Beyond managed costs.

Managed care organizations (MCOs) face an uncertain future. While consolidation and price competition have expanded their market share, health care expenditures are expected to rise in the near future, and the cost containment premise--and promise--of MCOs is being threatened by mixed blessing and nonsupportive stakeholders. To shed light on MCOs' situation, we discuss four drivers for change in health management in the U.S.: technology, regulation, consumerism, and demographics. Using those four drivers, we then assess the various stakeholders in the industry through a competitive analysis and a stakeholder analysis. These analyses suggest that the munificence of the MCO business environment has significantly declined, especially among supplier and buyer stakeholders. Hence, MCOs cannot continue to manage health care costs alone as this will no longer generate sufficient support among buyer and supplier stakeholders. Instead, MCOs must tackle five critical health care issues by working closely with other stakeholders and also by learning what they can from innovative health care initiatives both inside and outside the United States.

Can ethical management and managed care coexist?

The growth of for-profit managed care organizations raises serious ethical questions for managers in these settings, such as whether contemporary business ethics are most appropriate for health care organizations or how the principles of biomedical ethics can be integrated into profit-seeking firms. A model is proposed that seeks to consolidate both business ethics and biomedical ethics into a form that is useful to health service managers.

Governance of integrated delivery systems/networks: a stakeholder approach.

The health care environment is complex and turbulent, and traditional governance forms face many challenges. As integrated delivery systems/networks are formed, governance structures must be responsive to both internal and external stakeholders. Both internal efficiencies and socially responsible actions are required of these relatively new organizational forms. To meet these needs, a two-tier governance structure is presented that consists of overarching and facilitating boards.

Managing exposure to tuberculosis in the PACU: CDC guidelines and cost analysis.

The Postanesthesia Care Unit (PACU) is an area of high risk for the transmission of Mycobacterium tuberculosis. The Centers for Disease Control (CDC) have recommended administrative controls, engineering controls, and personal protection devices to reduce the risks; nevertheless, perianesthesia nurses inhale airborne pathogens. The CDC guidelines are enforced by the Occupational Safety and Health Administration (OSHA). If an exposure occurs, the health-care facility has an OSHA-mandated course of action. The cost of follow-up of exposed persons can be high, depending on the patient census of the PACU at the time of unprotected exposure. This report presents the CDC guidelines for follow-up of exposure and costs based on typical surgical volumes and admission patterns for a large hospital with 10 thousand or more annual surgical procedures.

Why do key integrated delivery stakeholders really matter? Assessing control, coalitions, resources and power.

This is the fourth in a series of articles describing and interpreting the results from the Facing the Uncertain Future (FUF) study. This article focuses on one vital aspect of strategic stakeholder management: assessment of key stakeholders. Specifically, the article uses Round Two data and presents an assessment of four key medical group practice stakeholders: integrated delivery systems/networks (IDS/Ns), managed care organizations (MCOs), physicians and hospitals. These key stakeholders were identified by medical group practice executives as some of the most important stakeholders in the year 2000. These four stakeholders are assessed on the criteria of organizational control, coalition formation, control of resources, and relative power. The FUF study was conducted jointly between the Center for Research in Ambulatory Health Care Administration (the research and development arm of MGMA), and The Institute for Management and Leadership Research (IMLR), College of Business Administration at Texas Tech University, Lubbock, Texas. MGMA's American College of Medical Practice Executives, faculty of Texas Tech University's Ph.D. and M.B.A. Programs in Health Organization Management (HOM), and faculty from the University of Alabama at Birmingham collaborated on the project. Abbott Laboratories, Abbott Park, Ill., provided funding for the FUF project. The administration of Round One was completed in the Fall of 1994. The administration of Round Two was completed in the summer of 1995. Selected Round One and Round Two results have previously been presented in educational programs and publications.

Urban-rural hospital affiliations: assessing control, fit, and stakeholder issues strategically.

