Is Your Healthcare Organisation Badly Designed?

By Benedict A Stanberry, Principal, IHLM, Oxford, UK

Why do healthcare staff sometimes find their workplace so oppressive? Why are some hospitals unable to impose greater accountability on physicians? Why do healthcare systems struggle to satisfy patient expectations? There are many answers to these questions, but as I prepare for IHLM’s upcoming programme on healthcare strategy and strategic planning I am struck by just how helpful one particular management theory is at explaining the problems that many healthcare staff, hospitals and systems encounter: something about their organisational design is inconsistent with the strategy they are trying to achieve.

Henry Mintzberg and the Structuring of Organisations

The name Henry Mintzberg will probably be familiar to most management academics and students, but not necessarily to healthcare managers. A professor at McGill University in Montreal, he is one of the most prolific and original writers on business and management and runs McGill’s International Masters for Healthcare Leadership. Some of his most insightful research dates all the way back to the late 1970s, when he investigated how the structuring of organisations influences the way they function and observed that there are five commonly occurring structures or ‘configurations’. Even though his work is now almost four decades old, it can easily be applied to the types of healthcare organisation we see today and offers many insights into why they either succeed or fail.

1. Simple Structure

A simple structure is managed and led from its strategic apex by a single leader or a small leadership team. They hold all the power and co-ordination takes place through their direct supervision. This type of organisational structure can often be seen in small and medium-sized healthcare enterprises, including new hospitals and clinics that have been established by an entrepreneurial physician or team who like to be ‘hands on’ and hence minimise the number of middle line managers.

In healthcare, simple structures can be fun and effective if they’re run by an affiliative, democratic leadership team with whom staff enjoy a direct and informal relationship. But they can easily be derailed by two kinds of extreme leadership behaviour. When leaders are autocratic micro-managers a climate of fear can quickly grip the organisation. Bad news is buried. Candour forgotten. A ‘blame culture’ takes over. On the other hand, the scandal of poor care at Stafford Hospital, a small district general hospital in the UK, might in part be explained by powerful leaders becoming too distant from frontline staff and ignoring their concerns.

Most healthcare organisations begin their lives as simple structures. But if they want to grow, they will almost certainly have to transition into a…

2. Machine Bureaucracy

This is probably the most common configuration for healthcare organisations, in which a technostructure of quality auditors, analysts and managers tightly control the way the operative core of healthcare professionals deliver care to patients. Machine bureaucracies in healthcare are typified by behemoths such as the English National Health Service that, over the last few decades, have become dominated by multiple overlapping agencies that measure, inspect and regulate practically every aspect of performance and have gained significant power over the day-to-day work of healthcare staff.

Machine bureaucracies work best in simple, stable environments and can be very effective in raising standards of care, managing resources efficiently and creating transparency. Managed care providers such as Kaiser Permanente are typical machine healthcare bureaucracies, with entire departments dedicated to disease management, case management, wellness incentives, patient education, and utilisation management and review. But by over-standardising the way care is delivered they can stifle professional initiative and prevent change and innovation occurring. The sheer volume and variety of performance measures may overwhelm clinicians and divert them from frontline care.

Though doubtless indispensable, machine bureaucracies have made the very word ‘bureaucracy’ a dirty one in healthcare and alienated many healthcare staff. But there is an alternative…

3. Professional Bureaucracy

More human and hospitable than machine bureaucracies, professional bureaucracies put the operating core of healthcare staff in control. By decentralising decision-making and empowering frontline teams, professional healthcare bureaucracies enable their staff to work relatively freely, achieving whatever coordination is required through the standardisation of professional skill and knowledge that took place during their training. Indeed, in this configuration staff might identify more closely with their team or profession than with their organisation and will often organise themselves into functional or market-oriented groups – cardiologists will treat cardiac patients, for instance, oncologists will care for cancer patients, and so on.

A professional bureaucracy might be the organisational structure that most healthcare professionals would prefer if given the choice, since it gives them freedom to innovate and provide high-quality services in complex but stable environments. However, problems of poor coordination and communication can be common and some senior clinicians may cherish their autonomy so much that, as occurred in the Bristol Royal Infirmary scandal, they become an oligarchy: resenting or resisting being held to account.

