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Key factors that influence change at Tufts NEMC Case Study Paper

Key factors that influence change at Tufts NEMC Case Study Paper

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Complete Part 2 of an in-depth analysis of the case study, “Case Study 5: Ellen Zane—Leading change at Tufts/NEMC.” Your 6–8-page analysis will focus on how the organization navigated the changes made to improve its stability, how those changes impacted the various stakeholders and departments, and the communication practices utilized throughout this change management process.

Note: The assessments in this course build upon the work you have completed in the previous assessments. Therefore, complete the assessments in the order in which they are presented.

In today’s dynamic health care environment, leaders are expected to assume a greater change agent role and will be required to use their positional power and expertise to lead their organizations forward in uncertain waters. An in-depth understanding of organizational structures, power dynamics, resistance to change, and other factors is vital to becoming a master change agent.

This assessment provides an opportunity for you to examine the key factors in an organization that influence the development of an appropriate change strategy and implementation plan.

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

  • Competency 1: Analytical Thinking: Develop complex plans or analyses.
    • Evaluate an organization’s use of structures and systems to deal with environmental uncertainty and complexity.
    • Explain how various departments and stakeholders are affected by a proposed change.
  • Competency 3: Innovative Thinking: Apply “tried and true” concepts or trends.
    • Describe the types of power at play within the organization and its potential effects.
    • Outline potential actions designed to prevent or mitigate conflict and resistance to change.
  • Competency 4: Process Management and Organizational Design: Benchmark good processes and practices.
    • Assess the effects of communications on change implementation.
  • Competency 6: Communicate effectively with diverse audiences, in an appropriate form and style, consistent with applicable organizational, professional, and scholarly standards.
    • Write clearly and concisely, using correct grammar and mechanics.Key factors that influence change at Tufts NEMC Case Study Paper
    • Support main points, claims, and conclusions with relevant and credible evidence, correctly formatting citations and references using APA style.

 

Templates

Use this template for your case study analysis.

Required Resources

The following resource is required to complete the assessment.

Resources

Suggested Resources

The resources provided here are optional. You may use other resources of your choice to prepare for this assessment; however, you will need to ensure that they are appropriate, credible, and valid. The MHA-FP5040 Health Administration Change Leadership Library Guide can help direct your research, and the Supplemental Resources and Research Resources, both linked from the left navigation menu in your courseroom, provide additional resources to help support you.Key factors that influence change at Tufts NEMC Case Study Paper

Organizational Change

The following resources may be of use to you in examining how the organization navigated the changes made to improve its stability, the impact of those changes, and the use of communication practices throughout the change management process.

Writing Resources

You are encouraged to explore the following writing resources. You can use them to improve your writing skills and as source materials for seeking answers to specific questions.

Additional Resources for Further Exploration

  • Cawsey, T. F., Deszca, G., & Ingols, C. (2016). Organizational change: An action-oriented toolkit (3rd ed.). Thousand Oaks, CA: Sage. Available from the bookstore.
    • Chapter 5, “Navigating Change Through Formal Structures and Systems,” pages 143–179.
    • Chapter 6, “Navigating Organizational Politics and Culture,” pages 182–211.
    • Chapter 7, “Managing Recipients of Change and Influencing Internal Stakeholders,” pages 215–252.
    • Chapter 8, “Becoming a Master Change Agent,” pages 256–294.

 

 

Assessment Instructions

Note: This assessment extends the case study analysis you began in the previous assessment and must be completed prior to the next assessment. Therefore, complete the assessments in this course in the order in which they are presented.

Preparation

Review the case study, “Case Study 5: Ellen Zane—Leading change at Tufts/NEMC,” linked in the resources.

Note: Remember that you can submit all—or a portion of—your draft analysis to Smarthinking for feedback, before you submit the final version for this assessment. If you plan on using this free service, be mindful of the turnaround time of 24–48 hours for receiving feedback.

Requirements

Analyze how the organization navigated the changes made to improve its stability, how those changes impacted the various stakeholders and departments, and the communication practices utilized throughout this change management process.

Document Format and Length

Format your analysis using APA style.

  • Use the APA Style Paper Template, linked in the Required Resources. An APA Style Paper Tutorial is also provided (linked in the Suggested Resources) to help you in writing and formatting your analysis. Be sure to include:
  • Your analysis should be 6–8 pages in length, not including the title page and references page.

Supporting Evidence

Cite 3–5 sources of credible, scholarly, or professional evidence to support your analysis.

