task persistence (Latham & Locke, 1991) .



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The findings in support of the use of performance goals are not absolute, however. In their study of a complex air traffic control simulation, Kanfer and Ackerman (1989) demonstrate that, with a difficult task, setting performance goals too early in the process can lead to decreased performance . They describe three phases of skill acquisition : (1) declarative knowledge, (2) knowledge compilation, and (3) procedural knowledge . Individuals have limited attentional/cognitive resources and the early phases of skill acquisition, particularly the declarative knowledge phase, require more of an individual's attentional resources relative to the last phase by which time the skill has been learned or "encoded" (the task is essentially automated and thus requires little cognitive attention) . Because so much of an individual's attentional resources are required to gain an understanding of the task during the declarative knowledge phase, setting performance goals at the outset of a complex task takes much needed attentional resources away from obtaining declarative knowledge and redirects those attentional resources towards the self-regulatory (selfmonitoring, evaluation and reaction) processes that goal setting requires. However, once the necessary declarative knowledge has been obtained, cognitive resources are freed up and can be effectively directed toward the attainment of performance goals (Kanfer & Ackerman, 1989) . Kanfer and Ackerman tentatively support the notion that "the impact of motivational interventions (e .g . goal setting) on performance depends on the dynamic changes in attention/information-processing demands of the task during skill acquisition" (1989, 679) . While setting performance goals at the declarative knowledge stage may ultimately have a negative impact on performance, learning goals could be appropriate at this stage . Learning goals are those that focus on strategies for enhancing performance and they are appropriate when one lacks the "how to" knowledge (Winters & Latham, 1996) . The nurse manager wanting to learn about TQM techniques provides a good example of this kind of learning goal . As Winters and Latham (1996) point out, a learning goal may be one that asks an individual to focus on a task for an hour and then identify four strategies that will help improve his/her performance on the task . They find evidence that learning goals, more than outcome goals, work to enhance performance quality on complex tasks . That goal setting is an effective learning tool as much as an effective motivational force is evident from their work. Additionally, Winters and Latham (1996) found that not only did assigning a learning goal on a complex task lead to significantly higher performance than either a performance goal or a "do your best" instruction, but learning goals led to the development of a significantly higher number of task strategies to help achieve the goal than both of the other goal/no goal conditions .



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Latham and Seijts (1997) further the discussion of goal setting on complex tasks by testing the hypotheses that, in addition to distal goals, proximal goals are necessary to enhance performance. They conclude that in the absence of proximal goals, distal goals will have a more negative effect on performance of a complex task than a do your best condition, which supports Kanfer and Ackerman's findings (1989) . They suggest that, on complex tasks, proximal goals lead to enhanced performance because proximal goals, in tandem with the continuous feedback they provide, help to enhance perceived self-efficacy for attaining the larger distal goal . More simply, "Proximal goals make the vision concrete by providing benchmarks for coordinating and guiding action" (Latham & Locke, 1991, 240) . Consider this very simple example of a physician who is faced with the distal goal of treating an increasing number of patients in the hospital's emergency room each month . The prescribed increase may seem unattainable ; however, a series of proximal goals might be established whereby the physician aims to treat a few more patients each day . Achieving these daily targets will enhance the physician's self-efficacy for attaining the larger goal . The role of goal setting and the self-regulatory process it sets in motion can have a powerful impact on individual motivation which, I argue, can be used to improve the practice of TQM in healthcare organizations . For front-line managers and staff in healthcare, many TQM activities are tantamount to a complex task . In this respect, I will show that the use of proximal learning goals by front-line managers and staff can address technical deficits in TQM practice while proximal performance goals can help foster successful TQM implementation . First, it is necessary to clarify that goal setting is, in fact, quite compatible with TQM, despite suggestions to the contrary (Hackman & Wageman, 1995 ; Waldman, 1994 ; Deming, 1991) . TQM AS A SYSTEM-FOCUSED PHILOSOPHY : SITUATING GOAL-SETTING THEORY It is not surprising that TQM does not address the issue of individual motivation given its strong system or macro focus - a focus that is well documented (Anderson et al ., 1994 ; Spencer, 1994 ; Waldman, 1994) . The absence of goal setting in the philosophy of TQM is a reflection of this system focus . While it has been argued that goal-setting theory is at odds with TQM (Hackman & Wageman, 1995 ; Waldman, 1994), the reality is that goals are very much a part of TQM's philosophy . However, goals in TQM are broad, distal, organizational goals that are system focused whereas goal-setting theory deals with more proximal, task specific performance and learning goals .



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Of the three founders of TQM, Deming has been characterized as the strongest opponent of goal setting (Anderson et al ., 1994; Hackman & Wageman, 1995 ; Waldman, 1994) . However, Deming explicitly states that "Goals are necessary for you and for me, but numerical goals set for other people, without a road map to reach the goal, have effects opposite to the effects sought" (1986, 69) . I think recent goal setting theorists would agree with Deming that goals are necessary, and that if they involve complex tasks, they should not be used without such a "road map" ; in other words they should not be used unless provisions for strategy development are made (Latham & Locke, 1991 ; Winters & Latham, 1996; Latham & Seijts, 1997) . These provisions for strategy development might be reflected in learning goals . Juran (1988) and Ishikawa (1985) don't dissuade organizations from using goals either. In fact, they endorse the use of goals . Again, Ishikawa diverges from the type of performance goals described by Latham and Locke (1991) only in the distal-proximal element or the system vs individual focus . According to Ishikawa, "Goals are to be set on the basis of problems the company wishes to solve . It is far better to do it this way than to assign separate goals for different divisions and organizations . Goals must be established in such a way as to ensure cooperation by all divisions" (1985, 61) . This systems focus is a clear reflection of the top-down nature of TQM : the values espoused by senior leaders in the organization are reflected in the organization's goals which, in turn, are dispersed throughout the organization . Ishikawa (1985) also argues that it is not enough to establish goals and tell people to "work hard ." While this is language similar to that found in the goalsetting literature, Ishikawa uses the phrase differently . He argues that the core processes for achieving goals must be examined and supplemented with the use of cause and effect or "fishbone" diagrams in order to come up with standards or regulations useful for everyone in attaining the common goals set . In broader terms, not referring to the use of specific and challenging performance goals for the enhancement of performance, Ishikawa is talking about the careful planning and process scrutinization necessary to jump start a quality cycle . Reinterpreted at a more micro level, such an approach is analogous to developing task strategies for goal attainment of complex tasks - learning goals as described by Winters and Latham (1996) . So the case is not that goal setting is in conflict with the founders' vision of TQM as articulated by Hackman and Wageman when they state that "TQM explicitly eschews a number of popular motivational devices, including work redesign (e.g . job enrichment), goal setting (e .g . management by objectives), and performance-contingent rewards (e .g. pay for performance)" (1995, 326) . Rather, TQM is a more macro-level philosophy that focuses on the distal goals



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of the organization. TQM theory is an organizational theory that does not address individual-level behaviors and attitudes . As such, it fails to address the reality of most organizational phenomenon in which both organizational-level variables (such as structure and context) and individual-level variables (such as motivation and commitment) will influence the success of TQM . Waldman points to the gap left as a result of the system focus in TQM when he states that "a clear theoretical framework presently does not exist to show the connections between aspects of systems and the work performance of individuals within the system" (1994, 510) . So far I have argued that: (1) there exists an overly optimistic assumption in TQM about people and their natural inclination to quality, and (2) that TQM is a top-down philosophy whereby the goals and ideals of senior management are reflected in quality endeavors throughout the organization meaning that the potential for goal incongruence between individuals and the organization exists . In part, these problems with TQM theory as well as several of the obstacles to TQM practice arise because of the systems-focused nature of TQM . Moreover, this system-level focus and consequent failure to address individual-level issues such as behavior motivation and organizational commitment has meant that organizations who look to TQM theory as they try to overcome implementation obstacles receive little guidance . In the final section I will focus on one particular obstacle to TQM practice and present brief examples of how proximal goal setting may be used to improve this practice .

INTEGRATING GOAL SETTING AND TQM IN HEALTHCARE ORGANIZATIONS In making a case for a more thorough integration of goal-setting theory into TQM practice, it is important to clearly outline a particular aspect of TQM practice that goal setting will address . This kind of boundary definition is necessary because much like theories of motivation or leadership "whose construct space, by definition, is not bounded" (Reeves & Bednar, 1994, 440), quality is better understood and measured in manageable parts . Similar observations have been made with respect to the question of whether it is possible to conduct randomized trials of TQM . Samsa and Matchar (2000) argue that Randomized Control Trials (RCTs) of Continuous Quality Improvement (CQI) as a general philosophy of management are practically impossible to achieve but RCTs of CQI that are more focused on CQI as a method for solving problems are quite feasible . Dean and Bowen suggest possible areas of focus : "areas in which theory development is clearly needed . . . include prescriptions for information processing, strategy implementation, process improvement . . ." (1994, 411) .



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Given these suggestions, it makes sense to look specifically at how goal setting can be used to enhance the likelihood that employees will participate in and succeed in one area of quality identified by Dean and Bowen (1994), namely information gathering for process improvement . As noted earlier, Hackman and Wageman (1995) point out that this is one of the most problematic areas for organizations implementing TQM. Although they suggest that TQM passes both the convergent and discriminant validity tests (e .g. TQM theory and practices share common features and these features are distinguishable from the features of other management philosophies), they find that the most serious divergence from the founders' vision of TQM is the "attenuated role of scientific methods in TQM programs" (1995, 317) . They also find that training is widely used in organizations implementing TQM, but training in statistical analysis occurs less frequently . It is toward these divergences that I now turn my attention . Deming (1985) also noted that poor teaching of statistical methods in organizations is one of the major obstacles to transforming Western-style management. This is reflected in an inability of front-line workers and even middle management to effectively utilize statistical methods for improvement. Ishikawa addresses the issue and suggests that the solution lies in having people skilled in more than one area. He argues for example, that to achieve quality an engineer must be more than an engineer, he/she "must possess a general knowledge of electrical engineering, electronics, metallurgy, chemistry, statistical methods and computers" (1985, 101-102) . In healthcare this argument would certainly apply to front-line managers and possibly even to front-line clinicians .' . In a quality organization, in addition to having clinical expertise and an effective leadership style, a front-line manager needs to possess the tools and knowledge for implementing quality improvement initiatives on his/her individual nursing unit . These front-line pockets of activity are akin to the "manageable parts" of the complex quality process described by Reeves and Bednar (1994) . People's unfamiliarity with and inability to properly utilize statistical measures in organizations working to achieve quality pose serious problems, as Deming and Ishikawa point out. Statistical methods are the tools of quality . How can you have a quality organization in which the front-line people engaged in process analysis and redesign are unfamiliar with statistical methods and don't have this expertise readily available to them? In a quality organization, managers need the technical quality skills that Ishikawa describes or they need access to people who possess these skills . Without this knowledge, people can't even properly undertake the "manageable parts" of the complex quality process . Ultimately, barriers to the "infusion of the technical TQM" help ensure that TQM remains more rhetoric than reality in organizations (Zbaracki, 1998, 620) .



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In the healthcare setting, evidence of this technical obstacle is abundant . Even in truly committed quality organizations there exists a profound lack of knowledge about the statistical methods necessary to properly monitor processes and track changes for improvement (O'Brien, Shortell, Hughes, Foster, Carman, Boerstler & O'Connor, 1995 ; Zbaracki, 1998) . Goldberg, Wagner, Film et al . (1998) show that a randomized controlled trial of the use of TQM teams to improve guideline compliance around hypertension and depression had no effect because of teams' failure to properly implement the TQM processes . In essence, the intervention failed not because TQM does not work but because the teams lacked TQM knowledge and therefore designed largely ineffective interventions (Goldberg, 1998) . Goldberg and colleagues conclude that clinics implementing TQM need help to acquire skills and experience with the tools of TQM . This is consistent with Shortell and colleagues' overall assessment that the weakness of TQM lies not "so much in the approach itself but, rather, in the infrastructure required for its success" (1998, 605) . Shortell et al . (1998) argue that in addition to a receptive organization and sustained leadership, appropriate levels of training and support as well as data and measurement systems are required if TQM has any chance of succeeding . The importance of this technical dimension has been supported by O'Brien and colleagues' (1995) work on the four dimensions required for successful TQM, one of which refers to the technical issues of training, support, data, and measurement . The absence of the technical dimension leads to "frustration and false starts" according to Shortell and colleagues (1998, 607) . Ultimately, TQM relies heavily on the scientific method and one of the failures of early TQM initiatives stems from organizations' lack of technical support and guidance in the statistical elements of quality (Blumenthal & Kilo, 1998) . While a challenge, the infusion of technical TQM into healthcare organizations should not be an insurmountable barrier . The consistency of TQM methods with clinical modes of inquiry in which health professionals are trained does act as a facilitating factor for applying TQM in healthcare most effectively (Shortell et al ., 1998) . In addition, TQM is compatible with other areas of health services management that emphasize quality measurement and improvement such as guidelines and clinical pathways, outcomes measurement (Blumenthal & Kilo, 1998), evidence-based management (Goldberg, 2000) as well as performance measurement and public accountability demands increasingly being heard in the public sector (Shortell et al ., 1998) . We now turn to a couple of examples of how injecting goal-setting practices into TQM should help motivate front-line workers and managers and give them access to the statistical skills and technical tools they require to successfully implement TQM .



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In TQM, there are certain situations in which performance goals would be appropriate and others in which learning goals would be appropriate . Learning goals are best for helping front-line managers and clinicians learn to use the statistical tools necessary for quality improvement . In Deming's (1986) terms, learning goals will help them acquire the kind of "profound knowledge" which is part of the learning organization envisioned by TQM . According to Deming (1986), profound knowledge is distinct from "task process knowledge ." Task process knowledge "enables researchers to understand the characteristics of the process that produces and delivers products and services, [while] the latter type [profound knowledge] contributes the methodological knowledge necessary to conduct process (i.e. scientific) inquiry that allows an organization to learn" (Anderson et al ., 1994, 485) . Both types of knowledge are crucial for people to be able to partake in quality activities ; while learning goals are appropriate for obtaining profound knowledge ; performance goals are suitable when applying profound and task process knowledge together as one moves through a typical Shewart cycle of "Plan, Do, Check, Act". Figure 1 shows the stages in the PDCA cycle at which learning and performance are optimal . As shown in Fig . 1, learning goals are appropriate during the "plan" stage when data are required to provide people with baseline information about the process in question. For those who are not well versed in statistical methods and tools, the very notion of a control chart plotting data such as rates of cardiac arrest across hospital medical services can be terrifying . In turn, one's selfefficacy for grasping and understanding this type of quantitative information is likely to be very low . For this type of complex task, acquiring statistical skills is tantamount to obtaining the kind of "declarative knowledge" described by Kanfer and Ackerman (1989) so learning goals are more suitable than performance goals (Winter & Latham, 1996) . Recall that using proximal learning goals helps with complex tasks by : (a) not taking needed attentional resources away during the difficult phase of skill acquisition (Kanfer & Ackerman, 1989), and (b) breaking a complex task into a series of manageable pieces thereby boosting self-efficacy and increasing persistence on difficult tasks (Latham & Locke, 1991 ; Latham & Seijts, 1997) . In the case of a staff member attempting to understand the control chart for cardiac arrest rates across medical services, he/she might first set a learning goal that focuses on understanding what the upper and lower control limits represent . Positive feedback is received when he/she experiences success at reading and interpreting control charts and, in the process, gains knowledge about a relevant process that is "in control" or "out of control." Successful learning and grasping of the concepts will, in turn, continue to raise his/her self-efficacy for learning how to utilize statistical control measures . The utilization of learning goals can therefore



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Act:

Plan :

adopt, abandon or re-run the change

Wan a change or tut aimed at improvement

Make appropriate changes to the system Continue to monitor and improve

AL • Study impact ofchanges • Analyze data collected to assess impact of change

• Make plans to reduce special cause variation if found

• Make process change Collect additional data

Check :

Do:

carry out the change on a small scale

study the results

~*

4

4OM6.2 .1-,

Fig . 1 .

help enable those who lack fluency in the technical tools of TQM to work at and obtain the necessary skills for this process analysis component of TQM that is so often neglected in organizations . This learning all takes place inside of the "plan" quadrant in Fig. 1 . Once technical knowledge of TQM is obtained (either through the use of learning goals or because an organization has dedicated personnel with technical TQM skills who are available to work teams), performance goals can be introduced (Kanfer & Ackerman, 1989) that will motivate individuals to move through the PDCA cycle to improve performance . To continue with the example offered earlier, a team who uses learning goals to understand how to interpret a control chart with rates of cardiac arrest across medical services may,



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variation . At that point, performance goals can be used as they try to make changes to the system of care in order to lower rates of cardiac arrest in those medical services where rates are "out of control ." Once performance goals are accepted, goal-setting theory tells us that four processes are set in motion : people will direct attention to the task at hand, mobilize effort, persist at the task, and actively develop strategies for task performance (Evans, 1986) . These four processes are consistent with additional "plan" activities in the PDCA cycle. In the "do" phase of the PDCA cycle, the system change strategies are carried out in an effort to reduce cardiac arrest rates in "out of control" areas . During the "check" phase, additional cardiac arrest rate data are collected and plotted on another control chart, thereby providing performance feedback about whether the change strategies employed have been successful . These "do" and "check" phases mirror and are entirely consistent with the feedback phase of how goal setting impacts performance . Use of performance goals is therefore linked to both the "do" and "check" phases of Fig. 1 . However, consistent with TQM's system-level focus, the psychological impact of the performance feedback studied during the "check" phase is not explicitly articulated in the PDCA cycle . Goal-setting theory therefore adds to the PDCA cycle by demonstrating that feedback (in this case, cardiac arrest rates following changes to the system that were carried out in the "do" phase) first tells work groups whether they have achieved their goal and, if not, the degree to which the performance attained diverges from the goal that was set . Next, self-efficacy (Bandura & Cervone, 1983) and attributional processes (Weiner, 1972) come into play . Provided that failure to obtain the desired goal is not attributed to task impossibility (which would serve to lower perceived self-efficacy and likely lead to abandonment of the task), teams should persist in their efforts to reduce cardiac arrest rates in areas still found to be "out of control ." This interaction among goal setting, feedback, attributional tendencies, and self-efficacy works to enhance motivation. Evans articulates this when he argues that social learning theory has recently helped to forge the relationship among the major motivational theories (including expectancy theory, goal-setting theory and achievement theory) and he states that this rapprochement "suggests that goal setting has its main effects on motivation through the performer's pride or shame in performance and his or her sense of efficacy or feeling that he or she can function at the desired level of performance" (1986, 205) . Goal setting and the related motivational theories can therefore add a micro organizational behavior perspective as we try to work through the practical challenges organizations face with the technical aspects of TQM . In sum, when organizations undertake to implement the technical aspects of TQM or other quality initiatives there is a need to reexamine processes,



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introduce the use of statistical measures and, in many ways, fundamentally alter the way things are done . The introduction of these complex activities into all levels of the organization creates the ideal setting for the value of learning goals to be realized . Goals can be used to motivate individuals and to overcome resistance to and fear of TQM . Moreover, learning goals can help with what is perhaps the most serious challenge facing organizations trying to implement TQM : the lack of knowledge about how to "do quality" and its requisite complex activities (Zbaracki, 1998) . Once people posses the requisite skills for quality improvement activities, performance goals can be used to help achieve the improved performance targets that have been identified . Meeting the Practical Needs of Healthcare Organizations Since 1997, the Joint Commission on Accreditation of Healthcare Organizations (JCAHO)'s ORYX initiative has integrated performance measurement into the accreditation process (JCAHO, 2000) . Because hospitals are now required to select at least six performance measures, the ORYX initiative provides hospitals with measurement data that are an important part of the quality improvement process (e .g. the ORYX performance indicator data can be used as a source of baseline information for any number of TQM improvement initiatives) . However, as Blumenthal and Kilo (1998) point out, initiatives like ORYX will help organizations measure quality, but training and knowledge of technical TQM processes and tools are still required in order to improve quality . Moreover, the JCAHO is now suggesting that surveyors carrying out hospital accreditation site visits begin to look beyond a hospital's performance on the ORYX indicators to assess the way the hospital is analyzing and using performance measurement data derived from ORYX (JCAHO, 2001) . It is in this regard that the ideas advanced in this paper are applicable . In addition to the internal process improvements goal setting can bring to TQM practice, organizations that experience added successes implementing TQM practices might also enjoy additional benefits in the area of external legitimacy gains .

