Four challenges for health care project managers

THE SHEER SIZE and complexity of the health care system and the current emphasis on quality and cost have created a lively interest in project planning and management (PPM) among health care professionals. But PPM is a new tool for those trained in health care disciplines. Moreover, whether team members are engaged in reengineering emergency room procedures (project management in health care) or case managing heart attack patients (project management of health care), they face particular project management challenges. What are some of these challenges? How should project managers deal with them? To put these questions in context, let's look at the industry in general and at two major forces that often act in opposition on the health care system to produce project management challenges.

U.S. Health Care

Health care has been called the largest service industry in America, and it is probably the largest service industry in the world. Although I will use the term “industry,” care is provided in a rather loosely organized system that encompasses more than 5,000 hospitals, over 500,000 practicing physicians, and nearly 2 million nurses (as well as numerous other types of facilities and health professionals).

This “industry” accounts for an enormous amount of money. In 1995, nearly $1 trillion was spent on hospital care (36 percent), physician services (20 percent), nursing homes (8 percent), personal health care (25 percent), and other goods and services (11 percent), including dentists, medical equipment and supplies, and so on (K.R. Levit in Medical Benefits, Mar. 15, 1997). On a per capita basis, this was about $3,000; overall, it represented almost 14 percent of America's gross domestic product (GDP).

Government paid for 46 percent of that total, primarily through the Medicare and Medicaid programs. The remainder was paid for by private health insurance (about 31 percent, mostly employer-based plans) or out of pocket (about 19 percent).

Two major forces, one with a high potential for adding to costs, one with a high potential for reducing them, are at work in this system. Because these forces often act in opposition on the professionals engaged in health care projects, they contribute to project management challenges.

The first, potentially cost-adding force is biomedical technology. Globally, the U.S. has the largest investment in biomedical research. Although we spend the same percentage of GDP on research and development as Germany and Japan—two technology-intensive nations—we spend three times as much on government-funded biomedical R&D, according to the Organisation for Economic Cooperation and Development. One result of this investment is that we have a successful biotechnology industry, providing drugs for conditions as wide-ranging as heart attack or multiple sclerosis. Whatever their use, however, these high-technology medicines have a very high price.

Another result of this investment is medical devices, including state-of-the-art diagnostic tools and “replacement parts” (such as knee and hip joints). By some estimates, U.S. companies have developed more than 80 percent of all commercialized devices since 1950. According to Standard & Poor's (1995), such devices account for $118 of the per capita health care costs in the U.S. versus $53 in Europe, another indication of our high-technology health care.

Because a large proportion of U.S. investment in biomedical technology is devoted to research in medical schools and teaching hospitals, physicians-in-training receive a technology-intensive scientific and clinical education. More important, 80 percent of the 16,000 annual graduates from medical school spend five or more years in clinical training in a teaching hospital that belongs to the Council of Teaching Hospitals. These institutions are larger, more costly, and more technology-intensive than other hospitals.

One agency that has been tracking U.S. health care system indices (the National Committee for Quality Health Care) found that the R&D index “rose dramatically between 1978 and 1994, due to increases in R&D funding and the greater number of approvals and applications for new pharmaceuticals and medical devices.” As a result, U.S. health care is much more high-tech than the care provided in, for example, Canada and Germany.

The second—and potentially cost-reducing—force acting on the system is managed care. Between 1984 and 1994, expenditures on health care rose more than 9 percent per year (partly as a result of the force of biomedical technology), compared with 6 percent per year growth in GDP. To put brakes on that rate of growth, business has been shifting employee health care to managed care organizations (MCOs): health maintenance organizations, preferred provider organizations, point of service plans, and so on.

In response to the force of managed care, hospitals and medical group practices have been consolidating rapidly. In fact, the past few years have set a record in the number of merger and acquisition transactions in health care. Overall, a major consequence of managed care has been downsizing: system downsizing (through mergers and acquisitions), institutional downsizing (reductions in hospital beds), and price reduction (lower fees for medical goods and services).

Four Challenges for Health Care Project Management

In this industry context, there are bound to be challenges to project planning and management. Let's examine four of these challenges.

Historic Rivalry. The cost-reducing force of managed care has galvanized numerous mergers and acquisitions in the hospital and medical group sectors in an attempt to gain economies of scale and offer a more economically attractive package to MCOs. Usually, the merged or integrated institutions have been rivals for the same patients and have competed against each other on the basis of technology, such as which hospital could offer magnetic resonance imaging on-site. The same historic competitiveness characterized physician groups as well as hospitals seeking relationships with physician groups expected to bring in large numbers of patients. In short, components of the new, merged system are likely to have been competitors—until the merger.

