Resilient organizations modify structures to meet the
demands of the marketplace. The author describes
a structure that enables multihospital organizations
to innovate and rapidly adapt to changes. Service
line management within a matrix model is an evolving
organizational structure for complex systems in
which nurses are pivotal members.
The resilient organization is able to sustain competitive
advantage over time through its capability to
do 2 things simultaneously: deliver excellent performance
and effectively innovate and adapt to rapid,
turbulent changes in markets and technologies.1 For
healthcare organizations to be resilient, they must
adapt to rapid change. Healthcare organizations
must reorganize, refocus, and modify approaches to
meet societal demands for affordable care, access,
and quality. Nursing involvement is critical to successful
change management in patient care areas.
Organizational Authority Models
All healthcare organizations operate under some
type of authority model. Two organizational models
based on reporting structures are apparent in the
literature. The 2 models, traditional and matrix, use
different authority configurations to achieve similar
outcomes. Authority configurations fall into 2 categories,
single command or multiple commands.
Traditional Model
The organizational structure of a hospital based on
the single command configuration is commonly re-
Author affiliation: School of Nursing, University ofWisconsin
– Madison.
Correspondence: School of Nursing, University of Wisconsin
– Madison, 600 Highland Ave, Madison, WI 53792 (jawestphal@
wisc.edu).
ferred to as the traditional model. This single command
hierarchy is easily understood and has been
used for centuries. Examples of entities that use
this model are the military, monarchies, and religious
organizations. This pyramid-like structure has
well-defined line and staff functions reenforced with
organizational charts and job descriptions.2,3 Each
member in the organization has one supervisor who
provides oversight and direction. Decisions usually
flow from the leader to followers who carry out the
directives, and goals of the organization.
Matrix Model
The matrix model is based on the concept of multiple
commands, the opposite of the traditional
model. Matrix management requires the individual
to achieve a level of competence with the concept of
having 2 “bosses.” While this seems to run counter
to common sense, which would support 1 boss, there
are examples of matrix models in our culture.Acommon
example is government that functions under a
3-boss model of legislative, executive, and judicial
branches.
The matrix model is used in the aeronautics industry
as an effective way to organize and coordinate
complex processes. Each member of an aeronautics
project is assigned 2 supervisors, one is the functional
boss of the worker’s specialty, that is, electrical
engineering, and the other is the supervisor of the
current work project. The model couples specialist
orientation and team enthusiasm for an integrated
project.
This concept is not foreign in healthcare, as different
hierarchies may give different opinions such as
the physician and department manager. Charns and
Tewksbury describe use of matrix models in healthcare
in the 1980s in single-hospital structures.4 Most
acute care facilities across the United States use the
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traditional model of single command and apply it
across the organization.
Organizational Structure
Structure influences the workflow, culture, and outputs
of an organization. Functional and multidivisional
structures represent 2 different ways of
managing an organization. Both models have implications
for healthcare organizations.
Functional Structure
The major functions in a hospital are composed
of the following departments: nursing, pharmacy,
environmental services, dietary, laboratory services,
radiology, and surgery. Usually each of these departments
is managed by an individual reporting in a
hierarchy to various management levels and ultimately
to the chief executive officer (CEO) of the
hospital. The functional approach uses the command
structure of the traditional model for each
department. The functional structure maximizes differentiation,
emphasizes management, and focuses
on each discipline independently. The patient moves
from department to department in some cases, or the
departments bring services to the bedside of the patient.
Care coordination is necessary at various levels
in the organization.
Frequently, gaps in communication result in
poor care. While the model allows economies of
scale by pooling shared resources and maintaining
professional competence through peer interaction, it
does not provide integration across functions.4 The
structure is easily defined and organized; however,
using the structure produces silos and disciplinecentered
thinking. The traditional healthcare management
structures are not flexible, fluid, or necessarily
designed with patient needs in mind.