CONCLUDING REMARKS Goal setting offers itself as a solution to the failings of TQM if defined in terms of organizations' divergence from the core concepts . Use of statistical methods is an integral component of TQM, and it is also the most challenging for many organizations that implement Total Quality Management . By using learning goals to help groups of people who lack statistical measurement skills develop those skills and enhance their collective efficacy, goal setting may provide the



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motivational impetus necessary to propel people to more closely adhere to the tenets of TQM . Such an accomplishment might enable TQM to maintain its uniqueness as a viable management philosophy (Hackman & Wageman, 1995 ; Zbaracki, 1998) . Although the inclusion of learning and performance goals in TQM practices fills some of the void left by the absence of motivational theories in TQM, clearly, other factors also impact the ability to successfully implement quality practices into organizations . Although beyond the scope of this paper, these factors should nonetheless be recognized . Without straying from the motivational and goal-setting literature, the above discussion does not address the issue of individual ability . Motivation and ability together work to effect performance (Evans, 1993) . And it is possible that, given the complexity of technical TQM and the degree to which it needs to penetrate the front lines of an organization, not all front-line managers and staff involved will have the ability to effectively grasp and utilize the array of statistical techniques that exist under the banner of TQM . What has also not been addressed in this paper is the effect of situational factors and organizational context on the implementation of TQM, areas upon which the majority of good empirical work on the implementation of TQM in healthcare has focused (e .g . Westphal, Gulati & Shortell, 1997 ; Shortell et al ., 1995 ; Carman et al ., 1996, etc.) . Moreover, organizational constraints such as limited availability of time and already overburdened staff and managers persist as important contextual challenges for the successful implementation of TQM . In addition to filling what I have suggested is a motivational gap in TQM theory, TQM in combination with goal setting offers an opportunity to further test and expand our knowledge of goal-setting theory in the organizational context where its impact, while strong, is more tenuous . Specifically, we can ask whether the power of goal setting is maintained when it is forced to compete with other environmental variables and potentially conflicting goals that exist in the large overburdened healthcare organization of today? The sustainability of TQM as a viable management philosophy has recently been called into question (Hackman & Wageman, 1995) . Many of the challenges to TQM can be explained by the fact that it is such a broad based philosophy ; it is not possible for it to properly address all individual, group, 2 and organizational processes that operate in the context of TQM . In other words, a parsimonious model, something organizational behaviorists strive for, is simply incompatible with the broad nature of TQM . That said, it does tend to be a top-down, macro-level philosophy containing overly optimistic assumptions about employees' natural inclination towards quality . Moreover, ignoring the place of individuals in organizations minimizes their ability to effect change



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and improvement. More emphasis on individual-level motivational techniques such as goal setting would help to address some of the shortcomings of TQM and the challenges for its implementation in healthcare organizations . The successful integration of proximal, task-specific performance and learning goals into TQM practices could help sustain and validate the use of TQM in organizations in the future, thus helping to address the challenge of TQM of "how best to make practicable what is theoretically attractive" (Goldberg, 1998, 42) . TQM suffers in two different respects . It suffers in theory due to inadequate emphasis on individual motivation, and it suffers in practice in terms of organizations' inability to effectively utilize statistical methods for process improvement. Expanding the theory to include micro-level processes will help facilitate its practical implementation in organizations . Goal setting offers a solution to the shortcomings of the philosophy itself (lack of motivational impetus) and also to challenges organizations endure as they try to adhere to its tenets . Finally, an additional challenge to TQM as a viable management practice that is well documented in the literature surrounds the theory's lack of empirical support (e .g . Bigelow & Arndt, 1995 ; Gann & Restuccia, 1994 ; Goldberg et al ., 1998 ; Goldberg, 2000; Samsa & Matchar, 2000 ; Shortell et al ., 1998 ; Shortell et al ., 1995) . By introducing learning and performance goals into TQM, we introduce the possibility of improving our ability to measure the effects of TQM. Goal-setting research in the field has already received strong empirical support (Latham & Lee, 1986) . Perhaps through the use of these welldeveloped methodologies, the effect of learning and performance goals on performance in the context of TQM can be demonstrated, thereby lending empirical support to TQM's viability as a practical management philosophy .

ACKNOWLEDGMENT I would like to thank Martin Evans for his encouragement and for his helpful comments on earlier drafts of this paper.

NOTES 1 . As part of their training in the scientific method, physicians are actually well equipped to understand quality methods and use statistical quality tools . However, their highly professionalized and autonomous nature and, in some cases, their method of remuneration pose other barriers to their involvement in TQM . For these reasons, I focus more on the front-line nurses and managers throughout .



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2 . Given the primacy of teams in TQM, the theoretical and empirical literature on groups may provide insight into other challenges to TQM implementation that relate to group dynamics and group decision making .

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Hackman, J . R ., & Wageman, R . (1995) . Total quality management : Empirical , conceptual and practical issues . Administrative Science Quarterly, 40, 309-342 . House, R. J ., & Baetz, M. L . (1979). Leadership : Some empirical generalizations and new research directions . In: B . Staw & L. L . Cummings (Eds), Research in Organizational Behavior (Vol . 1) . Greenwich, CT : JAI Press Inc . Ishikawa, K . (1985) . What is total quality control? The Japanese way . Englewood Cliffs, NJ : Prentice-Hall . Joiner, B . J. (1994). Fourth generation management . New York : McGraw-Hill. Joint Commission on Accreditation of Healthcare Organizations (2000) . ORYX/Performance Measurement For Health Care Organizations . Oakbrook Terrace, IL : Retrieved February 14, 2001, from the World Wide Web: http://www .jcaho.org/oryx_frm.html Juran, J . M . (1988) . Juran on planning for quality . New York: Free Press. Kanfer, R ., & Ackerman, P . L . (1989) . Motivation and cognitive abilities : an integrative/aptitudetreatment interaction approach to skill acquisition . Journal of Applied Psychology, 74, 657-690. Kanfer, R . (1990) . Motivation theory and industrial and organizational psychology . In : M . D . Dunnette & L . M. Hough (Eds), Handbook of Industrial and Organizational Psychology (2nd ed., Vol .1, pp. 75-170) . Palo Alto, CA : Consulting Psychologists Press . Latham , G . P., & Lee, T . W . (1986) . Goal setting. In : E . A. Locke (Ed .), Generalizing from

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McLaughlin, C . P ., & Kaluzny, A. D . (1999) . Continuous quality improvement in health care : Theory, implementation, and applications (2nd ed.) . Gaithersburg, MD: Aspen Publishers Inc. Meyer, J. P., & Allen, N . J . (1991) . A three-component conceptualization of organizational commitment. Human Resource Management Review, 1, 61-89. Mento, A. J ., Steel, R. P ., & Karren, R. J . (1987) . A meta-analytic study of the effects of goal setting on task performance : 1966-1984 . Organizational Behavior and Human Decision Processes, 39, 52-83 . O'Brien, J . L ., Shortell, S . M ., Hughes, E . F . X ., Foster, R. W ., Carman, J. M., Boerstler, H ., & O'Connor, E . J . (1995). An integrative model for organization-wide quality improvement : Lessons from the field . Quality Management in Health Care, 3(4), 19-30. Ovretveit, J . (2000) . Total quality management in European healthcare. International Journal of Health Care Quality Assurance, 13(2), 74-79 . Phillips, R. L ., Duran, C . A ., Blair, J . D ., Peterson, M . F ., Savage, G . T ., & Whitehead, C . J . (1990). Quality Circles in Healthcare Organizations : Pitfalls and Promises . In: N . Metzger (Ed .), Handbook of Health Care Human Resources Management (2nd ed ., pp . 137-146) . Rockville, MD : Aspen Publishers Inc . Reeves, C. A ., & Bednar, D . A . (1994) . Defining quality : Alternatives and implications . Academy of Management Review, 19, 419-445 .



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STRATEGY, STRUCTURE AND PERFORMANCE IN NURSING FACILITIES Juliet A . Davis, Diane Brannon, Jacqueline Zinn and Vincent Mor ABSTRACT This study tests the contingency theory proposition that a nursing facility's strategy moderated by its management structure improves performance . Strategy is modeled in terms of degree of innovation; while structure is modeled as organic versus mechanistic . Payor mix, measured as the proportion of Medicaid residents, is used as an indicator of financial performance. Facilities in eight states comprise the sample (N = 308) . The data are analyzed via hierarchical moderated regression analysis. The primary finding is that facilities that are both innovative and have an organic structure are more likely to have a lower proportion of Medicaid residents, an indicator of stronger financial performance .

INTRODUCTION Long-term care facilities have traditionally been considered the "cash cows" of the health care industry (Hawes & Phillips, 1986) operating in a stable and predictable, if not particularly generous, environment . Changes in this formerly Advances in Health Care Management, Volume 2, pages 291-313 . Copyright ® 2001 by Elsevier Science Ltd . All rights of reproduction in any form reserved . ISBN: 0-7623-0802-8 291



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benign environment suggest a shift to a more strategic paradigm focusing on the competitive milieu and the increased risk of significant financial losses . This paradigm shift provides an opportunity to gain a better understanding of how nursing facilities align structures and strategies to impact performance, which is an important, but poorly understood relationship . According to contingency theory, interactions among various components of the organization work in concert to influence performance (Donaldson, 1996). This study assesses the relationship of organizational strategy (moderated by structure) on nursing home performance . The goal of this study is to determine the relationship of nursing home strategy implementation and structure to organizational performance . Like the health care industry as a whole, the nursing home industry is in flux . Changes in service reimbursement, care regulations (Aaronson, Zinn & Rosko 1995 ; Feder, Lambrew & Huckaby, 1997 ; Laliberte, Mor, Berg et al ., 1997), and environmental shifts (Harrington & Pollock, 1998 ; Rhoades, Potter & Krauss, 1998) have created a particularly tumultuous environment for nursing facilities . To compensate, nursing facilities have downsized, substituted the use of less costly staff, or changed service mix (Adler, 1998 ; Rose, 1999 ; Thornton, 1995) . During the next decade, a growing elderly population will result in an increase in the demand for nursing home and other long-term care services (Stucki & Mulvey, 2000). Payment constraints will make it difficult for nursing facilities to thrive in this turbulent environment . Therefore, the potential for selective admission is high (Nyman, 1987) . Nursing facilities may choose to aggressively manage payor mix to ensure a sufficient and economically advantageous balance between private-pay, Medicaid, and Medicare residents . Many of these regulatory and reimbursement changes are a direct result of the billions of dollars spent on nursing home care each year by governmental payors, Medicare and Medicaid, in an effort to control or reduce expenditures while maintaining quality (Binstock & Spector, 1997) . Given these changes, facilities will need to adjust their strategies and structures, aligning each to environmental and regulatory demands, in order to ensure long-term survival .

THEORY AND HYPOTHESES Nursing Facility Performance

Performance is traditionally measured using various financial and other organizational indicators . However, in the long term care industry, which is highly dependent on reimbursement from Medicaid, Medicare, and private pay residents, a strong argument can be made that monitoring trends in the



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percentages of residents in each payor category provides an adequate indicator of nursing home financial performance (Bedard & Johnson, 1984 ; Fizel & Nunnikhoven, 1992) . For example, it is well documented that, ceteris paribus, Medicaid - the dominant payor for long-term care services - tends to pay less than Medicare and private pay (private insurance and self-pay) . Therefore, facilities that have high Medicaid levels must aggressively seek ways to keep costs at or below the reimbursement rate to be profitable (Gertler, 1988) . "As a consequence, most nursing home providers tailor operation strategies to . . . reimbursement levels . . ." (Arling, Nordquist & Capitman, 1987, 256) . Additionally, because the demand for nursing home beds vary by payor, (Nyman, 1989), the nursing facility can market their services to the more profitable segments by targeting the caregivers who make admitting decisions . This study measures performance using the percentage of Medicaid residents in the nursing facility . Nursing Facility Structure

The dynamic nature of the organization's structure is partly related to the nature and frequency of transactions between the firm and the environment (Williamson, 1979) . As the number of transactions increases or as the complexity of external relationships grows, the firm adapts a structure that facilitates better interaction with the environment. The firm may choose between a mechanistic, highly formalized structural design, or it may choose an organic, less formalized design (Burns & Stalker, 1961) . More stable environments require a more mechanistic structure while environments that are more complex require a more organic structure . Scott (1998, 83), notes that "in mechanistic systems, the interdependence among the parts is such that their behavior is highly constrained and limited . . ." . The structure is relatively rigid and the system of relations determinant . Burns and Stalker (1961) postulate that the mechanistic system is more commonly found in a stable and simple environment where decision making is structured, control is hierarchical (Shafritz & Ott, 1992), tasks are routinized (Perrow, 1967), and the number of low-skilled workers is high (Woodward, 1970) . This structural pattern describes much of the long-term care industry . Nursing assistants, who are the least trained category of nurses, perform the majority of tasks and are the largest staff category in nursing facilities . Because these individuals are low skilled, task routinization is a favored strategy for maintaining control and achieving set levels of quality . In contrast, for " . . . organic systems, the connections among the interdependent parts are somewhat less constrained, allowing for more flexibility



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of response" (Scott, 1998, 83) . Organic organizations often exist in a more dynamic, complex environment (Miles & Snow, 1978) . Decision making is less rigid, allowing employees to define and redefine their tasks and relationships as necessary (Shafritz & Ott, 1992) . Tasks are less routine and employees are more likely to be professional than unskilled (Perrow, 1967 ; Woodward, 1970) . An organic management structure may benefit nursing facilities because it allows greater freedom to nursing assistants, who despite their low skills, may be better qualified to make care planning decisions for their daily residents than other staff who may rarely treat the resident . Such structural autonomy may result in high quality of care for residents . Nursing Facility Strategy

Strategic orientation is optimally determined by self-typing . However, archival data may also provide a good indicator of an organization's orientation . Because this study uses secondary data analysis, it relies upon archival data as an indicator of strategic orientation . Miles (1982) described two distinct strategic patterns, domain-defensive and domain-offensive. Thomas, McDaniel and Anderson (1991, 872) found that "domain-offensive hospitals may be better positioned to meet a wider range of environmental demands than domain-defensive hospitals because they [domain-offensive hospitals] focus more of their attention on external issues . . ." On one hand, an organization involved in domain-defensive activities is focused on maintaining its legitimacy. This type of organization wants to maintain a niche and little else . This strategic pattern is consistent with Miles and Snow's (1978) Defender orientation . Defenders function well when the environment is stable and uncertainty is low . They provide few products to a narrow portion of the market (Miles & Snow, 1978) . Defenders are less likely to be innovators, but can achieve success by producing a cost-efficient, single-core technology . Hence, domain-defensive nursing facilities should offer basic nursing care and avoid specialty services such as dementia care units . On the other hand, domain-offensive organizations engage in competitive activities to increase market share . This strategic pattern is similar to the Prospector orientation (Miles & Snow, 1978) . Prospectors thrive in a more dynamic, less consistent environment . As the name implies, Prospectors are innovators and employ a strategy that responds well to market fluctuations. Prospectors are best suited for market uncertainty and prefer product development to stable profits . Within a stable market, the Prospector is unable to use its resources efficiently, placing it at risk for both decreased profitability and viability . Hence, domain-offensive nursing facilities should be more likely



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to contact with managed care . Managed care organizations should reimburse at a higher rate than Medicaid . Hypothesis 1 : In a turbulent environment a domain-offensive strategy will be associated with a lower proportion of Medicaid residents than a domain-defensive strategy . Fit Between Strategy and Structure According to structural contingency theory, the relationship between structure and performance depends upon other organizational factors such as size, technology, and strategy (Davis & Powell, 1992 ; Donaldson, 1996 ; Emery & Trist, 1965) . Furthermore, it is not simply the link, but the actual fit between strategy and structure, on the one hand, and the environment on the other hand, that produces good outcomes (Parthasarthy & Sethi, 1992 ; Van de Ven & Drazin, 1985) . Donaldson (1996, 63) states that "fit is the underlying key" between both constructs . According to Thomas et al . (1991), to understand the strategic decision-making processes that occur in hospitals, the organization's strategy and structure must be included in the analysis . Hypothesis 2 : In a turbulent environment, a domain-offensive strategy coupled with an organic management structure will be more strongly and negatively related to the proportion of Medicaid residents than will the independent effect of domain-offensive or any other strategy-structure combination . Figure 1 is a conceptual model showing the relationship between strategy, structure, and performance .