Once the legal issues of such mergers are settled, the most pressing need in the integrated organization is to reduce costs via reengineering projects. Teams consisting of clinical professionals from the component organizations are assembled and chartered to streamline admissions procedures, surgical scheduling, emergency room processes, and so on.

Because team members have been historic rivals, the project manager's first order of the day is to recognize both rivalry and the probable lack of shared incentives for people to work together. For instance, if the emergency room processes in the new network are reengineered, at which hospital's expense will this be? Which hospital's staff will be cut? Which physician group will be relocated?

In addition to the lack of shared incentives, even straightforward project management tasks such as cost estimating are hampered by tensions among former competitors. Determining the “true” cost of the overhead at a rival hospital's surgical suite may be impossible without senior management intervention. In fact, unless system executives engage in intense effort to bring the clinical professionals together, projects are doomed to fail.

In an article in Healthcare Forum Journal (Sep.–Oct. 1994), J.C. Goldsmith described the “illusive logic of integration,” when “larger health care organizations have actually displayed dis-economies both of scale and coordination.” Historic rivalry and lack of shared incentives to collaborate have made it extremely difficult to make “the organizational restructuring meaningful to those who get blood on their shoes.” Although everyone pays at least lip service to the need for top management commitment, this is an instance in which such intervention is absolutely critical to project success. Apparently it has not been recognized, because Goldsmith also noted “how little hard evidence of economic advantage or market share gain has accrued from system development in health care.”

Strange Bedfellows. Even if this first challenge to project planning and management is overcome, there are others to follow. The rush to consolidate and merge makes it almost certain that team members from the component organizations will be unfamiliar with each other's operations. Even if system executives ensure a collaborative environment and shared incentives to restructure, clinicians on the team will be strangers to each other.

Consider the merger of an acute care hospital, rehabilitation facility, and visiting nurse organization. A likely project charter might be redesigning care so that heart attack patients—who represent a sizable proportion of total costs—receive acute medical (and surgical), rehabilitation, and home services in a high quality, more efficient, and less costly process. The project team could include a cardiologist (hospital), director of physical therapy (rehab facility), nurse manager of cardiac intensive care (hospital), social worker (rehab facility), two nurse managers from the visiting nurse organization, and director of admissions (rehab facility).

Because people in these organizations operated at arm's length until the merger, some team members may not understand the complexity of the hospital's physical plant and how considerations of physical plant should figure in cost-reducing and streamlining activities. Others may not understand what a visiting nurse does. Others may not understand the amount and type of physical therapy required for different levels of cardiac impairment. The project manager has to take this unfamiliarity into account, perhaps scheduling visits to the component organizations. Although this tactic will increase the project's duration, it will also improve the outcome.

In addition to unfamiliarity because they come from different types of organizations, team members may be “strange bedfellows” because they come from different functions that previously operated at arm's length. Pressures for cost reduction from the force of managed care often result in teams composed of financial and clinical professionals. In many instances, financial professionals are viewed by clinicians as naysayers and are left out of important decision loops. In most instances, each views the other with skepticism and even suspicion. The project manager must ensure that team members overcome their functional unfamiliarity, again using visits to a clinical floor (for the benefit of the financial professionals) and to the accounting department (for the benefit of the clinicians). The project manager has to confront the skepticism and suspicion between functions before the team can work effectively.

Poor Morale. The third challenge manifests itself as lack of enthusiasm for the project objective, defensiveness about the project objective, and defensiveness about perceived asymmetry of organizational representation. Writing in The Scientist (“Merger mania hits med schools,” Jan. 1997), M.E. Watanabe notes that, in the U.S. health care system, “the effects of mergers and subsequent downsizing on staff morale are so apparent that [there is now a sizable] literature on hospital employee stress in these circumstances.”

Health care professionals are caught in the crossfire of the cost-increasing force of biomedical technology and the cost-reducing force of managed care. Trained to investigate, evaluate, and implement biomedical innovations, they are at the same time required to be “prudent buyers” who provide care for a fixed amount of resources. According to Watanabe, the sizable government funds supporting biomedical R&D “stimulated the growth of an enormous enterprise that was effectively shielded from external market forces and competition.” Thus, a project to decrease the use of biotechnology drugs by HMO physicians essentially pits health care professionals against themselves. Lack of enthusiasm for such a project is understandable.

