Analyze the root and immediate causes contributing to health insecurity in a given region or nation.         – CL0.6.  Plan supply, support, communication, and information management ser

CHAPTER

3

FUNCTIONS, STRUCTURE, AND PHYSICAL RESOURCES OF HEALTHCARE ORGANIZATIONS

Bernardo Ramirez, MD, Antonio Hurtado, MD, Gary L. Filerman, PhD, and Cherie L. Ramirez, PhD

Chapter Focus

The key idea of this chapter is that form follows function, and function defines structure. Healthcare organizations vary—not only from country to country, but also within each country—as they address issues of access, quality, and cost that are influenced by social, economic, and political factors. The principles described in this chapter can be applied to ambulatory, acute, chronic, and home care organizations with varying levels of resources and local organizational response capacity. The first section of this chapter examines the key functions of healthcare organizations, with an emphasis on the need for a continuum of patient-centered care. Later sections review the main components of health- care organizations and the ways they interact to achieve desired outcomes and performance improvement. The chapter explores ways of designing, structur- ing, and analyzing organizations to effectively and efficiently manage physical resources and carry out key functions.

Learning Objectives

Upon completion of this chapter, you should be able to

• distinguish the key functions of healthcare organizations and relate them to the priorities of access, cost, and quality;

• develop mechanisms to assess the performance of healthcare organizations;

• design a structure for an organization that takes into consideration the resources available in a given community to achieve the best possible health outcomes;

1

C o p y r i g h t 2 0 1 9 . H e a l t h A d m i n i s t r a t i o n P r e s s .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

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The Global Healthcare Manager4

• plan and prioritize the physical resources needed to effectively accomplish the organization’s key functions, taking into account the available resources in that particular system; and

• integrate physical, human, and technological resources to provide appropriate clinical, support, managerial, and supply chain services in a healthcare organization, taking into consideration all legal, accreditation, and regulatory mandates.

Competencies

• Demonstrate an understanding of system structure, funding mechanisms, and the way healthcare services are organized.

• Balance the interrelationships among access, quality, safety, cost, resource allocation, accountability, care setting, community need, and professional roles.

• Assess the performance of the organization as a part of the health system. • Use monitoring systems to ensure that corporate and administrative

functions meet all legal, ethical, and quality/safety standards. • Effectively apply knowledge of organizational systems, theories, and

behaviors. • Demonstrate knowledge of governmental, regulatory, professional, and

accreditation agencies. • Interpret public policy, and assess legislative and advocacy processes

within the organization. • Effectively manage the supply chain to achieve timeliness and efficiency

of inputs, materials, warehousing, and distribution, so that supplies reach the end user in a cost-effective manner.

• Adhere to procurement regulations in terms of contract management and tendering.

• Effectively manage the interdependency and logistics of supply chain services within the organization.

Key Terms

• Facility design • Healthcare system • Health technology assessment

(HTA)

• Prearchitectural medical functional program

• Regionalization • Sustainability

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 5

Key Concepts

• Facility design • Facility management • Low-resource management • Medical equipment

• Operations management • Organizational design • Performance improvement • Physical resources management

Introduction

We can defi ne the most important functions of healthcare organizations using a systemic analysis inspired by Avedis Donabedian’s (1988) original conception of structure, process, and outcomes. Exhibit 1.1 shows how, as the population and the healthcare organization interact, the system aligns the available or required resources to produce the key notions of utilization, access, produc- tivity, effi ciency, and effectiveness, which interact to shape the organization’s performance. Performance, meanwhile, depends on the competent actions of healthcare managers and other human resources in the organization.

Since the mid-1900s, the functions, responsibilities, and competencies of healthcare managers have developed in different ways around the world. In the United States and Canada, the role primarily developed as a postgraduate specialty supported by the W. K. Kellogg Foundation under the umbrella of

HEALTH AS A SYSTEMRESOURCES

HEALTH SERVICES

POPULATION

HEALTH STATUS

PRODUCTIVITY

INDICATORS

STRUCTURE

PROCESS

OUTPUTS

OUTCOMES

TH STATUS

Sources: Data from Bradbury and Ramirez-Minvielle (1995); Donabedian (1966).

