Organizational turnaround emerging lessons from a study of failing health care providers in england
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Organizational Turnaround: emerging lessons from a study of ‘failing’ health care providers in England. Work in progress Naomi Fulop London School Of Hygiene & Tropical Medicine. Acknowledgements. Project team: Fiona Scheibl Nigel Edwards Gerasimos Protopsaltis

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Organizational turnaround emerging lessons from a study of failing health care providers in england

Organizational Turnaround:emerging lessons from a study of ‘failing’ health care providers in England

Work in progress

Naomi Fulop

London School Of Hygiene & Tropical Medicine


Acknowledgements
Acknowledgements

Project team:

Fiona Scheibl

Nigel Edwards

Gerasimos Protopsaltis

Funded by: NHS Confederation


Outline of seminar
Outline of Seminar

  • Policy context

  • What do we know from the literature?

  • Study aims

  • Methods

  • Findings

  • Some lessons/policy implications

  • Conceptual/methodological issues


Policy context
Policy context

  • New public management – ideas from management of private sector transplanted to management of public sector

  • Increasing focus on performance in public sector

  • Performance assessment developed in education, health, local government in England & elsewhere


The english health care context
The English health care context

  • A National Health Service (NHS)

  • Funded out of taxation

  • Mainly publicly provided

  • Elected politicians provide overall direction

  • Very centralised and hierarchical - tension with decentralisation tendencies


A star rating system 1
A star rating system (1)

  • Performance assessment system introduced in NHS in 2001

  • Health care organizations graded – ‘star rating’ system


Star rating system 2
Star rating system (2)

  • Three stars - highest levels of performance

  • Two stars - performing well overall, but have not quite reached the same consistently high standards

  • One star - some cause for concern regarding particular areas of performance

  • Zero stars - poorest levels of performance against the indicators or little progress in implementing clinical governance


What are ratings based on
What are ratings based on?

Key targets and indicators – examples

  • A&E emergency admission waits (12 hours)

  • cancelled operations not admitted within 28 days

  • financial management

  • hospital cleanliness

  • death within 30 days of selected surgical procedures

  • emergency readmission to hospital following discharge

  • Clinical governance (CHI) reviews


Publicly available source chi website 2003 ratings

Barking, Havering and Redbridge Hospitals NHS Trust

**

Summary

Trust report

Barnet and Chase Farm Hospitals NHS Trust

*

Summary

Trust report

Barnsley District General Hospital NHS Trust

***

Summary

Trust report

Barts and The London NHS Trust

*

Summary

Trust report

Basildon and Thurrock University Hospitals NHS Trust

***

Summary

Trust report

Bedford Hospitals NHS Trust

**

Summary

Trust report

Publicly availablesource: CHI website (2003 ratings)


Policy responses
Policy responses

  • Concept of ‘failing’ health care organization

  • Franchising policy – ‘heroic leadership’ model

  • Development of more sophisticated interventions – Modernisation Agency

  • Three star organisations get ‘earned autonomy’ (Foundation hospitals)


Why were we interested
Why were we interested?

  • Mergers study – unstated driver to deal with managerial deficits…..

  • Franchising policy – concern about ‘heroic leadership’ model

  • Personal interest in ‘failure’


What do we know from the literature 1
What do we know from the literature? (1)

  • Quite extensive literature on turnaround in private sector

  • Very little literature on turnaround in public sector


What do we know from the literature 2
What do we know from the literature? (2)

  • Approx. 25-30 studies on turnaround in private sector

  • Explain failure in two main ways:

    • a) changes in external environment

    • b) inertia within the organisation

  • Dominant model of successful turnaround

    • Retrenchment (withdraw from unprofitable sectors)

    • Strategic change (new markets or new products in existing markets)

    • Leadership change (CEO and/or senior management team)

      Source: Skelcher et al (2003)


How helpful is this model of turnaround for public sector organisations
How helpful is this model of turnaround for public sector organisations?

  • Retrenchment – can hospitals stop providing certain services? (but can contract out)

  • Strategic change – can’t easily take over another provider (but can redesign processes)

  • Leadership change – is possible in NHS and focus has been on this

  • Turnaround in public sector, e.g. NHS is constrained by context – markers for ‘success’ and ‘failure’ more contested

    Source: Skelcher, 2003


Study objectives
Study objectives organisations?

