Transcript Can (f)ailing hospitals be turned around?

Organizational Turnaround:
emerging lessons from a study of
‘failing’ health care providers in
England
Work in progress
Naomi Fulop
London School Of Hygiene &
Tropical Medicine
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Acknowledgements
Project team:
Fiona Scheibl
Nigel Edwards
Gerasimos Protopsaltis
Funded by: NHS Confederation
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Outline of Seminar
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Policy context
What do we know from the literature?
Study aims
Methods
Findings
Some lessons/policy implications
Conceptual/methodological issues
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Policy context
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New public management – ideas from
management of private sector transplanted
to management of public sector
Increasing focus on performance in public
sector
Performance assessment developed in
education, health, local government in
England & elsewhere
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The English health care context
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A National Health Service (NHS)
Funded out of taxation
Mainly publicly provided
Elected politicians provide overall
direction
Very centralised and hierarchical tension with decentralisation
tendencies
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A star rating system (1)
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Performance assessment system
introduced in NHS in 2001
Health care organizations graded –
‘star rating’ system
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Star rating system (2)
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Three stars - highest levels of performance
Two stars - performing well overall, but
have not quite reached the same consistently
high standards
One star - some cause for concern
regarding particular areas of performance
Zero stars - poorest levels of performance
against the indicators or little progress in
implementing clinical governance
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What are ratings based on?
Key targets and indicators – examples
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A&E emergency admission waits (12 hours)
cancelled operations not admitted within 28
days
financial management
hospital cleanliness
death within 30 days of selected surgical
procedures
emergency readmission to hospital following
discharge
Clinical governance (CHI) reviews
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Publicly available
source: CHI website (2003 ratings)
Barking, Havering and Redbridge Hospitals NHS Trust
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Summary
Trust report
Barnet and Chase Farm Hospitals NHS Trust
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Summary
Trust report
Barnsley District General Hospital NHS Trust
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Summary
Trust report
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Summary
Trust report
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Summary
Trust report
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Summary
Trust report
Barts and The London NHS Trust
Basildon and Thurrock University Hospitals NHS Trust
Bedford Hospitals NHS Trust
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Policy responses
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Concept of ‘failing’ health care
organization
Franchising policy – ‘heroic leadership’
model
Development of more sophisticated
interventions – Modernisation Agency
Three star organisations get ‘earned
autonomy’ (Foundation hospitals)
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Why were we interested?
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Mergers study – unstated driver to
deal with managerial deficits…..
Franchising policy – concern about
‘heroic leadership’ model
Personal interest in ‘failure’
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What do we know from the
literature? (1)
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Quite extensive literature on
turnaround in private sector
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Very little literature on turnaround in
public sector
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What do we know from the
literature? (2)
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Approx. 25-30 studies on turnaround in private
sector
Explain failure in two main ways:
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a) changes in external environment
b) inertia within the organisation
Dominant model of successful turnaround
Retrenchment (withdraw from unprofitable sectors)
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Strategic change (new markets or new products in existing
markets)
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Leadership change (CEO and/or senior management
team)
Source: Skelcher et al (2003)
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How helpful is this model of turnaround
for public sector organisations?
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Retrenchment – can hospitals stop providing certain
services? (but can contract out)
Strategic change – can’t easily take over another
provider (but can redesign processes)
Leadership change – is possible in NHS and focus
has been on this
Turnaround in public sector, e.g. NHS is
constrained by context – markers for ‘success’ and
‘failure’ more contested
Source: Skelcher, 2003
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Study objectives
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Draw lessons from the experience of changing the
management of ‘failing’ organisations
Specifically exploring:
 Markers for ‘failure’
 Responses to turnaround
 Strategies for turnaround
 Process/Impact of these strategies
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Methods
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Phase 1 (2002): case studies of 5 hospitals
 Perceived to be ‘failing’
 New management brought in
 At different stages of turnaround
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Phase 2 (2003): followed up 4/5 from phase 1 plus
four added:
 Zero star (or ‘at risk’)
 Management replaced
 Support from Modernisation Agency
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Data collection and analysis
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Semi-structured interviews with 106 internal and
external stakeholders across 9 hospitals
Analysis of national and local media coverage
Changes in star ratings over time
Analysis within and between case studies
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Markers For Failure
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Poor performance on key targets e.g. waiting lists
Financial deficits
Major developments – ‘eyes off the ball’ e.g. merger,
redevelopment (PFI)
Stagnating management team
Lack of clear management structures/processes
Lack of engagement of clinicians in management of
services
Poor public image e.g. relations with media and
external stakeholders
Low staff morale
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Common Markers for
Failure
Examples
Poor performance on core
targets
“The trust was rated no stars in the
government’s league tables, mainly due to
its failure to achieve the major access
targets in the NHS plan - the waiting list
started rising, the outpatients’ waiting time
started rising, and it took a while to react to
that” (Senior manager, Trust A).