Case Study Analysis

Note: The requirements outlined below correspond to the grading criteria in the scoring guide. Be sure that your analysis addresses each point, at a minimum. You may also want to read the Case Study Analysis—Part 2 Scoring Guide to better understand how each criterion will be assessed. Be sure to note the requirements in the Distinguished column.

  • Evaluate the organization’s use of structures and systems to deal with environmental uncertainty and complexity.
    • What uncertainties and degree of complexity did the organization face?
    • How successful were particular structures and systems at countering those challenges?
    • What evidence supports your conclusions?
  • Describe the types of power at play within the organization and its potential effects.
    • Consider the source of power and the role of power and influence in the organization.
  • Explain how the various departments and stakeholders were affected by the proposed change.
  • Outline potential actions designed to prevent or mitigate identified conflicts and resistance to change.
    • How will these actions help mitigate conflict or promote acceptance of change?
    • Which actions are likely to be more effective? Why?
  • Assess the effects of communications on change implementation.
    • Consider communication best practices.
    • Was Ellen Zane’s communication strategy effective?
  • Write clearly and concisely, using correct grammar and mechanics.
    • Express your main points and conclusions coherently.
    • Proofread your writing to minimize errors that could distract readers and make it more difficult for them to focus on the substance of your evaluation.
  • Support main points, claims, and conclusions with relevant and credible evidence, correctly formatting citations and references using APA style.
    • How or why does particular evidence support your main points, claims, or conclusions?
    • Is your supporting evidence clear and explicit?
    • Will your audience see the connection?

 

 