EXHIBIT 1.1 Elements of Health Systems Analyzed with a Systemic Approach

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The Global Healthcare Manager6

the Association of University Programs in Health Administration (AUPHA). A handful of university programs were established in 1948. As demand grew and the healthcare field expanded, new graduate and undergraduate university programs developed in a number of schools related to health or management disciplines (Counte, Ramirez, and Aaronson 2011).

Around the world, a number of countries—and a number of locations inside countries—have developed a strong alignment of professional healthcare managers across healthcare organizations; other locations, however, have almost no notion of healthcare management as a profession. In some countries, clinicians are promoted to serve in managerial roles at healthcare organizations without first having had the opportunity to acquire management competencies (West et al. 2012). The International Hospital Federation (IHF) has created a special interest group in health management to promote the professionalization of the discipline and the use of a leadership competency framework to improve the impact of managers at all levels of organizations and health systems (IHF 2015).

The main functions of healthcare systems and organizations in the continuum of care are financing, provision of health services, stewardship, and resource development (Frenk, Góméz-Dantes, and Moon 2014). Of these functions, provision of health services and resource development are key, and they are the ones further explored in this chapter. Provision of health services starts with sound planning and effective/efficient organization. Financing is addressed in chapters 2 and 3, and stewardship is discussed in chapters 6 and 11.

The Performance of Health Systems: Six Core Domains

Healthcare organizational performance around the world was the focus of an extensive study sponsored by the World Bank, in which investigators conducted a thorough literature review and developed a guide to concepts, determinants, measurement, and intervention design (Bradley et al. 2010). The World Bank report examined six core performance domains:

1. Access 2. Utilization 3. Efficiency 4. Quality 5. Sustainability 6. Learning

The first four domains are related to the “iron triangle” of healthcare, a concept that was introduced by Kissick (1994) and later provided the basis for the “triple

healthcare system The arrangement of people, institutions, and resources that deliver healthcare services to meet the needs of a target population. The system’s framework aligns resources to support the key performance domains of access, utilization, efficiency, quality, sustainability, and learning.

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 7

aim” initiative developed by the Institute for Healthcare Improvement (IHI). Kissick’s iron triangle consists of access, quality, and cost containment, whereas the IHI’s “triple aim” adds the dynamics of population health (IHI 2012).

Access incorporates several dimensions—physical access, financial access, linguistic access, and information access—that are supplemented by service availability and the provision of nondiscriminatory services. Equitable treat- ment should be provided regardless of gender, race, ethnicity, religion, age, or any other physical or socioeconomic condition. Utilization includes dimen- sions of patient or procedure volume relative to capacity or population health characteristics. Efficiency is determined by cost- or staff-to-service ratios and by patient or procedure volume. Quality includes clinical and management quality, as well as patient experience.

The last two domains—sustainability and learning—are key to ensuring constant, self-propelled growth in an ever-changing, complex environment such as healthcare. Sustainability in healthcare can be defined as “the capacity of health services to function with efficiency, including the financial, environment and social interaction that guaranties an effective service now and in the future, with a minimum of external intervention and without limiting the capacity of future generations to fulfill their needs” (Ramirez, Oetjen, and Malvey 2011, 134). Sustainability can be considered from two distinct perspectives or dimen- sions. The first perspective focuses on the sustainability of processes that create a basic functional network throughout the organization, allowing for flexibility and quality improvement—both of which are necessary for the dynamic change environment of healthcare. The second perspective deals with organizational sustainability, and it includes five multidimensional pillars:

1. The environmental pillar represents the initial point of focus for sustainability, and it includes—but is not limited to—the use of clean and renewable energy and the conservation of the natural environment. This pillar incorporates recycling techniques to preserve the quality of the atmosphere, to reuse solid and liquid waste, and to safely dispose of contaminants.