METHODS Sample The study combines both primary data, a survey sent to Director of Nurses in eight states, and several secondary data sources, the Online Survey Certification Automated Record and the Area Resource File . The primary data source represent a cross-sectional sample of Medicare or Medicaid certified nursing homes in Maine, Mississippi, Missouri, Nebraska, New York, Ohio, Washington, and Wisconsin . These states are from the population of all states that had automated the Medicare Minimum Data Set (MDS) as of 1995 . Regional representation was an important consideration in the original sample design . Additional attention was paid to representation of facilities with special care units and Medicare residents . Hospital-based skilled nursing



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1 Wider E c onomic, Cultural,

Organizational Strategy

and

Political E nvironment

I

Organizational Structure Interaction of Strategy Structure

Nursing Facility Performance

Medicaid Payor Mix = F (Structure, Strategy, Interaction of Structure and Strategy, Controls)

Fig. 1 .

Conceptual Model .

facilities were excluded from the sample . The collection period for the sample was from mid-1995 to late-1996. Each facility was stratified by location (urban or rural), ownership status (profit or non-profit), chain affiliation (chain or independent), and size (25-100 beds or over 100 beds) . There are 16 strata in the primary data set . Of the initial 501 facilities contacted, 24 could not be located, had changed licensure, or were no longer in business . This decreased the sample size to 477, of which 308 or 64 .5% agreed to participate by returning the initial Director of Nurses questionnaires . To ensure proper representation within each stratum, three waves of mailings were sent to facilities that did not respond to each previous request for survey participation . Following attempts to increase the response rate by contacting non-respondents by telephone, separate analyses were conducted on the non-respondents to determine if these facilities were different from the sample of facilities that did respond and if there was a pattern



Strategy, Structure and Performance in Nursing Facilities

2 97

in the non-response rate . As mentioned earlier, the facilities in this study were stratified ; therefore, the analysis of non-response was according to strata. The procedure consisted of comparing several organizational characteristics of the dropouts, such as percent of resident population with bedsores, to the other facilities in the strata . The results show some non-uniformity among the dropouts. Additionally, several strata did not have any dropouts . The secondary data source is information from the Online Survey Certification Automated Record (OSCAR') file and from the Area Resource File (ARF) . Additionally, a control variable, the average Medicaid per diem reimbursement by state for 1995 from the Profiles of Long-Term Care Systems (Bectel & Tucker, 1998), was added to the data set. Table 1 describes the sample characteristics and the source of each of the variables is indicated in the last column . Dependent Variable The dependent variable, proportion of Medicaid residents, acts as a proxy for organizational performance . The proportion of Medicaid residents is an indicator of the nursing facility's reliance on Medicaid . A high reliance on Medicaid can result in cost minimizing activities, such as the use of less expensive staff (Zinn, 1993) . A strategy that may potentially result in decreased financial effectiveness should have characteristics that are markedly different from a strategy that improves financial performance . These characteristics should be even more pronounced when the various structural components are included in the model. Structure Structure is measured by using two indices consisting of variables based on the Bums and Stalker (1961) description of the characteristics of a mechanistic/ organic structure (Van de Ven & Ferry, 1980 ; Zanzi, 1987) . The decentralization index measures the degree to which decision-making potentially occurs on lower levels . Two separate variables, the number of departments reporting to the administrator and the number of departments attending care-planning meetings, were summed to create the decentralization index . As the number of departments reporting to the top administrator increases, control by the top administrator over each of these departments typically begins to decrease, thus resulting in greater decision-making freedom for each department (Van de Ven & Ferry, 1980) . This decision-making freedom may further exert itself in the form of the number of departments attending care-planning meetings . By allowing more departments to attend care-planning meetings, centralized control over care-planning decreases . For this index, the greater the score the more organic the organization's structure .



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Table 1 .

Sample Descriptives and Data Sources .

Description

Range Min Max

Mean

SD

Data Source

Dependent Variable

• Percent Medicaid

0

100

67 .48

20 .38

OSCAR'

0 0

1 1

0 .18 0 .21

0 .39 0 .41

Survey' Survey

0 0

1 1

0 .31 0 .40

0 .46 0.49

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0 0 0

1 1 5

0 .14 0 .07 1 .31

0.34 0 .26 1 .15

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1

11

6 .95

2.03

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0

8

4 .74

1 .22

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5 3

18 14

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1 143

0 .59 94

0 .49 25

520 1 1

112 0 .15 0 .18

67 0 .25 0 .22

49,197 18,740 12 .9 6 .78

4,506 2 .11

Independent Variables Strategy Variables 1 . Does the facility have an Alzheimer's unit? 2 . Does your facility have a managed care contract? 3 . Fully integrated system. 4. Are radiology, pulse oximetry, EKGs, IV therapy and lab services offered onsite? 5 . Percent of hospice residents . 6 . Percent of beds designated Medicare SNF . • Strategy Index Structure Variables 1 . The number of departments that report to the CEO. 2. The number of departments participating in care-planning meetings. • Decentralization Index 3 . The number of job titles that exist within the nursing department. 4. The number of job titles whose incumbents attend supervisory training seminars . • Knowledge-Enhancing Index Control Variables OSCAR Bectel et al ., 1998 OSCAR ARF ARF3 ARF ARF

' OSCAR= On-line Survey Certification of Automated Records ; 'Survey= Director of Nursing Survey; 3 ARF = Area Resource File .



Strategy, Structure and Performance in Nursing Facilities

299

The second index consists of two measures that capture knowledge-enhancing activities . Movement toward greater professionalism and task heterogeneity may indicate greater external input, which is associated with an organic management structure . The number of positions attending supervisory training seminars measures professionalism and the number of positions in the nursing department measures task heterogeneity . Traditionally, supervisory training seminars in nursing facilities are limited to only the top managers, so allowing more personnel to attend these seminars may increase the potential for an infusion of new knowledge . For task heterogeneity, movement away from the traditional nursing position mix of registered nurses, licensed practical nurses, and certified nursing assistants structure to one incorporating more diverse and newer position titles expands the type of tasks performed in each facility, thus adding to the potential for increasing new knowledge . Appendix B provides a list of the survey questions . Strategy

Six different indicators were used to assess the strategic orientation of the facility . An Alzheimer's unit, onsite laboratory service, managed care contract, network integration, Medicare designated beds, and the percent of hospice residents . At the core, the strategy indicators measure a nursing facility's ability to maintain adequate financial resources to attract and service payors other than Medicaid. Following Shortell and Zajac's (1990) approach, several archival, self-reported variables were selected as proxies for the strategic orientation of the facility . The strategic orientation index is additive with higher scores representing a more domain-offensive position . Variables such as an Alzheimer's unit, onsite laboratory service, managed care contract, network integration, and offering hospice care are services or actions that allow a nursing facility, greater service diversification and the potential for competitive advantage . The presence of each of these variables may increase the possibility of attracting Medicare and private pay residents . Finally, if the facility has the ability to attract Medicare beneficiaries on an ongoing basis, then it is more likely to reserve a proportion of its beds for these residents . Control Variables

Several variables are included to control for differences that may be attributable to factors such as size, market factors, and organizational factors other than strategy or structure (Gertler, 1988) . Specifically, the items controlled for are : (1) profit status ; (2) Medicaid per diem reimbursement rate ; (3) facility bed size ; (4)



300

JULLET A . DAVIS ET AL .

county level Medicare market share ; (5) nursing home bed concentration ; (6) the 1992 median per capita income, and (7) the 1992 unemployment rate . Profit status controls for differences in the strategic behavior of for-profit facilities versus not-for-profit facilities (Frank & Salkever, 1994) . The Medicaid per diem reimbursement controls for differences in the proportion of Medicaid residents that may be attributable to state-level variations in the reimbursement rate for Medicaid beneficiaries . The number of beds is a well-established control measure in health care literature with larger nursing facilities commanding more internal resources than smaller facilities (Banaszak-Holl, Zinn & Mor, 1996) . The county level Medicare market share measure captures the proportion of all Medicare residents in the county that are located in a given facility . The nursing home bed concentration measures the level of market concentration and it approximates the competitive nature of the market (Folland, Goodman & Stano, 1993) . The median income captures payor mix differences attributable to the community income characteristics . According to Nyman (1989), communities that have a higher per capita income are more likely to have a greater number of private pay residents than communities that have a lower per capita income . Finally, the unemployment rate variable controls for differences in the state economic conditions, we expectation that lower unemployment rates signify better market conditions (Banaszak-Holl et al ., 1996) . Several of the variables are collinear; hence, a log transformation is used in the models . The data contain a facility-weighting variable that was developed using the Survey Data Analysis program (Shah, Barnwell & Hunt, 1995) : "This software was specifically developed to analyze complex design survey data and appropriately weight cases and adjusts the standard errors to account for the sampling strategy . The result is an unbiased comparison of the differences between groups in the population of interest" (p . 1762) . Weighting allows for generalization to the population of nursing facilities in the states from which the data were collected . The total number of facilities in the eight states is 2987 . Statistical Analyses The two hypotheses articulated earlier are hierarchically ordered . The strategy index with the control variables, block one, has a specified relationship with the proportion of Medicaid residents . Block two consists of adding the structure indices and the interaction terms . The data are analyzed via hierarchical moderated regression analysis . The hierarchical method allows for analysis of the effect of the moderator variable . The final model contains twelve independent measures . The correlation matrix reveals significant correlation among the variables (see Table 2) . To further test



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the robustness of the Medicaid model, a separate model substitutes the percent of private payor residents as the dependent variable . Given that attracting private payor residents may require different strategies, we expect to find opposite results between the Medicaid and private payor models .

RESULTS Medicaid by Strategy and Structure Preliminary analysis supports the presence of an interactive relationship between strategy and structure . A cross tabulation of the average percent of Medicaid residents by each strategy and structure index substantiates the presence of an interaction between the two constructs . The dependent variable clearly varies by the level of the independent variables . Therefore, for this data, an interaction is present if the effect of strategy on the percent of Medicaid residents varies by the structure variables . Table 3 shows the mean number of Medicaid residents by strategy and structure . The results of the strategy only model (Table 4) show a significant and negative relationship between a domain-offensive strategy and the proportion of Medicaid residents in the facility . This finding supports the hypothesis that as a facility becomes more domain-offensive, performance improves . This finding suggests that as the facility offers more services and engages in activities that generally cost more, it is more likely to attract non-Medicaid clients . Several of the control variables - profit status, total facility beds, the Medicare market share, nursing home concentration, and the per capita unemployment rate - were also significant. The second hypothesis states that the interaction of strategy with the decentralization index and the knowledge-enhancing index would be negatively related to the proportion of Medicaid residents . Table 5 shows the results of the Table 3.

Percent Medicaid by Dichotomized Strategy and Structure Variables . Range

0-1

Strategy

2-5

Decentralization Index

5-11 12-18

69.63 71 .39

64.20 62.14

Knowledge Enhancing Index

3-10 11-23

70.23 70.68

63 .41 62.74



Strategy, Structure and Performance in Nursing Facilities

Table

303

4. Model 1 : Strategy Only .

Variable

B

Constant Strategy Index (Domain Offensive) Profit Status Medicaid per diem reimbursement rate Log of the total facility beds Log of the county level Medicare market share Log of the nursing home bed concentration within the county 1992 per capita income 1992 unemployment rate

25 .878* -3 .242*** 6 .085* 0.059 5 .557* -7.025*** 8.601*** 0 .000 1 .711*

Standard Error 11 .422 0.946 2.510 0 .052 2 .414 1 .551 1 .908 0.000 0 .665

Rz = 0 .243 Adjusted R2 = 0.214 ***p<0 .001 **p<0.01 *p<0 .05 tp<0.10

full model; it contains the main effects and the interaction terms . In this model, the strategy index is not significant . The first interaction, strategy with the decentralization index is not significant . The second interaction, strategy and the knowledge-enhancing index, is significant . However, it is positively associated Table

5. Model 2 : Full Model .

Variables Constant Strategy Index (Domain Offensive) Decentralization Index Knowledge Enhancing Index Strategy by Decentralization Index Strategy by Knowledge Enhancing Index Profit Status Medicaid per diem reimbursement rate Log of the total facility beds Log of the county level Medicare market share Log of the nursing home bed concentration within the county 1992 per capita income 1992 unemployment rate R 2 = 0 .288 Adjusted R 2 = 0.247 ***p<0 .001 **p<0.01 *p<0 .05 tp<0.10

B 31 .017* -2.755 -0 .337 -0.238 -0 .473 0.399t 7 .225** 0 .056 5 .184* -6.798*** 8 .043*** 0.000 1 .807**

Standard Error 14 .408 5 .210 0 .740 0 .483 0 .346 0.236 2 .539 0 .051 2 .434 1 .531 1 .886 0 .000 0.653



304

JULLET A . DAVIS ET AL.

with the dependent variable, which is not consistent with the hypothesis . As in the first model, profit status, total facility beds, the Medicare market share, nursing home concentration, and the per capita unemployment rate, were significant. Based on the significance of the F statistic for each of the models (see Table 6), it is clear that all three models are significant predictors of the percent of Medicaid residents in the facility . However, the full model (see Table 5) is a stronger model than the strategy-only model (Table 4), accounting for 29% of the observed variance . As the modeling process goes from the strategy-only model to the full model, relatively small yet statistically significant changes occur in the R2 (Table 6) . The results of the model using the proportion of private payor residents as the dependent variable confirm the robustness of the Medicaid model (see Appendix A) . The R2 for the private payor model containing the main effects and interaction term is 0 .225 and the adjusted R 2 is 0 .180. In the strategy only model, domain-offensive is associated with an increase in the proportion of private payor residents . In the full model, domain-offensive is not significant. The interaction of strategy with decentralization is significant, however, the interaction of strategy with knowledge enhancing is not significant . Several of the control variables are significant. Table 6. Model 1 2 Model 1 2

Model R2 0 .243 0 .288

Model F 8 .472 6 .975

Change in R 2 0 .243 0.045

Model Comparisons.

F Change

8 .472 3 .256

df 1, df2

p value

8,211 12,207

0 .000 0 .000

df1, df2

p value

8,211 4,207

0 .000 0 .013

DISCUSSION This study explored the relationship of a domain-offensive strategy moderated by an organic management system on organizational performance . The findings of this study support previous research that suggested modeling structure as the moderator of strategy provides a better indicator of nursing home performance than the independent effect of strategy . This work adds a new dimension to our



Strategy, Structure and Performance in Nursing Facilities

305

understanding of nursing facilities and their strategy implementation . Further, given environmental turbulence, nursing facilities are attempting to become more proactive to improve performance . Two of the measures supported the hypotheses ; a third measure did not. Hypothesis one posited a direct relationship between strategy and organizational performance . The negative sign on the domain-offensive measure suggests that as the facility offers more services and engages in activities that generally cost more, it is able to reduce its dependence on Medicaid . Given the geneally lower reimbursement rate for the Medicaid resident, facilities that are able to attract other payors may outperform other facilities, at least in terms of profitability . Nonetheless, facilities at the other extreme may also retain profitability, specifically, one recourse of nursing facilities that attract high levels of Medicaid residents may be to offer fewer services in order to keep costs at or below the reimbursement rate, thus maintaining profitability . The second hypothesis stated that a domain-offensive strategy moderated by an organic management structure, measured in terms of decentralization and knowledge-enhancing activities, would be negatively associated with the proportion of Medicaid residents . The positive sign on the regression coefficient of the interaction term in Table 5 does not support the hypothesis for the knowledge-enhancing measure . One possible explanation for this finding may be that as facilities increase their resident population, regardless of payer, they may also be forced to increase staff positions and staff training . Although additional measures in the form of control variables were included to account for variation beyond that of the hypothesized constructs, clearly many other confounding factors may alter the hypothesized relationships, not the least of which is the available population from which the nursing facility draws its resident population . One possible reason for the significance of profit status is that for-profit nursing facilities engaging in profit maximizing activities may prefer a filled bed over an empty one ; therefore, they are willing to fill the bed with Medicaid residents . The preference for a filled bed over an empty one may also explain why as the number of beds increase in the nursing facility, the facility is likely to admit more Medicaid residents . The negative sign on the Medicare market share measure may mean that as the facility's Medicare market share increases, they may be less likely to admit Medicaid residents . Further, as the market becomes more concentrated nursing facilities may be forced to admit more Medicaid residents . The unemployment rate measure acts as a proxy for the level of poverty in the surrounding community . Based on the positive sign, facilities are likely to have a higher proportion of Medicaid residents when there is higher unemployment in the area.



306

JULLET A. DAVIS ET AL.