Many healthcare professionals have spent their entire working lives in professional bureaucracies. For them, the transition of these structures into machine bureaucracies is unwelcome.

4. Divisionalised Form

Some healthcare organisations operate multiple hospitals and clinics, so take a divisionalised form in which a middle line of intermediate managers, sitting between the leadership team and the healthcare professionals, coordinates the work of each division. This organisational structure is appropriate when individual business units are charged with servicing their own market and there is little or no interdependency between them – such as primary healthcare clinics distributed over different suburbs or districts. Without the need for close coordination, a large number of divisions can report to one central headquarters.

In divisionalised healthcare organisations, however, there are frequently tensions between a division’s desire for autonomy and headquarter’s need to align the goals of the divisions with its own. This is often resolved by standardising the outputs of those divisions using performance control systems designed by a small headquarters technostructure.

Divisionalised healthcare organisations are not complete structures: they are superimposed upon other organisational structures that are capable of accepting the imposition of standards – ie, either a machine or a professional bureaucracy. They enable healthcare organisations to become very large – Hospital Corporation of America manages 168 hospitals and 116 freestanding surgery centres, for example – yet this can lead to the concentration of a huge amount of economic power in a few hands. This may encourage that power to be used irresponsibly or fraudulently.

5. Adhocracy

Finally we have the adhocracy: a special administrative structure found in organisations such as Apple and Google that facilitates innovation by fusing experts from different specialties into smoothly functioning project teams who coordinate their work through informal communication and teamwork.

For every healthcare bureaucracy there is an adhocracy that does similar work, but with a broader orientation. So while a professional healthcare bureaucracy tends to pigeonhole each patient into a particular clinical discipline – eg, cardiology, oncology, endocrinology and so on – a healthcare adhocracy takes a very different approach. It groups healthcare professionals into multidisciplinary teams in order to encourage mutual adjustment and a focus on the complete physical and mental health needs of the patient. A professional healthcare bureaucracy leverages the standardisation of skills to enable clinicians to work autonomously, but an adhocracy convenes healthcare professionals into teams of interdependent caregivers in order to facilitate the delivery of innovative, integrated care.

Adhocracies come into their own in complex, dynamic healthcare environments that demand new types of healthcare delivery: the kind that calls for a fluid structure with a good deal of decentralisation, such as Geisinger’s Medical Home programme.

Getting the Structure Right

So we have seen that simple organisational structures can be highly adaptable, but permit their leaders to become bullies. Professional healthcare bureaucracies can become ‘club cultures’ where doctors are a law unto themselves, whereas machine bureaucracies are perfect for delivering large scale public healthcare but slow to adapt to new situations. Organisational designs have consequences, it seems. So how can the progressive healthcare manager put Henry Mintzberg’s theories to work? Well, here are four lessons we can all take away:

• There is no one best way. We must avoid the temptation to simply copy-and-paste our organisational structure from another hospital or clinic. What works for them might not work for us.

• Strategy and organisational structure must be consistent. Or in other words, you cannot achieve anything that your organisation’s design won’t allow. If you want to empower healthcare staff, for example, a simple structure dominated by a powerful leader is unlikely to facilitate this. Depending on the situation, a professional bureaucracy or even an adhocracy may be far more suited to this purpose.

• The organisation’s structure must be consistent with its environment. Some configurations, namely the bureaucracies and the divisionalised form, are very well suited to stable environments. But when the environment becomes more dynamic and the demands of patients and other stakeholders begin changing dramatically, these structures struggle with change while the simple structures and adhocracies thrive.

• With every structure comes a culture. Each type of organisational design has its own norms, traditions and beliefs. Machine bureaucracies are unlikely to be particularly innovative or risk-taking. Professional bureaucracies are likely to resist change, particularly if it is top-down. Adhocracies probably won’t take much notice of policies and procedures that prevent innovation. If you want to change your healthcare organisation’s prevailing ideology, you may have to radically alter its structure.

You can learn more about organisational design by joining IHLM’s forthcoming Healthcare Strategy and Strategic Planning programme.