Week 3 Assignment 1 Discussion for Human Growth and Development
May 5, 2021
Discussion Responses approx 100-150 words
May 5, 2021


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Effective Leadership and Management in Nursing

Eleanor J. Sullivan, PhD, RN, FAAN

Eighth Edition

Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto

Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo


Eleanor J. Sullivan, PhD, RN, FAAN, is the former dean of the University of Kansas School of Nurs- ing, past president of Sigma Theta Tau International, and previous editor of the Journal of Professional Nursing. She has served on the board of directors of the American Association of Colleges of Nursing, testified before the U.S. Senate, served on a National Institutes of Health council, presented papers to international audiences, been quoted in the Chicago Tribune, St. Louis Post-Dispatch, and Rolling Stone Magazine, and named to the “Who’s Who in Health Care” by the Kansas City Business Journal.

She earned nursing degrees from St. Louis Community College, St. Louis University, and Southern Illinois University and holds a PhD from St. Louis University.

Dr. Sullivan is known for her publications in nursing, including this award-winning textbook, Effective Leadership & Management in Nursing, and Becoming Influential: A Guide for Nurses, 2nd edition, from Prentice Hall. Other publica- tions include Creating Nursing’s Future: Issues, Opportunities and Challenges and Nursing Care for Clients with Sub- stance Abuse.

Today, Dr. Sullivan is a mystery writer. Her first three (Twice Dead, Deadly Diversion, and Assumed Dead) feature nurse sleuth Monika Everhardt.

Her latest book, Cover Her Body, A Singular Village Mystery, is the first in a new series of historical mysteries featur- ing a 19th-century midwife and set in the Northern Ohio village of Dr. Sullivan’s ancestors. Dr. Sullivan’s blog posts, found at www.EleanorSullivan.com, reveal the history behind her historical fiction.

Connect with Dr. Sullivan at www.EleanorSullivan.com.

This book is dedicated to my family for their continuing love and support.

Eleanor J. Sullivan



Our heartfelt thanks go out to our colleagues from schools of nursing across the country who have given their time generously to help us create this exciting new edition of our book. We have reaped the benefit of your collective experi- ence as nurses and teachers and have made many improvements due to your efforts. Among those who gave us their encouragement and comments are:


Reviewers Theresa Ameri Part-time/adjunct instructor, Marymount University Arlington, VA

Becky Brown, MSN, RN Full-time instructor, College of Southern Idaho Twin Falls, ID

Candace Burns, PhD, ARNP Professor, University of South Florida College of Nursing Tampa, FL

Sandra Janashak Cadena, PhD, APRN, CNE Professor, University of South Florida Tampa, FL

Margaret Decker Full-time instructor, Binghamton University Binghamton, NY

Denise Eccles, MSN/Ed, RN Professor, Miami Dade College Miami, FL

Barb Gilbert, EdD, MSN, RN, CNE Part-time/adjunct instructor, Excelsior College Albany, NY

Karen Joris, MSN, RN Assistant professor, Lorain County Community College Elyria, OH

Jean M. Klein, PhD, PMHCNS, BC Associate professor, Widener University Chester, PA

Jemimah Mitchell-Levy, MSN, ARNP Professor, Miami Dade College Miami, FL

Rorey Pritchard, EdS, MSN, RN, CNOR Full-time instructor, Chippewa Valley Technical College Eau Claire, WI

Heather Saifman, MSN, RN, CCRN Assistant professor, Nova Southeastern University

Miami Kendall, FL Linda Stone Other Cambridge, MA

Sandra Swearingen Part-time/adjunct instructor, UCF Orlando, FL

Diane Whitehead, EdD, RN, ANEF Department chair, Nova Southeastern University Fort Lauderdale, FL



Leading and managing are essential skills for all nurses in today’s rapidly changing health care arena. New graduates find themselves managing unlicensed assistive personnel, and experienced nurses are managing groups of health care providers from a variety of disciplines and educational lev- els. Declining revenues, increasing costs, demands for safe care, and health care reform legislation mandate that every organization use its resources efficiently.

Nurses today are challenged to manage effectively with fewer resources. Never has the information presented in this textbook been needed more. Effective Leadership & Management in Nursing, eighth edition, can help both stu- dent nurses and those with practice experience acquire the skills needed to ensure success in today’s dynamic health care environment.

Features of the Eighth Edition Effective Leadership & Management in Nursing has made a significant and lasting contribution to the education of nurses and nurse managers in its seven previous editions. Used worldwide, this award-winning textbook is now of- fered in an updated and revised edition to reflect changes in the current health care system and in response to sug- gestions from the book’s users. The eighth edition builds upon the work of previous contributors to provide the most up-to-date and comprehensive learning package for today’s busy students and professionals.

This book has been a success for many reasons. It com- bines practicality with conceptual understanding; is respon- sive to the needs of faculty, nurse managers, and students; and taps the expertise of contributors from a variety of dis- ciplines, especially management professionals whose work has been adapted by nurses for current nursing practice. The expertise of management professors in schools of busi- ness and practicing nurse managers is seldom incorporated into nursing textbooks. This unique approach provides students with invaluable knowledge and skills and sets the book apart from others.

Features new or expanded in the eighth edition include:

• Information about the Patient Protection and Afford- able Care Act

• An emphasis on quality initiatives, including Six Sigma, Lean Six Sigma, and DMAIC

• The use of Magnet-certified hospitals as examples of concepts

• The addition of emotional leadership concepts • The use of social media in management • An emphasis on multicratic leadership and interprofes-

sional relationships • Updated legal and legislative content • Tips on how to deal with disruptive staff behaviors,

including bullying • Guidance on preparing for emergencies and mass

casualty incidents • Information on preventing workplace violence

Student-Friendly Learning Tools Designed with the adult learner in mind, the book focuses on the application of the content presented and offers spe- cific guidelines on how to implement the skills included. To further illustrate and emphasize key points, each chapter in this edition includes these features:

• A chapter outline and preview • New MediaLink boxes introduce readers to resources

and activities on the Student Resources site through nursing.pearsonhighered.com.

• Key terms are defined in the glossary at the end of the book

• What You Know Now lists at the end of each chapter • A list of “tools,” or key behaviors, for using the skills

presented in the chapter • Questions to Challenge You to help students relate

concepts to their experiences • Up-to-date references and Web resources identified • Case Studies with a Manager’s Checklist to demonstrate

application of content

Organization The text is organized into four sections that address the es- sential information and key skills that nurses must learn to succeed in today’s volatile health care environment.

Part 1. Understanding Nursing Management and Organizations. Part 1 introduces the context for nursing management, with an emphasis on how organizations are designed, on ways that nursing care is delivered, on the concepts of leading and managing, on how to initiate and manage change, on


providing quality care, and on using power and politics— all necessary for nurses to succeed and prosper in today’s chaotic health care world.

Part 2. Learning Key Skills in Nursing Management. Part 2 delves into the essential skills for today’s manag- ers, including thinking critically, making decisions, solv- ing problems, communicating with a variety of individuals and groups, delegating, working in teams, resolving con- flicts, and managing time.

Part 3. Managing Resources. Knowing how to manage resources is vital for nurses to- day. They must be adept at budgeting fiscal resources; recruiting and selecting staff; handling staffing and sched- uling; motivating and developing staff; evaluating staff performance; coaching, disciplining and terminating staff; managing absenteeism, reducing turnover, and retaining staff; and handling disruptive staff behaviors, including bullying. In addition, collective bargaining and preparing for emergencies and preventing workplace violence are in- cluded in Part 3.

Part 4. Taking Care of Yourself. Nurses are their own most valuable resource. Part 4 shows how to manage stress and to advance in a career.

Resources for Teaching and Learning Student and Instructor Resources can be accessed by regis- tering or logging in at nursing.pearsonhighered.com.

Acknowledgments The success of previous editions of this book has been due to the expertise of many contributors. Nursing adminis- trators, management professors, and faculty in schools of nursing all made significant contributions to earlier edi- tions. I am enormously grateful to them for sharing their knowledge and experience to help nurses learn leadership and management skills. Without them, this book would not exist.

At Pearson Health Science, Acquisitions Editor Pamela Fuller and Development Editor Susan Geraghty guided this revision from start to finish. Editorial Assistant Cyn- thia Gates was also especially helpful.

Because health care continues to change, reviewers who are using the book in their management practice and in their classes provided invaluable comments and sugges- tions (see list on pages xi–xii).

I am especially grateful to experienced nurse manager and graduate student Rachel Pepper for her expert research assistance, ability to generate real-life examples, and ex- pertise in creating case scenarios to exemplify the experi- ence of nurses in management roles. She lent assistance throughout with ideas and suggestions. This book and Becoming Influential: A Guide for Nurses, 2nd edition, are better for her contributions.

To everyone who has contributed to this fine book over the years, I thank you.

Eleanor J. Sullivan, PhD, RN, FAAN www.EleanorSullivan.com



Thank You vi Preface vii

PART 1 Understanding Nursing Management and Organizations 1

CHAPTER 1 Introducing Nursing Management 1 Learning Outcomes 1


How America Pays for Health Care 2 Pay for Performance 2

DEMAND FOR QUALITY 2 Quality Initiatives 2 The Leapfrog Group 3 Benchmarking 3 Evidence-Based Practice 3 Magnet® Certification 4

EVOLVING TECHNOLOGY 4 Electronic Health Records 5 Virtual Care 5 Robotics 5 Communication Technology 5


Even More Change . . . 7 Challenges Facing Nurses and Managers 7

CHAPTER 2 Designing Organizations 11 Learning Outcomes 11


Classical Theory 12 Humanistic Theory 14 Systems Theory 14 Contingency Theory 14 Chaos Theory 15 Complexity Theory 15


Functional Structure 16 Hybrid Structure 16

Matrix Structure 16 Parallel Structure 16


Primary Care 19 Acute Care Hospitals 20 Home Health Care 20 Long-Term Care 20


Health Care Networks 21 Interorganizational Relationships 21 Diversification 22 Managed Health Care Organizations 23 Accountable Care Organizations 23


CHAPTER 3 Delivering Nursing Care 29 Learning Outcomes 29

TRADITIONAL MODELS OF CARE 30 Functional Nursing 30 Team Nursing 31 Total Patient Care 32 Primary Nursing 33

INTEGRATED MODELS OF CARE 34 Practice Partnerships 34 Case Management 34 Critical Pathways 35 Differentiated Practice 36

