Management Mistakes in Healthcare: Identification, Correction, and Prevention

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Overview

While increasing attention has been directed recently toward recognizing and reducing medical errors, healthcare organizations have yet to benefit from a similar scrutiny of management mistakes. Serving as a call to action for health care managers throughout the world, this book addresses the information gap on this critical issue.

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Editorial Reviews

From the Publisher
The important insights provided in the first several chapters are ones the reader will want to return to often...Hofmann and Perry have made a realistic and significant contribution in creating a primer for today's health care executive.
Kathryn H. Ruscitto, Senior Vice President, St. Joseph's Hospital Health Center
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Product Details

  • ISBN-13: 9780521535946
  • Publisher: Cambridge University Press
  • Publication date: 4/1/2010
  • Edition description: New Edition
  • Pages: 276
  • Product dimensions: 6.70 (w) x 9.60 (h) x 0.70 (d)

Meet the Author

DOB July 6, 1941.

DOB November 18, 1934

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Read an Excerpt

Management Mistakes in Healthcare
Cambridge University Press
0521829003 - Management Mistakes in Healthcare by - Paul B. Hofmann and Frankie Perry
Excerpt



Addressing management mistakes in healthcare



Acknowledging and examining management mistakes

The failed merger of the hospitals owned by Stanford University and the University of California at San Francisco cost both institutions a combined financial loss of $176 million over a twenty-nine-month period (Russell 2000), but the non-financial costs remain immeasurable. Like all aborted mergers, it was originally well intentioned. However, unlike most mistakes, the failure was highly scrutinized and publicized.

Although the examination of medical errors in the USA was greatly accelerated by the Institute of Medicine (1999) report, To Err Is Human: Building a Safer Health System, and physicians have urged colleagues to acknowledge mistakes for years (Hilfiker 1984), the healthcare literature has rarely addressed or even acknowledged executive mistakes.

Unsuccessful consolidations, as well as the apparent inability of other mergers to achieve cost-saving targets (Costello 2000), have contributed to a continuing perception that healthcare resources should be better managed. In part, such problems have caused a deterioration of public trust in hospitals, but this erosion has been under way for some time (Hofmann 1991). Ultimately, a reduction in management mistakes should lead to greater public trust, stronger executive performance, improved financial results, enhanced quality of patient care, and higher staff morale. It is difficult to imagine a more compelling set of incentives for aggressively pursuing an analysis and reduction in management mistakes.

In an exceptional article entitled "Morally Managing Medical Mistakes," Smith and Forster (2000) noted that medical mistakes might be simple and benign, cause serious but reversible harm, or result in permanent damage or death. The authors raised a cluster of questions, including: What counts as a mistake or an error? What are the reasons for, and causes of, mistakes? What happens to professionals, emotionally and spiritually, when mistakes are made? Should mistakes be routinely disclosed, and to whom? All of these inquiries are clearly relevant, but they cover only part of the healthcare landscape. Healthcare administrators also make errors; some are strategic, some may be unethical, and some are inevitable when managing large and very complex service enterprises. As in medicine, the moral imperative is to learn from our mistakes so we can lessen the probability of repeating them. For institutions striving to be learning organizations (Garvin 2000), mistakes could also be viewed as opportunities for promoting individual growth and development.

An understandable reticence




For many reasons, healthcare executives have been reluctant to talk or write about their failures and what they learned from them. Depending on the consequences resulting from a mistake, executives may fear reprimand, job loss, or even legal exposure. In addition, given human nature, pride, and ego, it is understandable that executives have not felt motivated to describe their misjudgments, tactical errors, or blunders. To preserve their sense of self-worth or the illusion of management omniscience, they may contend that uncontrollable events conspired to cause the failure, declaring, "If not for pressures created by limited resources, conflicting opinions, severe time constraints, and uncertain market conditions, I would have made a different and better decision."

However, it is precisely when challenging circumstances raise the stakes of a critical management decision that executives should demonstrate their administrative competence and courage. Most managers can "look good" when the environment is relatively stable and benign. Greenspan (2002) properly notes that the conundrum most frequently confronted by executives is not a decision involving a right and wrong choice, but one pertaining to unappealing options or two attractive alternatives, each with competing sets of values. Nonetheless, displaying organizational aptitude and skill in making the tough calls correctly is one of the major reasons most senior executives are well compensated.

Understandably, mistakes cannot be managed unless they are recognized. Eventually, most errors such as the following, become evident:

  • an incompetent manager was tolerated for an inordinate length of time

  • negative financial results were not promptly disclosed

  • a merger was ill-advised, poorly planned, and/or badly implemented

  • managed care contracts were signed without adequate due diligence

  • substandard clinical performance by a physician, nurse, or other clinician was not quickly addressed.