Managerial Implications There are several implications of these findings for the nursing home industry . The first implication is that some nursing facilities are engaging in strategic behavior, and this behavior may be specifically targeted at improving their performance . Given the regulatory environment of the mid-1990s, domainoffensive nursing facilities may be better positioned to meet the reimbursement changes that are currently occurring . Further, these nursing facilities may increase activities aimed at maintaining market advantage more aggressively than other facilities in light of increased federal regulations and cost containment legislation . The final managerial implication is that as nursing facilities engage in strategic activities, their structures will undergo further refinement, which may increase the opportunities for new categories of professionals entering this field . This may result in new managerial or care innovations in light of environmental changes . Limitations There are several limitations to this study. The first limitation is we infer strategy classifications . Investigator-inferred strategic and structural type designations have the advantage of objectivity over other methods such as self-typing ; however, the investigator may not have sufficient information to make an accurate determination as to the strategic orientation of the organization (Snow & Hambrick, 1980) . The second limitation is that the nature of cross-sectional data prevents discussion of causality. Therefore, this study establishes the association between the dependent and independent variables rather than the ability of the independent variables to predict the dependent. This is an important limitation that can only be addressed through future longitudinal research . Finally, there may be other factors beyond strategy and structure that determine or influence the proportion of Medicaid residents in a nursing facility . For example, the study does not control for the effect of residents who enter the facility as a Medicare enrollee and remain in the facility beyond their Medicare allotted time limit and then convert to a Medicaid ; nor does the study control for individuals who are admitted as private pay and deplete their assets to qualify for Medicaid. Conversion from the Medicare or private payor group to Medicaid may mask a domain-offensive strategy . Although most research designs attempt to ensure generalizability back to some national population, the sample design method used during the original



Strategy, Structure and Performance in Nursing Facilities

307

data collection only allows for generalizations back to nursing facilities in eight states : Maine, Mississippi, Missouri, Nebraska, New York, Ohio, Washington, and Wisconsin . These states were chosen because their MDS was computerized at the time of the survey and they vary sufficiently to roughly approximate the range of facilities and performance in the market of the U .S . Thus allowing for some generalizability to the U .S . population of nursing facilities .

CONCLUSIONS This study clearly shows that a domain-offensive strategy is indeed moderated by an organic structure . While the domain-offensive index independently is associated with performance, including the interaction of strategy and structure provided an overall stronger model . Given the increasing volatility in the nursing home industry environment, this research contributes to the steps needed in the development of better measures, other than resident outcomes, to assess nursing home structure, strategy, and performance . Future research studies should use longitudinal designs and multiple assessments of strategic orientation, structure, and performance to improve upon the analysis conducted here . Clearly, this research study supports the view that understanding the current structure and strategy of nursing homes will help to determine what changes may be needed to ensure an adequate supply of nursing facility beds for an aging population .

NOTE 1 . The OSCAR data set consists of hundreds of variables describing various facility and resident characteristics for all Medicare and/or Medicaid certified nursing homes in the U .S . The data is collected quarterly and compiled by the Health Care Financing Administration . Use of this dataset is well documented in the nursing home literature .

REFERENCES Aaronson, W . E ., Zinn, J . S ., & Rosko, M . D . (1995). Subacute care, Medicare benefits, and nursing home behavior. Medical Care Research and Review, 52(3), 364-388 . Adler, S . (1998) . Manor care lays off 10% of corporate staff . Contemporary Longterm Care, 21(6), 106-109 . Arling, G., Nordquist, R . H., & Capitman, J . (1987) . Nursing home cost and ownership type: Evidence of interaction effects . Health Services Research, 2(22), 255-270. Banaszak-Holl, J ., Zinn, J ., & Mor, V . (1996) . The impact of market and organizational characteristics on nursing care facility service innovation : a resource dependency perspective . Health Services Research, 31(1), 97-117.



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Bectel, R. W ., & Tucker, N. G . (1998) . Across the states 1998: Profiles of long-term care systems (3rd ed.) . Bedard, J . C., & Johnson, A . C . (1984). The organizational effectiveness paradigm in health care management. Health Care Management Review, 9(4), 67-77. Binstock, R . H., & Spector, W . D . (1997) . Five priority area for research on long-term care . Health Services Research, 32(5), 715-730. Bums, T ., & Stalker, G. M. (1961) . The management of innovation . Chicago : Quadrangle Books . Davis, G . F., & Powell, W. W . (1992) . Organization-environment relations. In : M . D. Dunnette & L. M . Hough (Eds), Handbook of Industrial and Organizational Psychology, (pp . 315-375). California: Consulting Psychologists Press . DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited : Institutional isomorphism and collective rationality in organizational fields . American Sociological Review, 48, 147-160 . Donaldson, L . (1996) . The normal science of structural contingency theory . In: S. R. Clegg, C. Hardy & W . R . Nord (Eds), Handbook of Organization Studies . (pp . 57-76). Thousand Oaks: Sage . Emery, F. E., & Trist, E. L. (1965). The causal texture of organizational environments . Human Relations, 18(1), 21-32. Feder, J., Lambrew, J., & Huckaby, M . (1997) . Medicaid and long-term care for the elderly : Implications of restructuring . The Milbank Quarterly, 75(4), 425-460 . Fizel, J ., & Nunnikhoven, T. (1992) . Technical efficiency of for-profit and non-profit nursing homes . Managerial and Decision Economics, 13(5), 429-439. Folland, S ., Goodman, A., & Stano, M. (1993) . The economics of health and health care. New York: Macmillian Publishing Company . Frank, R ., & Salkever, D . (1994). Non-profit organizations in the health sector. Journal of economic Perspectives, 8(4), 129-144 . Gertler, P. J. (1988). A latent-variable model of quality determination . Journal of Business & Economic Statistics, 6(1), 97-104. Hannan, M . T., & Freeman, J . (1977) . The population ecology of organizations . American Journal of Sociology, 82(5), 929-964. Harrington, C ., & Pollock, A. M . (1998) . Decentralization and privatisation of long-term care in U .K. and USA. Lancet, 351(9118), 1805-1808 . Hawes, C ., & Phillips, C. D . (1986) . The changing structure of the nursing home industry and the impact of ownership on quality, cost, and access. In: B . H. Gray (Ed.), For Profit Enterprise in Health Care, (pp . 492-541). Washington D .C. : National Academy Press. Laliberte, L ., Mor, V ., & Berg, K . et al . (1997) . Impact of the Medicare catastrophic coverage act on nursing homes . The Milbank Quarterly, 75(2), 203-233. Miles, R. H. 1982. Coffin nails and corporate strategies . New Jersey: Prentice-Hall . Miles, R . E., & Snow, C . (1978) . Organizational strategy, structure, and process . New York : McGraw-Hill . Nyman, J . A. (1987) . Excess demand, the percentage of Medicaid patients, and the quality of nursing home care. The Journal of Human Resources, 23(1), 76-91 . Nyman, J. A. (1989) . The private demand for nursing home care. Journal of Health Economics, 8(2), 209-231 . Parthasarthy, R., & Sethi, S . P. (1992) . The impact of flexible automation on business strategy and organizational structure . Academy of Management Review, 17(1), 86-111 . Perrow, C . (1967) . A framework for the comparative analysis of organizations. American Sociological Review, 32(2), 194-208 .



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Rhoades, J ., Potter, D. E. B ., & Krauss, N . (1998) . Nursing homes - structure and selected characteristics, 1996 . MEPS Research Findings No . 4. Rockville : Agency for Health Care Policy and Research . Rose, J. (1999) . The shrinking pool of nurses is likely to get even smaller. Medical Economics, 76(6), 46 . Scott, W. R. (1998) . Organizations: Rational, natural, and open systems (4th ed .) . New Jersey : Prentice-Hall . Shafritz, J . M ., & Ott, J . S . (1992) . Classics of organization theory (3rd ed.) . California : Wadsworth . Shah, B . V ., Barnwell, B . G ., & Hunt, P . N . (1995) . SUDAAN users manual, Release 6.5. Professional software for survey data analysis for multi-stage sample designs. Research Triangle: Triangle Institute . Shortell, S . M ., & Zajac, E . J . (1990) . Perceptual and archival measures of Miles and Snow's strategic types : a comprehensive assessment of reliability and validity. Academy of Management Journal, 33(4), 817-832 . Snow, C ., & Hambrick, D . (1980) . Measuring organizational strategies : Some theoretical and methodological problems . Academy of Management Review, 5(4), 527-538 . Thomas, J . B ., McDaniel, R . R., & Anderson, R. A. (1991) . Hospitals as interpretation systems . Health Services Research, 25(6), 860-880 . Thompson, J. D. (1967) . Organizations in action . New York: McGraw-Hill . Thornton, P. (1995) . Linking market research to strategic planning . Nursing Homes, 44(l), 34. Van de Ven, A . H ., & Drazin, R . (1985) . The concept of fit in contingency theory . Research in Organizational Behavior, 7, 333-366. Van de Ven, A . H., & Ferry, D . L . (1980). Measuring and assessing organizations . New York : John Wiley & Sons . Williamson, O . E. (1979). Transaction-cost economics : The governance of contractual relations . The Journal of Law and Economics, 22(10), 233-261 . Woodward, J . (1970) . Industrial organization : Behavior and control . London: Oxford University. Zanzi, A. (1987) . How organic is your organization? - Determinants of organic/mechanistic tendencies in a public accounting firm . Journal of Management Studies, 24(2), 125-142 . Zinn, J . S . (1993) . The influence of nurse wage differentials on nursing home staffing and resident care decisions . The Gerontologist, 33(6), 721-729 . Zinn, J . S. (1994) . Market competition and the quality of nursing home care . Journal of Health Politics, Policy and Law, 19(3), 555-582 . Zinn, J . S ., Mor, V ., Castle, N ., Intrator, 0., & Brannon, D . (1999) . Organizational and environmental factors associated with nursing home participation in managed care . Health Services Research, 33(6), 1753-1767 .



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APPENDIX A Private Payor Models Table A .

Model 1 : Strategy Only .

Variable

B

Constant Strategy Index (Domain Offensive) Profit Status Medicare per diem reimbursement rate Log of the total facility beds Log of the county level Medicare market share Log of the nursing home bed concentration within the county 1992 per capita income 1992 unemployment rate

74 .434*** 2 .273* -6 .840** -0 .063 -6 .276* 3 .318* -4 .859* 0 .000 -1 .777**

Standard Error 11 .807 0 .992 2 .601 0 .053 2 .495 1 .608 1 .976 0 .000 0 .686

R 2 = 0.180 Adjusted R 2 = 0.149 ***p<0 .001 **p<0 .01 *p<0 .05 tp<0 .10

Table B .

Model 2 : Full Model .

Variable Constant Strategy Index (Domain Offensive) Decentralization Index Knowledge Enhancing Index Strategy by Decentralization Index Strategy by Knowledge Enhancing Index Profit Status Medicare per diem reimbursement rate Log of the total facility beds Log of the county level Medicare market share Log of the nursing home bed concentration within the county 1992 per capita income 1992 unemployment rate R'= 0 .225 Adjusted R2 = 0 .180 ***p<0.001 **p<0 .01 *p<0.05 tp<0 .10

B 75 .486*** -4.668 0.100 -0.022 0.671t -0.072 -7.198** -0.061 -5.832* 3 .126t -4 .349* 0.000 -1 .899**

Standard Error 14.942 5 .569 0.766 0.503 0.359 0.257 2.646 0.052 2.522 1 .591 1 .957 0.000 0.675



Strategy, Structure and Performance in Nursing Facilities

Table C. Model 1 2 Model 1 2

311

Model Comparisons .

Model RI

Model F

df1, df2

p value

0 .180 0 .225

5 .751 4 .959

8, 209 12, 205

0 .000 0 .000

Change in R2

F Change

dfl, df2

p value

0 .180 0.045

5 .751 2 .947

8, 209 4, 205

0 .000 0.021

JULLET A. DAVIS ET AL.

312

APPENDIX B Structure Questions : 1 . Within your nursing home, how many different departments or sections report directly to the top administrator? Please name . Nursing Dietary HK Laundry

0, 0, 0, 0,

1 1 1 1

Maintenance Env Svcs Soc Svcs Activities

0, 0, 0, 0,

1 1 1 1

Therapies Business Offc Other

0, 1 0, 1 0, 1

2 . Please check who routinely attends interdisciplinary care planning meetings and their level of participation.

1. 2. 3. 4. 5. 6. 7. 8.

Doesn't attend or attends and participates a little Dir/Asst Dir of Nursing 0 Charge Nurse/RN/LPNs 0 Social Service Staff 0 PT/OT/Speech 0 Activity Staff/Dietary 0 Medical Director/Physician 0 Assessment Specialist 0 Other (specify) 0

Attends and participates alot 1 1 1 1 1 1 1 1

N/A 8 8 8 8 8 8 8 8

3 . Below is a list of possible job titles that exist within nursing departments . Please indicate how many of them are found within your facility and add any others that we have missed . 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11 . 12 . 13 . 14. 15 . 16.

Director of Nursing Associate/Assistant Director of Nursing Head Nurse Unit Manager Clinical Coordinator Charge Nurse Assessment Specialist/Coordinator Resident Care Coordinator Staff Development Nurse Quality Assurance/Infection Control Nurse Staff Nurse Off Shift Supervisor Nurse Assistant/CNA Advanced CNAs Certified Med Tech Other

No 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Yes 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1



Strategy, Structure and Performance in Nursing Facilities 4. Have any nurses in your facility attended educational seminars in supervision or staff management in the past year? If so, what position does this/these person(s) hold? (Please select all that apply) No Yes 1 . Director of Nursing 0 1 2 . Associate/Assistant Director of Nursing 0 1 3 . Unit Manager 0 1 4 . Clinical Coordinator 0 1 5 . Charge Nurse 0 1 6 . Resident Care Coordinator 0 1 7 . Staff Development Nurse 1 0 8 . Quality Assurance/Infection Control Nurse 1 0 9 . Staff Nurse 1 0 10 . Off Shift Supervisor 0 1 11 . Nurse Assistant/CNA 0 1 12 . Advanced CNAs 0 1 13 . Other 0 1 14 . Not Applicable 8

313

A LONGITUDINAL STUDY OF WORK GROUP INNOVATION : THE IMPORTANCE OF TRANSFORMATIONAL LEADERSHIP AND MORALE Elisabeth Wilson-Evered, Charmine E . J. Hartel and Matthew Neale

ABSTRACT The health care industry involves the continual introduction of new clinical interventions and technologies designed to improve patient and business outcomes. This article argues for the integration of two possible improvement strategies, namely the use of work groups to generate and implement new ideas and the development of leadership capacity to promote innovativeness in others . A longitudinal study of 45 groups of employees at a specialist metropolitan teaching hospital revealed that the adoption of transformational styles of leadership in the workplace influences innovation by producing high levels of group morale that, in turn, results in work group interventions having measurable benefit to patients.

Advances in Health Care Management, Volume 2, pages 315-340 . 2001 by Elsevier Science Ltd . ISBN : 0-7623-0802-8 315



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INTRODUCTION Determining the factors conducive to innovation is relevant for achieving both economic and human relations goals in organizations . Innovation is a significant feature of health care as the constant flow of new technologies and treatments require staff not only to adapt to changes but also to actively discover new solutions for all aspects of the healthcare system (Parker, Wubbenhorst, Young, Desai & Charns, 1999) . This paper will first provide a brief review of existing theories and prior research dealing with the leadership role in innovation, then review theory relating to innovation from which a number of hypotheses emerge. Next, we describe research conducted between 1996 and 1998 at an Australian metropolitan teaching hospital undergoing major change . Innovations, whether clinical, administrative or technological, occur frequently and are critical for successful performance in the health care industry (Kaluzny, Konrad & McLaughlin, 1995 ; Savitz, Kaluzny & Silver, 2000 ; Schneller, 1997). How those innovations are adopted, diffused and whether they accomplish benefits is less clear (Henley, Pearce, Phillips & Weir ; 1998 ; Savitz, Kaluzny, Kelly & Tew, 2000) . Although methods for the diffusion of effective clinical process innovations (Savitz et al ., 2000), quality improvement (Kaluzny, McLaughlin & Kibbe, 1995 ; McLaughlin & Kaluzny, 1997) and treatments have been developed (e .g . Cochrane Collaboration, 1979), minimal research has been conducted on the effectiveness of administrative innovations, which are the focus of this article (O'Neill, Ponder & Buchholtzas, 1998) . Administrative innovations are targeted at both structural and cultural changes in organizations (Abrahamson, 1991, 1996 ; O'Neill et al ., 1998) . Two common strategic interventions for facilitating administrative innovations focus on : (a) developing leadership capacity, and (b) devolving responsibility to the work group to find new and improved ways of working (Kirkman & Rosen, 1999) . Though often employed separately, this paper argues that both interventions are part of one overall strategy to ensure that innovations realize their potential benefits .