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FOR THE USE OF CAPELLA UNIVERSITY STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Copyright © 2016 by SAGE Publications, Inc. Case Study 5 Ellen Zane—Leading Change at Tufts/NEMC Cynthia Ingols Lisa Brem Simmons College School of Management Boston It was a difficult decision to take this job. But there was something about the history of Tufts-NEMC and its importance to so many stakeholders that really grabbed me as the epitome of what one could do in one’s career. I’d also learned not to be adverse to risks. You have to take risks, not stupid risks, but you have to take risks. — Ellen Zane, CEO, Tufts-NEMC E llen Zane brought a cup of coffee into her home office. It was 4:30 a.m. and she was, as usual, starting the day early. She fired off a few e-mails to her senior staff and looked over the Women’s Business magazine on her desk. Her photograph was on the cover, highlighting the article on the turnaround she was attempting to execute at Tufts-New England Medical Center (Tufts-NEMC). It was the summer of 2006 and it had been an incredibly rough two-and-a-half years since she accepted the CEO position at the ailing Boston hospital. Since then the hospital had survived the worst of its financial troubles—they were meeting efficiency goals and for the first time in years, more doctors joined the hospital than left it. Tufts-NEMC posted an $18 million gain in 2005, after losing nearly $60 million since 2001 (see Exhibit 1 for financial statements). People were smiling and thanking Zane in the corridors. But that was a piece of the problem. This was the tricky part, she thought, in one of her rare moments of quiet as the predawn light slowly infused the room. Zane realized that she was still deeply worried about the future: This place was just so fragile and I still consider it fragile. It’s one month forward and one month back. This market is unforgiving and tough—I swim with the Source: From Linda E. Swayne, W. Jack Duncan & Peter M. Ginter. Strategic Management of Health Care Organizations. Jossey-Bass. 2008. 449 FOR THE USE OF CAPELLA UNIVERSITY STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Copyright © 2016 by SAGE Publications, Inc. 450   ORGANIZATIONAL CHANGE sharks and nobody glad-hands us. I tell the staff all the time—not a minute do we take our foot off the gas. Zane struggled with how to maintain the solidarity that the financial crisis had created among Tufts-NEMC’s 5,000 employees.1 She knew from her 30 years of experience in hospital management that sustaining change in Boston’s cutthroat medical industry was the hardest part of any turnaround. She had been successful before with Quincy Hospital, but Quincy had been a much smaller player. Tufts-NEMC was a 450-bed Academic Medical Center (AMC) that was the primary teaching site for Tufts University School of Medicine, and conducted over $50 million in research each year. It had 17,000 admissions in 2005 and generated $600 million in revenue. Unfortunately, while Boston’s other AMCs merged, built networks, and grew stronger, Tufts-NEMC had for years floundered directionless in Boston’s rough seas. As Zane headed to her office overlooking Boston’s Chinatown she wondered: How could she create and sustain true and lasting change for Tufts-NEMC? The Health Care Industry in Boston “Health care, together with education and computer technology, is what Massachusetts is known for throughout the world.”2 Home to several high-profile Academic Medical Centers, the Boston area was a worldrenowned destination for health care services. Massachusetts General Hospital (MGH), Brigham and Women’s Hospital (BWH), and Beth Israel/Deaconess Medical Center were affiliated with Harvard Medical School, Boston University Medical Center with Boston University, and Tufts-New England Medical Center with Tufts. These large AMCs led the way in capturing $2.3 billion in National Institutes of Health (NIH) research grant money, second only to California. Massachusetts hospitals employed 12.2% of the total labor pool, and accounted for a whopping 11.7% of the gross state product. Health care expenditures per capita were between 27% and 29% higher than the national average from 1990 to 2000 (see Exhibits 2–9 for Massachusetts health care statistics). Consumers, health plans, and governing bodies tended to accept that heath care in Boston costs more in accordance with the high quality and cutting-edge services the region provided. Nationally, however, years of underfunding by federal and state governments and rising enrollment left Medicare and Medicaid payments lagging behind surging medical costs.Key factors that influence change at Tufts NEMC Case Study Paper
Hospitals in Massachusetts and the rest of the nation amassed significant debt in the 1970s and 1980s as they refurbished older facilities, expanded services, and purchased expensive new technologies. While reimbursements fell behind rising costs, hospital discharges declined sharply in the 1980s, as did the average length of stay. In Massachusetts, a decrease in hospital births and nonresident discharges3 led to an overall decline of 24% in total hospital discharges from 1991 to 1996. The increase in outpatient surgeries also affected hospitalizations.4 Throughout the 1990s, Massachusetts health care insurance plans followed nationwide trends when they merged into three large competitors: Harvard Pilgrim Health Care, Blue Cross/Blue Shield of Massachusetts, and Tufts Health Plan. These “big three” plans wielded increasing power in the marketplace, and their movement to managed health (HMO) plans resulted in lower payments to providers5 and more oversight on costs and medical services. All three expanded regionally, to entice large regional and national companies to offer their plans to employees. HMOs used capitated payments, meaning they reimbursed providers based on the number of “covered lives” in the provider system. Thus, providers of health care services such as hospitals and doctors believed volume FOR THE USE OF CAPELLA UNIVERSITY STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Copyright © 2016 by SAGE Publications, Inc. Case Study 5   451 and efficiency of services to be the most important factors in future financial success. In 1991 Massachusetts deregulated hospitals for the first time in ten years. These conditions succeeded in making an impact—threatening the financial viability of hospitals and moving them toward more efficient and cost effective management practices. Boston’s health care leaders