Alternatively, there could be doubt or disagreement that an error had occurred. An objective third party could legitimately conclude that a bad outcome was unfortunate, but not necessarily the result of a mistake given the prevailing circumstances. Examples abound: the purchase of physician practices seemed reasonable at the time, as did the decision to acquire that managed care plan, buy the new computer system, sign all those managed care contracts, and hire that candidate for Vice President of Professional Services who interviewed so well and whose credentials and references were impressive.

Defining and acknowledging executive mistakes




Clearly defining an executive error is not easy. What constitutes a mistake, and from whose perspective? In some cases, it may be ambiguous, such as authorizing an interest-free housing loan to help recruit a new chief operating officer. In other instances, it may be clear, such as a CEO obtaining a check for a down payment on his own home from the chief financial officer without board approval. How does one differentiate between the use of poor judgment and sound decision-making processes that simply result in decisions that "don't work out"? Some mistakes are minor or questionable, and others are major and indisputable. Mistakes might thus be viewed on a continuum with shades of gray. Because management is a less precise science than medicine – where, for example, ordering the wrong medication or failing to initiate treatment despite repeated abnormal laboratory findings is an unequivocal error – the management continuum is longer and less exact.

The words "mistake" and "error" have so many connotations that a framework is needed to clarify one's use of the terms. The 1999 Institute of Medicine report defined an error "as the failure of a planned action to be completed as intended or the use of a wrong plan to achieve an end." For purposes of this discussion, a mistake is viewed as making a decision to act or not act without thoroughly assessing known evidence and incorporating stakeholders' perspectives when the action or inaction (a) places patients, staff, the organization, and/or the community at risk, or (b) is costly to implement, or (c) costly to change. Often, but not always, such mistakes result in obviously bad outcomes. At least three categories can be identified using this conceptualization: negligence, decisions or non-decisions producing bad outcomes that were neither intended nor foreseeable, and mistakes that do not produce bad outcomes:

  • Negligence must satisfy several requirements. First, the decision made or action taken is one that a reasonable person would consider risky. Second, a bad outcome occurs. Third, the risky behavior is the proximate cause of the bad outcome. Fourth, a reasonable person would have foreseen such an outcome. Unless all these conditions are present, negligence has not occurred. Negligence is evident when an executive decides not to check the references of a candidate for vice president who has falsified her employment history and, after hiring the person, finds that the individual has embezzled funds for the third time.

  • The category of unintended and unforeseeable bad outcomes is more self- explanatory. Sometimes, and only in retrospect, perhaps after days, months, or years, a decision or non-decision may be described as a "mistake," and the more substantial the fallout, the greater the interest in holding someone accountable. If best management practices were followed prior to a failed merger or a belated decision to merge, this would be an example of a mistake that was not the result of negligence nor quickly obvious.

  • Some might claim that when a mistake does not result in a bad outcome, no error has actually occurred. However, mistakes that do not produce bad outcomes should not be seen as irrelevant or inconsequential, but actually "near misses" or intercepted mistakes that can provide invaluable learning experiences. For example, a contingency plan should have been prepared to address a possible shortfall in reimbursement, but legislative intervention and an improvement in payer mix made significant cost reduction measures unnecessary.

Intentional wrongdoing is purposely excluded from this overview. Whether motivated by anger, intimidation, greed, indifference, or other impulses, there is no confusion or ambiguity in such situations; the decision or behavior is unequivocally unacceptable and inappropriate. Such decisions or actions are thus not interpreted as mistakes, but there is a defect in an organization's culture or value system if intentional wrongdoing is tolerated – that is, not discouraged and promptly sanctioned when it occurs.

Unavoidable mistakes




To promote organizational morale, the virtues of leaders may be excessively extolled and their shortcomings minimized or overlooked. Zero tolerance for mistakes may be self-imposed or promulgated by some senior executives – or, in the case of a CEO, perhaps by the governing body. To the extent this happens, executives do themselves a great disservice when they perpetuate unrealistic expectations.

Even the most capable executive will make mistakes. The effective healthcare executive will take calculated risks to develop innovative strategies and programs, recruit independent thinkers to the board and administrative staff, invest in new technology, respond to and shape the political and competitive environment, and challenge the status quo. Inevitably, an executive who is constantly considering different approaches and models will occasionally select a course that yields unanticipated and unwanted results.

In these less than successful situations, how extensive is the critique or failure analysis, and how broadly are the results disseminated? In actuality, the extent of analysis and disclosure is frequently limited because many executives may be reluctant to accept or admit the extent of their own fallibility. Defensively, they may also assert that insufficient time has passed to label a specific decision as "wrong." Consequently, mistakes are commonly hidden, like those of their clinical colleagues, behind what Smith and Forster (2000) describe as "a curtain of denial and nondisclosure." This curtain, however, is frequently transparent to subordinates and others. Furthermore, it is both ironic and disappointing that most programs dedicated to risk management and continuous quality improvement have essentially ignored such sensitive yet potentially fertile terrain.