Leadership and Innovation Inspirational theories of leadership are most relevant for innovation, included among which are transformational or charismatic notions . These notions build upon Bums' (1978) conceptualization, which indicates that transformational leadership can have extraordinary effects on followers, lifting their performance to an unexpected level and eventually changing social systems (Bass, 1985; Conger & Kanungo, 1988 ; House, 1977, 1995) . In accordance with charismatic



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leadership theories, the altruistic intentions of the leader stimulate the creative potential of followers by enabling follower autonomy, self-direction and personal development (Bass, 1985 ; Burns ; 1978 ; Conger, 1991 ; Howell & Avolio, 1993). The leader characteristics that induce these responses in followers include expressive and non-verbal communication style . Charismatic leaders are able to formulate a vision and communicate it to others, and by doing so illustrate to others a range of new possibilities that stimulate the intellect and motivate others to achieve the vision . Transformational leaders show qualities such as a high level of self-confidence, a depth of concern for others and recognition for other's needs . Further, they have the ability to perceive other's reactions accurately and quickly (Bass, 1985 ; Singh & House, 1987) . Charismatic and transformational theories, however, focus on dyadic relationships rather than group and organizational outcomes (Shamir, Zakay, Breinin & Popper, 1998) . Indeed, there is limited theoretical explanation of the leadership of innovative groups in organizations (Guzzo, Yost, Campbell & Shea, 1993 ; Kanter, 1983 ; West, 1996) . Leadership affects a range of group effectiveness measures including profit margins, follower performance, project quality and acceptance of change (see Bass & Avolio, 1994 ; Hay & Hartel, in press ; Keller, 1992; for meta-analytic reviews see Fuller, Patterson, Hester & Stringer, 1996 ; Lowe, Kroeck & Sivasubramanian, 1996 ; Sosik, Avolio & Kahai, 1997) . Others argue against identifying any particular leadership style to promote innovation . Most noteworthy is Glassman's (1986) claim that no single leadership style can be used to apply to all situations where innovation is sought . Rather the style has to be modified according to the capacity for self-direction demonstrated by the subordinates (King, 1990), a viewpoint consistent with situational leadership theories (Yukl & Van Fleet, 1992) . Notwithstanding the latter arguments, theoretically transformational leadership is predicted to have positive effects on innovation and group process variables are implicated as mediators . Whereas leadership research is extensive, there are few studies examining intervening processes, which is necessary to enhance understanding of how to lead groups to perform (Guzzo, 1996) . An analysis of transformational leadership, transactional leadership, locus of control and support for innovation revealed that transformational leadership was associated with a higher internal locus of control and significantly and positively predicted business unit performance over a one-year interval . A study of female head nurses found a positive relationship between leader effectiveness and transformational leadership and a negative relationship with management by exception (Bycio, Allen & Hackett, 1995) . A study of individual innovation, leadership, individual problem solving style and group relations was found to affect innovative behavior (Scott & Bruce,



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1994) . Along similar lines, but at the group level of analysis, Maier (1970) proposed a set of principles for the leadership of innovative groups . After extensive laboratory studies, Maier (1970) concluded that such leaders take a primary role in managing the group process in establishing a work environment conducive to innovation . The leader's active role in the group in Maier's formulation contrasts with a more recent theory of group innovation (West, 1990) . Namely, unlike Maier, no explicit reference to leadership is made and the emphasis, like other studies, is placed on the group process . From these studies it is evident that most charismatic or transformational leadership theories incorporate comprehensive measures of individual followers' emotional and motivational responses both to the leader and the work situation (Singh & House, 1987) ; but research at the group level has been largely atheoretical (Shamir et al ., 1998) . Given the theoretical capacity of transformational leadership to induce high levels of excitement and enthusiasm in groups of followers (Berlew, 1974), the assumption can reasonably be made that followers or subordinates will experience high levels of morale (Shamir et al., 1998) . Morale has been given relatively little attention as a mediating factor in group performance, although it is a term frequently cited in the industrial relations and human resource literatures . In the military, morale has been identified as important during war time and studies show that units with high levels of cohesion, esprit de corps and morale perform better (Motowidlo & Borman, 1978 ; Solomon, Mikulinicer & Hobfill, 1986 ; Shamir, et al, 1998) . Most definitions of morale make reference to satisfaction, motivation, high energy and enthusiasm at the individual or group level (Motowidlo & Borman, 1978) . Morale tends to be future oriented and often is group referenced. Often, descriptions of morale allude to a sense of common purpose or goals (Locke, 1976), which implies group cohesion and identification (Shamir et al ., 1998) . Cohesion is frequently linked with transformational leadership and teams (Avolio, 1996 ; Carless, Mann & Wearing, 1996) or leadership of military units (Shamir et al ., 1998) . Parallels can be drawn between military and health personnel . Both are involved in work teams that are highly charged to work quickly in complex settings in which they hold responsibility for the health and well being of others . Similarly, both groups have historically similar management structures that depend on formal authority allocated through seniority and professional experience and expertise . Because the health field shares the high demand situation of active military service, it is likely that morale will also be important for performance in health care settings . Taken together these studies suggest that transformational leaders are skillful in developing followers' commitment to a vision, are able to stimulate



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excitement and enthusiasm in followers to achieve that vision, and are able to use their influence on others to improve organizational performance . Therefore, Hypothesis 1 . Transformational leadership will be directly associated with high morale in work groups . Innovation Perspective In accordance with the definition proposed by West and Farr (1990), innovation embraces both the generation and introduction of a new idea or process and, while being commonplace in one part of an organization, may be new to a particular group within that organization (West & Fan, 1990) . Innovation research largely falls into two categories, the process approach and the antecedent or situational approach (for review of innovation and creativity processes at work see Amabile and colleagues, 1983, 1987, 1988, 1996 ; Rogers, 1983, 1995 . A distinction is made between antecedent and process approaches, the former is much more common and tends to follow a variance approach and be cross sectional in design . It is concerned with identifying facilitators and inhibitors of innovation . Process research, on the other hand, is either historical or longitudinal and uses more qualitative, case study methods to study the sequence of events that constitute the process of innovation (King, 1990 ; Shroeder, Van de Ven, Scudder & Polley, 1986) . In our study, we adopted an antecedent approach as distinct from a process approach . Further, our interest was in the implementation of innovations within a work group rather than their institutionalization across the organization . Our rationale is because groups are likely to produce innovations uniquely applicable to their specialization (e .g . medical imaging, maternity wards, pharmacy, operating theatre, social work), which may not be generalizable to other units . Our approach differs from that of Savitz, Kaluzny, McLaughlin et al . (2000) in their research of clinical process innovations . These authors make reference to facilitators, inhibitors and processes and argue that either alone is inadequate to understand the way in which innovations are implemented and institutionalized . A large number of situational antecedents have been implicated in individual innovation. Examples include participative decision-making, discretionary control, role clarity, autonomy, clear objectives, intellectual stimulation and a supportive climate (Burke & Litwin, 1992 ; Burningham & West, 1995 ; Farr & Ford, 1990 ; Glassman, 1986 ; Hosking & Anderson, 1992 ; Miller & Monge, 1988 ; West, 1987) . Within this large literature, a number of studies have suggested leadership as an important precursor of innovation (Bain & Mann, 1997 ; Kanter 1983,



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1988). For example, leaders holding high expectations for team members have teams that are more successful at completing challenging assignments, which strengthens the team's potency experiences (Burpitt & Bigoness, 1997) . Leaders who are supportive, facilitative (Guastello, 1995 ; King, 1990), transformational or creative (Kanter, 1983, 1988) are considered to be effective for innovation. The leader's role is to support and motivate followers and enable them to innovate . By attending to such matters as clarifying roles, setting objectives, obtaining resources and managing relationships with others with whom the group must interact, leaders make the environment conducive to creativity (Ayoko & Hartel, 2000 ; Lovelace, 1986) . These antecedents of innovation are clearly synonymous with the characteristics and behaviors of transformational leaders (Avolio, 1996 ; Bass, 1985) . Similarly, Maier's (1970) formulation for leadership of innovative teams is congruent with the transformational paradigm . From the perspective of innovation, then, it is argued that there are conceptual similarities between impacts of transformational leadership and the antecedents of innovation . In other words, the antecedents of the innovation model juxtapose with the transformational leadership model at the level of the group process . It is theoretically clear, from both perspectives, that transformational leadership should predict innovation among subordinates by acting upon group processes rather than directly on the innovation outcome so that, Hypothesis 2 . Leadership will directly affect group process, which in turn affects innovation . That is, the relationship between leadership and innovation is indirect, being mediated by group process . Innovation in Health Care Teams West (1990) formulated a theory of group innovation arguing that a climate for innovation can be stimulated through a combination of four group processes . These processes include : support for new ideas ; clear objectives (Support for Team Objectives) ; norms for excellence (Team Orientation) ; and participative safety among group members . Theoretically, then, four social processes are required for innovation to occur . Some support for the model is reported (Anderson & West, 1996 ; Burningham & West ; 1995 ; West & Anderson, 1996; West & Farr, 1990 ; West & Wallace, 1991). Teams, defined as individuals who work interdependently to solve problems or carry out work (Hartel & Hartel, 1997 ; Manz & Sims, 1993), are fundamental to health care delivery (Berwick, 1998) . The study of the antecedents of innovation has been largely atheoretical (King, 1990), with West's (1990) group theory of innovation being the notable exception . However theories of innovation processes are more common (Amabile, 1986 ; Rogers, 1983) . An



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extensive literature exists on individual, group and organizational innovation (see Amabile, 1983 ; 1986 ; Damanpour, 1987, 1988 ; Kanter, 1988 ; Van de Ven, 1986 ; West & Farr, 1990 ; West, 1997) . Moreover, West and colleagues in the U .K . and Europe have conducted a significant proportion of innovation research on health care in the U .K . (Burningham & West, 1995 ; West & Altink, 1996 ; West & Anderson, 1996 ; West & Farr, 1990; West & Wallace, 1991) . A literature search however, produced no published studies examining the longitudinal impact of leadership on innovation in health care teams . West's (1990) model does not address the role of the leader or of group morale in the achievement of a climate for innovation . Their absence from the model is paradoxical as West and Fan's (1989) extensive literature review also argued the importance of participative leadership and cohesion for innovation . By contrast, studies of transformational leadership consistently show a link between this type of leadership and high follower morale (Shamir et al ., 1998) . Indeed, subordinates of such leaders are characterized by their effort, commitment, satisfaction, motivation, high performance ratings, high trust in their leaders, prosocial behaviors, cohesion, potency and innovation (Bass ; 1990; Bass & Avolio, 1993 ; Carless et al ., 1996 ; Howell & Avolio; 1993 ; Lowe et . al ., 1996 ; Shamir et al ., 1998 ; Yukl, 1994) . By integrating the two approaches to innovation, as we advocate, it would be expected that a group with a transformational leader will experience high morale as well as the group processes congruent with those specified in West's (1990) theory, which in turn lead to innovation . Therefore, Hypothesis 3. Work group climate processes will mediate the effects of leadership on innovation ; work group climate is comprised of team objectives ; support for new ideas ; team orientation, participative safety and work group morale . Innovation in Health Care

Health care organizations are dynamic, changing entities and in line with other industries these organizations seek to understand and improve leadership capacity among clinicians and administrators (Schneller, 1997) . Teams are seen as key to solving organizational problems and improving work processes in a climate of continuous quality improvement and innovation (Berwick, 1999 ; Parker et al., 1999 ; West, 1996) . Both leadership and teams are viewed within health care organizations as means to encourage new ideas and achieve innovations to improve business outcomes (Avolio, 1996 ; Manz & Sims, 1987 ; West, 1997) . Few studies, however, provide clear evidence of their direct relevance to innovation, which is necessary to guide strategic human resource



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interventions in the health care sector . This paper contributes to this gap by offering an integrative framework that informs strategic cultural interventions to promote innovation . Summary

The research reviewed here suggests that to achieve innovation in work groups, certain social and interactional processes are required . It is proposed that the psychological conditions for innovation are met when a group has a transformational leader, high morale and a positive team climate . It is further proposed that interventions aimed at improving innovative performance in groups must simultaneously focus on both leadership and group processes . International Perspective

A final point is made from the work reviewed to date . The majority of studies of transformational leadership have been conducted in the USA whereas the majority of studies on innovation in healthcare work groups have been conducted in the U.K . This raises questions about the generalizeability of these findings to cultures outside the respective settings . This paper contributes to answering that question by looking at the applicability of these findings in Australia. Australian researchers have begun evaluating the generalizeability of the transformational leadership paradigm to local managers (see Parry, 1996) and specific research programs are currently progressing on leadership role in the success of project and research and development teams (Bain & Mann, 1997). Apart from the increased comprehension of leadership-innovation linkages, this study contributes to understanding the utility of both theories within the Australian culture .

METHOD Data and Sample Sample

A field study was used to assess the impact of leadership on actual work group innovations and estimate the mediating role of morale . The study was conducted in one healthcare facility in order to prevent confounding effects of different organizational influences on innovation . The hospital is a publicly funded 200-bed facility (with some private beds) in northeastern Australia . It provides



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primary, secondary and tertiary level services to the local catchments area and specialized services to the entire state. The hospital has significant research and teaching responsibilities and is affiliated with the major universities recognized for health care education. The hospital, as with others world wide, has an urgent need to refocus its business, which has meant major structural and process changes . Further, it is currently subject to a major merger and rebuilding program. A significant element of the long-term corporate improvement strategy is a values-based culture program that integrates with evidence-based change management interventions . Participants surveyed were the entire staff at the metropolitan teaching hospital specializing in women's health and childbirth as well as intensive care for neonates and women's gynecological disorders . Participants were from 45 work groups, averaging in size of 11 .38 (range 3 to 102) . The groups were comprised of mostly hospital-based clinical teams and included mixed professionals and administrative staff . The majority of the members of clinical teams were from nursing but other teams such as medical, allied health and administration were included in the sample . The mean age of the sample was 40 .3 years and most (80%) were female . As members of natural work groups, the participants worked together in units such as maternity wards, research centers, physiotherapy and social work departments, medical imaging, human resources, childcare services and executive management. Each individual's data was coded for work group and department enabling grouping at the work unit level and providing the opportunity to measure and compare both longitudinal and qualitative observations . Even where the entire work group was large such as in the Neonatal Unit and Labor Ward, a much smaller number of staff worked together on a shift and rotating rosters enabled staff to become familiar with one another . The staff group was relatively stable with a small turnover rate per year and junior staff, most commonly nurses, largely represented those leaving . For the survey measures of leadership and morale, an average of 56% of the people in each work group responded in full (range 20% to 100%) . Two sets of analyses were conducted, one in which groups with a response rate of less than one third were deleted, and the other using all groups . There were no substantive differences between the results, so only results using the full data are reported . Measures Leadership and morale were measured using a survey distributed to the work groups in 1997 . The variables were measured on either 7- or 5-point likert type scales . Scores were rescaled prior to analysis to a 100 point scale, as this was



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the scale used by the hospital for reporting group level data as part of an ongoing organizational improvement initiative (Wilson-Evered & Griffin, 1997) . Qualitative data on innovations were collected from each work group in 1997 and 1998 . A separate panel rated these data in both years . Transformational Leadership This scale was derived from the Multifactor Leadership Inventory (Avolio, Bass & Jung, 1995 ; Bass & Avolio, 1997) . The score was achieved by averaging five highly correlated leadership sub-styles, where each sub-style was measured by four individual items. A total of 20 items were therefore used in creating this variable . The sub-styles were Attributed Charisma, Idealized Influence, Inspirational Motivation, Intellectual Stimulation, and Individualized Consideration . These styles emphasized positive action and support . An example item from Inspirational Motivation sub-style was, "Provides an exciting image of what is essential to consider" (0 = Not at all ; 4 = Frequently/Always) . Average scores for the sub-styles were combined to form the final scale, which had high reliability (Cronbach's alpha = 0 .95) . Morale Workplace morale is a group level construct and was derived from the Queensland Public Agency Staff Survey (Hart, Griffin, Wearing & Cooper, 1996) that was developed for use in collaborative research and continuous improvement programs in public sector agencies in Australia . Morale was measured by averaging five items that accessed positive feelings relating to work from the 1996 survey (Cronbach's alpha = 0 .85) . An example item was, "There is good team spirit in this workplace" (1 = Strongly Disagree ; 5 = Strongly Agree) . Team Climate for Innovation The Team Climate Inventory (Anderson & West, 1996), which is based on West's model of work group innovation, was used to measure team climate for innovation . The scale includes the sub-scales of Team Orientation, Support for New Ideas, Support for Team Objectives and Participative Safety. A total of 38 items were used, an example was "We have a `we are in it together' attitude" (1 = Strongly disagree ; 5 = Strongly agree) . The 38 items were averaged to provide a summary index . Reliability of the index was high (Cronbach's alpha = 0 .97) . Innovation Innovation data were obtained by asking each work group to nominate innovations that they had implemented over the previous year . Innovations were new practices, processes, services, procedures, tools, activities and the like that



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had been developed and introduced by the staff of that work area . The innovations were recorded verbatim and returned to the work group for verification. All interventions were recorded and presented in a report that was distributed to each work group . The reports were anonymous apart from the name of the particular work unit, for example a ward or departmental title. Examples of innovations are listed below : Gynaecological Outpatients : The introduction of a new community clinic, introduction of clinical pathways, "Steripeal" instruments used instead of flash sterilizing, introduction of a menopause support group . Labor Ward: The establishment of birth plans prior to admission, implementation of self-rostering, and introduction of a communication room . Maternity Ward 1 : Clinical pathways and clinical pathway audits were introduced, clinical staff were involved in recruiting in place of administrative staff, a new graduate professional development program introduced - designed by staff, new workbooks for registered nurses were introduced, Maternity Ward 2 : The introduction of patient laundry, patient phones in rooms, various in-services education sessions, e .g . beauty therapy and physiotherapy, the introduction of a memorial service with the Red Cross for patients whose baby died at less than 20 weeks gestation, providing, the introduction of evaluation systems . Perinatal Research Unit : The introduction of a Perinatal Newsletter, a questionnaire research project to evaluate how patients feel about taking part in a research project, new born follow up procedure including psychometric testing developed in collaboration with the Neonatal Unit and Lions Medical Research Group, fundraising for an ultrasound probe, an informal social activity called the `metabolic round' introduced weekly with refreshments providing the opportunity for staff to socialize, the introduction of research meetings within the hospital, a research project initiated in collaboration with universities studying Perinatal EEGs . The number of innovations for 1996 was 157 (mean = 7 : range 4-16), which increased in 1998 to 347 (mean 8 .7 : range 4-25) . The reports were then distributed to a group of health industry experts who were selected on the basis of three criteria . First, the person was not working at the hospital during that time. Second, the person was external to the hospital but part of the same state department . Third, the person was considered an authority in health care management . Expertise was also defined using specialist professional qualifications and hierarchical role in the organization as criteria . For example, Allied Health Advisor (ex-speech pathologist), Zonal Coordinator (ex-nurse), District Manager (doctor), Assistant District Manager (business



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administrator) Director of Nursing and Director of Corporate Development (economist) . The innovations were rated by this panel of six experts in terms of their benefit to patients, benefit to staff and benefit to administration following a procedure described in West and Anderson's (1996) study of innovation in top management teams . This resulted in three innovation variables, one for each target group . These ratings were made on a 5-point likert type scale, where 5 indicated a large benefit, and 1 a marginal benefit . An average score for each of these benefits was calculated for each work group . Innovation data were obtained in 1997 and 1998. Only the 1998 data are reported in this study . Group Level Data