struggled for a strategy to survive in the new environment. Mergers, closures, and conversions loomed. The leaders of MGH and BWH made the first decisive move. Managers at both hospitals believed they needed additional leverage to hold their own in negotiations with the ever more powerful health insurance plans. They also envisioned building a network of community primary care and specialist providers who would refer tertiary6 patients to the member hospitals, thus bolstering volume. In 1994, when the news of the merger of these two behemoths—forming Partner’s Healthcare System, Inc. (Partner’s)—became public, it was a seismic change in the landscape of the New England medical industry. Others quickly followed suit. From 1990 to 2000, there were 47 acquisitions and mergers and 19 acute care hospital closures, not including the formation of 10 major hospital systems in Massachusetts.7 Following the market consolidations in the 1990s, the turn of the twenty-first century years were difficult ones for Boston’s hospitals and insurers. Both Harvard Pilgrim and Tufts Health Plans were hindered by regional over-expansion. In 1999, Harvard Pilgrim went into receivership after posting a $226 million loss, while Tufts Health Plan lost $42 million. Community hospitals also continued to struggle from high debt, inadequate reimbursements, high labor and pharmaceutical costs, and failed merger or network integration attempts. In Massachusetts particularly, consumers began to migrate to the more expensive AMCs from the smaller regional or community hospitals, seeking what they perceived to be higher quality of care. Cuts in payments from Medicaid, Medicare, and pri- vate insurance plans continued to plague many providers.Key factors that influence change at Tufts NEMC Case Study Paper
To encourage more efficient management and cost containment practices among its providers, HMOs started to move away from capitated care and toward pay-for-performance plans. Even some AMCs felt the pressure on their organizations. CareGroup— another Massachusettsbased hospital umbrella organization—posted a loss of $215 million over 1999 and 2000 and lost market share and network physicians. Partners, however, grew and remained strong, reaching 5,600 doctors in its Partner’s Healthcare System, Inc. (PCHI) network. In a seminal flexing of its market strength, Partner’s negotiated up to 30% increases from all three major health plans, at one point refusing to continue a contract with Tufts Health Plan until it agreed to higher payments.8 By 2005, the provider market was dominated by four major hospital systems: Partners, reporting a surplus of $30 million; Caritas Christi; CareGroup (which had decentralized most of its operations back to its member hospitals); and Boston Medical Center. See Exhibit 10 for provider descriptions. When the dust settled on the consolidation activity, there were approximately 25 acute care, five psychiatric, and five rehabilitation hospitals in the metropolitan Boston area, with Partners leading in market share.9 On the insurer’s side, the major health plans recovered, with Blue Cross/Blue Shield of Massachusetts coming out on top, Harvard Pilgrim regaining strength, and Tufts maintaining a third position. According to one survey of the Boston health care industry, trends through 2005 were: •• AMCs faced lack of capacity from years of merging and downsizing, while admissions moved to AMCs from community hospitals; •• pay-for-performance (quality incentive) programs were gaining in popularity, using measures such as cost, efficiency, IT capacity, admission rates, and patient satisfaction to bolster reimbursements;Key factors that influence change at Tufts NEMC Case Study Paper
FOR THE USE OF CAPELLA UNIVERSITY STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Copyright © 2016 by SAGE Publications, Inc. 452   ORGANIZATIONAL CHANGE •• hospitals struggled to recruit new doctors and nurses, with AMCs poaching from each other; •• nationally, the growing number of uninsured and underinsured people increased the amount of bad debt hospitals carried. Although mitigated in Massachusetts by strong safety net programs, collections were still a rising concern.10 History of Tufts-NEMC11 New England Medical Center, originally the Boston Dispensary, was one of the oldest hospitals in the United States. Started in 1796 by the philanthropic activities of historical Boston figures Samuel Adams and Paul Revere, the Boston Dispensary was the first permanent medical facility in New England. First envisioned as a community medical service for the poor, the hospital quickly gained a reputation for innovation. It was the first U.S. hospital to assign nurses to patients, to form a visiting nurse association, and establish dental, rehabilitation, venereal disease, lung, food and nutrition, and evening pay clinics. It pioneered employer-paid clinic treatment, well-child services, and moving x-rays. The first modern test for syphilis, the first group psychotherapy experiment, the first human growth hormone, and immuno-suppression therapies were developed at the Boston Dispensary. In 1929 New England Medical Center was formed by the merger of the Dispensary and Tufts College Medical and Dental Schools. By 1965, it added the Floating Hospital and the Pratt Diagnostic Clinic–New England Center Hospital.12 In recent years, the tradition of innovation continued, with strong programs in cancer treatment, transplants, and neurosurgery. In 1992, with the addition of a maternity service, TuftsNEMC became the first full-service, private teaching hospital in Boston. The Neely House, opened in 1997, was a unique bed and breakfast style home located within the hospital for cancer patients and their families. And in 2001, TuftsNEMC opened a transplant exchange program, the first of its kind in the U.S. which allowed family members of transplant patients to donate kidneys to patients on the global waiting list, thus increasing the number of organs available for transplant. Financially, however, Tufts-NEMC was struggling. Although in the 1990s the hospital had posted gains, it was largely due to a write-down in assets, and not improved efficiency or an enhanced revenue cycle. The hospital had fallen prey to the same negative market forces that had taken their toll on other non-affiliated hospitals in the 1990s. By 1996, it was $240 million in debt (up from $130 million in 1990) and was losing physicians, market share, and hospital acquisitions to Partners and CareGroup. Like many AMCs, Tufts-NEMC was slow to react to market pressures, and ineffective in improving processes and cash flow. In a particularly devastating blow to the hospital, Harvard Pilgrim Health Care discontinued coverage to Tufts-NEMC in 1995, citing high costs. As Zane explained: Harvard Pilgrim HC had taken TuftsNEMC out of their network and it had almost killed the place. A doctor in Hyannis wants to send a patient to Boston. He or she has to ask “does this patient have Harvard Pilgrim?” The situation caused doctors to have to think too much about insurance. It was just easier to send everybody to the Brigham. So, for Tufts-NEMC, not being in that contract was incredibly hurtful. The Lifespan Merger In the mid-1990s, Tufts-NEMC began to actively look for a partner to remedy its fiscal dilemmas.Key factors that influence change at Tufts NEMC Case Study Paper
