Work in progress Naomi Fulop London School Of Hygiene & Tropical Medicine

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Organizational Turnaround:emerging lessons from a study of ‘failing’ health care providers in England

Work in progress

Naomi FulopLondon 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

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

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

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)

Performance assessment system introduced in NHS in 2001

Health care organizations graded – ‘star rating’ system

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Star rating system (2)

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 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 availablesource: CHI website (2003 ratings)

Barking, Havering and Redbridge Hospitals NHS Trust ** Summary Trust report

Barnet and Chase Farm Hospitals NHS Trust * Summary Trust report

Barnsley District General Hospital NHS Trust *** Summary Trust report

Barts and The London NHS Trust * Summary Trust report

Basildon and Thurrock University Hospitals NHS Trust *** Summary Trust report

Bedford Hospitals NHS Trust ** Summary Trust report

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Policy responses

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?

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)

Quite extensive literature on turnaround in private sector

Very little literature on turnaround in public sector

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What do we know from the literature? (2)

Approx. 25-30 studies on turnaround in private sector

Explain failure in two main ways: a) changes in external environment b) inertia within the organisation

Dominant model of successful turnaround Retrenchment (withdraw from unprofitable sectors) Strategic change (new markets or new products in

existing markets) 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?

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

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

Phase 1 (2002): case studies of 5 hospitals Perceived to be ‘failing’ New management brought in At different stages of turnaround

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

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

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).

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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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Examples

Lack of clear management structures/processes

“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 clinicians in management of services

“The acute trust was working in isolation to the whole system. And that was exacerbated by 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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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

- “eyes off the ball”- poor relationships with external stakeholders- financial deficits

INTERNAL EXTERNAL

- increase in competition- changes in Govt policy

- poor financial control

- lack of HRM strategies

- lack of leadership

Primary Causes

Secondary causes

Markers

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)ButWhen RO or HA intervened – should they have intervened earlier? (‘The dangers of delay’ McKiernan, 2002)

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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).

The dangers of delay

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Turnaround strategies (1)

3 types of management change: 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)

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

Involving staff “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 “[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

Focus on operational performance “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

Patient care Staff Organisational culture Public image/external relations Star ratings

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On patient care

How much ‘failure’ was about quality of clinical care?

Focus on operational (esp. access) targets led to improvements

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On Staff ‘Honeymoon period’ – opportunity for

change

Initial dip in morale because loyalty to outgoing management – destabilising

Only affects staff close to top of the hierarchy?

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Process/Impact Of Turnaround Strategies

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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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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On organisational culture Attempts to Move:

From ‘can’t do’ to ‘can do’ From ‘closed’ to ‘open’

Some successes reported

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On organisational culture

“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).

“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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On public image/external relations

Great improvements reported With local MPs With local media With other external stakeholders

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In short term, some showed improvements in operational performance

Takes longer to address organisational culture issues

Two groups of hospitals: Group 1 (5): transformed from ‘failing’ to ‘self-regulating’ Group 2 (4): stagnating or ‘permanently failing’

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Impact Of Turnaround Strategies?

A B C D ENew Management 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?

F G H I New Management Mar 01 Jun 02 Jan 02 01

Star Rating 01 ** 0 ** **

Star Rating 02 * 0 0 0

Star Rating 03 * 0 ** **

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Resources required for turnaround

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

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

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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Documents

Work in progress Naomi Fulop London School Of Hygiene & Tropical Medicine