EVOLVING MODELS OF CARE 36 Patient-Centered Care 36 Synergy Model of Care 37 Clinical Microsystems 37 Chronic Care Model 37

CHAPTER 4 Leading, Managing, Following 40 Learning Outcomes 40



CONTEMPORARY THEORIES 42 Quantum Leadership 42 Transactional Leadership 42 Transformational Leadership 43 Shared Leadership 43 Servant Leadership 44 Emotional Leadership 44


Planning 46 Organizing 46 Directing 47 Controlling 47

NURSE MANAGERS IN PRACTICE 47 Nurse Manager Competencies 47 Staff Nurse 48 First-Level Management 48 Charge Nurse 49 Clinical Nurse Leader 50


CHAPTER 5 Initiating and Managing Change 55 Learning Outcomes 55


Assessment 58 Planning 60 Implementation 60 Evaluation 61

CHANGE STRATEGIES 61 Power-Coercive Strategies 61 Empirical–Rational Model 62 Normative–Reeducative Strategies 62


Initiating Change 64 Implementing Change 65


CHAPTER 6 Managing and Improving Quality 69 Learning Outcomes 69

QUALITY MANAGEMENT 70 Total Quality Management 70 Continuous Quality Improvement 71 Components of Quality Management 72 Six Sigma 73 Lean Six Sigma 73 DMAIC Method 74

IMPROVING THE QUALITY OF CARE 74 National Initiatives 74 How Cost Affects Quality 75 Evidence-Based Practice 75 Electronic Medical Records 75 Dashboards 76 Nurse Staffing 76 Reducing Medication Errors 76 Peer Review 76

RISK MANAGEMENT 77 Nursing’s Role in Risk Management 77 Incident Reports 78 Examples of Risk 78 Root Cause Analysis 80 Role of the Nurse Manager 80 Creating a Blame-Free Environment 81

CHAPTER 7 Understanding Power and Politics 86 Learning Outcomes 86


Image as Power 89 Using Power Appropriately 91


Nursing’s Political History 93 Using Political Skills to Influence Policies 93 Influencing Public Policies 94


PART 2 Learning Key Skills in Nursing Management 99

CHAPTER 8 Thinking Critically, Making Decisions, Solving Problems 99 Learning Outcomes 99

CRITICAL THINKING 100 Critical Thinking in Nursing 100 Using Critical Thinking 101 Creativity 101

DECISION MAKING 103 Types of Decisions 104 Decision-Making Conditions 104 The Decision-Making Process 106


Decision-Making Techniques 107 Group Decision Making 108

PROBLEM SOLVING 109 Problem-Solving Methods 109 The Problem-Solving Process 110 Group Problem Solving 112


CHAPTER 9 Communicating Effectively 117 Learning Outcomes 117

COMMUNICATION 118 Modes of Communication 118 Distorted Communication 118 Directions of Communication 120 Effective Listening 120


Gender Differences in Communication 121 Generational and Cultural Differences in Communication 121 Differences in Organizational Culture 122


Employees 123 Administrators 123 Coworkers 125 Medical Staff 125 Other Health Care Personnel 126 Patients and Families 126


CHAPTER 10 Delegating Successfully 131 Learning Outcomes 131


Benefits to the Nurse 132 Benefits to the Delegate 133 Benefits to the Manager 133 Benefits to the Organization 133

THE FIVE RIGHTS OF DELEGATION 133 The Delegation Process 134


Organizational Culture 138 Lack of Resources 138 An Insecure Delegator 138 An Unwilling Delegate 139 Underdelegation 140

Reverse Delegation 140 Overdelegation 140

CHAPTER 11 Building and Managing Teams 143 Learning Outcomes 143


Norms 147 Roles 148

BUILDING TEAMS 149 Assessment 149 Team-Building Activities 150

MANAGING TEAMS 150 Task 151 Group Size and Composition 151 Productivity and Cohesiveness 151 Development and Growth 152 Shared Governance 152


Communication 153 Evaluating Team Performance 153


Guidelines for Conducting Meetings 155 Managing Task Forces 156



Antecedent Conditions 163 Perceived and Felt Conflict 164 Conflict Behaviors 165 Conflict Resolved or Suppressed 165 Outcomes 165

MANAGING CONFLICT 165 Conflict Responses 166 Filley’s Strategies 168 Alternative Dispute Strategies 169

CHAPTER 13 Managing Time 172 Learning Outcomes 172

TIME WASTERS 173 Time Analysis 174 The Manager’s Time 175

SETTING GOALS 175 Determining Priorities 176 Daily Planning and Scheduling 176


Grouping Activities and Minimizing Routine Work 177 Personal Organization and Self-Discipline 177

CONTROLLING INTERRUPTIONS 178 Phone Calls, Voice Mail, Text Messages 179 E-Mail 180 Drop-In Visitors 181 Paperwork 181


PART 3 Managing Resources 184

CHAPTER 14 Budgeting and Managing Fiscal Resources 184 Learning Outcomes 184


Incremental Budget 186 Zero-Based Budget 187 Fixed or Variable Budgets 187

THE OPERATING BUDGET 187 The Revenue Budget 187 The Expense Budget 188


Benefits 189 Shift Differentials 190 Overtime 190 On-Call Hours 190 Premiums 190 Salary Increases 191 Additional Considerations 191


Variance Analysis 193 Position Control 195


Reimbursement Problems 195 Staff Impact on Budget 196

CHAPTER 15 Recruiting and Selecting Staff 199 Learning Outcomes 199


RECRUITING APPLICANTS 200 Where to Look 201 How to Look 202 When to Look 202 How to Promote the Organization 202 Cross-Training as a Recruitment Strategy 203


Principles for Effective Interviewing 205 Involving Staff in the Interview Process 209 Interview Reliability and Validity 209

MAKING A HIRE DECISION 210 Education, Experience, and Licensure 210 Integrating the Information 210 Making an Offer 211


CHAPTER 16 Staffing and Scheduling 217 Learning Outcomes 217

STAFFING 218 Patient Classification Systems 218 Determining Nursing Care Hours 219 Determining FTEs 219 Determining Staffing Mix 220 Determining Distribution of Staff 220

SCHEDULING 221 Creative and Flexible Staffing 221 Automated Scheduling 222 Supplementing Staff 223

CHAPTER 17 Motivating and Developing Staff 227 Learning Outcomes 227 A MODEL OF JOB PERFORMANCE 228

Employee Motivation 229 Motivational Theories 229


Orientation 231 On-the-Job Instruction 232 Preceptors 233 Mentoring 233 Coaching 234 Nurse Residency Programs 234 Career Advancement 234 Leadership Development 235



CHAPTER 18 Evaluating Staff Performance 239 Learning Outcomes 239

THE PERFORMANCE APPRAISAL 240 Evaluation Systems 241 Evidence of Performance 244 Evaluating Skill Competency 247 Diagnosing Performance Problems 247 The Performance Appraisal Interview 248

POTENTIAL APPRAISAL PROBLEMS 251 Leniency Error 251 Recency Error 251 Halo Error 252 Ambiguous Evaluation Standards 252 Written Comments Problem 252

IMPROVING APPRAISAL ACCURACY 253 Appraiser Ability 253 Appraiser Motivation 253


CHAPTER 19 Coaching, Disciplining, and Terminating Staff 257 Learning Outcomes 257


CHAPTER 20 Managing Absenteeism, Reducing Turnover, Retaining Staff 268 Learning Outcomes 268 ABSENTEEISM 269

A Model of Employee Attendance 269 Managing Employee Absenteeism 272 Absenteeism Policies 273 Selecting Employees and Monitoring Absenteeism 274 Family and Medical Leave 274

REDUCING TURNOVER 275 Cost of Nursing Turnover 275 Causes of Turnover 276 Understanding Voluntary Turnover 276

RETAINING STAFF 277 Employee Engagement 277 Healthy Work Environment 277 Improving Salaries 277 Recognizing Staff Performance 278 Additional Retention Strategies 279

CHAPTER 21 Dealing with Disruptive Staff Problems 283 Learning Outcomes 283

HARASSING BEHAVIORS 284 Bullying 284 Lack of Civility 284 Lateral Violence 285

HOW TO HANDLE PROBLEM BEHAVIORS 286 Marginal Employees 286 Disgruntled Employees 287


State Board of Nursing 289 Strategies for Intervention 289 Reentry 290 The Americans with Disabilities Act and Substance Abuse 291

CHAPTER 22 Preparing for Emergencies 294 Learning Outcomes 294


Natural Disasters 295 Man-Made Disasters 295 Levels of Disasters 295


Emergency Operations Plan 296 Disaster Triage 297 Core Competencies for Nurses 297 Continuation of Services 297 Impact on Employees 298

CHAPTER 23 Preventing Workplace Violence 302 Learning Outcomes 302

VIOLENCE IN HEALTH CARE 303 Incidence of Workplace Violence 303 Consequences of Workplace Violence 303 Factors Contributing to Violence in Health Care 303

PREVENTING VIOLENCE 304 Zero-Tolerance Policies 304 Reporting and Education 304 Environmental Controls 304

DEALING WITH VIOLENCE 305 Verbal Intervention 305 A Violent Incident 305 Other Dangerous Incidents 306 Post-Incident Follow-Up 306


CHAPTER 24 Handling Collective Bargaining Issues 310 Learning Outcomes 310


The Grievance Process 312 The Nurse Manager’s Role 312


Legal Status of Nursing Unions 313 The Future of Collective Bargaining for Nurses 314

PART 4 Taking Care of Yourself 316

CHAPTER 25 Managing Stress 316 Learning Outcomes 316


Organizational Factors 318 Interpersonal Factors 318 Individual Factors 319


Personal Methods 320 Organizational Methods 321

CHAPTER 26 Advancing Your Career 325 Learning Outcomes 325


Applying for the Position 327 The Interview 328 Accepting the Position 331 Declining the Position 331

BUILDING A RÉSUMÉ 331 Tracking Your Progress 333 Identifying Your Learning Needs 334


Finding Your Next Position 337 Leaving Your Present Position 337

WHEN YOUR PLANS FAIL 337 Taking the Wrong Job 337 Adapting to Change 338

Glossary 340 Index 348


Changes in Health Care












Cultural, Gender, and Generational Differences

Violence Prevention and Disaster Preparedness

Changes in Nursing’s Future EVEN MORE CHANGE . . .