Executives must be cautious not to take false refuge in the belief that a comprehensive and widely disseminated values statement is sufficient to ensure consistent adherence to those values. Few studies have been conducted to confirm an alignment between espoused organizational values and enacted values (Ray, Goodstein, and Garland 1999). Organizational culture and values have a powerful influence on the extent to which errors are recognized and analyzed. If the institution's vision and values statements promote the concept of a learning organization and the rhetoric is matched by reality, the positive aspects of individual pride and ego can contribute to an environment more open to unfettered inquiry and investigation of management as well as medical mistakes. In reality, very little learning occurs without making some mistakes.

Evolution of healthcare management mistakes




For at least the past four decades, so many publications have made repeated reference to the "healthcare crisis" that one may now reasonably contend that the crisis has become a chronic condition. The cumulative pressures produced by managed care, inadequate reimbursement, growing staff shortages, increasing competition, proliferating legal and regulatory requirements, rising expenses, higher patient and staff expectations, and a host of similar issues have conspired to make the difficulties seem overwhelming. Moreover, efforts to reduce overhead costs have resulted in fewer managers who have broader assignments and more subordinates. In addition, honoring the intrinsic obligation of a charitable institution to serve the community's best interest without adversely affecting the hospital's financial condition can create unusually complex management dilemmas (Vladeck 1992).

Contributing to the administrative challenge is the fact that healthcare executives have held less functional power than comparable managers in general business, primarily because physicians, who are generally not employees and hold an anomalous position outside the direct chain of command, exercise exceptional influence over management decisions. This imbalance of power can compel executives to make decisions that they personally find objectionable but that may be necessitated by the medical culture and accepted by the governing body. For example, at least some hospital-based physician contract terms could be difficult to defend on a productivity and service basis. In other situations, executives may have capitulated as the result of failing to engage physicians in a collaborative decision-making process. If physicians do not understand the inescapable resource constraints facing the institution and the need to help design a rational allocation system that preserves the organization's fiscal health, they may be inclined to adopt adversarial rather than cooperative approaches to resolving conflict.

Particularly in health systems, the need to make large financial turnarounds can create extensive organizational dissonance. If strategy, structure, process, and culture are not well aligned around a clear vision and mission, corporate administration and business units can be at odds. Not surprisingly, suspicion, resentment, and hostility will produce an unhealthy climate in which both management timidity and error can thrive. Mistrust, not administrative competency and innocence, is the dominant presumption. Consequently, some executives may be inclined to think more about avoiding risky decisions and less about making courageous ones. The challenge is intensified when clinical issues are involved.

To further exacerbate the problem, differentiating between a clinical mistake and a management error can be difficult; often they are inextricably intertwined. Also, some decisions are clearly errors, whereas others are simply immoral. The most obvious examples involve the familiar tension between financial and patient care priorities, for instance:

  • Permitting early discharge of seriously ill patients because of economic pressures

  • Closing a trauma center because too many patients lack insurance

  • Reducing social work and home health personnel, with the result that patients are discharged without adequate regard for their ability to care for themselves

  • Allowing an organ transplant program to continue for non-clinical reasons, although its volume is low and its patient outcomes are poor

  • Using insufficiently trained lower-skilled personnel to perform duties previously assigned to higher-skilled and more expensive staff

  • Deferring funding of essential but mundane capital equipment (replacement beds, sterilizers) to accommodate less urgent requests of influential physicians.

The reconciliation of tensions around resource allocation decisions, and the tradeoffs among them, cannot be avoided. Nor can the crucial link between cost and quality be ignored. However, improving quality does not always require more resources. In a hospital truly committed to a "patients first" philosophy, the above examples should not exist. Too frequently, management mistakes are repeated because previous assumptions about the tradeoffs between resource allocation decisions and quality are not subject to proper review, evaluation, and audit in the context of the institution's mission.

Many of the conflicts of interest that influence these decisions are apparent, but not all. Edward Spencer and his colleagues (2000) suggest that conflicts of interest occur in "situations where one's profession, professional judgment, or professional code is in conflict with other demands or influences that, if acted upon, would compromise professional judgment." The authors offer four guidelines when one is confronted with these circumstances:

  1. The existence of the conflict should be recognized and acknowledged

  2. Whenever possible, the conflict's existence should be disclosed to all parties

  3. A series of questions should be asked:

    1. How would an impartial professional evaluate and act in this kind of situation?

    2. Would acting on the conflict of interest compromise one's professional judgment?

    3. What kinds of precedents would acting on this conflict set? Would you expect other professionals to act similarly? Can this be defended in a public forum?