2. The sociocultural pillar strengthens community support and promotes the identification of key cultural, ethnic, and other values among the community of staff, patients, and users. It incorporates population health and social marketing strategies.

3. The institutional capacity development pillar promotes the strategic management of the organization. It aims to strengthen competencies at all levels and instill an empowering knowledge management culture, facilitating coordinated efforts of governance, leadership, and personnel integration and participation.

sustainability The capacity for a healthcare organization to function efficiently and in a manner that supports effective service both presently and in the future.

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The Global Healthcare Manager8

4. The financial pillar ensures the delivery of healthcare programs and activities that are cost effective and efficient in the use of resources. It is indispensable for achieving the organization’s goals and objectives.

5. The political pillar involves staff, patient, and community advocacy to advance the interests of the organization.

Finally, the learning domain empowers the organization to adapt to change and to explore and adopt innovations. It incorporates efforts to use data audit and feedback processes, to distribute relevant information and provide patient education through partnerships with the constituency, and to imple- ment training and continuing education initiatives for the healthcare workforce.

The Challenge of Organizing Health Services Resources to Achieve Optimum Performance

The provision of universal access to optimal prevention, care, cure, and reha- bilitation can be considered an ultimate goal of healthcare. Most governments, either directly or indirectly, subscribe to this goal; the challenge is—given the limitations of resources and entrenched infrastructure—achieving the greatest possible return on the investment toward reaching it. All countries, regard- less of their level of wealth or industrialization, are limited in their ability to achieve this goal, often because of political philosophies expressed as public policy. Even those nations in the most favorable positions often lack the will or capacity to translate their knowledge of what is possible into practice for the benefit of all people.

Over many years of technological development and interaction among professional, political, and economic forces, three enduring organizational foci have emerged for achieving the optimum health status for a population. They are (1) hospitals, (2) primary care provision, and (3) regionalization.

Hospitals In every country, hospitals are the most visible symbol of healthcare develop- ment and care for the sick. They represent public assurance that there is a place for people to go for care when needed. Hospitals are also important economic engines, generating employment and anchoring the economies of communities. They consume a large portion of the health sector resources in many countries.

The hospital is arguably the most complex contemporary organization to manage. Hospitals, particularly in developing countries, struggle internally with inadequate management and governance; limited sources of income; insufficient human resources; poorly planned, financed, and maintained physi- cal plants; and rudimentary quality controls. At the same time, they are often

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 9

buffeted by such external forces as regulations, competition, inadequate pay- ment systems, and conflicting service demands.

Experts from a number of countries, the World Health Organization (WHO), and the international development agencies of industrialized nations came together in an extraordinary meeting to address the challenges facing hospitals today and going forward (German Federal Ministry for Economic Cooperation and Development [BMZ] / German Corporation for International Cooperation [GTZ] and WHO 2010). The meeting was based on the premise that the role of hospitals should change within the upcoming decade, and it sought to clarify the critical issues concerning hospital reform. It also sought to formulate a plan to address those issues. There was no official follow-up to the meeting, but the consensus sent a powerful message to the policy com- munity. The key issues identified by the meeting are as follows (BMZ/GTZ and WHO 2010):

• Clarifying the role and function of hospitals in the health system • Political dimensions and expectations of hospitals • Hospital isolation in the face of blurring demarcations • Linkages between hospitals and other levels of the health system • Cost and benefit of technological progress • Data to measure hospital performance in relation to population

outcomes • Universal coverage and accessibility • Hospital financing within overall health spending • Hospital governance and autonomy • The legal framework within which hospitals operate • Human resources • Involvement of private hospital actors • Hospitals in a global health marketplace • Hospitals and the wider economy

There is no better summary of the challenges facing hospital and health system administrators and planners.