Introducing Nursing Management 1

1. Describe the forces that are changing the health care system.

2. Discuss changes in paying for health care. 3. Explain how quality initiatives can reduce

medical errors. 4. Describe how evidence-based practice is

changing nursing. 5. Explain how to become a Magnet-certified


6. Explain what emerging technologies mean for nursing.

7. Describe how cultural, gender, and genera- tional differences affect management.

8. Explain why preparation is the best defense against violence and disasters.

9. Discuss the changes and challenges that nurses face now and into the future.

Learning Outcomes After completing this chapter, you will be able to:

Key Terms Benchmarking Electronic health records

(EHRs) Evidence-based practice Leapfrog Group

Magnet Recognition Program®

Patient Protection and Affordable Care Act (PPACA)

Quality initiatives Robotics Social media Virtual care


T oday, all nurses are managers. Whether you work in a freestanding clinic, an ambula-tory surgical center, a critical unit in an acute care hospital, or in hospice care for a home care agency, you must deal with staff, including other nurses and unlicensed as- sistive personnel, who work with you and for you. At the same time, you must be vigilant about costs. To manage well, you must understand the health care system and the organizations where you work. You need to recognize what external forces affect your work and how to influence those forces. You need to know what motivates people and how you can help create an environ- ment that inspires and sustains the individuals who work in it. You must be able to collaborate with others, as a leader, a follower, and a team member, in order to become confident in your ability to be a leader and a manager.

This book is designed to provide new graduates or novice managers with the information they need to become effective managers and leaders in health care. More than ever before, today’s rapidly changing health care environment demands highly refined management skills and superb leadership.

Changes in Health Care Today’s health care system is continuing to undergo significant changes. Costly lifesaving medi- cines, robotics, virtual care, and innovations in imaging technologies, noninvasive treatments, and surgical procedures have combined to produce the most sophisticated and effective health care ever—and the most expensive. Skyrocketing costs and inaccessibility to health care are ongoing concerns for employers, health care providers, policy makers, and the public at large. A number of factors are forcing change on the health care system.

Paying for Health Care

How America Pays for Health Care The United States spends more money on health care than any other country, and health care spending continues to rise with costs of $2.5 trillion in 2009, consuming more than 17 percent of the country’s gross domestic product (GDP) (CMS, 2011). With the goal of providing access to health care to most U.S. citizens and containing costs, Congress passed a health care reform bill known as the Patient Protection and Affordable Care Act (PPACA) that was signed into law March 23, 2010. While implementation of the bill is pending court challenges, the promise of providing adequate and affordable care to more Americans is on the horizon.

Pay for Performance In 1999, the Institute of Medicine (IOM, 1999) reported that 98,000 deaths occurred each year from preventable medical mistakes, such as falls, wrong site surgeries, avoidable infections, and pressure ulcers, among others. By 2008, researchers learned that “the effects of medical mistakes continue long after the patient leaves the hospital” (Encinosa & Hellinger, 2008, p. 2067). In spite of numerous efforts to prevent mistakes, the cost of medical errors has con- tinued to climb. Recent estimates put such costs at $19.5 billion annually (Shreve et al., 2010).

In 2008, the Centers for Medicare and Medicaid Services, the agency that oversees gov- ernment payments for care, tied payment to the quality of care by changing its reimbursement policy to no longer cover costs incurred by medical mistakes (Wachter, Foster, & Dudley, 2008). If medical mistakes occur, the hospital must absorb the costs. Thus, pay for performance became the norm, and performance is now measured by the quality of care (Milstein, 2009).

Demand for Quality

Quality Initiatives In an effort to ameliorate medical mistakes, a number of quality initiatives have emerged. Quality management is a preventive approach designed to address problems before they become crises. The quality movement actually began in post–World War II Japan, when Japanese industries adopted a


system that W. Edwards Deming designed to improve the quality of manufactured products. The philosophy of the system is that consumers’ needs should be the focus and that employees should be empowered to evaluate and improve quality. In addition to businesses in the United States and else- where, the health care industry has adopted total quality management or variations on it.

Built into the system is a mechanism for continuous improvement of products and services through constant evaluation of how well consumers’ needs are met and plans adjusted to per- fect the process. Patient satisfaction surveys are one example of how health care organizations evaluate their customers’ needs. Today, quality initiatives address all aspects of patient care and include government efforts as well as private sector endeavors.

Public reporting of heath care organizations has emerged as a strategy to improve quality (Christianson et al., 2010). To further that goal, the Agency for Healthcare Research and Quality (AHRQ)—whose mission is to improve the quality, safety, efficiency, and effectiveness of health care—funds projects that address three quality indicators: prevention, inpatient, quality, and patient safety (Dunton et al., 2011).

The Leapfrog Group Efforts by the Leapfrog Group constitute one private sector initiative to address quality. The Leapfrog Group is a consortium of public and private purchasers established to reduce prevent- able medical mistakes. The organization uses its mammoth purchasing power to leverage quality care for its consumers by rewarding health care organizations that demonstrate quality outcome measures. The quality indicators the group focuses on include ICU staffing, electronic medi- cation ordering systems, and the use of higher performing hospitals for high-risk procedures. Leapfrog estimates that if these three patient safety practices were implemented, more than 57,000 lives could be saved, more than $12 billion dollars could be saved, and more than 3 mil- lion adverse drug events could be avoided (Binder, 2010).

Benchmarking In contrast to quality management strategies that compare internal measures across comparable units, such as the Leapfrog Group, benchmarking compares an organization’s data with similar organizations. Outcome indicators are identified that can be used to compare performance across disciplines or organizations. Once the results are known, health care organizations can address areas of weakness and enhance areas of strength (Nolte, 2011). Interestingly, one study found that hospital size didn’t affect the ability of institutions to compare results (Brown et al., 2010).

Evidence-Based Practice Evidence-based practice has emerged as a strategy to improve quality by using the best avail- able knowledge integrated with clinical experience and the patient’s values and preferences to provide care (Houser & Oman, 2010).

Similar to the nursing process, the steps in EBP are:

1. Identify the clinical question.

2. Acquire the evidence to answer the question.

3. Evaluate the evidence.

4. Apply the evidence.

5. Assess the outcome.

Research findings with conflicting results puzzle consumers daily, and nurses are no excep- tion, especially when they search for practice evidence. Hader (2010) suggests that evidence falls into several categories:

● Anecdotal—derived from experience ● Testimonial—reported by an expert in the field


● Statistical—built from a scientific approach ● Case study—an in-depth analysis used to translate to other clinical situations ● Nonexperimental design research—gathering factors related to a clinical condition ● Quasi-experimental design research—a study limited to one group of subjects ● Randomized control trial—uses both experimental and control groups to determine the

effectiveness of an intervention

While all forms of evidence are useful for clinical decision making, a randomized control design and statistical evidence are the most rigorous (Hader, 2010).

Magnet® Certification The Magnet Recognition Program® designates organizations that “recognize health care orga- nizations that provide nursing excellence” (ANCC, 2011). To qualify for recognition as a mag- net hospital the organization must demonstrate that they are:

● Promoting quality in a setting that supports professional practice ● Identifying excellence in the delivery of nursing services to patients/residents ● Disseminating “best practices” in nursing services.

Becoming a magnet hospital requires a significant investment of time and financial resources. Research shows, however, that patient safety is improved when nurse staffing meets Magnet standards (Lake et al., 2010).

Systems involving participatory management and shared governance create organizational environments that reward decision making, creativity, independence, and autonomy. These orga- nizations retain and recruit independent, accountable professionals. Organizations that empower nurses to make decisions will better meet consumer requests. As the health care environment continues to evolve, more and more organizations are adopting consumer-sensitive cultures that require accountability and decision making from nurses.

Magnet hospitals are those institutions that have met the stringent guidelines for nurses and are credentialed by the American Nurses Credentialing Center. Characteristics common in mag-

net hospitals include:

● Higher ratios of nurses to patients ● Flexible schedules ● Decentralized administration ● Participatory management ● Autonomy in decision making ● Recognition ● Advancement opportunities

To retain the current workforce and attract other nurses, health care organizations can take from the magnet program characteristics to improve work-life conditions for nurses. Encourag- ing nurses to be full participants and to share a vested interest in the success of the organization can help alleviate the nursing shortage in those organizations and in the profession.

See Chapter 6 , Managing and Improving Quality, to learn more about improving quality in health care.

Evolving Technology Rapid changes in technology seem, at times, to overwhelm us. Hospital information systems (HIS); electronic health records (EHR); point-of-care data entry (POC); provider order entry; bar-code medication administration; dashboards to manage, report, and compare data across plat- forms; virtual care provided from a distance; and robotics—to name a few of the many evolving technologies—both fascinate and frighten us simultaneously. At the same time, communication


technology—from smartphones to social media—continues to march into the future. It is no wonder that people who work in health care complain that they can’t keep up! The rapidity of technological change promises, unfortunately, to continue unabated.

Electronic Health Records Electronic health records (EHRs) represent a technology destined for rapid expansion. While banks, retailers, airlines, and other industries began to rely on fully integrated systems to man- age communication and reduce redundancies, health care was still continuing to rely on volu- minous paper records duplicated in multiple locations. Keeping data safe continues to worry health care organizations, consumers, and policy makers, but the benefits of integrated systems outweigh the risks (Trossman, 2009a).

EHRs reduce redundancies, improve efficiency, decrease medical errors, and lower health care costs. Continuity of care, discharge planning and follow-up, ambulatory care collaboration, and patient safety are just a few of the additional advantages of EHRs. Furthermore, fully integrated systems allow for collective data analysis across clinical conditions, health care organizations, or worldwide and sup- port evidence-based decision making. With the federal government funding health systems to upgrade to EHRs, the current 12 percent of hospitals with EHRs is expected to increase (Gomez, 2010).

Virtual Care Virtual care, previously known as telemedicine and now more commonly called telehealth, has evolved as technologies to assess, intervene, and monitor patients remotely improved. Both communication technology (i.e., audio and video) and improvements in mobile care technology contribute to the ability of health care professionals to provide care from a distance. Nurses, for example, can watch banks of video screens monitoring ICU patients’ vitals signs miles away from the hospital. Electronic equipment, such as a stethoscope, can be accessed by a health care provider in a distant location. Such systems are especially useful in providing expert consulta- tion for specialty care (Zapatochny-Rufo, 2010).

