Edgeware - Tales

 

"Managing a Living Thing"

Fostering a merger of two physician organizations and a natural view of organizations

A Story from Richard Weinberg, Vice President, Network Development, Atlantic Health System
Told by: Ken Baskin, Brenda Zimmerman and Curt Lindberg

Illustration of:

  • complexity lens
  • creating conditions for emergence
  • min specs
  • clockware/ swarmware


Principles
Complexity lens

 

 

"As a physician, I learned to think from a biological perspective," notes Richard Weinberg, "When I went into management, traditional organizational theory seemed artificial, foreign to my experience.

"So when I started studying complexity theory through the VHA project last year (1996), I was stunned. Here was a way of thinking about organizations that compared them to living things. That makes sense to me, intuitively."

Besides making sense, Weinberg finds that complexity theory is based on a more accurate model of how hospitals, and the economy in general, work. So, for example, it offers a valuable explanation of why business plans so often don’t come out the way managers expect.

"Traditional management theory tells us to develop a long-term strategy, extending five-to-ten years out," he explains. "At every step along the way, we’re supposed to measure where we are against where the plan says we should be and make adjustments.


"As a physician, I learned to think from a biological perspective. When I went into management, traditional organizational theory seemed artificial, foreign to my experience. so when I started studying complexity theory, I was stunned. Here was a way of thinking about organizations that compared them to living things. That makes sense to me, intuitively."


"So the leader of a health care system will decide that it should have a specific numbers of hospitals, physicians, and nurse practitioners. But life never works out the way our plans expect. So even the best plan can get derailed by some event it hadn’t anticipated. If the leader insists the system follows his plan, without changing it to account for that event, he or she is likely to end up with a less than optimal operation and lots of unhappy people. After all, an organization isn’t a car or a truck that you can drive to a predetermined destination."

Complexity theory, Weinberg adds, teaches that organizations are more like living things, subject to unexpected events. Instead of fixing numerical goals and trying to force people to meet them, complexity theory suggests that managers set goals, in terms of quality or cost reduction, for example, and then free people to find their own best way to meet those goals.


Aides
Min specs

"They’ll become more efficient," he says, "and will probably develop ideas you never would have thought of. What you’re really doing is making the most of the intelligence of all parts of the organization in solving your problems."

As an example of this technique of problem solving, Weinberg points to a problem several of the hospitals involved with his physicians’ organization now face.

"Until recently, we could only reshape damaged arteries with invasive surgery and required a vascular surgeon," he explains. "However, a new technique, noninvasive peripheral vascular surgery, allows us to reshape the arteries with only a minor incision. As a result, radiologists and cardiologists can also perform the procedure. So we’ve been set up for a major turf battle."

There are three alternatives for resolving this conflict, Weinberg continues:

  1. Autocratic leaders can make the decision. Whatever they decide, two of the three types of specialists will be unhappy, and the conflict could continue.

  2. A hospital can let anyone who wants perform the procedure. This decision is also unworkable. It means that physicians in all three specialties will want to perform the procedure. That means more procedures than are required, which will damage any managed care system by driving up the cost of capitation.

  3. Using complexity theory, Weinberg prefers involving physicians from the three specialties and asking them to develop a plan. To give them some incentive, he suggests the hospital tell them it won’t invest in the procedure until they’ve come up with a plan that they can agree on and that meets minimum requirements for quality and cost.

"The third alternative yields the best results because the physicians involved are likely to come up with something more innovative than any one or two people handing down an edict," he explains. "And, because they design the final plan, they’re much less likely to turn it into an ongoing conflict. It also allows different hospitals, with different needs, to develop the solutions that fit them best."

Weinberg adds that the four hospitals his group works with demonstrate the financial benefits of encouraging this kind of physician collaboration. "We have four hospitals," he notes. "The largest, most successful one is also the most collaborative. It makes important decisions by involving all the parties involved. On the other hand, our most financially troubled hospital is the most hierarchical in its decision making."