The degree of agreement among panel members on innovation data was assessed using the rwg (j) statistic (James, Demaree & Wolf, 1993) . The average rwg (j) for each of the three measures was above the recommended cut-off of 0 .7, (Benefit to Patients : 0 .71 ; Benefit to Administration: 0.76 ; Benefit to Staff: 0 .74) . It was concluded that there was substantial agreement among panel members on the nature of the innovations that indicated appropriate group level aggregation . The same procedure was applied to the team climate variables, which yielded rwg (j) values as follows ; Team Objectives 0 .83 ; Participative Safety 0 .86 ; Support for New Ideas 0.72 ; Team Orientation 0 .74. These data indicate substantial agreement about the work climate among work group members . The rwg (j) values for the leadership styles were as follows ; Laissezfaire 0 .59 ; Contingent reward 0.63 ; Transformational 0 .85 ; Management by exception-active 0 .50; Management by exception-passive 0 .49 ; Team objectives 0 .83 ; Supportive leadership 0.72 . Group-level phenomena can be measured using individual member ratings of their groups or teams on particular attributes and these ratings can be averaged to form a group score (Campion, Papper & Medsker, 1996 ; Hyatt & Ruddy, 1997) . For the leadership and morale data, therefore, responses from employees within the one work group were averaged to provide a single score for each group . The degree of within group agreement was examined using mean rwg (j) (James, Demaree & Wolf, 1993) . Rwg (j) ranges from 0, which indicates the level of agreement expected by chance, and 1, or perfect agreement . The researchers determined that the statistic demonstrated acceptable levels of agreement for all variables . Procedure

Questionnaires were distributed in person to all work groups by a facilitator who volunteered to be a change agent and communicator for the project . There



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were three groups of change agents, strategic managers, line managers and members of task focused teams that emerged during the course of the project in order to address particular issues and tasks . Line managers were viewed as key to the project success. Therefore, they were entrusted with the accountability for communicating about the project and creating an enabling environment for staff to be both involved in the project and also to contribute to innovations. A communication assessment indicated that staff in the organization believed line managers and trusted them above all others (Wilson-Evered, 1997) . Staff members on leave from work also received a survey and were identified and contacted as part of the communication process . A substantial information and preparation process preceded the distribution in order to define team/work group and leadership and develop the survey measures in a contextually appropriate way for the institution . Although some clinicians worked across a number of teams (e.g . medical and allied health), respondents were asked to nominate the group with which they most identified and that possessed a leader to which they report . A letter of support from senior management and information about confidentiality and feedback processes were included with the survey . Facilitators and team leaders, who delivered the surveys, reminded team members to fill out their surveys on work time, insert completed surveys into supplied addressed and reply paid envelopes, seal them, and place them in a designated mail box located in a secure area . The survey was voluntary and if any employee wished not to participate they could return the blank survey in the addressed envelope .

RESULTS Simple regression was used to examine the effects of transformational leadership on morale . Following this analysis, hierarchical multiple regression was used to examine the effect of morale on the three innovation variables (Benefit to patients, benefit to staff, benefit to administration) . The hierarchical regression was structured so that innovation in 1997 was controlled when morale in 1997 was used to predict innovation in 1998 . Correlations, means and standard deviations of the variables involved in the analysis are presented in Table 1 . From this table it can be seen that morale and transformational leadership are significantly correlated at 0 .49 (p < 0 .01) . As expected, leadership is not directly correlated with the innovation variables . Hypothesis one, which stated that transformational leadership would be associated with high morale was supported . Hypothesis two was supported for the group process variable work group morale . The remaining aspects of group



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Table 1 .

Means, Standard Deviations And Correlations Between Leadership, Morale And Innovation .

Variables

Mean

SD

1 . Morale 2 . Transformational 3 . Benefit to Patients '98 4 . Benefit to Admin. '98 5 . Benefit to staff '98 6 . Benefit to Patients '97 7 . Benefit to Admin. '97 8 . Benefit to staff '97

55 .42 61 .31 2 .71

10.62 15 .29 0.64

2 .42

1.

2.

3.

4.

5.

6.

7.

8.

0 .49** 0 .56** 0.14

-

0.56

0 .16

0.14

0.52** -

2.86

0.51

0.21

0.13

0.61** 0.82** -

1 .65

0.59

0.08

0.25

0.52** 0.39*

0 .61** -

1 .54

0.55

-0.12

0 .28

0.18

0 .39*

0 .54** 0.73** -

1 .90

0.81

-0.07

0.30

0.28

0.38*

0 .52** 0.82** 0 .93** -

*p<0.05 **p<0.01 n = 45 work groups

climate (team orientation, support for new ideas, participative safety, team objectives), however, did not correlate with innovation and so are omitted from the table . In order to investigate the effects of leadership and morale on workplace innovations, innovation data from 1998 and leadership and morale data from 1997 were obtained . This strategy allows for conjecture about the direction of influence, as innovations in 1998 cannot influence morale or leadership in the previous year, whereas morale or leadership in 1997 can have an effect on innovation in the following year . Innovation in 1997 was controlled for to rule it out as a cause of high morale and transformational leadership in 1997 and high innovation in 1998 . First, the effect of leadership on morale was investigated using regression analyses . Leadership was strongly related to ; morale in 1997, accounting for 24% of the variance in morale ((3 = 0 .49, p < 0.01) . Second, the innovation variables in 1998 were regressed on morale in 1997 . In each case, the innovation data from 1997 was entered at step 1 as a control, followed by morale at step 2 (see Table 2) . Morale in 1997 was related to innovations that produced a measurable benefit to patients in 1998 (see Fig . 1) . The data from this study show that the relationship between morale and transformational leadership is approximately linear . A plot of residuals against

A Longitudinal Study of Work Group Innovation Table 2 .

Multiple Regression Results : Morale and Innovation .

DV = Benefit to Patients '98 Step 1 :

Step 2 :

329

(3

R2

Benefit to Patients '97 Benefit to Administration. '97 Benefit to Staff '97

0 .84** -0 .61 0 .16

0 .38**

Benefit to Patients '97 Benefit to Administration. '97 Benefit to Staff '97 Morale

0 .67* -0 .47 0 .21 0.41**

0 .53**

Benefit to Patients '97 Benefit to Administration. '97 Benefit to Staff '97

0 .39 0 .51 -0.37

0 .17

Benefit to Patients '97 Benefit to Administration. '97 Benefit to Staff '97 Morale

0 .32 0.49 -0 .38 -0 .05

0 .17

Benefit to Patients '97 Benefit to Administration . '97 Benefit to Staff '97

0.62** 0.63* -0 .61

0 .40**

Benefit to Patients '97 Benefit to Administration. '97 Benefit to Staff '97 Morale

0 .59* 0.66 -0.60 0 .06

0 .40**

DV = Benefit to Administration. '98 Step 1 :

Step 2:

DV = Benefit to Staff '98 Step 1 :

Step 2:

*p<0.05 **p<0 .01 n = 45 work groups

predicted residuals from regressing transformational leadership on morale shows no significant departure from normality . Further, there was no correlation between size of work group and number of innovations in each year . In sum, there was limited support for hypothesis three, which stated the work group climate will mediate the effect of leadership on innovation . Of the climate processes studied (support for new ideas ; team orientation, participative safety and work group morale), only morale emerged as influential but not as a



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6 Transfonnatio nal leadership '97

.49

Morale '97 4%

.41 - .05

Fig. 1 .

Benefit staff '98 0% Benefit patients '98 15% Benefit administration '98 0%

Model to Illustrate the Relationship Between Leadership and Actual Work Group Innovation .

mediator . Transformational leadership was associated with high morale in work

groups and high morale in workgroups was related to innovations that benefit

patients . The effect of transformational leadership on actual innovation was not significant . The findings pertain only to innovations that benefit patients, no

relationships were found between leadership and morale and the other types of

innovation (designed to benefit administration and staff) . The fact that these links were found between different surveys completed by different people in

different years overcomes the problem of common method variance (Podsakoff & Organ, 1986) .

DISCUSSION Summary and Main Findings The key finding of the research was the strong positive relationship observed between transformational leadership and morale in the same year and the link

between morale and innovations that produced a measurable benefit to patients in the subsequent year . Second, leadership was not directly related to innovation

that was judged to benefit patients, administration or staff, rather leadership indirectly affected innovation by increasing morale . Third, leadership did not

affect climate for innovation and climate for innovation did not affect actual innovation . This finding is surprising given previous research findings that indicated a predictive relationship between climate for innovation and actual

innovation (Burningham & West, 1995 ; West & Anderson ; 1996) and

transformational leadership and climate for innovation (Wilson-Evered, 1999) . It is possible that this finding is idiosyncratic of these work groups . One



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explanation for this contrary result may lie in the purpose of the hospital and hence the staff preferences . The hospital, with a largely female workforce, is a specialist hospital focused on the health issues of women and newborns . It is possible that in such an emotive workplace, the values promoting cohesion, energy and esprit de corps underpin the culture . In such a climate, morale might be held as more fundamental to work group performance than other team experiences, such as objectives, orientation and participation . Nevertheless, the study demonstrates the lasting effect of leadership on morale as an element of climate to promote actual work group innovations . Theoretical Implications The research reported here investigated the role of leadership styles on innovation from a vantage point that integrated two previously separated theoretical perspectives, leadership and innovation . Leadership theories define specific leadership styles and from this perspective we asked the question "Is transformational leadership effective in producing innovative outcomes?" There is evidence that leadership has an important impact on innovation through the behaviors of managers . In addition, a transformational leadership style was found to favor high levels of team morale leading to significantly better innovation outcomes with a marked benefit to patients . From the innovation perspective we asked, "What predicts innovation?" The predicted antecedents were transformational leadership, support for team objectives, support for new ideas, participative safety, support for team orientation and morale . The findings did not support the theory suggesting limitations in existing group theories of innovation (West, 1990). Moreover, the results indicate the need to broaden current models of group innovation to include such influences as morale and leadership style . The results suggest that transformational leadership and morale are related, and that morale may have an important effect on innovation . A central part of transformational leadership theory is that transformational leadership - particularly inspirational motivation and also intellectual stimulation and individualized consideration will be related to high morale . Certainly, the lack of these experiences among work groups would be related to low levels of morale . Bass (1985 ; 1990) argues that transformational leadership will be associated with high levels of confidence in goal achievement through inspirational motivation . A high level of confidence is likely to be related to morale . The findings, obtained in the Australian setting, may reflect international differences in experiences of leadership and innovation . The study used theoretical models developed in Britain and America . Although culturally similar these nations are separated from the Australian experience by distance



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and demographic mix. Australia has adopted parts of both cultures and developed particular aspects of its own because of its unique history and geography . Cultural differences may explain the findings that leadership exerted its effect on innovation through stimulating morale, which was not the case in the British setting. Further, transformational leadership works through morale rather than directly on innovation as implicated in American theories . The research reported here cannot discount the role of certain personality traits or other characteristics that may enable leaders to have remarkable effects upon followers . Such research, however, fails to provide theoretical links between a given trait and leadership behaviors that result in positive outcomes (Bass & Avolio, 1994 ; Barge & Hirokawa, 1989 ; Bums, 1978 ; House, 1977) . It is these links that are necessary for a better understanding of the role of leadership in innovation . The study reported here does however potentially progress the theoretical understanding of the parallelism among theories of transformational leadership and those of group innovation . Methodological Limitations The study has some methodological limitations that we note here . Initially it was believed that using natural work groups was a suitable testing ground to evaluate innovation theory . However, in attempting to explain the surprising finding in the study of no relationship between the theory of group innovation and innovation outcomes, we propose that contextual considerations might limit the generalizeability of the specific findings to other situations . Nevertheless, although some of the specific findings may be influenced by the context, the theoretical implications of the findings remain convincing . Second, the data aggregation technique used for the team climate and innovation measures could be substituted with a team consensus technique (Kirkman & Rosen, 1999) . There is some evidence that the team consensus technique is a superior predictor of group level outcomes and is more theoretically appropriate for obtaining group level data when compared with the aggregation technique (Kirkman & Rosen, 1999) . A combination of aggregate and consensus measures to evaluate group level phenomena is advisable for future research . In addition to limitations relating to the study design, a qualification is made with respect to the measure of team leadership . These data could be obtained using a group level scale or one designed to measure group leadership (Avolio, 1996) . However, this study sought opinions of employees in order to inform interventions . Obtaining reports from other sources, such as interviews and observations, could also enhance measurement of leadership and the information



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derived . While the methodology used in the study is believed to be sound, these additional approaches need to be considered in replications . Third, the affective experiences of the work group were assessed largely through perceptions of workplace morale . Given the strength of this variable in predicting innovation, future studies should add other affective measures to known group level variables that stimulate innovation (George, 1990) . Such findings could augment the theoretical framework of work group innovation with a new dimension . Finally, our research adopted an antecedent approach to the study of innovation . However, an integrated approach that examines both antecedent and processes of innovation (Savitz et al ., 2000) is recognized as superior especially in health care . Such an approach will improve understanding by providing a rich picture of the context in which innovation emerges, is supported and disseminated. Preferably, such research should also explicate antecedents and social factors influencing innovation at various stages of the innovation diffusion process . From this work new theories can be developed or current theories refined that will advance our knowledge of innovation . Further, the organization sciences have recently employed theories from the physical sciences to model organization processes such as innovation . Seeing organizations as complex adaptive systems rather than products of linear or hierarchical processes is viewed by some authors to provide major new insights into both understanding and changing organizations especially in the health care industry (Ashmos, Duchon & McDaniel, 2000 ; Zimmerman, 1999) . Implications for Management Practice First, this research found evidence for an indirect relationship between leadership and innovation but transformational leadership alone is insufficient to arouse members' innovativeness . Second, this type of leadership creates energy and involvement (high morale) among work group members . For practitioners this study suggests that a leader must concentrate on developing skills to inspire, motivate, stimulate, consider and influence others . In doing so, followers may attribute charisma to such leaders . Third, and most important of all, is the role of the transformational leader in encouraging esprit de corps, which is demonstrated in enthusiasm and high morale in the workplace . Morale seems to be the key to producing an environment in which employees perceive that their ideas are supported and subsequently introduced, implemented and tested. The findings are consistent with those of Carless and colleagues (1996) who found that the relationship between transformational leadership and team



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performance was mediated by group cohesion. These authors emphasize that team performance was affected by the leader behaviors of modeling the way and encouraging the heart (Kouzes & Posner, 1987), leader self-efficacy and the degree to which the leader establishes cohesion among group members . Their study, however, was cross sectional in design . Our research, which used a longitudinal design, also found leadership and morale to be important for team performance . The present findings, therefore, increase the confidence with which the critical role of morale in team performance can be accepted . Strategic Cultural Interventions in Health Care If it can be taken for granted that innovation is necessary and not optional, health care management must ensure the integration of interventions that promote leadership capacity and those that promote group innovation . Leadership for innovation cannot be learned in isolation from the group of subordinates and their performance . It is proposed that managers who develop effective transformational leadership qualities are equipped to partner with subordinates who have the contextual knowledge about what enables their performance . Together they can establish a climate supportive of innovation through the discovery and implementation of strategies that foster high morale. Further, it is proposed that these processes cascade through all levels of management with the executive team providing a role model for the operational teams.

CONCLUSION A significant contribution has been made to the understanding of the role of leadership in the innovative performance of work groups and the application of theories developed largely in Britain and America to the study of Australian health care management . However, the picture is far from complete . Future research must address structural factors that might impact on the leader-work group innovation process, such as tenure, size, resource allocation and group composition . Group characteristics such as length of time working together, number of innovators in the group, type of work done by the group, educational level and commitment to health care may also be important for innovation. Most important is the need to evaluate the relative influence of both affective



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and cognitive influences on innovation . This research found that the group feelings of esprit de corps explained innovation outcomes in the presence of a transformational leader more than any other group process studied . The clear message is that investing in the development of leadership behaviors that enhance work group morale is an important management strategy that can lead to the generation of innovations that benefit patients .

ACKOWLEDGMENTS Elisabeth Wilson-Evered acknowledges the assistance of Dr Patricia Dall, the University of Queensland, Alannah Rafferty, Queensland University of Technology, Keiron Byme, Griffith University and the support of Queensland Health in this research . Thanks especially to Professors Michael West and Bruce Avolio for their insightful questions, helpful comments and encouragement .

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Yukl,

THE CHALLENGE OF INTERPRETING PERFORMANCE IN HEALTH CARE : A STUDY OF INTENSIVE CARE UNITS IN NORWEGIAN HOSPITALS Inger Johanne Pettersen ABSTRACT This paper presents a study which goes beyond the process of constructing performance measures in hospital Intensive Care Units (ICUs) . The making of input-output measures in ICUs should be based on richer information than statistics normally found in the hospitals' patient administrative systems. A study of a national sample of ICUs was conducted in Norwegian hospitals to analyse the relations between abstract and more concrete measures of unit performance . We found that there are not necessarily conflicts between abstract perceptional measures and more concrete efficiency measures in high-reliability organisations like ICUs. Reliable performance requires a well-developed collective mind to form an attentive, complex system tied together by trust . To improve health care management, more attention should be directed towards the practical implications of the interrelationships between different elements of performance measures .