Consider also that merger and integration of former competitors occur because one or more of the component institutions was in trouble and survival was at stake. Most projects stemming from integration therefore have solving a problem (e.g., high cost) as their overall objective. But solving a problem, as opposed to taking advantage of an opportunity, invariably raises defensiveness among team members who feel implicated in that problem in the first place. These project teams are composed of people who are symbolic of the problem and all too aware of the problem of cost and its consequences.

Asymmetry of representation—more people from one organization than another, or higher ranking people from one organization—also raises defensiveness among team members. Project leaders must take that into account in the initial stages of integration. The admonition to “leave titles at the door” is a necessary but perhaps not sufficient condition to reduce perceived asymmetry. If it is not possible to ensure equality of rank on the team, the project manager must be strong enough to confront those who use rank in such a way that they trigger defensiveness and other dysfunctional behaviors. An outside facilitator may be needed during the team-building process.

High Discipline Diversity. High-technology care is provided by very specialized health care professionals; increasingly integrated care (project management of health care) involves a wide array of disciplines. The outcome is high discipline diversity in the project team.

Teams of multiple disciplines, especially if they have not worked together before, are likely to lack a common language. People from the same discipline share a common meaning for the words they use and understand each other. But, when a number of disciplines are involved—surgery, physical therapy, social work, nursing—people may use the same words and incorrectly assume they mean the same to everyone around the table.

In one situation I observed, there was a high level of conflict about process redesign in a rehabilitation facility that had become an important part of a new network. The project leader discovered that two of the clinical disciplines represented on the team had a distinct definition of “patient readiness.” For the nurses, the term meant that the patient was dressed although still in bed. The physical therapists expected the patient to be dressed, fed, and sitting in a wheelchair for transport to the physical therapy floor. Conflict had arisen because each discipline assumed the other understood its own meaning of that term.

In another situation, misunderstanding arose among members of a quality improvement team because each discipline defined “quality” differently. Surgeons defined the word as low mortality and morbidity. Social workers defined it as improved functioning (e.g., ability to dress and feed oneself independently). Managers defined it as clinically excellent care with reduced variability of cost. Although each discipline ultimately agreed that the other's definition was important, the project leader spent several meetings surfacing the multiple interpretations and coming to consensus as to what “quality improvement” would mean for all disciplines on the team.

In communication terms, what occurs is erroneous translation: a person from one discipline encodes a meaning for a term but someone from a different discipline decodes a different meaning. As a result, the message is not understood. This is particularly difficult to address in the health care team because of the apparent simplicity of the terminology. Perhaps the safest assumption the project leader can make at the start of the effort is that people from different disciplines do not understand each other and that giving and receiving feedback is crucial. Asking apparently obvious questions can be very useful until a common language is achieved within the team.

BECAUSE PROJECT MANAGEMENT is especially problematic for health care professionals at this time, here are a few recommendations for project team leaders in this industry:

Ensure that the technical composition of the project team is based on the project objective. If the objective is to reduce costs, ensure that all members are knowledgeable about cost measurement and accounting. If the objective is to bundle system services in order to be attractive to a managed care organization, ensure that team members are knowledgeable about competing systems in the market.

Ensure that team members are at a high enough level in their respective organization that recommendations have a high probability of being implemented. For example, if the project objective is to reduce the cost of heart attack care, team members must be confident that senior management will agree to their proposals to modify components of that cost.

Ensure that the politics of integration are not underestimated. Transforming rivals into collaborators may involve an enormous amount of mediation before project activities can be managed. Only when team members appreciate that all stand or fall together can the actual project work begin.

Ensure that team members genuinely relate to each other as peers. Health care, like any other industry, has an implicit hierarchy of professions, but that hierarchy must not interfere with the peer relationships of the team. The person(s) who directs the team in solving a particular problem should be that member with the relevant knowledge and experience, rather than the person at the top of the implicit hierarchy. As problems change, ensure that problem-solving leadership (which is different from project leadership) changes as well. ■

Alice Sapienza is a professor of health care administration at Simmons College Graduate School for Health Studies in Boston, Mass. She is the author of Managing Scientists and Creating Technology Strategies (Wiley, 1995 and 1997) and co-author of Successful Strategies in Drug R&D (VCH, 1996).