Financial deficits
“There had been a history of financial
pressure on the trust, and the management
at that time had struggled to find solutions
to those financial pressures. So they were
under pressure from Primary Care Groups
to withdraw work, reduce management
costs to make cash, releasing savings, and
all they were doing was cutting
management” (Senior manager, Trust C). 19
Common Markers for
Failure
Examples
Major developments
causing ‘eyes off ball’
“Probably the most major defining event was
the building the new hospital. While the
hospital was built on time, in budget,
absolutely as planned, what probably
happened is the eye wasn’t on the ball”
(Senior manager, Trust A).
Stagnating management
“There’d been a complete loss of confidence
in senior management, and that senior
management themselves were exhausted, I
know they’d all been here about ten years, I
think they’d lost the idea to what else to do, it
was fairly obvious where to change the
board” (Senior manager, Trust D).
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Common Markers for
Failure
Lack of clear
management
structures/processes
Examples
“One thing this place didn’t have was any
systems, anything written down, any
processes or protocols. People did pretty
much what they wanted. The previous
management was run by Cabal. There was
what was known as ‘The Breakfast Club’,
which met every Tuesday morning and made
all the decisions. Other managers and
clinicians were pretty much powerless.”
(Senior manager, Trust E).
Lack of engagement of
“The acute trust was working in isolation to the
clinicians in management whole system. And that was exacerbated by
of services
the trust itself, which had very strong divisions,
internally, and they didn’t work together. The
medical staff weren’t signed up” (Senior
manager, Trust C).
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Common Markers for
Failure
Examples
Poor public image and
poor working relations
with local media and
external stakeholders
“The term ‘fortress’ was used to exemplify the
feeling around health economy, that the trust
didn’t want to participate in the workings of
the wider health economy” (Senior manager,
Trust B).
Low staff morale
“I think there were a lot of people who were
frustrated, the morale wasn’t good” (Senior
manager, Trust B).
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Markers and causes of failure
Markers
- “eyes off the ball”
- poor relationships with external
stakeholders
- financial deficits
INTERNAL
- poor financial
control
- lack of HRM
strategies
Secondary
causes
EXTERNAL
- increase in
competition
- changes in
Govt policy
- lack of
leadership
Primary
Causes
Organisational
- introspection
- arrogance
- trauma
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Responses to failure
Health authorities (HAs) and Regional
Offices (ROs) played key roles in turnaround
situations.
E.g. RO ‘encouraged’ chairman to resign
and provided additional financial support to
in-coming team (Trust E)
But
When RO or HA intervened – should they
have intervened earlier? (‘The dangers of
delay’ McKiernan, 2002)
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The dangers of delay
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I can’t quite see why they weren’t making change
almost a year earlier. Because all the signs were
there in 1999 that things were going badly wrong,
yet they waited another year until there was almost
complete collapse, before action was taken. I do
think regions, as then, and in those still evolving
days of the performance management system, was
still perhaps not being helped totally by their
indicators, or their intelligence” (Senior manager,
Trust C).
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Turnaround strategies (1)
3 types of management change:
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Merger of ‘failing’ trust with ‘successful’
one (1)
Chief Executive franchise (2)
Replacement of entire executive teams (6)
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Turnaround strategies (2)
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Internal reorganisation
 Formally and informally involving clinicians
 Introduction of systems/processes/protocols
Improving operational performance
Focus on human resources
Financial analysis and control
Attempts to change ‘organisational culture’
External relations
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Strategies For Turnaround
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Involving staff
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“There was this big drive to improve communications,
involve all the staff in what was going on, and make
sure they had an opportunity to influence what was
going on” (Middle manager, Trust C).
Engaging Clinicians
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“[The new Chief Executive] managed to get an
understanding over to the clinicians that you have to
meet the national targets. They were not negotiable.
And if you didn’t meet them, you were stuffed,
basically. You’d get nothing. You’d get no money,
you’d have major problems here. And there’d be no
new development. And eventually that gradually
came home” (Senior manager, Trust C).
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Strategies For Turnaround
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Focus on operational performance
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“Our focus, because of the situation we were
in, was very much on waiting lists, waiting
times, turning the culture of the organisation
and the focus of the organisation. So we took
an approach that was very much about
process redesign, and involving people who
were involved in the front line care, and also
the administrative processes in how we could
improve things, make things better” (Senior
manager, Trust B).
