A Hospital Might Perform Well — But is it Healthy?

During a June 26 webinar hosted by Becker's Hospital Review, experts from two McKinsey Solutions — Objective Health and the Organizational Health Index — discussed why providers should assess and actively manage their organizational health.

 

The webinar featured presenters Connie Cibrone, senior director of client services with Objective Health, Elizabeth Irons, COO for McKinsey & Company's Organizational Health Index Solution, and Carla Arellano, head of marketing for McKinsey's Organizational Health Index Solution.

The speakers said organizations must manage their performance and organizational health equally. "When we talk about health, what we're talking about is an organization's ability to align, to effectively execute, and to renew itself to sustain exceptional performance over time," said Ms. Cibrone.  

The presentation began with a poll for the virtual audience.

How much time does your leadership team spend on organizational health?

• None — 13 percent
• Some, it comes up a couple times a year — 35 percent
• Quite a bit, we talk about it quarterly — 31 percent
• Lots, we actively measure and manage it — 20 percent

Empirical research has proven that organizational performance and health are mutually reinforcing drivers, said Ms. Irons. "The healthiest organizations tend to financially and operationally outperform less healthy organizations," she said. Ms. Irons pointed to a study that compared organizations' total return to shareholders. Over a nine-year period, the most healthy organizations in McKinsey’s global database saw a Total Return to Shareholders (TRS) that was three-times greater than that of the least healthy organizations.

"If you can sustain high levels of health, you'll be able to outperform substantially over time," said Ms. Irons. "The big message here for leaders of organizations who are trying to convince key stakeholders and Boards that this is worth paying attention to: The math really does add up."

But before an organization can assess, improve and sustain its health, it first needs to know how to define this term. There are nine core elements to organizational health:

• Direction
• Accountability
• Coordination and control
• External orientation
• Leadership
• Innovation and learning
• Capabilities
• Motivation
• Culture and climate

These nine elements can be grouped into three clusters: alignment, execution and renewal. Ms. Irons said leadership is at the center of all three of these clusters because it is the core of a healthy organization. The speakers conducted another poll with the virtual audience to get a sense of their organizations' health.

How healthy is your organization?

• Very healthy — 14 percent
• Somewhat healthy — 63 percent
• Unhealthy — 17 percent
• Very unhealthy — 5 percent

When the Organizational Health Index Solution scores organizations for their health, Ms. Arellano said she and her colleagues have seen polarized scores across healthcare providers, with just over one-third of providers in the top quartile and nearly 30 percent in the bottom quartile. "Healthcare providers tend to be either very healthy or very unhealthy," she said.

The healthiest providers do share some common traits. They tend to emphasize a strong focus on patients and motivate and engage staff through a clear vision, meaningful values and recognition and rewards. Still, the speakers stressed that there is no one model for healthy organizations. "When looking at healthy organizations, we didn't just find one recipe for success," said Ms. Irons. "We identified four basic recipes." Ms. Irons and her colleagues refer to these as 'archetypes' of organizational health:

Archetype A: Leaders are the performance catalyst within these organizations. They set the performance expectations and the organizations achieve them.

Archetype B: These organizations are shaped by market trends. Building a portfolio of solid, innovative brands keeps these organizations ahead of the competition.

Archetype C: Discipline, sound execution and continuous improvement are the foundations of great performance for these organizations.

Archetype D: For these organizations, collective talent and knowledge are the most important assets. Success depends on talent development.

The healthiest healthcare providers in McKinsey’s database "tend to follow a market-focused recipe," or Archetype B, according to Ms. Irons. "The core idea behind this recipe is that patients are really at the center of your focus. This is all about really understanding who and where your ‘customers’ are, being attuned to the external environment, and ‘constantly skating ahead of the puck’ to meet their needs as they evolve."

Two management practices that are key 'competitive differentiators' for healthcare providers are customer (or in this case, 'patient') focus and meaningful values. These are both critical for sustaining health and top performance. When they are achieved, they can really make a difference in healthcare organizations.

The speakers concluded their presentation by asking the virtual audience what Archetype, or recipe, their organization is deploying for health:

Archetype A: Leadership drives the organization to tackle thorny issues — 29 percent
Archetype B: Market-focused with an emphasis on ideas from the outside — 19 percent
Archetype C: Discipline, sound execution and continuous improvement — 21 percent
Archetype D: Talent development drives success — 19 percent
• None — 11 percent  

"All organizations should measure organizational health at least annually," Ms. Arellano said in her closing remarks. "We like to suggest aligning organizational health management to your organization’s performance cycle. Make sure you are at least running an overall survey once a year to inform conversations around performance and course correct as needed."

 

View or download the Webinar by clicking here (wmv). We suggest you download the video to your computer before viewing to ensure better quality. If you have problems viewing the video, which is in Windows Media Video format, you can use a program like VLC media player, free for download by clicking here.

Download a copy of the presentation by clicking here (pdf).

More Articles on Organizational Health:

5 Traits of High Reliability Organizations: How to Hardwire Each in Your Organization
How and Why Emotional Intelligence is Affecting Hospitals' Bottom Lines
Developing a Workforce Strategy for Patient-Centered Care: 6 Key Steps

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