April/May 2005

Operating Model Shifts as System Matures

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As Catholic Health Initiatives moves toward its goals for clinical quality, patient and employee satisfaction and strong financial performance, there is a new focus on the organization’s operating model – “In other words, changing the ways we work together,” said Michael Rowan, executive vice president and chief operating officer. The basis of Catholic Health initiatives’ operating model is the relationship between the system’s national offices and its market-based organizations. “Catholic Health Initiatives’ challenge has always been finding the best ways to combine the advantages of its overall size and scope with local market focus and responsiveness,” said Rowan. “System-level decisions affect local operations, and local decisions affect system-wide operations. So, decision-making roles and responsibilities at each level must be very clear and well-defined.” According to Rowan, the time is right to change the operating model - the ways we work together - to achieve even higher levels of performance across the system. The role of a market-based organization - the fundamental operating unit of Catholic Health Initiatives - is to effectively manage the system’s resources in relation to local market needs and opportunities. Specific responsibilities include assessment of local needs and configuration of system resources to meet market strategies. The role of the system is to advance the mission, vision and values of Catholic Health Initiatives as a national health care ministry. The system accomplishes this by pursuing strategies and establishing functions that create significant value for its key stakeholders: its market-based organizations and the communities they serve. These strategies and functions include strategic leadership and leveraging access to capital. “As the Catholic Health Initiatives system matures, its operating model changes,” said Rowan. “This change is not about taking or shifting control, but about setting expectations for unified effort and results at the system and market-based levels.” These expectations include:
  • A common vision for the future of Catholic Health initiatives, with all activity based on achievement of the organization’s core strategies of People, Information, Quality, Performance and Growth.
  • A strategic orientation that creates clear system and local objectives, as well as plans to accomplish them.
  • Decision-making based on the best interests of the system as a whole. “Occasionally, support of the system requires some sacrifice of local needs,” said Rowan. “Market-based organizations will be recognized and rewarded in these instances.”
  • A system-wide structure designed to optimize results. “Catholic Health Initiatives may standardize processes and functions where there is significant opportunity to improve system effectiveness, efficiency and outcomes,” said Rowan. “Processes and functions may be consolidated when there is significant opportunity for economies of scale that will benefit the entire system.”
  • The use of benchmarks to set targets for top-tier clinical and financial performance. “We plan to benchmark both local operational performance and system-level function performance,” said Rowan.
  • Use of management best practices.
  • Defined roles and opportunities for local input on system decisions.
  • Intervention, including performance improvement measures, for operating units that are not meeting expectations.
Rowan also said that changes in Catholic Health Initiatives’ operating model are not just about setting expectations, but about creating shared accountability for realizing those expectations. “Creating accountability includes setting realistic goals for expense management and revenue growth; analysis of the resources required for success; and intervention at the system and local levels when performances does not meet expectations,” he said. “We are creating a number of tools to help maintain shared accountability, such as a balanced scorecard with metrics that cascade from the system level to the local level; and a management ‘dashboard’ that shows financial, operational and clinical indicators. “Everything we do as market-based organizations or as national offices is to help ensure that we achieve Catholic Health Initiatives’ mission, vision and values in service to our patients, residents and the communities we serve,” added Rowan. “That is the measure by which we will ultimately be judged.”

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