Robotics Another technological advance is robotics. In the hospital, supplies can be ordered electroni- cally, and then laser-guided robots can fill the order in the pharmacy or central supply and de- liver the requested supplies to nursing units via their own elevators more efficiently, accurately, and in less time than individuals can. Mobile robots can also monitor patients, report changes and conditions, and allow caregivers to communicate from a distance (Markoff, 2010) via a wireless connection to a laptop or a smart phone. Robot functionality will continue to expand, limited only by resources and ingenuity.

Communication Technology Just as rapidly as clinical and data technology are evolving, so are communication technolo- gies, changing forever the ways people keep informed and interact (Sullivan, 2013). Informa- tion (accurate or inaccurate) is disseminated with lightening speed while smartphones capture real-time events and broadcast images instantaneously.

Social media has revolutionized communication beyond the realm of possibilities from just a few years ago (Kaplan & Haenlein, 2010). Social media connects diverse populations and en- courages collaboration, the exchange of images, ideas, opinions, and preferences in networking Web sites, online forums, Web blogs, social blogs, wikis, podcasts, RSS feeds, photos, video content communities, social bookmarking, online chat rooms, microblogs, such as Twitter, and online communities, such as Facebook and LinkedIn (Sullivan, 2013).

Similar to other enterprises, most health care organizations have an online presence with a Web site and social media sites, such as Facebook, Twitter, and blogs. Units within the organiza- tion may have Facebook pages as well, with staff who post on those sites. These opportunities


for information sharing and relationship building also come with risks (Raso, 2010; Trossman, 2010b). Patient confidentiality, the organization’s reputation, and recruiting efforts can be en- hanced or put in jeopardy by posts to the site (Sullivan, 2013).

Cultural, Gender, and Generational Differences According to the U.S. Census Bureau, the minority population in the U.S. increased from 31 to 36 percent from 2000 to 2010 (U.S. Census, 2011). The largest minority population is Hispanic, and that population increased to 50 million (16 percent of the total U.S. population) in 2010. The Asian population grew to 14 million (5 percent) in the same time period, and the African American population stands at 42 million (14 percent).

The cultural diversity seen in the general population is also reflected in nursing. The Health Resources and Services Administration (HRSA, 2011) reports that 16 percent of nurses are Asian, African American, Hispanic, or other ethnic minorities, an increase from 12 percent in 2004.

The gender mix found in nursing, however, differs from the general population, with men greatly outnumbered by women. Of the population of more than 3 million nurses in the U.S., only 6 percent are men, although changes suggest the ratio is improving. The proportion of men to women has risen to 1 in 10 in the decades since 1990 (HRSA, 2011). Both cultural diversity and gender diversity challenge the nurse manager to consider such differences when working with staff, colleagues, and administrators as well as mediating conflicts between individuals.

Generational differences in the nursing population is unprecedented, with four generational cohorts working together (Keepnews et al., 2010). Referred to as traditionals, baby boomers, Generation X, and Generation Y, each generational group has different expectations in the work- place. Traditionals value loyalty and respect authority. Baby boomers value professional and personal growth and expect that their work will make a difference.

Generation X members strive to balance work with family life and believe that they are not rewarded given their responsibilities (Keepnews et al., 2010). Generation Y (also called milleni- als) are technically savvy and expect immediate access to information electronically.

Similar to dealing with cultural and gender differences, the challenge for managers is to avoid stereotyping within the generations, to value the unique contributions of each generation, to encourage mutual respect for differences, and to leverage these differences to enhance team work (Chambers, 2010).

Violence Prevention and Disaster Preparedness Sadly, violence invades workplaces, and health care is no exception. Moreover, nearly 500,000 nurses are victims of workplace violence (Trossman, 2010c). In addition, recent disasters (e. g., the earthquake and tsunami in Japan, tornadoes in the U.S.) and the threats of terrorism and pan- demics challenge health care organizations to prepare for the unthinkable.

Extensive staff training is required (AHRQ, 2011). Techniques include computer simula- tions, video demonstrations, disaster drills, and a clear understanding of communication sys- tems and the incident command center. A natural disaster, an attack of terrorism, an epidemic, or other mass casualty events may, and probably will, occur at some time. All health care organizations must be prepared to care for a surge in casualties while reducing the impact on patients and staff.

Changes in Nursing’s Future Nurses will face many changes in the future, including an increasing demand for nurses as the population ages, a worsening shortage as nurses age, and recommendations for changes to prac- tice and education. The aging population is surviving previously fatal diseases and conditions


due to ever-evolving health care technologies. These patients often require ongoing care for chronic illnesses as well as for acute episodes of illness.

Just as the population is aging and requiring more and more care, nurses too are growing older. The average age of the registered nurse is 46 years, although the number of RNs under age 30 is increasing at a faster pace than before (HRSA, 2011).

Slightly more than 3 million nurses are currently licensed as registered nurses in the U.S., and 85 percent of them practice full- or part-time in the profession (HRSA, 2011). Jobs for nurses, however, are expected to grow to 3.2 million by 2018, much faster than the average for all occupations (U.S. Department of Labor, 2011). Also, with implementation of health care reform, increases in the demand for nurses in primary care and acute care settings are expected.

The Institute of Medicine’s report on the future of nursing makes sweeping recommenda- tions for nursing’s future, including that “nurses should be full partners, with physicians and other health care professionals, in redesigning health care in the United States” (IOM, 2010, p. 3). In addition, IOM posits that today’s health care environment necessitates better-educated nurses and recommends that 80 percent of nurses be prepared at the baccaluareate or higher level by 2020.

At the same time, the Carnegie Foundation recommends radically transforming nursing education (Benner et al., 2009). Its recommendations include:

1. Focus on how to apply knowledge, not only acquire it.

2. Integrate clinical and classroom teaching, rather than separately.

3. Emphasize clinical reasoning, not only critical thinking.

4. Emphasize formation, rather than socialization and role taking (Benner et al., 2009).

Even More Change . . . What does the future hold for health care? Change is the one constant. Quality of care will continue to be monitored and reported with accompanying demands to tie pay to performance. Technology of care, communication, and data management will become more and more com- plex as computer processing power and storage capacity expand (Clancy, 2010) and equipment becomes smaller and more mobile. Access to care and how to pay for it will continue to drive policy and funding decisions. Everyone in health care must learn to live with ambiguity and be flexible enough to adapt to the changes it brings.

Challenges Facing Nurses and Managers Every nurse must be prepared to manage. Specific training in management skills is needed in nursing school as well as in the work setting. Most important, however, is that nurses be able to transfer their newly acquired skills to the job itself. Thus, nurse managers must be experienced in management themselves and be able to assist their staff in developing adequate management skills. Management training for nurses at all levels is essential for any organization to be effi- cient and effective in today’s cost-conscious and competitive environment.

The challenge for nurse managers and administrators is how to manage in a constantly changing system. Working with teams of administrators and providers to deliver quality health care in the most cost-effective manner offers opportunity as well. Nurses’ unique skills in communication, negotiation, and collaboration position them well for the system of today and for the future.

Nurse managers today are challenged to monitor and improve quality care, manage with limited resources, help design new systems of care, supervise teams of professionals and nonprofessionals from a variety of cultures, and, finally, teach personnel how to function well in


the new system. This is no small task. It requires that nurses and their managers be committed, involved, enthusiastic, flexible, and innovative; above all else, it requires that they have good mental and physical health. Because the nurse manager of today is responsible for others’ work, the nurse manager must also be a coach, a teacher, and a facilitator. The manager works through others to meet the goals of individuals, of the unit, and of the organization. Most of all, the man- ager must be a leader who can motivate and inspire.

Nurse managers must address the interests of administrators, colleagues in other disciplines, and employees. All want the same result—quality care. Administrators, however, must focus on cost and efficiency in order for the organization to compete and survive. Colleagues want col- laborative and efficient systems of care. Employees want to be supported in their work with ad- equate staffing, supplies, equipment, and, most of all, time. Therein lies the conflict. Between all of them is the nurse manager, who must balance the needs of all. Being a nurse manager today is the most challenging opportunity in health care. This book is designed to prepare you to meet these challenges.

What You Know Now • Health care is radically changing and is expected to continue to change in the foreseeable future. • The tension between providing adequate nursing care and paying for that care will continue to dominate

health policy decisions. • Reducing medical errors is the goal of quality initiatives. • Cultural, gender, and generational diversity will continue to shape the nursing workforce. • Evidence-based practice will guide nursing decisions into the future. • Electronic health records, robotics, and virtual care are just a few of the many technologies continuing to

evolve. • Expansion in communication technologies will continue to offer opportunities and challenges to health

care organizations. • Threats of natural disasters, terrorism, and pandemics require all health care organizations to plan and

prepare for mass casualties. • The nurse manager is challenged to manage in a constantly changing environment.

Questions to Challenge You 1. Name three changes that you would suggest to reduce the cost of health care without compromising

patients’ health and safety. Talk about how you could help make these changes. 2. What mechanisms could you suggest to improve and ensure the quality of care? (Don’t just suggest

adding nursing staff!) 3. How could you help reduce medical errors? What can you suggest that a health care organization

could do? 4. Do your clinical decisions rely on evidence-based practice? If you answer no, why not? 5. What are some ways that nurses could take advantage of emerging technologies in health care and

information systems? Think big. 6. Have you participated in a disaster drill? Did you notice ways to improve the organization’s readi-

ness for mass casualties? Name at least one. 7. What steps can you take to transfer the knowledge and skills you learn in this book into your work



Pearson Nursing Student Resources Find additional review materials at www.nursing.pearsonhighered.com

Prepare for success with additional NCLEX®-style practice questions, interactive assignments and activities, Web links, animations and videos, and more!

Agency for Healthcare Research and Quality. (2011). AHRQ disaster response tools and resources. Retrieved May 25, 2011 from http://www.ahrq. gov/research/altstand

American Nurses Credential- ing Center (2011). Magnet Recognition Program. Retrieved April 27, 2011 from http://www. nursecredentialing.org/ Magnet.aspx

Benner, P., Sutphen, M., Leonard, V., and Day, L. (2009). Educating nurses: A call for radical trans- formation. San Francisco: Jossey-Bass.

Binder, L. (2010). Leapfrog: Unique and salient mea- sures of hospital quality and safety. Prescriptions for Excellence in Health Care, 8, 1–2.

