The Shangri-La Hospital is the major tertiary referral centre for the outer west sector of a
major capital city. Analysis of the demographic profile of the population indicates that a
large proportion of the population is composed of young families whose socioeconomic
circumstances are described as marginal. There is significant ethnic diversity and the area
has one of the largest indigenous populations of any urban area in the region. The ShangriLa
Hospital has 650 beds and offers a broad range of specialty services. These include
paediatric, oncology, cardiology, endocrine, respiratory, aged care, neurology, obstetrics
and gynaecology, psychiatry, indigenous health and other public health services.
The hospital is currently structured along functional lines. It is currently having difficulty
coordinating services and working within the ever-tightening constraints of the health
care budget A group of management consultants has been called in to do a complete
review of the organisation and its performance.
Following the analysis of the organisation and its environment by the consultants
the organisation is to be restructured along product/market lines in order to improve
efficiency and to increase accountability for resource utilisation. The redefined goals of
the organisation are to demonstrate in measurable terms better quality control systems,
enhanced continuity of care for clients and cost-effective use of resources.
Things to reflect on:
• What are the benefits to the organisation of this new design?
• How will this new structure facilitate the achievement of performance objectives?
• Look back to the earlier section of this chapter to the discussion regarding environmental
factors and their influence on organisational strategy and design. How will they affect
the successful implementation of a new organisational structure?
• Consider strategies to assess organisational culture, and plan a framework in which
to begin implementing the change processes required for the restructure.
Emerging designs
Driving forces behind structural reforms in health care are the finite health care
dollar, a greater emphasis on quality reforms and the need to have a focus that is
client-centred. To this end structural designs are evolving from the models discussed
earlier in this chapter to those that go some way towards addressing inherent disadvantages
and incorporating these newer ideals. Organisations are assuming flatter
more flexible structures, outsourcing some of their activities (e.g. catering, cleaning)
and employing some staff on a casual rather than permanent basis. Chapter 13 deals
further with organisational structure in relation to integrating service delivery (i.e.,
networks and alliances) and Chapter 14 addresses interorganisational contractual
arrangements.
Casemix and organisational design
Casemix is a tool and an approach to the production of quality information about
health care. It aims to build pertinent classifications of patient care episodes and then
utilise the information gleaned to better manage health care and its resources (Eager
& Hindle 1994, p 1). While structural reform is not mandatory in a casemix environment,
it is helpful if the structure and the information system are compatible. This
will greatly enhance the ability of the clinician manager to function within devolved
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12 • STRATEGY AND ORGANISATIONAL DESIGN IN HEALTH CARE
decision-making structures such as product line or matrix designs (McCaughan &
Picone 1994, p 521).
Clinicians are required to be.more accountable and in the process they are required
to be more evaluative in their practice. The continuing challenge to health care providers
is to make decisions based on data about outcomes that facilitate the greatest
utility per dollar. Casemix information assists such decisions as well as being a vehicle
for performance improvement (Hindle 1997, pp 167-8, McTurk 1994, p 22).
Parallel designs
Patient safety and continuous quality improvement have been firmly on the health
policy agenda internationally for over a decade. The Harvard Medical Practice
study (Brennan et al 1991), the Quality in Australian Health Care Study (Wilson et
aI1995), the Institute of Medicine Report (1999), and others clearly delineate high
levels of adverse events in health care institutions. Health services and governments
around the world have sought to implement constructive solutions to address this
problem. To this end, an organisational structure that facilitates broad representation
across the organisation in quality initiatives is becoming increasingly important.
:Moving beyond the aforementioned organisational structures, Leatt et al (2000
pp 89,291) describe the parallel design which emphasises the importance that health
care organisations place on quality and safety. Functional units operate in parallel to
a quality committee or council. Such a committee is comprised of various personnel
from the functional units and project teams are formed to investigate and implement
initiatives that will improve quality of service and operational performance.
The advantages of such a design include the empowerment of workers to contribute
to processes of organisation-wide activities, the opportunity for individual learning
and development, and the ability to function in expanded roles. This in turn ideally
enhances organisational performance and the quality of its services as a whole.
Some disadvantages may manifest when workers are taken away from their functional
areas to attend to quality project activities, thus compromising the performance
of the functional unit. Overall operational costs may increase. Moreover, conflicts
may arise when lobbying for resources and when loyalty is divided between the quality committee and functional units. See the section above titled ‘Organisational
culture’ for comments relating to changing organisational culture which is implicit
in these quality and organisational design activities.
APPROACHES AND CHALLENGES FOR FUTURE ORGANISATIONAL
STRATEGY AND DESIGN
Factors influencing organisational strategy and design were examined earlier in this
chapter, including the external and internal environment, organisational mission
and objectives and organisational culture. Issues concerning these factors that may
influence design decisions made by health service managers will now be addressed.
The future internal and external environment
There are predictions of continuing pressure on health service organisations. This
will influence the design decisions of future health service managers. Such pressures
include:
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