It needed more clout against the health plans, more referrals from community hospitals, and a FOR THE USE OF CAPELLA UNIVERSITY STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Copyright © 2016 by SAGE Publications, Inc. Case Study 5   453 partner with deep enough pockets to help pay for growth to compete with Partners, CareGroup, and the other Boston systems. It was in talks with Columbia/HCA, a for-profit hospital chain from Tennessee that wanted to expand its presence in New England. If the merger went through, it would be the first AMC owned by a for-profit company in New England. This did not sit well with some of the board members, faculty, and community, who strongly wanted to preserve Tufts-NEMC’s non-profit nature. In late 1996, the hospital was treating a highranking official from the Lifespan Corporation, a regional non-profit hospital system formed in 1994 with a merger of the Miriam and Rhode Island hospitals.13 One of Tufts-NEMC’s physicians explained the hospital’s dilemma and talks began between Lifespan and Tufts-NEMC to merge. Tufts-NEMC leadership saw benefits to joining with Lifespan, such as needed capital, a chance to gain back the Harvard Pilgrim Health Care contract, and the potential referrals from the Rhode Island system. On Lifespan’s side, TuftsNEMC was enticing for its status as an AMC, its base in Boston, and its expertise in high-level care. The merger would create, as one journal wrote, “a $1.5 billion, 14,500-employee health care giant with the ability to serve 70 percent of the entire New England market” and would rival the $1.8 billion Partners system and $1.1 billion CareGroup.14 In January 1997, Tufts-NEMC and Lifespan officially announced the merger, which became effective in November of that year. Ed Schottland, Senior Vice President–System Integration at Lifespan and appointed COO at TuftsNEMC at the time of the merger, explained: Lifespan was interested in Tufts-NEMC because it gave them instant access into Boston and made them the regional system they wanted to be. The plan was to create Lifespan of Rhode Island and Lifespan of Massachusetts—of which TuftsNEMC would be the hub—both overseen by an overarching corporation. Tufts-NEMC is a tertiary and quaternary15 medical center, we do bone marrow, solid organ transplants, and we have a neonatal intensive care unit. They didn’t do any of those things in Rhode Island. The only BMT16 program allowed in Rhode Island was at Roger Williams Hospital. So Lifespan got instant access to highest levels of care. The merger filled out the service complement with a high class, well respected organization with great outcomes and great medical care. Everyone assumed that we would be able to direct our patients here from Rhode Island. We would have a system of care, just as Partners was trying to do with their North Shore hospitals. The marriage was not a happy one however— the hoped-for synergies never materialized. Rhode Island regulators objected to large amounts of capital migrating to Boston and required Lifespan to reduce the amount TuftsNEMC was to receive to $8.7 million a year for 10 years, down from 30 years as originally planned. Although Harvard Pilgrim did eventually re-contract with Tufts-NEMC, some in the industry believed that legislation or litigation would have forced that outcome regardless.
Key factors that influence change at Tufts NEMC Case Study PaperThe referrals also did not pan out. As Schottland explained: Physicians make their own decisions about where they refer. Physicians like to refer primarily based on personal and professional relationships. A secondary reason they didn’t refer to Tufts-NEMC was they felt that if they started to support a program here they might never get approval within the Lifespan system to get that program down in Rhode Island. This was a unique system since there were two medical schools—Brown and Tufts. The Brown faculty wanted to have the FOR THE USE OF CAPELLA UNIVERSITY STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Copyright © 2016 by SAGE Publications, Inc. 454   ORGANIZATIONAL CHANGE programs, like bone marrow transplants, in Rhode Island. So there was a certain reluctance to cooperate at times. Another problem with the merger was the “brain drain”. Lifespan took many of the administrative and support functions out of TuftsNEMC and centralized them in Rhode Island. Tufts-NEMC lost their human resource, finance, purchasing/supply chain, and IT, an area where Tufts-NEMC had been groundbreaking in the past. The anticipated growth in acquisitions also failed to take place. Hospitals that had previously affiliated with Tufts-NEMC, such as Faulkner, another Tufts Medical School teaching site, joined Partners instead, while Tufts-NEMC was busy finalizing its merger with Lifespan. In 2000, Lifespan/Tufts-NEMC also lost Hallmark Health System in Malden. As one industry journal wrote: Every time a decision had to be made, Tufts-NEMC President and Chief Executive Officer Tom O’Donnell, M.D., traveled 55 miles across the state line to Providence, R.I. There he conferred with the 21-member board of his parent system, Lifespan Corp. He would return to meet with his own 21-member board, then respond to Hallmark. […] The extra corporate layer proved to be too much. Hallmark, at the time a four-hospital system, walked away from the deal.17 Adding insult to injury, Quincy (Mass.) Medical Center and MetroWest Medical Center spurned Tufts-NEMC, citing that the “local hospitals did not think of Tufts-NEMC as a Massachusetts hospital.”18 But perhaps the worst thing about the merger was that insurance contracting was done in Rhode Island. Lifespan did not understand the cost of doing business in the Boston market and th …