Aides
Metaphor

Finally, Weinberg notes that some of the basic concepts of complexity theory give people tools they need to understand the nature of their shifting markets. Here, he talks about how he explained the recent merger of two physicians’ managed health care groups. "The idea of emergence was central here," he explains. "When you put together living systems that have never been together before, you can never be sure what will happen. The final state emerges as all the parts interact.


Bibliography
Morgan:
Imaginization

"In this kind of situation, people often have a lot of anxiety, especially in the environment of downsizing that’s existed for a while," he continues. "So I tried to explain that we were all in the middle of a new system that was emerging. I used Gareth Morgan’s metaphor, "We are rebuilding our house while we are living in it.’ I helped them understand that, while no one knows exactly what this new house will look like, we are building a very large house, that there will be many, many rooms."

He adds that a year or so ago, he would have tried to reassure each individual that he would try to take care of them. "Now," he says, "I try to reassure them, looking forward and painting a picture of the future that they can understand and grasp as a great opportunity."


Principles
Clockware/
swarmware

Weinberg emphasizes that not all problems need to be approached this way. Problems that are either simple or that have predictable outcomes don’t demand the creative, experimental approach complexity theory suggests. "Our chief financial officer won’t ever have to use it," he notes, "and does care about it."


Aides
Min specs

 

 

 

Weinberg cites one other example of using complexity theory in his administrative duties.



"We have four hospitals. The largest, most successful one is also the most collaborative. It makes important decisions by involving all the parties involved. On the other hand, our most financially troubled hospital is the most hierarchical in its decision making."


"We had two physicians organizations in this area," he explains, "my PHO with 440 doctors and a much smaller primary care IPA. More than 30 of our primary care doctors belonged to both. There were a couple of problems with this situation. For one thing, our PHO didn’t have enough primary care doctors. For another, some of the members of the IPA were associated with another hospital, so we were sometimes in competition. The logical solution was to merge the two organizations.

"There was a time when I would have planned out the merger and tried to force it to happen just the way I’d wanted," Weinberg continues. "But complexity theory told me to take a much different approach: Set up the minimum specs; give everyone a chance to define the pig [openly express their understanding of the situation]; then trust intelligent people to make the decision that’s best for everyone; and then watch for that one leverage point that would let the new arrangement emerge.

"So I approached the IPA and explained our minimum specs: We wanted to combine the two organizations in a way that would preserve the assets of the PHO and make as much of them as possible available to the new members. We held talks every two weeks. I was keeping members of the IPA informed about developments and held focus sessions with members of the PHO. It was all very open. And then we hit a snag.

"Members of the PHO decided they had to know who the capital partner was going to be before they would vote," Weinberg notes. "The small group was not happy about this new minimum spec. They were unhappy with the capital partner the PHO was suggesting, and everything came to a dead stop.

"Here was the major difference in using complexity theory," he points out. "Rather than trying to convince the IPA members or use our larger size to intimidate them, we continued to operate in the open and trust the IPA. On a Thursday night, the PHO decided to vote for its capital partner and we sent a message to the IPA saying we were still interested, but that we had to choose the capital partner.

"Then, on the next Tuesday night, at a regular focus group, half the board members from the IPA showed up! I explained what the PHO was going to do. The IPA held a board meeting that night and agreed with our choice for capital partner. Now we’re finishing up the merger.

"It worked exactly the way complexity theory suggested it should," Weinberg says. "We got exactly the outcome we’d wanted. But I couldn’t track the interventions that were going on because all I had to do was push one lever that flipped the situation. It didn’t require the hard work, all the cajoling and negotiations, that I’m used to in the business world. All it required was to accept what the other physicians were thinking and to state what we wanted. It was almost too easy."

Of course, no one expects all outcomes to emerge that effortlessly. Still, Weinberg recognizes that the rapid change of today’s markets will throw up lots of problems that are complex and unpredictable-that is, problems that respond well to complexity theory.

"We used to think we were in equilibrium," Weinberg points out. "We’ll never be able to fool ourselves like that again. Today, we’re in the middle of vast changes, and I don’t believe any of us will see an end to them.

"Complexity gives us the tools to manage and survive in the middle of that unending change."

 

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