Multidivisional Structure
The multidivisional structure has its roots in business
and industry and utilizes components of the
traditional command structure. A study of the 100
largest for-profit nonhealthcare firms in the United
States from 1919 to 1979, conducted by Fligstein, revealed
that 51 firms stayed in the top 100 category all
60 years. Further study demonstrated those firms
that stayed on the list had a high rate of adopting
the multidivisional structure.5 The multidivisional
structure is defined as a decentralized management
structure in which the firm is organized into product
divisions and each division contains a unitary
structure.5 A study of multihospital systems conducted
by Alexander found structure to be an advantage
of the divisional form, which allows for rapid
response to environmental change.6 The literature is
organized around 2 major themes, service line management
and product line management.
Product Line Management
Proactive healthcare leaders looking for new organizational
models to address changes brought about by
managed care began to experiment with the product
line model as an option for healthcare structure in
single-hospital and multihospital systems.7 Product
lines are groupings of services organized according
to the market or population served. An early case
study of a product line model outlined an oncology
service in a Canadian hospital.8 The oncology product
line grouped services provided to patients with
cancer under a single management structure. The services
included radiation therapy, chemotherapy, and
laboratory.
Product line management was defined as centralized
program management, planning, and marketing
strategies for a single product line. The case
study revealed that early efforts were focused on
planning for cancer service needs and then switched
to integration of physicians into the management
of the product line. Multihospital systems are differentiated
primarily on the basis of markets; however,
hospitals in the same geography belonging
to a multihospital system can organize by product
lines.6
A study conducted on 219 nongovernmental
hospitals found that hospitals with increasing specialization
(concentrated efforts on a select number
of product lines) had an 8% decline in unit costs
per admission.7 Specialization was also associated
with improved quality of care. Product line management
as a concept also refers to centers of excellence,
clinical service lines, macro segments, core
business, strategic business units, and care centers.9-13
All of these terms refer to the alignment of programs,
services, and efforts around a single focus that is
deemed critical for the organization.
Service Line Management
The leaders of a healthcare organization must determine
how to design and manage systems that involve
and meet customer needs. Service line management
is an organizational structure designed to
meet customer needs. Research on the organization
and implementation of service line management can
be found in single-case studies.3,8,9,11-14 Competition,
organizational strengths, and market position often
determine the choice of service line. A case study
of a hospital system noted reduced hospitalizations,
fewer readmissions, and less emergency department
visits for patients with congestive heart failure when
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service line management was implemented.14 Hanold
defined women’s and infants’ service line success in
a multihospital system as market share growth, improved
patient satisfaction, incremental marketing
revenues in broader services, community recognition,
and clinical outcome improvements.13
Quality improvement was an outcome of a pediatric
service line case study.11 A review of 4 service
lines within a multihospital system demonstrated improved
patient satisfaction rates, improved financial
performance, and increased volumes.9 A large study
conducted within the Veterans Administration surveyed
140 hospitals with service line structures to
determine whether clinical service lines in primary
care and mental health reduced inpatient and urgent
care utilization.15 The study revealed that service
lines provided no effect or statistically significant
negative effect on changes in the variables related
to utilization. The effectiveness of service lines
was not evaluated in terms of quality or patient
satisfaction.
Structural Change
Organizations modify structures to meet the demands
of the marketplace. Forces for organizational
structure change are often based on need to lower
costs, meet consumer demands, or increase market
share. These challenges often result in mergers,
affiliations, or consolidation with another healthcare
facility. Merging hospitals bring administrative
teams together and collapse the teams into a single
leadership group focused on the success of the new
entity. The creation of a new entity often provides
the opportunity to consider a change in management
structure.
If a merger is not the precipitating event for
change, other reasons such as declining reimbursement
rates, declining census, and market share losses
often force hospitals to evaluate the way they have
been doing business. The usual response is to implement
cost-containment strategies, which include
monitoring productivity, evaluating supply costs,
boosting use of technology to save time and money,
and reworking processes to eliminate unnecessary
steps.
If the cost-containment strategies are not successful
in responding to the financial stressors,
the organization might consider restructuring with
focus on profitable service lines. The advantages of
focusing organizational efforts on select services are
to improve marketing, planning, and coordination
of services within a defined service line.8,15 Service
lines also improve quality, volumes, and financial
performance.9,11,14
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