Advances in Health Care Management, Volume 2, pages 341-367. Copyright ® 2001 by Elsevier Science Ltd . All rights of reproduction in any form reserved . ISBN: 0-7623-0802-8 341



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INTRODUCTION Many reforms have been introduced on an international scale during the last decade which put a strong focus on management control of health care services to cut the rising hospital expenditures . Consequently, accounting information has become more visible . However, hospital managers face the complexity of health care performance and the inability of using numbers to describe this complex reality (Ballantine et al ., 1998). The main problem has been expressed as one of defining and understanding performance measures to account properly for the multi-dimensional attributes of health care . Intensive care is among the most expensive treatments given in hospitals . One day in an Intensive Care Unit (ICU) amounts to 4-6 times of the cost of the average patient-day in a hospital . ICUs are high-cost and hightechnological organisations which daily confront uncertain and disorderly, acute events . Human crisis on the edge between life and death are more usual here that in any other settings . The ambiguity of such health care services demands other performance measurements than those criteria that are based on the usual financial perspectives . In this paper we discuss the challenges of interpreting comprehensive performance measures in a national population of Intensive Care Units (ICUs) in Norwegian hospitals . To bridge the informational gap between conventional accounting measures and clinical practises, the complex world of the ICUs must be more clearly visualised through dimensions describing the experiences and evaluation of the professional caregivers . This task of bridging information from the clinical world with that of the management world does not only face the challenge of constructing relevant and multi-dimensional performance measures . The other challenge is that of interpreting these measures . In this paper the focus is on the diverse aspect of performance measurements and the understanding of the interrelationship between these different dimensions of measures . To define and understand the relevant measures of high performance in ICU settings, one has to somehow find a core definition of high performing ICUs . Due to the tasks of these hospital units, one may consider the delivery of high quality intensive care to be dependent on the joint ability of the professional teams in the ICU to translate complex problems into simple, workable solutions . In organisations such as ICUs, which are regularly confronted with unclear cues, there must take place internal, communicative processes among the professionals (the physicians and the nurses) based on high-quality standardised skills. Communication of information and adequate reaction have to occur simultaneously due to the patients' acute illness . To save time and act efficiently under these circumstances, communication should also be observed beyond



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words based on body-language, routinised experiences and co-operation in the ICU team . This is a kind of inter-subjective consensus and agreement among the professional members of the ICU teams ; a collective tacit understanding on which high quality care of acute patient situations is dependent. To characterise ICUs according to the description above, information is needed beyond figures traditionally found in the administrative systems . One such source of information is evaluation based on the subjective perceptions made by the physicians and the nurses . Another important information source is patient evaluations . Because of the severity of the patients' illness, evaluation based on surveys among patients will be a very demanding research topic . Therefore, we have chosen to concentrate on the evaluation made by the ICU professional members . Further research into this field should focus on the patient perspective . The paper is structured as follows : The first section develops the theoretical framework. Subsequent sections describe the method and present the results of the empirical analysis . The last section discusses the results and addresses implications of the findings .

THEORETICAL FRAMEWORK Management Information and Clinical Action In most European countries, including Norway, hospitals have traditionally been a part of the public sector's services. During the last decade, different reforms have been introduced on an international scale where public institutions and hospitals have taken the image of private companies (Parker & Guthrie, 1993 ; Rea, 1994 ; Ballantine et al ., 1998 ; Brunsson et al ., 1998) . These New Public Management reforms have aimed at improving efficiency and reduce the role of government (Humphrey & Olson, 1994 ; Lapsley, 1997, Olson et al ., 1998). It has been assumed that such improvements are brought about largely through the design and implementation of various accountable management techniques, like cost improvement programmes, financial management information systems, resource allocation rules and per-case payment systems . However, empirical findings suggest that changes associated with these reforms have had only a minor effect as to generating relevant information for medical staff in their decision making processes (Jones & Dewing, 1997) . A study of budgeting and cost accounting procedures in European ICUs concludes that accountable management methods like cost calculation and budgetary control seem to be rather under-developed in a majority of the 12 European countries (Jegers, 1996) . That study confirms the assumption that conventional



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accounting information and economic aspects are not integrated into professional knowledge in the ICU levels. Economic information and clinical experiences seem to be separated . Consequently, accounting information has had little relevance for clinicians in their decisions . The use of conventional versus more elaborate and broad performance measures has been a recurring theme in health care accounting in the European countries (Pollitt et al ., 1988 ; Abernethy & Stoelwinder, 1990 ; Abernethy, 1996 ; Lapsley, 1997 ; Lowe & Doolin, 1999) . Conventional accounting information creates information asymmetries because of the separation of financial and nonfinancial information, and organisational learning is then hindered. These trade-offs between various performance dimensions should in some way be reduced through more integrated and multi-dimensional performance information. Consequently, management control systems should be developed that are more multidimensional, including performance measures based on subjective, professional judgements . We have to search for more abstract measures of clinical practices to be matched with concrete accounting information . Another problem will then arise, namely how to perceive these comprehensive measures which constitute the different dimensions of performance measures . Patients as Contingency Factors In a descriptive perspective, management control systems are treated as dependent upon characteristics of the organisation's tasks and environment rather than on knowledge of input and output relations (Otley, 1980) . Accordingly, hospital tasks defined as what hospitals do for their patients in terms of treatment and care, have a fundamental influence on the functioning of internal control mechanisms . These contingency factors can be introduced as the major explanatory variable of an effective information system (Daft & Lengel, 1984 ; Daft & MacIntosh, 1978) . Consequently, accountable management systems should be created on the basis of the hospital task characteristics, which are dominated by the patient-mix (Abernethy, 1996). Traditionally, the hospitals' status as caregivers was unquestioned (Ezzamel & Willmott, 1993) . The huge expansion in the sector has, however, made it legitimate for governments to ask if resources are used efficiently and effectively. Physicians and nurses are now expected to change practices to become cost conscious . In this normative framework, action in organisations is supposed to be controlled if input-output relations are clearly defined . But this normative view on organisational action is too narrow and deterministic when output is ambiguous and difficult to measure as in hospitals, and when the production process itself is difficult to understand (Thompson, 1967 ; Ouchi,



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1977) . When using this description of ICUs as complex organisations, evaluation of performance should be grounded in the professional norms, experiences and values of the ICUs' professional teams . Thus, outcome measures will be ambiguous . According to Ouchi (1979) this situation leads to a kind of clan control in professional organisations (like hospitals) . This clan control includes dimensions of co-operation, information exchange, co-ordination and formal/informal rules of responsibility sharing . According to this argument, the bridge between accounting information and clinical action is enhanced if the professional groups - the dominating clans consider the performance measures as important in their clinical decision making . The monitoring of performance should therefore act as feedback in the clinical decision processes . The ultimate purpose of monitoring performance is to improve performance through organisational learning (Huber, 1991). "Sharing" is a key to good work-group performance (Shulman, 1996) . Fulk (1993) operationalises sharing of views in terms of statistical analysis of central tendencies of five-point rating scales, along similar lines as we do in the present empirical study . Overlapping perceptual sets are indicators of such sharing . The function of that which is shared, however, is not a property contained in the individual, but it is inherent in the social system . Hutchins's (1991) analysis suggests that systems maintain the flexible, robust action associated with mindful performance if individuals have overlapping rather then mutually exclusive task knowledge which enables people to take responsibility for all parts of the process in which they can make a contribution . This kind of work-group performance built on sharing of task knowledge and experiences is of great importance in hospitals, where co-production is the key feature which distinguishes hospitals as human service organizations from manufacturing. This means that the clients are the "raw material" in the production process (Llewellyn & Saunders, 1998) . The characteristics of the patients affect the outcome of the health care interventions . Under these circumstances, high quality care will be more difficult to realize in very complicated patient situations than in straightforward cases . In ICUs, most cases are complicated ; life and death of patients are dependent on physicians' and nurses' professional qualifications . They must be able to treat multitraume and severely injured patients without having time to consult manuals and ask for guidelines . Co-ordination of these clinical actions must be based on professional judgement and accepted medical practices developed from professional norms and values (Mintzberg, 1979) . This implies that control in ICUs is embedded not only in behavioural specifications, but more crucially, in the standardisation of norms and values inherent in education of professional workers . Following this argumentation, clinical perception of core



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quality measures should be included in performance indicators for managerial purposes. Measuring Health Care - Objective and Subjective Measures? In general, product intangibility has implications for the evaluation of service quality . Tangible information pertains to physical characteristics, verifiable and objective, whereas intangible information does not . This puts the focus on the question of objectivity and subjectivity. Information on the tangible aspects of quality may be collected using quantitative tools. Information on the intangible aspects is made available to us through the subjective perceptions of the actors involved . Consequently, perception is important for health service evaluation . Health services are ambiguous phenomena depending on the perspectives and perceptive system of the observers . The more intangible the product, the more ambiguous the perception of product quality. There are several notions of intangibility of which we find Berkeley's (in Flew, 1989) most relevant . He states that all we can perceive depends on the perceivers . A distinction is made between "real things" and "images of things" . Real things can be characterised as physical properties of an object, while images of things are more dependent on the individual perceiver. Health care services comprise both concrete qualities such as technical equipment's, medicines and so on, and more imaginary aspects like personal skills of the physicians and nurses . Consequently, evaluation of health care services emerges as a complex and reflective process based on the perceptual system, values, expectations, norms and personal experiences of individuals and groups involved in the production and consumption of the services. To summarise, one can say that due to the ambiguous nature of health care services and differences in individual perceptual systems, consensus on quality is not easy to obtain . Identifying areas of shared perceptions may indicate to what extent and what it is that is consensually validated . From there we can work out performance measures based on both concrete criteria and abstract criteria based on perceptual data . The inter-relationships between these different performance measures will be more closely studied in the next chapter . ICUs can be described as health care institutions in unique settings . Most often patients in ICUs are in such a condition that they are unable to monitor what is going on around them . Thus, patients are unable to evaluate the quality of the medical treatment processes as such, and we have to develop measures that are not directly dependent on the experiences of the clients .



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ANALYTIC FRAMEWORK Within the area of health care research a focus has been put on the studies of outcomes prediction in acute health care with the goal of tailoring medical interventions to maximize positive patient outcomes . (Quartin et al ., 2000). These studies have not included multidimensional performance measures such as those developed in this paper (see among others Kramer et al ., 2000) . In this study the overall effectiveness of the ICUs is viewed as the joint outcome of clinical, social and economic performance, a framework used in an earlier study (Zimmermann (Eds .) 1989 ; Shortell, 1991, 1992) . This American ICU-study validated three outcome-measures of unit effectiveness based on nurse and physician perceptions . These measures involved nurses' and physicians' perceptions of the absolute technical quality of care provided in the units, their judgements of the ability of the unit to meet family member needs, and the third measure involved nursing turnover in the units . The empirical results provided a comprehensive set of tested managerial practice and organizational process variables . The empirical data showed covariations between organizational variables and effectiveness based on perceptional data from physicians and nurses . However, no explicit study of the relations between different effectiveness measures was made . Our study aims at giving more insight into these relations between different kinds of performance measures . A relevant study of relations between different performance measures was done in a European ICU study (EURICUS-I) . Here the effect of organisation and management on the effectiveness and efficiency of ICUs was studied. Data on patient diagnoses procedures, severity of illness and mortality rates were collected, and a standardised mortality rate was used as a measure of ICU performance . Three indicators of non-clinical performance were chosen : burnout, morale and satisfaction . An empirical study of the relations between these different performance measures showed that the severity of illness of the patients admitted to the ICUs had no measurable impacts on the variation of the non-clinical outcome measures . However, that study did not use nurses' and physicians' perceptions of performance as supplementary performance indicators. In this paper we will present empirical data which indicate how different performance measures based on both concrete data and different perceptual sets relate to each other at the ICU level. This paper draws on the experiences of these studies mentioned above . Performance measures comprise the perception of clinical performance, the internal process quality defined as social performance and measures concerning aspects of economic performance . However, instead of using two measures of performance such as social and clinical measures, earlier research on



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performance measurements suggests six dimensions of performance (Fitzgerald, 1991) . This framework splits between two measures of financial performance and competitiveness, and four dimensions measuring service quality, flexibility, resource utilisation and innovation . Table 1 shows the measures used for evaluating the performance in the ICUs . Perception of Clinical Performance The professional training of nurses and physicians produces different interpretation systems on which evaluation of health care is based . These different patterns of cognition form different social pictures of reality, which means that different groups may have different patterns of interpretation. Physicians and nurses observe different aspects of the activity in the ICUs, and they may have different interpretations of the phenomena observed . Identities of physicians and nurses appear as different norms for their activities and as different frames for interpreting and judging them (Sahlin-Andersson, 1994) . The nurses' and physicians' perceptions of clinical performance are here used as indicators of performance evaluation . See Appendix A for the validation of questionnaire and items which constitute the empirical developed constructs and Appendix B for the empirically developed constructs that measure unit performance based on nurses' and physicians' perception . Evaluation of performance covers both nurses' and physicians' perceived clinical job satisfactions and the perceived quality of medical treatment factors Table 1 .

Measures used for Evaluation the Performance of ICUs in Norwegian Hospitals .

Dimensions of performance Service Quality

Types of measures

• Perceived quality of treatment process Perceived quality of clinical performance

Constructs

• • • • •

Volume flexibility

• Staff competence & relative number • Capacity

• • •

Resource utilisation

• Productivity

•

Job-satisfaction, nurses Job-satisfaction physicians Perceived nursing quality, nurses Perceived quality of technology physicians Perceived quality of critical incidents handling No . of ICU nurses per bed No . of physicians per bed Perceived treatment capacity physicians No . of patients per nurse Relative (total) labour cost per patient



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(medical technology), see Appendix B . Measures of perceived nursing quality include variables such as the ICU ability of informing patients' families, the availability of equipment for acute patient care and the overall quality of unit nursing . Perceived quality of medical treatment covers three dimensions : The adequacy of facilities and equipment, the perceived capacity of the unit and the perceived quality of managing critical incident situations in treatment of patients under respiratory therapy. The total concept of service quality (see Table 1) captures some dimensions of the internal process quality including different items of clinical job satisfaction for both doctors and nurses . Perceived quality of information exchange is included as a dimension of internal process quality as perceived by the nurses because of the highly interactive and co-productive nature of their work . Economic Performance measures defined as profitability and competitive performance are lacking in Norwegian hospitals . Some surrogate measures should therefore be made . We have used the framework of Fitzgerald (1991) and define volume-flexibility and resource utilisation as dimensions of performance measures instead of economic performance, see Table 1 . These constructs will, however, only contribute to indirect measures of economic performance . Volume Flexibility is defined as a perceived measure of capacity and as the relative number of qualified nurses and physicians (per ICU-bed) in the units . Resource Utilisation is measured as the number of patients per nurse and the relative labour cost per patient . The last two variables were developed from patient statistics and accounts made for each ICU in the study . Due to different methods of calculation among the ICUs, these variables are crude numbers and may contain some oversimplified measures . The size of the ICUs' mother institution (number of beds) is included as external contingency factor which can serve as explanatory factors . ICU- structure is defined as the relative number of different patient-groups in the units : The more different patient-groups, the more differentiated are the ICUs . This measure captures the degree of diversity of tasks in the units, which will increase as the patient-mix becomes more diverse .

RESEARCH SETTING AND METHODOLOGY Research Setting and Data Collection Intensive Care Units are chosen as research setting because these units represent one of the core tasks in hospitals . Acute care for patients with severe illness is the most demanding activity as far as professional skills and technical equipment



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are concerned . This activity is also the most expensive . The patients need continuos surveillance, therapy, nursing and other treatment and their safety and well-being depend on the clinical skills of each member of the professional staff. The staff have to cope with complex tasks in highly demanding, and the ability of the professionals individually and collectively to cope under extreme time pressure in acute situations is critical to performance . A descriptive survey was chosen, and data were collected as a cross-sectional, field study based on information obtained by mailed questionnaires supplied by official reports on each ICU . The questionnaire was sent to the national sample of 48 general ICUs . This sample represents all governmental hospitals in Norway, all of which are not-for-profit organisations . The sample comprises hospital bed-size from 70 up to 760, including both very small hospitals and four hospitals with an affiliation with a medical school. As such, the sample reflects general aspects of the Norwegian health care system, namely the activities of small scale hospitals . We made a follow up interview with leaders in five ICUs in order to discuss and analyse the results from the survey study. The population consists of a national sample of ICUs, which comprise ICU-nurses on all shifts working at the national sample of hospitals . The respondents were randomly selected by names on member-lists from the Norwegian Association of Intensive Care Nurses . The same method was used to administer questionnaires to the physicians, including those physicians with full- or part-time association with an ICU . The size of the ICUs does not vary much across the hospitals as the size spreads from 10-22 beds. Nurses completed a total of 300 questionnaires (68% return) and physicians completed 172 questionnaires (61 % return) . The 300 nurses included in the sample represent 44 different ICUs, and a response-rate close to 70% is accepted as input for a statistical analysis . As for the physicians, 18 of those receiving the questionnaire did not at that moment actually work in an ICU . Considering this fact, the response rate is actually far above 70% for physicians associated with an ICU . The sample as a whole is considered to be representative and unbiased since 44 of the 48 Norwegian hospitals were represented . The 4 hospitals which did not participate, were so small that they did not have separate ICUs . Measurements

Five point Likert scale items (strongly disagree to strongly agree) measuring the concepts were initially pilot-tested in the ICU at the University Hospital in Middle Norway . Information from the pilot-test and different other techniques were used to increase the reliability of the measures . First, multiple indicators



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were used with three or more questions for each concept . Questions were alternated between positively and negatively worded items . We also, when possible, used existing measures with proven reliability . Convergent and discriminant validities were analysed through factor analysis (principle components with varimax rotation) . The items measuring the constructs were factor analysed to find if there were internally consistent scales . The rotated factor loadings for the scales are shown in Appendix A, Table A and B . We have only included factors that are valid on the aggregated, unit level . We used at cut-off criterion of 0 .40 and eigenvalues of 1 or above (Hair et al ., 1992) . Scales not meeting these criterions were excluded from the analysis . Items loading highly on two factors were also excluded . Thus we got some factors with only two items . Cronbach's alpha was used to measure the internal consistency of each scale (Hair et al ., 1992) . The results of the measurement construction are shown in Appendix A, Table C . There are some discrepancies between the tables shown in Table A and B on the factor loadings and the descriptive statistics in Table C due to the fact that items and constructs which did not pass the statistical tests, were excluded . The internal consistency reliabilities (alpha coefficients) of scales range from 0 .55 to 80 . Although some reliabilities are relatively low, they meet Nunnally's (1978) suggestions that constructs in an early stage of research development may have reliabilities as low as 0 .50 and still be viewed as acceptable . All scales not meeting a 0 .55 as a cut-off criterion, were excluded . The commonly accepted cut-off criterion is 0 .70 . But this is noticeably higher than most reported studies in health care organisations up to date (Shortell et al ., 1991 ; Abernethy, 1996) . Our testing of concepts and scales points out potentials for further refinement of variables and measures . The conclusion so far is that scales form internally consistent factors, which are theoretically and empirically acceptable . When correlating the individual response data for physicians and nurses, we found supplementary information strengthening the convergent and divergent validity of scales for the individual response data . Aggregating Data to Unit Level

The unit of analysis in this study is the unit (department) and not the individual physician and nurse . We study the characteristics of ICUs, and we must use the responses obtained from individuals to describe the unit levels . Therefore, the individual responses must be aggregated to the unit level in which the respondents are members . This is done also because measures of volume flexibility and resource utilisation are characteristics on unit level only . We obtained a total of 472 individual responses (from physicians and nurses) from



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44 different ICUs. We used a statistical criterion to judge if the individual response for each scale was a good approximation for the unit as a whole, permitting the individual responses to be aggregated to the unit level (Shortell et al ., 1991) . We compared the variance of the within-unit with between-unit responses for all scales across all 44 units, see Table D in Appendix A . The results shown this table indicate that the variability within ICUs is significantly less (p < 0.05) than the variability between units for all the scales . This suggests that the mean of the individual responses is a good approximation for each unit . However, it should be noted that this statistical procedure may overestimate the significance of the results, since all variability within units is put equal to zero. We have only included dimensions where variability within ICUs is significantly less than variability between ICUs . Several items from the questionnaires are therefore excluded of statistical reasons . The mean of individual responses for each scale is an approximation for the unit as a total, and we aggregated the individual responses to unit level constructs. Based on statistical criteria we have aggregated the data to cover the nurses' and physicians' perceptual sets . Thus, we have developed a kind of professional unit average for physicians and nurses . The correlation matrix in Table 2 shows the aggregated data and evidences the convergent and discriminant validity on unit level . The empirically developed constructs on the perceptual sets for nurses and physicians have been tested on validity and reliability as mentioned above . As can be seen in Table 2, we have collected data on the relative number of nurses and physicians in the unit, the structure of the units defined as the organisational model, hospital size and measures on volume flexibility and resource utilization . All measures are on unit level .