Brown, D. S., Aydin, C. E., Donaldson, N., Fridman, M., & Sandhu, M. (2010). Benchmarking for small hospitals: Size didn’t mat- ter! Journal of Healthcare Quality, 32(4), 50–60.

Centers for Medicare and Medic- aid Services (CMS) (2011). National health expenditure data. Retrieved April 25, 2011 from https://www. cms.gov/NationalHealth- ExpendData/25_NHE_Fact_ Sheet.asp

Chambers, P. D. (2010). Tap the unique strengths of the mil- lennial generation. Nursing

Management, 41(3), 37–39.

Christianson, J. B., Volmar, K. M., Alexander, J., & Scanlon, D. P. (2010). A report card on provider report cards: Current status of the health care transpar- ency movement. Journal of General Internal Medicine, 25(11), 1235–1241.

Clancy, T. R. (2010). Technology and complexity: Trouble brewing? Journal of Nurs- ing Administration, 40(6), 247–249.

Dunton, N., Gonnerman, D., Montalvo, I., & Schumann, M. J. (2011). Incorporating nursing quality indicators in public reporting and value- based purchasing initiatives. American Nurse Today, 6(1), 14–18.

Encinosa, W. E., & Hellinger, F. J. (2008). The impact of medical errors on ninety- day costs and outcomes: An examination of sur- gical patients. Health Services Research, 43(6), 2067–2085.

Hader, R. (2010). The evident that isn’t . . . interpreting research. Nursing Manage- ment, 41(9), 23–26.

Health Resources and Services Administration (HRSA) (2011). The registered nurse population: Findings from the 2008 national sample survey of registered nurses. Retrieved April 26, 2011

from http://bhpr.hrsa.gov/ healthworkforce/ rnsurvey2008.html

Houser, J., & Oman, K. S. (2010). Evidence-based practice: An implementa- tion guide for healthcare organizations. Sudbury, MA: Jones & Bartlett.

Gomez, R. (2010). Automation: HER upgrade consider- ations. Nursing Manage- ment, 41(2), 35–37.

Institute of Medicine (1999). To err is human: Build- ing a safer health system. Washington, DC: National Academy Press.

Institute of Medicine (2010). The future of nursing: Leading change, advancing health. Retrieved April 26, 2011 from http://www. thefutureofnursing.org/ IOM-Report

Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and opportunities of social media. Business Horizons, 53(1), 59–68.

Keepnews, D. M., Brewer, C. S., Kovner, C. T., & Shin, J. H. (2010). Genera- tional differences among newly licensed registered nurses. Nursing Outlook, 58(3), 155–163.

Lake, E. T., Shang, J., Klaus, S., & Dunton, N. E. (2010). Patient falls: Association with hospi- tal magnet status and nursing unit staffing. Research in



Nursing & Health, 33(5), 413–425.

Markoff, J. (2010, September 4). The boss is robotic, and rolling up behind you. New York Times. Retrieved April 28, 2011 from http://www.nytimes. com/2010/09/05/ science/05robots.html

Milstein, A. (2009). Encing extra payment for “never events”—Stronger incen- tives for patients’ safety. New England Journal of Medicine, 360(23), 2388–2390.

Nolte, E. (2011). International benchmarking of healthcare quality: A review of the literature. The Rand Corpo- ration. Retrieved April 26, 2011 from http://www.rand. org/pubs/technical_reports/ TR738.html

Raso, R. (2010). Social media for nurse managers: What does it all mean? Nursing Management, 41(8), 23–25.

Shreve, J., Van Den Bos, J., Gray, T., Halford, M., Rustagi, K., & Ziemkiewicz, E. (2010). The economic measurement of medical errors. Society of Actuaries. Retrieved April 28, 2011 from http:// www.soa.org/files/ pdf/research- econ-measurement.pdf

Sullivan, E. J. (2013). Becom- ing influential: A guide for nurses (2nd ed.). Upper Saddle River, NJ: Prentice Hall Health.

Trossman, S. (2009a). Issues up close: No peeking allowed. American Nurse Today, 4(2), 31–32.

Trossman, S. (2010b). Sharing too much? Nurses nation- wide need more informa- tion on social networking pitfalls. American Nurse Today, 5(11), 38–39.

Trossman, S. (2010c, November/ December). Not “part of the job”: Nurses seek an end

to workplace violence. The American Nurse, p. 1, 6.

U.S. Census Bureau (2011, March 24). 2010 Census shows America’s diversity. Retrieved April 29, 2011 from http://2010.census. gov/news/releases/ operations/cb11-cn125.html

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Wachter, R. M., Foster, N. E., & Dudley, R. A. (2008). Medi- care’s decision to withhold payment for hospital errors: The devil is in the details. Joint Commission Journal on Quality and Patient Safety, 34(2), 116–123.

Zapatochny-Rufo, R. J. (2010). Good-better-best: The virtual ICU and beyond. Nursing Management, 41(2), 38–41.


Traditional Organizational Theories







Traditional Organizational Structures





Service-Line Structures

Shared Governance

Ownership of Health Care Organizations

Health Care Settings PRIMARY CARE




Complex Health Care Arrangements HEALTH CARE NETWORKS





Redesigning Health Care

Strategic Planning

Organizational Environment and Culture

Designing Organizations 2

1. Discuss how organizational theories differ.

2. Describe the different types of health care organizations.

3. Explain how health care organizations are structured.

4. Discuss various ways that health care is provided.

5. Demonstrate how strategic planning guides the organization’s future.

6. Discuss how the organizational environment and culture affect workplace conditions.

Learning Outcomes After completing this chapter, you will be able to:

Key Terms Accountable care organization Bureaucracy Capitation Chain of command Diversification Goals Hawthorne effect Horizontal integration Integrated health care networks Line authority

Logic model Medical home Mission Objectives Organization Organizational culture Organizational environment Philosophy Redesign Retail medicine

Service-line structures Shared governance Span of control Staff authority Strategic planning Strategies Throughput Values Vertical integration Vision statement


A n organization is a collection of people working together under a defined structure to achieve predetermined outcomes using financial, human, and material resources. The justification for developing organizations is both rational and economic. Coordinated efforts capture more information and knowledge, purchase more technology, and produce more goods, services, opportunities, and securities than individual efforts. This chapter discusses or- ganizational theory, structures, and functions.

Traditional Organizational Theories The earliest recorded example of organizational thinking comes from the ancient Sumerian civi- lization, around 5000 b.c. The early Egyptians, Babylonians, Greeks, and Romans also gave thought to how groups were organized. Later, Machiavelli in the 1500s and Adam Smith in 1776 established the management principles we know as specialization and division of labor. Never- theless, organizational theory remained largely unexplored until the Industrial Revolution during the late 1800s and early 1900s, when a number of approaches to the structure and management of organizations developed. The early philosophies are traditionally labeled classical theory and humanistic theory while later approaches include systems theory, contingency theory, chaos theory, and complexity theory.

Classical Theory The classical approach to organizations focuses almost exclusively on the structure of the formal organization. The main premise is efficiency through design. People are seen as operating most productively within a rational and well-defined task or organizational design. Therefore, one designs an organization by subdividing work, specifying tasks to be done, and only then fitting people into the plan. Classical theory is built around four elements: division and specialization of labor, organizational structure, chain of command, and span of control.

Division and Specialization of Labor Dividing the work reduces the number of tasks that each employee must carry out, thereby increasing efficiency and improving the organization’s product. This concept lends itself to proficiency and specialization. Therefore, division of work and specialization are seen as economically beneficial. In addition, managers can standardize the work to be done, which in turn provides greater control.

Organizational Structure Organizational structure describes the arrangement of the work group. It is a rational approach for designing an effective organization. Classical theorists developed the concept of departmentaliza- tion as a means to maintain command, reinforce authority, and provide a formal system for commu- nication. The design of the organization is intended to foster the organization’s survival and success.

Characteristically, the structure takes shape as a set of differentiated but interrelated func- tions. Max Weber (1958) proposed the term bureaucracy to define the ideal, intentionally ratio- nal, most efficient form of organization. Today this word has a negative connotation, suggesting long waits, inefficiency, and red tape.

Chain of Command The chain of command is the hierarchy of authority and responsibility within the organization. Authority is the right or power to direct activity, whereas responsibility is the obligation to attain objectives or perform certain functions. Both are derived from one’s position within the organi- zation and define accountability. The line of authority is such that higher levels of management delegate work to those below them in the organization.

One type of authority is line authority, the linear hierarchy through which activity is directed. Another type is staff authority, an advisory relationship; recommendations and advice


are offered, but responsibility for the work is assigned to others. In Figure 2-1, the relationships among the chief nurse executive, nurse manager, and staff nurse are examples of line authority. The relationship between the acute care nurse practitioner and the nurse manager illustrates staff authority. Neither the acute care nurse practitioner nor the nurse manager is responsible for the work of the other; instead, they collaborate to improve the efficiency and productivity of the unit for which the nurse manager is responsible.

Span of Control Span of control addresses the pragmatic concern of how many employees a manager can effec- tively supervise. Complex organizations usually have numerous departments that are highly spe- cialized and differentiated; authority is centralized, resulting in a tall organizational structure with many small work groups. Less complex organizations have flat structures; authority is decentral- ized, with several managers supervising large work groups. Figure 2-2 depicts the differences.

In the professional bureaucracy, the operating core of professionals is the dominant feature. Decision making is usually decentralized, and the technostructure is underdeveloped. The sup- port staff, however, is well developed. Most hospitals are professional bureaucracies.

Chief nurse executive

Staff nurse Staff nurse Staff nurse

Acute care nurse practitioner

Nurse manager

Nurse manager

Nurse manager

Figure 2-1 • Chain of authority.



Figure 2-2 • Contrasting spans of control. From Longest, B. B., Rakich, J. S., & Darr, K. (2000). Managing health services organizations and systems (4th ed.). Baltimore: Health Professions Press, p. 124. Reprinted by permission.


Organizational theories suggest organizational structures. Traditional structures (described later in the chapter) operationalize the tenets of classical theory.

Humanistic Theory Criticism of classical theory led to the development of humanistic theory, an approach identified with the human relations movement of the 1930s. A major assumption of this theory is that peo- ple desire social relationships, respond to group pressures, and search for personal fulfillment. This theory was developed as the result of a series of studies conducted by the Western Electric Company at its Hawthorne plant in Chicago. The first study was conducted to examine the effect of illumination on productivity. However, this study failed to find any relationship between the two. In most groups, productivity varied at random, and in one study productivity actually rose as illumination levels declined. The researchers concluded that unforeseen psychological factors were responsible for the findings.