  • Draw lessons from the experience of changing the management of ‘failing’ organisations

  • Specifically exploring:

    • Markers for ‘failure’

    • Responses to turnaround

    • Strategies for turnaround

    • Process/Impact of these strategies


Methods
Methods organisations?

  • Phase 1 (2002): case studies of 5 hospitals

    • Perceived to be ‘failing’

    • New management brought in

    • At different stages of turnaround

  • Phase 2 (2003): followed up 4/5 from phase 1 plus four added:

    • Zero star (or ‘at risk’)

    • Management replaced

    • Support from Modernisation Agency


Data collection and analysis
Data collection and analysis organisations?

  • Semi-structured interviews with 106 internal and external stakeholders across 9 hospitals

  • Analysis of national and local media coverage

  • Changes in star ratings over time

  • Analysis within and between case studies


Markers for failure
Markers For Failure organisations?

  • Poor performance on key targets e.g. waiting lists

  • Financial deficits

  • Major developments – ‘eyes off the ball’ e.g. merger, redevelopment (PFI)

  • Stagnating management team

  • Lack of clear management structures/processes

  • Lack of engagement of clinicians in management of services

  • Poor public image e.g. relations with media and external stakeholders

  • Low staff morale


Markers and causes of failure

Markers organisations?

Secondary causes

- “eyes off the ball”

- poor relationships with external stakeholders

- financial deficits

INTERNAL

EXTERNAL

- poor financial control

- increase in competition

- changes in Govt policy

- lack of HRM strategies

- lack of leadership

Organisational

- introspection

- arrogance

- trauma

Primary Causes

Markers and causes of failure


Responses to failure
Responses to failure organisations?

Health authorities (HAs) and Regional Offices (ROs) played key roles in turnaround situations.

E.g. RO ‘encouraged’ chairman to resign and provided additional financial support to in-coming team (Trust E)

But

When RO or HA intervened – should they have intervened earlier? (‘The dangers of delay’ McKiernan, 2002)


The dangers of delay organisations?

  • I can’t quite see why they weren’t making change almost a year earlier. Because all the signs were there in 1999 that things were going badly wrong, yet they waited another year until there was almost complete collapse, before action was taken. I do think regions, as then, and in those still evolving days of the performance management system, was still perhaps not being helped totally by their indicators, or their intelligence” (Senior manager, Trust C).


Turnaround strategies 1
Turnaround strategies (1) organisations?

3 types of management change:

  • Merger of ‘failing’ trust with ‘successful’

    one (1)

  • Chief Executive franchise (2)

  • Replacement of entire executive teams (6)


Turnaround strategies 2
Turnaround strategies (2) organisations?

  • Internal reorganisation

    • Formally and informally involving clinicians

    • Introduction of systems/processes/protocols

  • Improving operational performance

  • Focus on human resources

  • Financial analysis and control

  • Attempts to change ‘organisational culture’

  • External relations


Strategies for turnaround
Strategies For Turnaround organisations?

  • Involving staff

    • “There was this big drive to improve communications, involve all the staff in what was going on, and make sure they had an opportunity to influence what was going on” (Middle manager, Trust C).

  • Engaging Clinicians

    • “[The new Chief Executive] managed to get an understanding over to the clinicians that you have to meet the national targets. They were not negotiable. And if you didn’t meet them, you were stuffed, basically. You’d get nothing. You’d get no money, you’d have major problems here. And there’d be no new development. And eventually that gradually came home” (Senior manager, Trust C).


Strategies for turnaround1
Strategies For Turnaround organisations?

  • Focus on operational performance

    • “Our focus, because of the situation we were in, was very much on waiting lists, waiting times, turning the culture of the organisation and the focus of the organisation. So we took an approach that was very much about process redesign, and involving people who were involved in the front line care, and also the administrative processes in how we could improve things, make things better”(Senior manager, Trust B).


Impact of turnaround strategies
Impact of turnaround strategies organisations?

  • Patient care

  • Staff

  • Organisational culture

  • Public image/external relations

  • Star ratings


Impact of turnaround strategies1
Impact of turnaround strategies organisations?

On patient care

  • How much ‘failure’ was about quality of clinical care?

  • Focus on operational (esp. access) targets led to improvements


Impact of turnaround strategies2
Impact of turnaround strategies organisations?

On Staff

  • ‘Honeymoon period’ – opportunity for change

  • Initial dip in morale because loyalty to outgoing management – destabilising

  • Only affects staff close to top of the hierarchy?