Urban-rural hospital affiliations are an outgrowth of both the external pressures on rural hospitals to survive and the need for urban hospitals to maintain or increase their share of the tertiary referral market. This article discusses the significant role of stakeholders in these affiliations, develops a fourfold typology of urban-rural hospital affiliations based on the notions of organizational control and fit, suggests four generic strategies for forming affiliations, and analyzes four actual cases of affiliation.

Negotiating with interactive scenarios and strategies.

Physician executives need to negotiate effectively with a wide range of parties. In those negotiations, they should consider the relative importance of both substantive and relationship outcomes in selecting initial negotiation strategies. Of course, these strategies may or may not be successful, depending on the strategies used by the other party. Hence, the physician executive must consider the other party's strategy and how it and his or her initial strategy are likely to interact both before and during negotiations.

Negotiating for more than a slice of the pie.

Negotiation is an important way for physician executives to manage conflict and to accomplish new projects. Because of the rapidly changing nature of the health care environment, as well as conflicts and politics within their organizations, managers need to effectively negotiate with a wide range of other parties. Managers should consider the relative importance of both the substantive and relationship outcomes of any potential negotiation. These two factors may guide the executive's selection of initial negotiation strategies.

Hospital-physician joint ventures: a strategic approach for both dimensions of success.

Joint ventures between hospitals and the physicians on their medical staffs have produced successes and failures. Each joint venture has two very different dimensions of success--financial and collaborative. The most successful ventures are able to accomplish both of these often conflicting goals. To enhance hospital executives' success in joint ventures with physicians, a strategic approach with a series of six steps and their corresponding models or maps is proposed. The steps in this strategic approach are: (1) identify key stakeholders and linkages among them; (2) surface stakeholder conflict using problem-oriented maps; (3) diagnose the venture on both dimensions of success; (4) classify the venture using both dimensions of success; (5) select a strategy to optimize the venture's current potential for success; and (6) select an approach to transform the venture with limited potential for success.

Assessing key stakeholders: who matters to hospitals and why?

A key stakeholder perspective, informed by illustrative quantitative and qualitative data, is developed for hospital administrators. These data provide answers to the questions, Who matters to hospitals? and Why do they matter? A tool kit for assessing stakeholders also is presented to help hospital executives identify their institutions' key stakeholders, determine the power of these stakeholders and their core values, and define who within their institutions should be responsible for the routine management of different stakeholders. These tools facilitate the management of each key stakeholder, ensuring that each strategic decision is examined in terms of the likely reaction of key stakeholders and is supplemented with plans for gaining stakeholder acceptance. Managers should recognize that the answers to Who matters? and Why? will vary by type of hospital and by the specific issue being addressed.

Stakeholder supportiveness and strategic vulnerability: implications for competitive strategy in the HMO industry.

A conceptual and empirical analysis of the strategic vulnerability of HMOs shows that they are strategically vulnerable on the social dimension of stakeholder supportiveness. One of the major implications of this finding is that HMOs' cost leadership strategy cannot be sustained, given the competition from such substitutes as PPAs.

A strategic approach for negotiating with hospital stakeholders.

Executives should consciously formulate negotiation strategies which are linked to the broader strategic posture of the hospital. This approach provides a diagnostic and action-oriented framework for (1) determining and focusing on desired outcomes and (2) anticipating actions stakeholders are likely to take.

The importance of relationships in hospital negotiation strategies.

Negotiation is one important way for hospital executives to manage conflict and to accomplish new projects. Because of the rapidly changing nature of the health care environment, as well as conflicts and politics within their organizations, managers need to negotiate effectively with a wide range of other parties. Hospital managers should consider the relative importance of both the substantive and relationship outcomes of any negotiation. These two factors, when viewed both in terms of the priorities of the hospital executive and the other party may guide the executive's anticipation of negotiation scenarios and selection of appropriate negotiation strategies.