Further studies of working conditions, such as rest breaks and the length of the workweek, still failed to reveal a relationship to productivity. The researchers concluded that the social set- ting created by the research itself—that is, the special attention given to workers as part of the research—enhanced productivity. This tendency for people to perform as expected because of special attention became known as the Hawthorne effect.

Although the findings are controversial, they led organizational theorists to focus on the so- cial aspects of work and organizational design. (See Chapter 17 for a description of motivational theories.) One important assertion of this school of thought was that individuals cannot be co- erced or bribed to do things they consider unreasonable; formal authority does not work without willing participants.

Systems Theory Organizational theorists who maintain a systems perspective view productivity as a function of the interplay among structure, people, technology, and environment. Like nursing theories based on systems theory (such as those of Roy and Neuman), organizational theory defines system as a set of interrelated parts arranged in a unified whole. Systems can be closed or open. Closed systems are self-contained and usually can be found only in the physical sciences. An open sys- tem, in contrast, interacts both internally and with its environment, much like a living organism.

An organization is a complex, sociotechnical, open system. This theory provides a frame- work by which the interrelated parts of the system and their functions can be studied. Resources, or input, such as employees, patients, materials, money, and equipment, are imported from the environment. Within the organization, energy and resources are utilized and transformed; work, a process called throughput, is performed to produce a product. The product, or output, is then exported to the environment. An organization, then, is a recurrent cycle of input, throughput, and output. Each health care organization—whether a hospital, ambulatory surgical center, or a home care agency, and so on—requires human, financial, and material resources. Each also provides a variety of services to treat illness, restore function, provide rehabilitation, and protect or promote wellness.

Throughput today is commonly associated with moving patients into and out of the sys- tem. Hospitals everywhere are focused on throughput of patients, such as if emergency depart- ments are on diversion, how long a patient has to wait for a bed, and the number of readmissions (Handel et al., 2010). Using information technology, bed management systems have emerged as a strategy to identify bed availability in real time (Gamble, 2009). Joint Commission accreditation standards now require hospitals to show data “throughput” statistics (Joint Commission, 2011).

Contingency Theory Contingency theory posits that organizational performance can be enhanced by matching an organization’s structure to its environment. The environment is defined as the people, objects,


and ideas outside the organization that influence the organization. The environment of a health care organization includes patients and potential patients; third-party payers, including the gov- ernment; regulators; competitors; and suppliers of physical facilities, personnel (such as schools of nursing and medicine), equipment, and pharmaceuticals.

Health care organizations are unique with respect to the kinds of products and services they offer. However, like all other organizations, health care organizations are shaped by external and internal forces. These forces stem from the economic and social environment, the technologies used in patient care, organizational size, and the abilities and limitations of the personnel involved in the delivery of health care, including nurses, physicians, technicians, administrators, and, of course, patients.

Given the variety of health care services and patients served today, it should come as no sur- prise that organizations differ with respect to the environments they face, the levels of training and skills of their caregivers, and the emotional and physical needs of patients. It is naive to think that the form of organization best for one type of patient in one type of environment is appropriate for another type of patient in a completely different environment. Think about the differences in the environment of a substance abuse treatment center compared to a women’s health clinic. Thus, the optimal form of the organization is contingent on the circumstances faced by that organization.

Chaos Theory Chaos theory, which was inspired by the finding of quantum mechanics, challenges us to look at organizations and the nature of relationships and proposes that nature’s work does not follow a straight line. The elements of nature often move in a circular, ebbing fashion; a stream destined for the ocean, for example, never takes a straight path. In fact, very little in life operates as a straight line; people’s relationships to each other and to their work certainly do not. This notion challenges traditional thinking regarding the design of organizations. Organizations are living, self-organizing systems that are complex and self-adaptive.

The life cycle of an organization is fully dependent on its adaptability and response to changes in its environment. The tendency is for the organization to grow. When it becomes a large entity, it tends to stabilize and develop more formal standards. From that point, however, the organization tends to lose its adaptability and responsiveness to its environment.

Chaos theory suggests that the drive to create permanent organizational structures is doomed to fail. The set of rules that guided the industrial notions of organizational function and integrity must be discarded, and newer principles that ensure flexibility, fluidity, speed of adaptability, and cultural sensitivity must emerge. The role of leadership in these changing organizations is to build resilience in the midst of change and to maintain a balance between tension and order, which promotes creativity and prevents instability. This theory requires us to abandon our at- tachment to any particular model of design and to reflect instead on creative and flexible formats that can be quickly adjusted and changed as the organization’s realities shift.

Complexity Theory Complexity theory originated in the computational sciences when scientists noted that random events interfered with expectations. The theory is useful in health care because the environment is rife with randomness and complex tasks. Patients’ conditions change in an instant; necessary staff are not available; or equipment fails, all without warning. Tasks involve intricate interactions between and among staff, patients, and the environment. Managing in such ambiguous circumstances requires considering every aspect of the system as it interacts and adapts to changes. Complexity theory ex- plains why health care organizations, in spite of concerted efforts, struggle with patient safety.

Traditional Organizational Structures The optimal organizational structure integrates organizational goals, size, technology, and envi- ronment. Various organizational structures have been utilized over time. Examples include func- tional structures, hybrid structures, matrix structures, and parallel structures.


Functional Structure In functional structures, employees are grouped in departments by specialty, with similar tasks being performed by the same group, similar groups operating out of the same depart- ment, and similar departments reporting to the same manager. In a functional structure, all nursing tasks fall under nursing service; the same is true of other functional areas. Functional structures tend to centralize decision making because the functions converge at the top of the organization.

Functional structures have several weaknesses. Coordination across functions is poor. Decision-making responsibilities can pile up at the top and overload senior managers, who may be uninformed regarding day-to-day operations. Responses to the external environment that re- quire coordination across functions are slow. General management training is limited because most employees move up the organization within functional departments. Functional structures are uncommon in today’s rapidly changing health care environment.

Hybrid Structure When an organization grows, it typically organizes both self-contained units and functional units; the result is a hybrid organization. The hybrid structure can provide simultaneous coordi- nation within product divisions, can improve alignment between corporate and service or prod- uct goals, and foster adaptation to the environment while still maintaining efficiency.

The weakness of hybrid structures is conflict between top administration and managers. Managers often resent administrators’ intrusions into what they see as their own area of respon- sibility. Over time, organizations tend to accumulate large corporate staffs to oversee divisions in an attempt to provide functional coordination across service or product structures.

Matrix Structure The matrix structure is unique and complex; it integrates both product and functional structures into one overlapping structure. In a matrix structure, different managers are responsible for func- tion and product. For example, the nurse manager for the oncology clinic may report to the vice president for nursing as well as the vice president for outpatient services.

Matrices tend to develop where there are strong outside pressures for a dual organizational focus on product and function. The matrix is appropriate in a highly uncertain environment that changes frequently but also requires organizational expertise.

A major weakness of the matrix structure is its dual authority, which can be frustrating and confusing for departmental managers and employees. Excellent interpersonal skills are required from the managers involved. A matrix organization is time-consuming because frequent meetings are required to resolve problems and conflicts; the structure will not work unless participants can see beyond their own functional area to the big organizational picture. Finally, if one side of the matrix is more closely aligned with organizational objectives, that side may become dominant.

Parallel Structure Parallel structure is a structure unique to health care. It is the result of complex relationships that exist between the formal authority of the health care organization and the authority of its medi- cal staff. In a parallel structure, the medical staff is separate and autonomous from the organiza- tion. The result is an organizational dilemma: two lines of authority. One line extends from the governing body to the chief executive officer and then to the managerial structure; the other line extends from the governing body to the medical staff. These two intersect in departments such as nursing because decision making involves both managerial and clinical elements.

Parallel structures are found in health care institutions with a functional structure and sepa- rate medical governance structure. Parallel structures are becoming less successful as health care organizations integrate into newer models that incorporate physician practice under the organi- zational umbrella.


Service-Line Structures More common in health care organizations today are service-line structures (Nugent et al., 2008). Service-line structures also are called product-line or service-integrated structures. In a service-line structure, clinical services are organized around patients with specific conditions (Figure 2-3).

Integrated structures are preferred in large and complex organizations because the same ac- tivity (for example, hiring) is assigned to several self-contained units, which can respond rapidly to the unit’s immediate needs. This is appropriate when environmental uncertainty is high and the organization requires frequent adaptation and innovation.

One of the strengths of the service-line structure is its potential for rapid change in a chang- ing environment. Because each division is specialized and its outputs can be tailored to the situa- tion, client satisfaction is high. Coordination across function (nursing, dietary, pharmacy, and so on) occurs easily; work partners identify with their own service and can compromise or collabo- rate with other service functions to meet service goals and reduce conflict. Service goals receive priority under this organizational structure because employees see the service outcomes as the primary purpose of their organization.

The major weaknesses of service-integrated structures include possible duplication of resources (such as ads for new positions) and lack of in-depth technical training and specialization. Coordination across service categories (oncology, cardiology, and the burn unit, for example) is difficult; services operate independently and often compete. Each service category, which is independent and autono- mous, has separate and often duplicate staff and competes with other service areas for resources. In addition, some service lines (e. g., pediatrics, obstetrics, bariatric surgery, and transplant centers) pres- ent special challenges due to low usage or the need for specialized personnel (Page, 2010).

Service-line structures are the most common structures found in Magnet-certified organiza- tions (Kaplow & Reed, 2008). Such structures, however, present a challenge to nursing adminis- trators and managers to maintain nursing standards across service lines (Hill, 2009). Armstrong, Laschinger, and Wong (2009) found improved patient safety in Magnet hospitals was related to nurses’ perception of empowerment. This can be explained, possibly, by Magnet standards that encourage staff participation in decision making.

Shared Governance Shared governance is a process for empowering nurses in the practice setting. It is based on a philosophy that nursing practice is best determined by nurses. Participative decision making is the hallmark of shared governance and a standard for Magnet certification. Interdependence and

Nursing Dietary



Pharmacy Storeroom

Nursing Dietary Pharmacy Storeroom


Nursing Dietary

Burn unit

Pharmacy Storeroom

Figure 2-3 • Service line structure.


accountability are the basis for constructing a network of making nursing practice decisions in a decentralized environment. As a result, nurses gain significant control over their practice, ef- ficiency and accountability are improved, and feelings of powerlessness are mitigated.