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Impact of turnaround strategies
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Patient care
Staff
Organisational culture
Public image/external relations
Star ratings
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Impact of turnaround strategies
On patient care
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How much ‘failure’ was about quality of
clinical care?
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Focus on operational (esp. access) targets
led to improvements
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Impact of turnaround strategies
On Staff
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‘Honeymoon period’ – opportunity for
change
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Initial dip in morale because loyalty to
outgoing management – destabilising
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Only affects staff close to top of the
hierarchy?
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Process/Impact Of Turnaround
Strategies
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On staff
“[The staff] knew what the problems were. We started
on a winner really, although it was an awful mess, the
thing was, it couldn’t get worse. And so you’ve got
credibility and goodwill. You’ve then got to
demonstrate your credibility. You’ve got to win people
round, haven’t you. Because good will does run out.
So you’ve actually got to start to deliver some things
fairly quickly” (Senior manager, Trust C).
“Initially, I think there was a dip in morale, because
certain staff had been in the cluster a very long time,
and I think they perceived that the early retirement of
the previous chief executive meant that there was
some concern” (Senior manager, Trust A).
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Process/Impact Of Turnaround
Strategies
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Conflicts / Tensions
“A lot of conflict between [the new Chief Executive], and a
lot of the consultants, who were very loyal to [the previous
Chief Executive], who had been there for a very long time,
and useless though he was, he had a very loyal following of
consultants, who felt that the way he’d been got rid of was
unfair, and immoral and so on” (Senior manager, Trust E).
“But there was [conflict] with acceptability of individuals, you
know, with clinicians, they didn’t like the look of me, or [the
other execs], sometimes based on their experience of you,
and that’s fair enough, if they don’t like you because they
don’t like what you represent, and what you said, and all the
rest of it, but if they don’t like you on principle, it’s a bit silly
for grown-ups. There was lots of that stuff. It’s died off now,
largely” (Senior manager, Trust D).
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Process/Impact Of Turnaround
Strategies
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On organisational culture
Attempts to Move:
 From ‘can’t do’ to ‘can do’
 From ‘closed’ to ‘open’
Some successes reported
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Impact of turnaround strategies
On organisational culture
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“it’s a can-do culture now, it’s not tired, it’s involved, it’s got pride.
Stuff like, we’re in the middle of nurses’ week, I mean two years ago,
you’d never have had a whole week of events which are really well
attended, and quite innovative, and all sorts of things” (Senior
manager, Trust B).
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“There were huge clashes of organisational culture. I mean the fact
that we came in, wanting them to work, to pay attention to
government guidance, this is not something [the trust] had ever done.
The fact that we have provided a much more open culture, some
have thoroughly enjoyed it, others are appalled because it also
means that some of their data, some of their poor practices are being
reported and commented upon” (Senior manager, Trust E).
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Impact of turnaround strategies
On public image/external
relations
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Great improvements reported
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With local MPs
With local media
With other external stakeholders
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Impact of turnaround
strategies
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In short term, some showed improvements in
operational performance
Takes longer to address organisational culture
issues
Two groups of hospitals:
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Group 1 (5): transformed from ‘failing’ to ‘self-regulating’
Group 2 (4): stagnating or ‘permanently failing’
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Impact Of Turnaround Strategies?
New Management
A
B
C
D
E
Dec 99 Feb 01 Dec 99 April 99 April 01
Star Rating 01
0
0
***
**
0
Star Rating 02
*
**
**
*
*
Star Rating 03
*
*
**
**
0
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Impact Of Turnaround Strategies?
New Management
F
Mar 01
G
H
Jun 02 Jan 02
I
01
Star Rating 01
**
0
**
**
Star Rating 02
*
0
0
0
Star Rating 03
*
0
**
**
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Resources required for
turnaround
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Temporal (time, stability)
Leadership skills
 Ability to develop change agenda
 Ability to grasp detail required to deliver core
targets
External support
Financial (access to funding to achieve ‘quick wins’)
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Lessons for
management/policy
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Skills for identifying ‘at risk’ organisations
Resources required for turnaround (esp. time and
leadership)
Diagnose the problem
Establish clear leadership
Secure engagement of clinical staff
Work with external stakeholders
Right people in right posts
Use internal reward systems
Use external support systems
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Conceptual/methodological
issues
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Definitions of ‘failure’ and ‘success’
Interaction between processes and
‘outcomes’ i.e. impact of being labelled zero
star
Comparisons of turnaround in NHS with
other public sector organizations
Comparison of ‘failing’ hospitals with more
successful ones – what’s the best
comparator?
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