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CHAPTER 1
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 healthcare organizations and the ways they interact to achieve desired outcomes and performance improvement. The chapter explores ways of designing, structuring, 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;
• 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
Key Concepts
• Facility design
• Facility management
• Low-resource management
• Medical equipment
• Operations management
• Organizational design
• Performance improvement
• Physical resources managementFacility design
Introduction
We can define 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, productivity, efficiency, 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 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 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 treatment should be provided regardless of gender, race, ethnicity, religion, age, or any other physical or socioeconomic condition. Utilization includes dimensions 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 dimensions. 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.
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 implement 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 rehabilitation 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, regardless 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 development 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 physical plants; and rudimentary quality controls. At the same time, they are often buffeted by such external forces as regulations, competition, inadequate payment 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 community. 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 developing 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 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 Declaration 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 community and the other levels"(WHO 2008, 55).
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Excerpted from "The Global Healthcare Manager"
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