The ultimate outcome of shared governance is that nurses participate in an accountable fo- rum to control their own practice within the health care organization. The assumption is that nursing staffs, like medical staffs, will predetermine the clinical skills of staff nurses and moni- tor the work of each through peer review while deciding on other practice issues through ac- countable forums or councils.

Shared governance allows staff nurses significant control over major decisions about nurs- ing practice. Most shared governance systems are similar to and reflect the principles often found in academic or medical governance models. As shown in the example in Figure 2-4, nurses par- ticipate in unit-based councils that interface with divisional councils, specialty councils, and a leadership council, consisting of nurse managers and administrators.

Decisions are made by consensus, rather than by the manager’s order or majority rule, a process that allows staff nurses an active voice in the decision. In the example in Figure 2-4, unit councils make decisions that directly affect the unit, divisional councils address issues that affect more than one unit, and a hospital-wide council determines overall issues.

The hospital-wide council consists of specific councils that address particular issues. The practice council, for example, is responsible for patient care standards. The professional development council maintains educational standards and competency assessments. The quality council monitors patient care quality. The research council assists in implementing evidence- based practice.

Although nursing practice councils have been operational for several decades, changes in health care and in organizational structures often require restructuring the councils, a process not without difficulty (Moore & Wells, 2010). Staffing shortages, patient demands and unfamiliarity with the process or its benefits may discourage participation.

Furthermore, not all shared governance models are successful (Ballard, 2010). Human fac- tors, such as lack of leadership, lack of staff or manager understanding of shared governance, or the absence of knowledgeable mentors, can impede the implementation of the model. Structural factors, such as a known structure for decision making, time available for meetings, and staffing support for attendance also can affect the success of shared governance.

With shared governance a Magnet standard, efforts to implement, refine and restructure the model in health care organizations is expected to continue (McDowell et al., 2010).

Ownership of Health Care Organizations Today’s health care organizations differ in ownership, role, activity, and size. Ownership can be either private or government, voluntary (not for profit) or investor-owned (for profit), and sectarian or non- sectarian (Figure 2-5). Private organizations are usually owned by corporations or religious entities,

Unit-based councils

Divisional council

Leadership council

Practice council

Professional development


Quality council

Research council

Figure 2-4 • Shared governance model. Adapted from McDowell, J. B., Williams, R. L., Kautz, D. D., Madden, P., Heilig, A., & Thompson, A. (2010). Shared governance: 10 years later. Nursing Management, 41(7), 32–37.


whereas government organizations are operated by city, county, state, or federal entities, such as the Indian Health Service. Voluntary organizations are usually not for profit, meaning that surplus mon- ies are reinvested into the organization. Investor-owned, or for-profit corporations, distribute surplus monies back to the investors, who expect a profit. Sectarian agencies have religious affiliations.

Health Care Settings Organizations are further divided by the setting in which they deliver care. These include pri- mary care, acute care hospitals, home health care, and long-term care organizations.

Primary Care Primary care is considered the patient’s first encounter with the health care system. Primary care is deliv- ered in physician’s offices, emergency rooms, public health clinics, and in sites known as retail medicine.


Voluntary (not for profit)

Roman Catholic, Salvation Army, Lutheran, Methodist, Baptist, Presbyterian, Latter-day Saints, Jewish


Industrial (railroad, lumber, union) Kaiser-Permanente Plan Shriners hospitals

Investor- owned (for profit)

Individual owner partnership corporation

Single hospital (Investor-owned hospitals)





State Long-term psychiatric, chronic, and other State university medical centers

Army Navy Air Force

Public Health Service Indian Health Service Other


Hospital district or authority County City-county City

Department of Defense

Department of Veterans Affairs

Department of Health and Human Services

Department of Justice—prisons

Figure 2-5 • Types of ownership in health care organizations. From Longest, B. S., Rakich, J. S., & Darr, K. (2000). Managing Health Services Organizations and Systems (4th ed.). Baltimore: Health Professions Press, p. 173. Reprinted by permission.


Retail medicine describes walk-in clinics that provide convenient services for low-acuity illnesses without scheduled appointments. Staffed by nurse practitioners with physician backup, these clinics seem a natural expectation of today’s fast food, 24/7 public mindset. The Ameri- can Medical Association, however, has questioned the quality of care provided in these clinics (Costello, 2008).

Rohrer, Angstman, and Furst (2009) addressed quality of care in their study. They com- pared the reutilization rates of patients seen in a retail clinic with those in a large group physician practice. They surmised that if clinic patients had no higher return visits or emer- gency room visits for the same condition than physician office patients, then the quality of care could be assumed to be comparable in both settings. That is exactly what they found. So, according to this study, patients not only benefitted from the convenience of a walk-in clinic, but the quality of care they received was comparable to a private physician’s office visit. In addition, the cost of care was much lower than either physician offices or emer- gency rooms.

Another model of primary care is the logic model. The logic model is a practice-based re- search network (PBRN) that provides a framework for planning and evaluation of primary care (Hayes, Parchman, & Howard, 2011). The goal of this model is to improve the health outcomes of patients. Primary care outcomes are seldom evaluated. The logic model offers one way to determine if efforts and resources are used in the most productive way and if subjective outcomes, such as pa- tient satisfaction and easy access are achieved.

Acute Care Hospitals Hospitals are frequently classified by length of stay and type of service. Most hospitals are acute (short-term or episodic) care facilities, and they may be classified as general or special care fa- cilities, such as pediatric, rehabilitative, and psychiatric facilities. Many hospitals also serve as teaching institutions for nurses, physicians, and other health care professionals.

The term “teaching hospital” commonly designates a hospital associated with a medical school that maintains a house staff of residents on call 24 hours a day. Nonteaching hospitals, in contrast, have only private physicians on staff. Because private physicians are less accessible than house staff, the medical supervision of patient care differs, as may the role of the nurse. This designation is changing dramatically as new forms of physician groups and allied practices emerge in partnerships with hospitals and medical schools. Some organizations hire hospitalists, physicians who provide care only to hospital inpatients; those who care for patients in intensive care are known as intensivists.

Home Health Care Home health care is the intermittent, temporary delivery of health care in the home by skilled or unskilled providers. With shortened lengths of hospital stay, more acutely ill patients are dis- charged to recuperate at home. Furthermore, more people are surviving life-threatening illnesses or trauma and require extended care. The primary service provided by home care agencies is nursing care; however, larger home care agencies also offer other professional services, such as physical or occupational therapy, and durable medical equipment, such as ventilators, hospital beds, home oxygen equipment, and other medical supplies. Hospice care for the final days of a patient’s terminal illness may be provided by a home care agency or a hospital.

An outgrowth of the home health care industry is the temporary service agency. These agencies provide nurses and other health care workers to hospitals that are temporarily short- staffed; they also provide private duty nurses to individual patients either at home or in the hospital.

Long-Term Care Long-term care facilities provide professional nursing care and rehabilitative services. They may be freestanding, part of a hospital, or affiliated with a health care organization. Usually, length of


stay is limited. Residential care facilities, also known as nursing homes, are sheltered environ- ments in which long-term care is provided by nursing assistants with supervision from licensed professional or registered nurses.

As the population ages and the frail elderly account for more and more of the nation’s citi- zens, care in long-term care facilities is growing (Weaver et al., 2008). These organizations pose different problems for staff. Ageism and infantilism permeate many settings (Ryvicker, 2009). In addition, patients often transition between the nursing home and the hospital, and that care may be fragmented and lead to poor outcomes (Naylor, Kurtzman, & Pauly, 2009). Challenges in providing care to the elderly include addressing the tendency to stigmatize older, frail adults and to provide continuity of care across settings.

Complex Health Care Arrangements Health Care Networks Integrated health care networks emerged as organizations struggled to find ways to survive in today’s cost-conscious environment. Integrated systems encompass a variety of model organiza- tional structures, but certain characteristics are common. Network systems

● Deliver a continuum of care; ● Provide geographic coverage for the buyers of health care services; and ● Accept the risk inherent in taking a fixed payment in return for providing health care for

all persons in the selected group, such as all employees of one company.

To provide such services, networks of providers evolved to encompass hospitals and physi- cian practices. Most importantly, the focal point for care is primary care rather than the hospital. The goal is to keep patients healthy by treating them in the setting that incurs the lowest cost and thereby reducing expensive hospital treatments. The former goal—to keep hospital beds filled— has been replaced with a new goal: to keep patients out of them!

A variety of other arrangements have emerged, varying from loose affiliations between hos- pitals to complete mergers of hospitals, clinics, and physician practices. These arrangements continue to move and shift as alliances fail, return to separate entities, and form new affiliations. Changes in health care payments offer possibilities for nurses to practice in expanding primary care networks are anticipated.

Interorganizational Relationships With increased competition for resources and public and governmental pressures for better efficiency and effectiveness, organizations have been forced to establish relationships with one another for their continued survival. Multihospital systems and multiorganizational ar- rangements, both formal and informal, are mechanisms by which these relationships have formed.

Arrangements between or among organizations that provide the same or similar services are examples of horizontal integration. For instance, all hospitals in the network provide compa- rable services, as shown in Figure 2-6.

Vertical integration, in contrast, is an arrangement between or among dissimilar but re- lated organizations to provide a continuum of services. An affiliation of a health maintenance organization with a hospital, pharmacy, and nursing facility represents vertical integration (see Figure 2-7).

Numerous arrangements using horizontal and vertical integration can be found, and these models likely will become the common structure for delivery of health care. Examples of such arrangements include affiliations, consortia, alliances, mergers, and consolidations. An assort- ment of health care agencies under the umbrella of a corporate network is shown in the example in Figure 2-8.


Hospital A

Hospital B

Hospital C

Hospital D

Hospital E

Hospital F

Hospital G

Figure 2-6 • Horizontal integration.

Acute care hospital

Long-term care facility

Home health agency

Ambulatory care clinic

Sports medicine clinic

Hospice care

Figure 2-7 • Vertical integration.

Hospital Imaging center

Home care services

Medical group


Skilled nursing facility

Ambulatory surgical center

Long-term care

Corporate board

Figure 2-8 • Corporate health care network.

Diversification Diversification provides another strategy for survival in today’s economy. Diversification is the expansion of an organization into new arenas. Two types of diversification are common: concen- tric and conglomerate.