    4. Who is harmed or benefited from acting on the conflict of interest?

    5. Can such actions prevent gratuitous harm or unfair practices, processes, or outcome; lying; breaking promises and contracts; and not respecting individuals and their rights?

    6. What kind of institutional structure, accountability procedure, or other constraint might have contributed to the existence of this conflict? Can these factors be mitigated in the future?

  4. When encountering an unavoidable and intractable conflict of interest, one may have to withdraw from the situation and, in some circumstances, report the matter to an external entity.

Whether or not conflict of interest is a contributing factor, a decision may be made that could constitute a serious mistake and a "sentinel event." The Joint Commission on Accreditation of Healthcare Organizations (JCAHO 1999) defines a sentinel event as "an unexpected occurrence involving death or serious physical or psychological injury, or the risk thereof." When such an event occurs, JCAHO expects that "the organization will quickly, thoroughly, and credibly engage in a critical, self-reflective process known as root-cause analysis" (Johnson and Roebuck-Colgan 1999). Given that JCAHO's definition of a "sentinel event" is clinically focused, how might the concept be modified to accommodate an unexpected outcome due to an administrative decision? Is a root-cause analysis any less relevant in such a situation?

For the purposes of this discussion, I suggest the following definition of a sentinel event for use in stimulating a healthcare management internal investigation: a sentinel administrative event is an unexpected occurrence involving major economic or non-economic losses adversely affecting patients or others or having the potential of leading to serious negative consequences. Such an event is intended to include any significant development adversely affecting patients, the community, or financial or human resources. In these cases, conducting a root-cause analysis should be just as appropriate and potentially productive as when dealing with serious clinical problems.

At a minimum, such an analysis should attempt to identify the source of the error and its cause. First, to identify the source, a distinction should be made between a manager's mistake and a management mistake. This is not simply a semantic consideration; there is a substantive difference. A manager's decisions and actions, whether they are right or wrong, reflect how a particular individual manages her priorities, goals, values, and relationships. Most mistakes by managers are the result of mismanaging people and other resources, as well as inattention to critical details. In contrast to a manager's individual decisions and actions, management mistakes and successes usually result from collective decision-making. Poor systems will undermine the quality of decisions by both managers and management. Second, regardless of the source of the error, any informed analysis should include an examination of its cause(s). Table 1.1 includes a brief list of possible sources and causes of healthcare management mistakes.

Table 1.1 Sources and causes of healthcare management mistakes




    Sources of mistakes




  • Directed board decision

  • Shared CEO/board decision

  • CEO decision

  • Shared CEO/management decision

  • Shared CEO/medical staff or physician group decision

  • Manager decision

  • Shared manager/management decision

    Causes of mistakes




  • Inadequate preparation of/by decision-maker(s)

  • Insufficient or inaccurate information

  • Lack of expert input

  • Ignorance of all legitimate alternatives

  • Flawed decision-making process

  • Carelessness

  • Political pressure, fear, timidity

  • Conflict of interest

  • Undue haste

  • Failure to follow established policies and/or external requirements






© Cambridge University Press
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Table of Contents

Notes on the contributors; Foreword Richard J. Davidson; Preface; Acknowledgements; Part I. Addressing Management Mistakes in Healthcare: 1. Acknowledging and examining management mistakes Paul B. Hofmann; 2. The context of managerial mistakes John Abbott Worthley; 3. Identifying, classifying and disclosing mistakes Wanda J. Jones; 4. What medical errors can tell us about management mistakes Carol Bayley; 5. Correcting and preventing management mistakes John A. Russell and Benn Greenspan; 6. A question of accountability Emily Friedman; Part II. Case Studies of Mistakes in Healthcare Management: 7. Medical errors: Paradise Hills Medical Center Commentary Frankie Perry; 8. Nurse shortage: Metropolitan Community Hospital commentary Trudy Land; 9. Information technology setback: Heartland Healthcare System commentary Mark R. Neaman; 10. Inept strategic planning: Southwestern Regional Healthcare System commentary Robert S. Bonney; 11. Public relations fiasco, George C. Fremont Community Hospital commentary Ruth M. Rothstein; 12. Ineffectual governance: Pleasant Valley Regional Health System commentary Joyce A. Godwin; 13. Failed hospital merger: Richland River Valley Healthcare System commentary Fred L. Brown; 14. UK review of selected cases Robert Nicholls and Andrew Wall; 15. Lessons learned: insights and admonitions Paul B. Hofmann and Frankie Perry; Suggested further reading; Index.

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