In the 15 months since its enactment, the Patient Protection and Affordable Care Act has changed countless rules, regulations and policies within the healthcare industry. These matters are discussed every day, whether in board rooms, the pages of business publications or on the evening news. One component, however, is also undergoing a transformation but not receiving as much attention: how hospital CEOs should lead in this new environment.
"This is a demanding but exciting opportunity for leaders," says Eugenie Dieck, a partner with Delta, the organizational transformation and leadership unit within consulting firm Oliver Wyman. "We'll see the market change, because some leaders are really going to step to the front. This is an opportunity for those who really wish to lead to do so," says Ms. Dieck. Here, Ms. Dieck explains four challenges that hospital CEOs must address as PPACA takes effect.
Defining the case for change
While CEOs have been wrestling with the demands of PPACA for some time, they need to ensure that their organizations understand what the future holds. First and foremost, Ms. Dieck says hospital CEOs should anticipate and prepare their hospital for the new environment spurred on by healthcare reform. Ms. Dieck recommends hospital leaders continually emphasize the context and consequence of healthcare reform's various parts. "Through context, the CEO should explain what is changing, its implications for the organization, and also what that change means for hospital employees" says Ms. Dieck. Hospitals have already seen migration from inpatient to outpatient settings, and leaders will be expected to balance a collaborative mindset while still maintaining a competitive edge in their marketplace. A move to redefine value in terms of cost and quality requires the CEO be able to articulate how their hospital is taking an active role in defining its place in the new value chain of healthcare reform.
Pacing the change
There is an art to introducing change at the perfect speed and sequence — rapidly enough to keep pace, but not so fast that the changes become overly operationally and emotionally disruptive. "Change requires a pacing or tempo so that people understand the overall and long-term view but also the discrete steps to achieve it," says Ms. Dieck. Healthcare leaders are particularly conscious of change since hospitals are the familiar flagships of health within their community, and sudden change can harm that trust.
Ms. Dieck recommends leaders think of change as a cascade with different levels of oversight and responsibility across management. "The arc of what that change looks like is definitely up to the CEO. [He/she] sets performance expectations for the organization," she says. Senior leaders should also be involved in this cascade-planning, with successive groups engaged and translating the change into what it means for their their own departments.
Sustaining communication
CEOs will find that they need to spend more time communicating, both internally and externally. They will need to anchor major strategic actions in the case for change and then engage the organization in translating this in day-to-day relevance. Multiple mechanisms should be employed, such as employee meetings, broadcasts, small-group interactions and/or literature. Ms. Dieck also recommends storytelling. "People describe their work now through stories. Communicate about their work via stories and make up new narratives for employees under healthcare reform," she says. While the CEO is responsible for communicating reform's "broad strokes," the detailed aspects of healthcare regulations — and how it will affect employee's individual duties — should be left to operational leaders.
Leaders should be prepared for resistance and criticism. Change doesn't come easily, particularly when it requires large-scale shifts in culture and mindset. Rather than react to criticism, hospital CEOs should simply listen. They should also avoid considering groups as homogenous in their reactions. For instance, it is unfair to paint physicians as a single group that will have uniform reactions to a new program or initiative. "Based on their circumstance, discipline or tenure, people will have unique reactions," says Ms. Dieck. By listening more than reacting, hospital leaders can respond in a more focused way and engage in a manner that is more tailored to each individual's wants or needs, whether it is a surgeon or a member of the hospital environmental staff.
Expanding skill sets
Given all the changes that PPACA will mean for hospitals, CEOs need to attend to what the implications are for their leadership skills. Ms. Dieck says capabilities required of CEOs may now include identifying new affiliation/partnership opportunities, developing risk agreements, and partnering effectively with other organizations. "It's really up to the individual CEO to consider how they need to raise the game in each of those areas."
There is also an emerging emphasis on a CEO's outside political skills so that they can develop and maintain ties to their community and the other providers within it. They should also develop a stronger understanding of financial stability from a long-term perspective. "Leaders will be expected to know more about financial risk, capital markets and risk scenarios in relation to partnerships, affiliations and other transactions," says Ms. Dieck. This type of understanding will complement a CEO's knowledge of a hospital's day-to-day operational finances.
CEOs have various options to polish skill sets they may currently be lacking or consider underdeveloped. Formal training, such as executive education sessions through business schools, or mentoring from board members with corporate backgrounds are valuable options. "Some of this training may be learning from other industries, or other organizations outside of the hospital's competitive market," says Ms. Dieck. Soliciting advice or expertise from outside the competitive market, such as a hospital out-of-state or of a different size, will be useful without posing a threat to that other organization.