Primary Care Provision The development of primary care has emerged as the central strategy to achieve universal access, comprehensive care, and cost containment, not only in devel- oping countries but also in industrialized countries. The goal for low-resource societies is to provide essential services that are realistically within their reach, with community participation. WHO (1978) has promoted primary care development since the Alma-Ata Declaration of 1978. The declaration was

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The Global Healthcare Manager10

formulated by public health leaders who were largely committed to the position that healthcare is a right and that the state has the responsibility to provide it.

Alma-Ata created an enduring tension between two “ideal” models—a hospital-centric ideal model of health system development, with overtones of private practice and specialization, and an ideal model based on publicly supported community-based primary care providers, with the hospital in a supporting role. The conflict between the two ideal models was summarized by Frenk, Ruelas, and Donabedian (1989, 1):

In most developing countries the concern is that . . . [hospitals] already absorb such

a high proportion of resources that they seriously threaten any effort to achieve

full coverage of the population. Furthermore, it is widely believed that a health care

system centered around hospitals is intrinsically incompatible with the geographic,

economic, and cultural attributes of many populations. In addition, the mix of services

offered by hospitals . . . is believed to poorly match the prevailing epidemiologic

profile and the population needs for preventive and continuous care.

Gillam (2008, 537) assessed the practical impact of the Alma-Ata Dec- laration on governments’ policies and actions, noting that “early efforts at expanding primary care in the late 1970’s and early 1980’s were overtaken in many parts of the developing world by economic crisis, sharp reductions in public spending, political instability, and emerging disease. The social and political goals of Alma Ata provoked early ideological opposition and were never fully embraced in market oriented, capitalistic countries. Hospitals retained their disproportionate share of local health economies.”

In setting out a model of a preferred future, the WHO (2008, 55) states: “Primary-care teams cannot ensure comprehensive responsibility for their populations without support from specialized services, organizations and institutions that are based outside the community served . . . [and] typically concentrated in a ‘first referral level district hospital.’” Assuming that, in many countries, most of the existent service deliverers are controlled by the system designers, the model calls for coordination of all resources to be vested in the primary health team, presumably mandated by law in most cases. Under that premise, “The primary-care team becomes the mediator between the com- munity and the other levels”(WHO 2008, 55).

It is important to emphasize that primary care systems are ultimately dependent on hospitals. To be comprehensive, a system must have a hospital available to treat complicated, often life-threatening cases. The system also must be able to receive trauma cases from rural employment and transportation situ- ations that far exceed the competencies and resources of primary care. Patients who are unable to access community and primary care services have been known to travel great distances to reach the nearest hospital in case of emergency.

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 11

Regionalization Regionalization is the third enduring organizational focus, but a specific defi- nition of the term is evasive. The term has as many definitions as it has plans and applications. Roemer (1965) stated that regionalization cannot be defined on the basis of experience but that agreement can be reached with regard to its objectives. The following general objectives have emerged, with a degree of agreement across applications, as central to the regionalization process:

• The efficient utilization of limited health resources • The efficient utilization of expensive health resources • The provision of adequate, appropriate, and accessible health services to

a population • The improvement and maintenance of standards of health services

provision

The application of the concept of regionalization to healthcare provi- sion can be traced back more than a hundred years. The event that had the broadest global impact was the United Kingdom’s 1920 “Interim Report on the Future of Medical and Allied Services,” commonly known as the Dawson report, after Sir Bertrand Dawson, a physician to the British royal family. The report proposed a comprehensive national organization of health services that was organized around base hospitals and integrated most services in defined regions of the country (Consultative Council on Medical and Allied Services, Great Britain 1920). The United Kingdom implemented the report’s basic principles in the country’s National Health Service over the course of 28 years. The Dawson report has influenced health systems in a variety of countries, particularly in Europe.