DISCUSSION Findings

In this study we have defined both concrete and abstract measures of performance . which constitute patterns of correlations between different aspects of performance . From Table 2 it can be found that there are patterns of significant overlap between these scales . Some ICUs are units where perceived quality of treatment process is high defined according to nurses' perception of job-satisfaction, and perceived quality of clinical performance is high defined as nurses' perception of nursing quality and the physicians' perception of critical incidents handling . And furthermore : These units also have high degree of volume flexibility measured as number of physicians per bed and high level of



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productivity measured as number of patients per ICU nurse . We also notice that the dimension describing nurses' perception of clinical job satisfaction correlates significantly positive with vital elements of other performance criteria. It is reasonable to define these units as high performing ICUs as having high values and distinct patterns of positive con elation between the abstract performance measures and the concrete measures of volume flexibility and productivity . A summary of the statistical findings is given below, and the results are more thoroughly discussed in the next section of the paper.

• There is significant and positive correlation between the nurses' perceived

•

• •

•

clinical job-satisfaction and the physicians' perceived clinical job-satisfaction, which reveals consistency of perception based on measures across professional groups . Accordingly, different professionals (nurses and physicians) have some normative and common platforms which can predict reliable measures of social performance in the ICUs . It is reasonable to assume that these overlapping perceptual sets based on nurses' and physicians' considerations, are indicators of relations that are inter-subjectively reliable as to factors which are most vital in producing high quality health care . The patterns of these perceptual sets form some consistent overlapping areas where a common evaluation of interpretations and factors could take place . This means that the group members have a sort of collective tacit understanding of the situation at hand across professional groups . The constructs measuring clinical job-satisfaction include information exchange as a core element, which indicates that interaction between medical staff is one important characteristic of high performing ICUs . There is a positive and significant correlation between nurses' perception of clinical job-satisfaction and their perception of nursing quality . This implies that there is internal consistency of scales within professional groups . The same internal consistency scales holds for the physicians . There is a positive and significant correlation between the nurses' perceived clinical job satisfaction and physicians' perceived clinical performance measured as ability of managing crises (critical incidents) . There is positive and significant correlation between volume flexibility, defined as staff competence (number of trained physicians in the unit), and nurses' perceived nursing quality . In other words, we find that volume flexibility is positively correlated with group-perceptions of quality in situations of high uncertainty and stress . There is a negative correlation between the number of physicians and perception of adequate capacity in the units, and the same holds for the number



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of physicians and unit size. On the other hand, nurses perceive that the bigger the hospital, the better the capacity of the unit and the better the clinical jobsatisfaction . Thus, the same context is perceived differently because the context sends different messages to physicians and nurses . Between-group dependencies are asymmetrical, and this influences the group perceptions . What nurses perceive as comforting might be stressful on the doctors and vice versa . Subsequently, different professional groups can develop a different collective understanding of similar elements of a composite performance measure . • We find a positive and significant correlation between nurses' perceived clinical job-satisfaction and resource utilization measured as number of patients per nurse. This is a crude productivity measure . However, it turns out that high turnover of patients (not adjusted for severity of illness) in an ICU is positively related to job satisfaction . • There is a positive and significant correlation between physicians' perception of medical technology quality (technological sophistication) and both elements of resource utilisation (number of patients per nurse and low labour cost per professional working hour in ICUs) . Discussion As have been shown above, there are significant patterns of correlations between different perceptual sets (nurses and physicians) and within perceptual sets (nurses and physicians separately) in the interpretation of complex performance measures . There are also significant patterns of correlations between abstract and concrete measures of ICU performance . These patterns of correlations should be more thoroughly studied in order to develop management control systems that monitor performance more adequately . The measures of volume flexibility and productivity are surrogate measures, and the study does not include patient outcome measures adjusted for mortality rates or severity of illness . Future studies will benefit from having more comprehensive measures on these dimensions. The measures based on perceptual data are, however, validated and can be used to gain insight into the interrelationship with more concrete measures such as volume flexibility, resource utilisation and external factors . Nurse-specific perceptions of high-quality units are (not surprisingly) associated with nurses' assumption that the work with patients in the unit is interesting and satisfying . At the same time, quality of care and nursing is given a high, positive rating in the unit . More importantly, the nurses' responses are based on positive ratings on various aspects of the informational and



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communicational standards of the unit. These standards comprise elements such as the physicians being easily reached for consultation, the physicians are giving good information about patient status, that the ICU generally give adequate information to other clinics about relevant patient situations and that the ICU is good at informing the patients' families . The physicians' specific perceptions are strongly related to the quality of medical treatment. Perceptions are also related to their professional working conditions with regard to professional as well as technological standards in the units . And, notably, when they perceive the quality of medical treatment to be high, they also feel that the unit is capable of coping with critical incident situations . To understand these statistical correlations, one needs to capture the logic of organisational performance in contexts where situations require nearly continuous operational reliability (Weick & Roberts, 1995) . Consequently, these are high reliability organisations . ICUs are continuously working with acute situations, and the units face an ultimate claim to succeed in coping with emergency conditions . The key to success under these conditions is that all elements of the social and technological systems in the ICUs are adequately interrelated . We have found some patterns of these important interrelations between the perceptual sets of the professionals and the more concrete measures (volume flexibility and resource utilisation) . Weick and Roberts (1995) have introduced the concept of collective mind to describe the ability to increase organizational comprehension and decrease organizational errors in settings like ICUs . The notion of collective mind is similar to Asby's concept of connectance in social systems (Ashby, 1970) . Actors in organisations construct their actions, understand that the system consists of connected actions by themselves and others, and they interrelate their actions within the system. A well-developed organizational mind which is capable of reliable performance, is according to Weick and Robert's (1995), thoroughly social . It is built of ongoing interrelating and dense interrelations . Consequently, interpersonal skills are a necessity for success in coping with emergencies . According to our data, we find that overlapping perceptual sets (a kind of collective minds) are positively correlated both with abstract measures of performance and the more concrete measures of volume flexibility and productivity, which are measures, although very crude measures, of performance . When discussing high performance in ICUs, performance can be either high or low, productive or unproductive, adequate or inadequate and careful or careless . "The concept of mind allows us to talk about careful versus careless performance, not just performance that is productive or unproductive" (Weick



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& Roberts, 1995, 353) . This shift in focus introduces the language of care as more suited to systems concerned with high-reliability services like acute care . On the other hand, high-efficiency organisations typically use more low-hazard technologies, their operations are carried out at lower level of intensity, objectives of the activity are unambiguous and outputs are measurable . Using Weick and Robert's concept, these organisations can stay more simple-minded and reach high performance . Organisations concerned with reliability enact aggregate mental processes that are more fully developed than those found in organisations concerned with efficiency . Accordingly, performance criteria should be developed that capture those aspects of performance associated with reliability rather than efficiency in ICUs . These arguments can also be applied for other units in hospitals, depending on the degree of acute incidents in the clinical treatment processes . Theoretical Reformulation Our study has revealed some patterns of shared perception based on average measures across professional groups in the ICUs . However, an understanding should be developed as to why such comprehensive measures are important in these settings . One main characteristics of high performing ICUs is high frequency of interaction between the professional staff. It can be recapitulated here that the constructs measuring clinical job satisfaction include information exchange as core elements of interaction . We have used the concept of collective mind to capture this social construction of interpersonal skills in high-performing ICUs. Consequently, high frequency of interaction among medical staff is one important characteristic of high-performing ICUs . Following Moscovici (1988) social cognition should be studied by focusing on interaction. This interactive view of cognitive and social aspects points at social representation as products of a social and cognitive elaboration of reality which are worked out during processes of interaction (Allard-Poesi, 1998) . In situations characterised by unexpected changes, which is the case for most ICUs, organisational processes like the ability of learning and immediate action are of highest importance . This ability is developed during periods of problem solving through interaction and cooperation, often under high time pressure where the work groups have to deal with tasks demanding high reliability . This is according to Doise and Moscovici (1994) a question of social influence in group processes . Depending on the various socio-cognitive dynamics between group members, and especially on the type of conflict created during interaction, the kind of participate mood will affect the form of consensus reached . Consensus



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can - among several pathways - also be reached because of conformity or conflict avoidance . Such consensus can lead to a "group and non-critical thinking" ; "a shared illusion of unanimity that comes from the self-censure of everybody and that increases because of the assumption that `who doesn't disagree agrees' " (Doise & Moscovici, 1994, 215) . In ICUs these decision making processes and interactions have to be of high-quality because consensus must be reached within short time limits . Thus, if all professionals in the ICU express themselves in the group, influence processes will not average the members initial positions . A collective result can then be produced by true collaboration between the group members . Doise and Moscovici (1994) content that this collective result tends to be close to the values the group members initially shared and tends to be more extreme than that produced by an average of the initial individual positions . This phenomenon of polarisation has been found as a general process in the field of risk taking (Allard-Poesi, 1998, 404), which is a field which has common traits with decision making in ICUs . These different socio-cognitive processes like conformity, normalization and polarization in groups are not captured by our study which has used a kind of averaging research method on unit level . However, our study have revealed some of the complexity of understanding collective representation and performance in high reliability organisations . To do further research into this field, in-depth analysis and field observations seem to be relevant alternatives . We have found in this study that there are not necessarily conflicts between abstract perceptional measures and more concrete efficiency measures in high-reliability organisations like ICUs . One main lesson which can be drawn from this study, is that reliable performance in these organisations requires a well-developed collective mind to form an attentive, complex system tied together by trust . To improve health care management, more attention should be directed towards the elicitation of practical implications of the interrelationships between different elements of performance . Our data indicate that there is a connection between perceived performance and the degree of informational integration in the ICUs . However, in order to get at the fabric of these aspects of ICUfunctioning, qualitative methods are needed that are able to capture the unique qualities of the social-cognitive order of the hospital context. Group-perceptions and the formation of social cognition may be one starting point for such studies . Making sense of the patterns of empirically developed correlations and the patterns of overlapping elements may assist us in the effort to improve the quality of patient care . In this paper we have strictly focused on performance



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measures which are self-reported by the care providers . A primary focus today is customer/client/patient-centric evaluations and outcome measurement. To develop our understanding in this field, a complementary study should be done to evaluate how the users of the ICU perceive performance . The combination of such two studies would be powerful to evaluate not only the internal (care-provider focused) perceptions of quality but also the external (patient-focused) view .

ACKNOWLEDGMENTS I thank my colleague Arnulf Hauan and two anonymous reviewers for helpful comments to earlier drafts of this paper .

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APPENDIX A Table A . Validation of Concepts . Varimax Rotated Factor Loadings for the Perceived Unit Performance Scales. Nurses' Responses . N = 300. Only Factors that are Valid on Aggregated Unit Level . Scales Number

FACTOR 1

VAR25F

0 .77

VAR35

0 .64

VAR34

0 .49

VAR25G

0 .46

Unit physicians are easily reached for consultation Physicians give adequate information about patients The unit gives adequate info . To other clinics about patients Unit work is stimulating and developing

Clinic work satisfaction

FACTOR 2

Nursing quality

VAR39

0.75

VAR36

0 .67

Equipment for emergency is easily reached The unit is good at informing patients' families VAR41

Quality of care has good rating in the unit, variance explained Cumulative explained variance % Eigenvalue

0.59

22,1

9,3

22,1

31 .4

2,88

1,21



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INGER JOHANNE PETI'ERSEN

Table B . Validation of concepts . Varimax Rotated Factor Loadings For Perceived Unit Performance Scales . Physician Responses . N = 172 . Only Factors That are Valid on Aggregated Unit Level . FACTOR I Clinical job satisfaction VAR24 Unit co-operation

0.83

VAR25 Work is developing

0.76

VAR22 Responsibility is Clearly defined

0.54

VAR13 Routines for clearing Out patients

0.53

VAR26 Quality of medical Treatment

0.49

VAR23 Cooperation nurses - physicians

0.43

FACTOR 2 Capacity

VAR11 Treatment capacity of ICU

0 .77

VAR6 Exchange of patients from ICU to Mother clinic who still need Intensive care

0 .75

VAR12 The number of patients returning from Mother clinics with worsened status

0 .74

FACTOR 3 Med . Techn . quality

VAR 18 Equipment for emergencies is Easily reached

0.76

VAR19 Quality of medical-technological Equipment

0.73

VAR21 Routines for daily control of equipment

0.72

FACTOR 4 Critical incidents



The Challenge of Interpreting Performance in Health Care

365

Table B . Continued FACTOR I Clinical job satisfaction

FACTOR 2 Capacity

FACTOR 3 Med. Techn . quality

FACTOR 4 Critical incidents

VAR9 Staff's co-ordination in situations where Treatment has to be terminated

0 .84

VAR8 Unit routines to handle critical situations

0 .84

% Variance explained Cumulative explained variance% Eigenvalue

Table C.

18,0

9,0

6,9

6,1

18,0 4,32

27,0 2,17

33,0 1,67

39,1 1,47

Descriptive Statistics and Cronbach's Alpha for Scales .

PERCEIVED UNIT PERFORMANCE - NURSES' RESPONSES Scale Perceived clinical job satisfaction - nurses Perceived quality of critical incidents Perceived quality of nursing

No of items

Cronbach's ALFA

Mean

SD

CASE(N)

4

4 .01

0.71

299

0.58

2

3 .11

1 .02

300

0.80

3

4.25

0.61

300

0.55

PERCEIVED UNIT PERFORMANCE - PHYSICIANS' RESPONSES Scale Perceived clinical job satisfaction, physicians Capacity Quality of technicalmedical equipment Perceived quality of critical incidents

No of items

mean

ST.DEV

CASE(N)

Cronbach's ALFA

5 3

4 .09 3 .02

0.68 0.85

170 171

0.73 0 .70

3

3 .94

0.81

171

0 .70

2

3 .60

0.97

171

0.76

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INGER JOHANNE PETTERSEN

Table D .

Analyses of Variance of Scales .

SCALES

Eta squ.

UNIT PERFORMANCE Perceived clinical job satisfaction - nurses Perceived quality of nursing Perceived medical jobsatisfaction, physicians Capacity of unit treatment Quality of medicaltechnological treatment Quality of critical incidentsphysicians

F

P

0.34

2 .86

0 .00

0.24

1 .66

0 .00

0.43

2 .18

0 .00

0.63

4.95

0.00

0.45

2.35

0.00

0.33

1 .45

0.05

APPENDIX B .

Physicians are easily reached for consultation

I

Physicians give good information about patient Perceived clinical The ICU generally gives adequate information to other clinics about relevant patient situations

satisfaction, nurses

Patientwork in this unit is generally very interesting

Perceived unit performance,

Equipment for acute patient care, is easily reached within the unit

nurses' responses

The ICU is good at informing the patients' families

Perceived quality o nursing in the unit

The quality of care and nursing is given a good rating within the unit

Fig. A .

The Empirically Developed Constructs that Measure Unit Performance based on Nurses' perception.



The Challenge of Interpreting Performance in Health Care

367

Whether the unit is a good place to work The work in the unit is interesting and developing The professional responsibility of the physicians is clearly defined in the unit

Perceived quality of medical treatment

The status of quality within medical treatment within the unit Co-operation between the physicians and nurses within the unit The perceived unit treatment capacity The number of patients who have to be moved into other units although they still need intensive care

Perceived capacity of treatment

The number of patients who are returned back to the unit with worsened status

Perceived unit performance, physicians' perceptual set

Medical equipment for emergency situations are easily reached The standard of medical/technological equipment

Perceived quality of medical-technological equipment

is-

There are adequate routines for daily control of medical-technological equi meet The degree of consensus and co-operation among unit members when terminating treatment of patients (clinical death) Unit routines end practices in such situations

Fig. B .

r

F

Coping with critical incidents situations

Empirically Developed Constructs that Measure Unit Performance Based on Physicians' Perception .