Related Articles on Hospital Leadership:
Beating Your Hospital's "Personal Best": Q&A With Hospital for Special Surgery CEO Louis Shapiro
The Value of Physician Leaders: Q&A With Dr. Richard Afable, CEO of Hoag Memorial Hospital Presbyterian
Multi-Generational Leadership: How to Bridge Gaps in Age and Understanding
"This is a demanding but exciting opportunity for leaders," says Eugenie Dieck, a partner with Delta, the organizational transformation and leadership unit within consulting firm Oliver Wyman. "We'll see the market change, because some leaders are really going to step to the front. This is an opportunity for those who really wish to lead to do so," says Ms. Dieck. Here, Ms. Dieck explains four challenges that hospital CEOs must address as PPACA takes effect.
Defining the case for change
While CEOs have been wrestling with the demands of PPACA for some time, they need to ensure that their organizations understand what the future holds. First and foremost, Ms. Dieck says hospital CEOs should anticipate and prepare their hospital for the new environment spurred on by healthcare reform. Ms. Dieck recommends hospital leaders continually emphasize the context and consequence of healthcare reform's various parts. "Through context, the CEO should explain what is changing, its implications for the organization, and also what that change means for hospital employees" says Ms. Dieck. Hospitals have already seen migration from inpatient to outpatient settings, and leaders will be expected to balance a collaborative mindset while still maintaining a competitive edge in their marketplace. A move to redefine value in terms of cost and quality requires the CEO be able to articulate how their hospital is taking an active role in defining its place in the new value chain of healthcare reform.
Pacing the change
There is an art to introducing change at the perfect speed and sequence — rapidly enough to keep pace, but not so fast that the changes become overly operationally and emotionally disruptive. "Change requires a pacing or tempo so that people understand the overall and long-term view but also the discrete steps to achieve it," says Ms. Dieck. Healthcare leaders are particularly conscious of change since hospitals are the familiar flagships of health within their community, and sudden change can harm that trust.
Ms. Dieck recommends leaders think of change as a cascade with different levels of oversight and responsibility across management. "The arc of what that change looks like is definitely up to the CEO. [He/she] sets performance expectations for the organization," she says. Senior leaders should also be involved in this cascade-planning, with successive groups engaged and translating the change into what it means for their their own departments.
Sustaining communication
CEOs will find that they need to spend more time communicating, both internally and externally. They will need to anchor major strategic actions in the case for change and then engage the organization in translating this in day-to-day relevance. Multiple mechanisms should be employed, such as employee meetings, broadcasts, small-group interactions and/or literature. Ms. Dieck also recommends storytelling. "People describe their work now through stories. Communicate about their work via stories and make up new narratives for employees under healthcare reform," she says. While the CEO is responsible for communicating reform's "broad strokes," the detailed aspects of healthcare regulations — and how it will affect employee's individual duties — should be left to operational leaders.
Leaders should be prepared for resistance and criticism. Change doesn't come easily, particularly when it requires large-scale shifts in culture and mindset. Rather than react to criticism, hospital CEOs should simply listen. They should also avoid considering groups as homogenous in their reactions. For instance, it is unfair to paint physicians as a single group that will have uniform reactions to a new program or initiative. "Based on their circumstance, discipline or tenure, people will have unique reactions," says Ms. Dieck. By listening more than reacting, hospital leaders can respond in a more focused way and engage in a manner that is more tailored to each individual's wants or needs, whether it is a surgeon or a member of the hospital environmental staff.
Expanding skill sets
Given all the changes that PPACA will mean for hospitals, CEOs need to attend to what the implications are for their leadership skills. Ms. Dieck says capabilities required of CEOs may now include identifying new affiliation/partnership opportunities, developing risk agreements, and partnering effectively with other organizations. "It's really up to the individual CEO to consider how they need to raise the game in each of those areas."
There is also an emerging emphasis on a CEO's outside political skills so that they can develop and maintain ties to their community and the other providers within it. They should also develop a stronger understanding of financial stability from a long-term perspective. "Leaders will be expected to know more about financial risk, capital markets and risk scenarios in relation to partnerships, affiliations and other transactions," says Ms. Dieck. This type of understanding will complement a CEO's knowledge of a hospital's day-to-day operational finances.
CEOs have various options to polish skill sets they may currently be lacking or consider underdeveloped. Formal training, such as executive education sessions through business schools, or mentoring from board members with corporate backgrounds are valuable options. "Some of this training may be learning from other industries, or other organizations outside of the hospital's competitive market," says Ms. Dieck. Soliciting advice or expertise from outside the competitive market, such as a hospital out-of-state or of a different size, will be useful without posing a threat to that other organization.
Related Articles on Hospital Leadership:
Beating Your Hospital's "Personal Best": Q&A With Hospital for Special Surgery CEO Louis Shapiro
The Value of Physician Leaders: Q&A With Dr. Richard Afable, CEO of Hoag Memorial Hospital Presbyterian
Multi-Generational Leadership: How to Bridge Gaps in Age and Understanding