Dawson proposed dividing the country into regions that would (eventu- ally) meet most of the preventive and curative health needs of the population. Specialized, scarce, and expensive services for a wider area (or country) would be available on referral but not duplicated at the regional level. The services of hospitals would be defined according to a classification system, thereby ensuring access to basic services while avoiding competition and underuse. The influence of Dawson’s emphasis on the integration of preventive and curative resources to achieve a more effective investment balance cannot be overstated.

Hospital-centered regionalization has become a widely discussed approach to health system organization in a number of countries, particu- larly in Europe but also elsewhere. For instance, the Chilean National Health Service reorganization program, which started in the 1960s, created hospital areas with the understanding that a hospital would have full responsibility for the health of the population within its service area. With all health activities linked to the hospital, clinical physicians would have to be directly involved in

regionalization A broad organizational concept with a variety of applications; its key aims include efficient use of limited and expensive health resources, the provision of accessible health services to a defined population, and the development of standards for health services provision.

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The Global Healthcare Manager12

the field programs, potentially leading to the effective integration of preventive and curative medicine. At the time of the program’s implementation, private hospitals were not included; the director of the area was to be the director of the largest (frequently, the only) hospital in the area.

The rationalization of health-provision resources to serve a defined population—be it a country, region, district, or community—is a very appealing idea. In theory, it is most likely to succeed in a central command-and-control political system, wherein one owner has control over all the components. However, that theory assumes that the full range of essential services exists or is accessible in each region. Application becomes more complicated—and potentially unrealistic—when applied to pluralistic environments with diverse financing schemes, multiple ownerships, local governments, advocacy orga- nizations, and competing demands. Also, of course, additional complications follow from the differing political philosophies about the role of the state.

One key organizational issue focuses on how to integrate new knowl- edge into the capital planning process. Another issue deals with reducing the duplication of diagnostic services that can be provided electronically to many hospitals. An additional question is how to create incentives in the capital management process that will modify internal organization and facility design to support such changes (Edwards, Wyatt, and McKee 2004).

Kenya’s pluralistic environment provides an example of how the role of the private sector can be constrained by the lack of access to capital. A substantial portion of care is provided by private for-profit and faith-based hospitals that have difficulty obtaining loans. As a result, funds are not available to start new hospitals, or to improve or replace existing facilities (Barnes et al. 2010). In Benin, banks generally loan only to large, well-established hospitals that are managed or owned by well-known doctors, and smaller enterprises are rarely considered. Capital funding limitations can also result from poor management skills, difficulties with property titles, and lack of collateral (Strengthening Health Outcomes Through the Private Sector [SHOPS] Project 2013).

Addressing these issues will require an understanding of global experience and an emphasis on the development of leadership and management compe- tencies. The professionalization of healthcare managers will be indispensable in advancing the effective and efficient use of organizations’ resources.

Organizational Planning and Design

Organizational planning and design enable managers to align the healthcare orga- nization’s functions and resources with its mission, vision, values, goals, and objec- tives. The planning process incorporates a variety of tools to facilitate work relations and interactions, efficient resource allocation, and effective decision making.

facility design The design of the space in which a business’s activities take place. The planning and layout of that space have a significant impact on the flow of work, materials, and information through the system.

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 13

The challenges facing healthcare managers can be either internal or external to the organization. One of the most important internal challenges involves the increasing technical complexity of the services being provided, which stems from continually changing medical technologies and the diver- sity and professional autonomy of the health professionals who interact in the delivery of services. Other internal and external challenges are associated with healthcare managers’ need to balance the components of the iron triangle. Balancing access and equity with efficient, cost-effective services and qual- ity outcomes requires robust organizational design and planning, as well as flexibility to confront the dynamic conditions of the healthcare environment.

Organizational designs take as many forms as needed to address the uniqueness of a dynamic organization. The designs are usually reflected in an organizational chart that describes the relations, authority, responsibilities, and interactions of the different units and individuals. Other documents and tools—such as organizational manuals, job descriptions, policies, regulations, and legal or administrative documents—also describe the various functions, r

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