Process impact of turnaround strategies
Process/Impact Of Turnaround Strategies organisations?

On staff

  • “[The staff] knew what the problems were. We started on a winner really, although it was an awful mess, the thing was, it couldn’t get worse. And so you’ve got credibility and goodwill. You’ve then got to demonstrate your credibility. You’ve got to win people round, haven’t you. Because good will does run out. So you’ve actually got to start to deliver some things fairly quickly” (Senior manager, Trust C).

  • “Initially, I think there was a dip in morale, because certain staff had been in the cluster a very long time, and I think they perceived that the early retirement of the previous chief executivemeant that there was some concern”(Senior manager, Trust A).


Process impact of turnaround strategies1
Process/Impact Of Turnaround Strategies organisations?

Conflicts / Tensions

  • “A lot of conflict between [the new Chief Executive], and a lot of the consultants, who were very loyal to [the previous Chief Executive], who had been there for a very long time, and useless though he was, he had a very loyal following of consultants, who felt that the way he’d been got rid of was unfair, and immoral and so on” (Senior manager, Trust E).

  • “But there was [conflict] with acceptability of individuals, you know, with clinicians, they didn’t like the look of me, or [the other execs], sometimes based on their experience of you, and that’s fair enough, if they don’t like you because they don’t like what you represent, and what you said, and all the rest of it, but if they don’t like you on principle, it’s a bit silly for grown-ups. There was lots of that stuff. It’s died off now, largely” (Senior manager, Trust D).


Process impact of turnaround strategies2
Process/Impact Of Turnaround Strategies organisations?

On organisational culture

  • Attempts to Move:

    • From ‘can’t do’ to ‘can do’

    • From ‘closed’ to ‘open’

  • Some successes reported


Impact of turnaround strategies3
Impact of turnaround strategies organisations?

On organisational culture

  • “it’s a can-do culture now, it’s not tired, it’s involved, it’s got pride. Stuff like, we’re in the middle of nurses’ week, I mean two years ago, you’d never have had a whole week of events which are really well attended, and quite innovative, and all sorts of things” (Senior manager, Trust B).

  • “There were huge clashes of organisational culture. I mean the fact that we came in, wanting them to work, to pay attention to government guidance, this is not something [the trust] had ever done. The fact that we have provided a much more open culture, some have thoroughly enjoyed it, others are appalled because it also means that some of their data, some of their poor practices are being reported and commented upon” (Senior manager, Trust E).


Impact of turnaround strategies4
Impact of turnaround strategies organisations?

On public image/external relations

  • Great improvements reported

    • With local MPs

    • With local media

    • With other external stakeholders


Impact of turnaround strategies5
Impact of turnaround strategies organisations?

  • In short term, some showed improvements in operational performance

  • Takes longer to address organisational culture issues

  • Two groups of hospitals:

    • Group 1 (5): transformed from ‘failing’ to ‘self-regulating’

    • Group 2 (4): stagnating or ‘permanently failing’


Impact of turnaround strategies6
Impact Of Turnaround Strategies? organisations?

A BCDE

New Management Dec 99Feb 01Dec 99April 99April 01

Star Rating 01 00*** **0

Star Rating 02 ***** **

Star Rating 03 * *** ** 0


Impact of turnaround strategies7
Impact Of Turnaround Strategies? organisations?

FGHI

New ManagementMar 01Jun 02Jan 0201

Star Rating 01 **0****

Star Rating 02 *000

Star Rating 03 *0 ** **


Resources required for turnaround
Resources required for turnaround organisations?

  • Temporal (time, stability)

  • Leadership skills

    • Ability to develop change agenda

    • Ability to grasp detail required to deliver core targets

  • External support

  • Financial (access to funding to achieve ‘quick wins’)


Lessons for management policy
Lessons for management/policy organisations?

  • Skills for identifying ‘at risk’ organisations

  • Resources required for turnaround (esp. time and leadership)

  • Diagnose the problem

  • Establish clear leadership

  • Secure engagement of clinical staff

  • Work with external stakeholders

  • Right people in right posts

  • Use internal reward systems

  • Use external support systems


Conceptual methodological issues
Conceptual/methodological issues organisations?

  • Definitions of ‘failure’ and ‘success’

  • Interaction between processes and ‘outcomes’ i.e. impact of being labelled zero star

  • Comparisons of turnaround in NHS with other public sector organizations

  • Comparison of ‘failing’ hospitals with more successful ones – what’s the best comparator?


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