Organizations often cite strategic, financial, and efficiency-driven reasons when making these decisions, but such changes can also have significant effects on staff, culture and overall effectiveness.
This raises the question: As large companies reduce managerial and executive ranks, should healthcare follow suit?
Below, executives from four hospitals and health systems provide their viewpoints.
Editor’s note: Responses have been lightly edited for clarity and flow.
Donna Anthony. Senior Vice President and Chief Strategy Officer at Children’s National (Washington, D.C.): There has been a significant amount of mergers and acquisitions over the past decade in healthcare. Through those activities, many organizations have much larger executive teams today and more complex governance structure. As a result, healthcare organizations are now thinking about how to be nimble and act as an integrated delivery system. No one can afford to operate in silos when the goal is patient-centered care. So, yes, I do think healthcare should be thinking about this, but should proceed with caution in terms of how swiftly they act and how much change the organization can tolerate.
Elizabeth Concordia. President and CEO of UCHealth (Aurora, Colo.): Right now, healthcare providers are under significant pressures. In Colorado, we’ve seen one of the nation’s largest percentages of individuals lose their Medicaid eligibility, which is leading to a flood of uninsured individuals in our hospitals and emergency departments. We’re also facing what will likely be no increase in Medicaid reimbursement next year despite providers’ significant increases in expenses and compensation costs. This is why hospitals, including many here in Colorado, are in financial troubles, and are cutting services and employees.
However, I think that any look at reducing costs must carefully consider potential impacts to a healthcare provider’s strategic priorities and brand. UCHealth has goals of delivering the very best quality and experience for our patients, and we cannot let expense reductions impact our patient care. There are always improvement opportunities, and while we will pursue those, our focus is on utilizing innovation and excellence to improve efficiency.
Jim Dover. President and CEO of Avera Health (Sioux Falls, S.D.): You have to size your management team to match the size of your organization. So, if the organization is downsizing in general, because volume is down, management has to be part of that. That’s a given. Taking out a layer of management for the sake of saying we could increase our return to the shareholders, I think, is a big mistake in terms of healthcare because we are in a service field where relationships matter.
For example, a lot of large health systems said, “We’re going to do away with the local CEO. We’re going to do away with the CEO title.” They did away with the CEO title — great. Saved you money. But the local medical staff and the community look at it and say, “That’s not our hospital anymore.” A lot of health systems said, “We’re going to eliminate the local board, and now there’s that one single board that’s going to save us time.” Good. Glad to know that’s going to help you. Guess what the local community says? “It’s no longer our hospital.” It makes it easy for people to leave town and get their care elsewhere because they no longer have an ownership aspect.
We have bucked the trend. For each of our regions, I have presidents and CEOs, and they are empowered to make decisions that are in the best interest of the region, in context with their overall strategic plan and budget, in order to do the right thing, in order to keep the care local.
What’s the result? Our ministries are thriving. We’re gaining market share, and every single one of those communities feels like that’s their hospital. So in healthcare, I would say proceed with great caution, but you always want to do what’s best for your communities and your organization. And then your finances — you’ll figure out the finances.
Laura Kaiser. President and CEO of SSM Health (St. Louis): Is there an opportunity to perpetually look at our organizational structure, which includes layers and spans of control? Yes, I think that’s something that every organization should do. It’s just a part of good hygiene, really. For healthcare, we aren’t yet as digitized as many other industries. We’re also a service industry meaning we are people-focused and people-dependent. Care is delivered through people. So, we may always be a little heavier. However, this is something that we will continue to look at over time as we work to operate as efficiently as possible.