Concentric diversification occurs when an organization complements its existing services by expanding into new markets or broadening the types of services it currently has available. For example, a children’s hospital might open a day-care center for developmentally delayed children or offer drop-in facilities for sick child care.

Conglomerate diversification is the expansion into areas that differ from the original product or service. The purpose of conglomerate diversification is to obtain a source of income that will support the organization’s product or service. For example, a long-term care facility might develop real estate or purchase a company that produces durable medical equipment.

Another type of diversification common to health care is the joint venture. A joint venture is a partnership in which each partner contributes different areas of expertise, resources, or services to create a new product or service. In one type of joint venture, one partner (general partner) finances and manages the venture, whereas the other partner (limited partner) pro- vides a needed service. Joint ventures between health care organizations and physicians are becoming increasingly common. Integrated health care organizations, hospitals, and clinics seek physician and/or practitioner groups they can bond (capture) in order to obtain more referrals. The health care organization as financier and manager is the general partner, and physicians are limited partners.


Managed Health Care Organizations The managed health care organization is a system in which a group of providers is responsible for delivering services (that is, managing health care) through an organized arrangement with a group of individuals (for example, all employees of one company, all Medicaid patients in the state). Different types of managed-care organizations exist: health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point-of-service plans (POS).

An HMO is a geographically organized system that provides an agreed-on package of health maintenance and treatment services provided to enrollees at a fixed monthly fee per enrollee, called capitation. Patients are required to choose providers within the network.

In a PPO, the managed-care organization contracts with independent practitioners to pro- vide enrollees with established discounted rates. If an enrollee obtains services from a nonpar- ticipating provider, significant copayments are usually required.

Point-of-service (POS) is considered to be an HMO–PPO hybrid. In a POS, enrollees may use the network of managed-care providers to go outside the network as they wish. However, use of a pro- vider outside the network usually results in additional costs in copayments, deductibles, or premiums.

Accountable Care Organizations Effective January 2012, accountable care organizations have been able to contract with Medicare to provide care to a group of Medicare recipients (Ansel & Miller, 2010). Strong incentives to reduce cost, share information across networks and improve quality are included in the provisions for reimbursement.

An accountable care organization consists of a group of health care providers that provide care to a specified group of patients. Various structures can be used in accountable care organiza- tions from loosely affiliated groups of providers to integrated delivery systems. An accountable care organization is more flexible than a HMO because consumers are free to choose providers from outside the network. Cognizant of the potential for Medicare contracts and, later, reim- bursement by other third-party payers, health care providers and organizations are scrambling to establish collaborative arrangements and networks.

Redesigning Health Care Health care is a dynamic environment with multiple factors impinging on continuity and stability. Implementation of accountable care organizations, demands for safe, quality care, Magnet standards that promote decentralized organizational structures and an aging population with multiple chronic conditions are just two of the factors that make redesigning health care a reality today.

Redesign includes strategies to better provide safe, efficient, quality health care. Some ex- amples of redesign strategies include adopting a patient-centered care model, focusing on spe- cific service lines, applying lean thinking to the system, and establishing a flat, decentralized organizational structure.

The Institute of Medicine’s 2001 report, Crossing the Quality Chasm, recommended ways to improve health care. One of those was to adopt a patient-centered care model (IOM, 2001). Success in implementing a patient- and family-centered care model has been reported in the lit- erature (Zarubi, Reiley & McCarter, 2008).

Another patient-centered model is the medical home (Berenson et al., 2008). Centered by a primary care provider (primary care physician or nurse practitioner), a medical home links all care providers in the “home.” The goal is to provide continuous, accessible, and comprehen- sive care. Challenges for coordinating care in a medical home include communication (e.g., ab- sence of electronic medical records for all providers), the multiple needs of patients with chronic health problems, discomfort of patients and providers to use electronic communication of data and information, and compensation for primary care. To offset some of these challenges are sev- eral suggestions (Berenson et al., 2008). These include implementing electronic medical records


using nurse practitioners to manage patients with chronic conditions, encouraging patients to self-manage chronic conditions, and persuading providers to use electronic communication with patients.

To meet both quality and cost-effective goals, the health care organization may decide to concentrate on specific service lines. Called big-dot focus areas, an organization selects a few major initiatives. They might, for example, put resources into building cardiology, cancer, and neuroscience while maintaining other services as is.

Another strategy is to adopt the quality concepts of lean thinking to redesign (Joosten, Bongers, & Janssen, 2009). Lean thinking focuses on the system rather than on individuals, concentrates on interventions that improve outcomes and disregards those that have little or no effect. A flat, decentralized organizational structure centers decision making closest to the problem. It promotes unit-based decision making and empowers staff to implement process improvements in a timely manner (Kramer, Schmalenberg, & Maguire, 2010). Furthermore, a decentralized structure encourages communication and collaboration and provides a quality im- provement infrastructure.

Redesigning an organization presents numerous challenges. Staff may be concerned that their jobs will change or may disappear. Administrators may complain that loss of authority will result in poor performance. Everyone may worry that cost effective measures may diminish the quality of care. Significant stress is to be expected (Lavoie-Tremblay et al., 2010).

Nurse managers are key players in the redesign efforts. They are expected not only to initi- ate change while reducing costs, maintaining or improving quality of care, coaching and men- toring, and team building, but also to do so in an ever-changing environment full of ambiguities while their own responsibilities are expanded.

Strategic Planning Successful organizations know that they must focus their resources on their unique strengths, and health care is no exception. Organizations that focus on a few strategic initiatives, as dis- cussed previously, do so after an intensive planning process. The competitive health care en- vironment and limited resources require organizations to respond to public demands for safe, accessible quality health care.

This is a time-consuming and demanding process and should not be undertaken hurriedly. Put in use, however, a well-thought-out strategic plan guides the organization toward its goals, helps all the staff stay directed, and prevents the organization from responding to inappropriate requests.

A strategic plan projects the organization’s goals and activities into the future, usually two to five years ahead (Schaffner, 2009). Based on the organization’s philosophy and leaders’ as- sessment of their organization and the environment, strategic planning guides the direction the organization is to take.

The philosophy is a written statement that reflects the organizational values, vision, and mission (Conway-Morana, 2009). Values are the beliefs or attitudes one has about people, ideas, objects, or actions that form a basis for behavior. Organizations use value statements to identify those beliefs or attitudes esteemed by the organizational leaders.

A vision statement describes the goal to which the organization aspires. The vision state- ment is designed to inspire and motivate employees to achieve a desired state of affairs. “Our vision is to be a regional integrated health care delivery system providing premier health care services, professional and community education, and health care research” is an example of a vision statement for a health care system.

The mission of an organization is a broad, general statement of the organization’s reason for existence. Developing the mission is the necessary first step to designing a strategic plan. “Our mission is to improve the health of the people and communities we serve” is an example of a mission statement that guides decision making for the organization. Purchasing a medical equipment company, for example, might not be considered because it fails to meet the mission of improving the community’s health.


The strategic plan is based on the organization’s philosophy, vision, and mission. The first steps in strategic planning are:

● Appoint a strategic planning committee ● Interview key stakeholders ● Conduct a SWOT (strengths, weaknesses, opportunities, and threats) analysis ● Develop the plan ● Communicate the plan

People who are enthusiastic, experienced, and committed to the organization are the best representatives to serve on the planning committee. Naysayers can be included once some parts of the plan are formulated. Everyone in the organization must be involved even peripherally. “Buy-in” is critical to the plan’s success.

Stakeholders include physicians, administrators, nurses, ancillary and support staff, and community representatives. They will have differing opinions about what the organization can and should do and provide valuable information unavailable elsewhere.

The SWOT analysis includes assessment of the external and internal environment (Kalisch & Curley, 2008). Data is collected from multiple sources, including stakeholder information.

To develop the plan:

● Determine goals, objectives and strategies ● Assess the projected costs ● Assign responsible units or individuals ● Identify outcome measures and expected dates of completion

Goals are specific statements of what outcome is to be achieved. Goals describe outcomes that are measurable and precise. “Every patient will be satisfied with his or her care” is an example of a goal.

Goals apply to the entire organization, whereas objectives are specific to an individual unit. A nursing objective to meet the above goal might be “Provide appropriate information and ed- ucation to patients from preadmission to discharge.” Strategies follow objectives and specify what actions will be taken. “Implement patient education classes for prenatal patients” is an example of a strategy to meet the patient satisfaction objective.

Other categories in a strategic plan include identifying the personnel responsible for each activity, determining the projected cost, establishing criteria to recognize that the goal has been met, and deciding the expected date of completion.

Strategic planning is an ongoing process, not an end in itself. It requires meticulous atten- tion to how the organization is meeting its goals and, if goals are not met, what the reasons are for the variance. Maybe the goal needs to change, or possibly other personnel should be assigned to the task. Perhaps a change in the environment (reimbursement) or within the organization (shortage of key personnel) requires the goal to be abandoned. Continual evaluation will help the organization target its resources best.

Organizational Environment and Culture The terms organizational environment and organizational culture both describe internal con- ditions in the work setting. Organizational environment is the systemwide conditions that con- tribute to a positive or negative work setting. In 2005, the American Association of Critical-Care Nurses identified six characteristics of a healthy work environment, characteristics that the orga- nization continues to promote (AACN, 2011 ). The characteristics are:

● Skilled communication ● True collaboration ● Effective decision making ● Appropriate staffing ● Meaningful recognition ● Authentic leadership.


One way to assess the organizational environment is to evaluate the qualities of those hired for key positions in the organization. An organization in which nursing leaders are in- novative, creative, and energetic will tend to operate in a fast-moving, goal-oriented fashion. If humanistic, interpersonal skills are sought in candidates for leadership positions, the or- ganization will focus on human resources, employees, and patient advocacy (Hersey, 2011).

Organizational culture, on the other hand, are the basic assumptions and values held by members of the organization (Sullivan, 2013). These are often known as the unstated “rules of the game.” For example, who wears a lab coat? When is report given? To whom? Is tardiness tolerated? How late is acceptable?

Like environment, organizational culture varies from one institution to the next and subcul- tures and even countercultures, groups whose values and goals differ significantly from those of the dominant organization, may exist. A subculture is a group that has shared experiences or like interests and values. Nurses form a subculture within health care environments. They share a common language, rules, rituals, dress, and have their own unstated rules. Individual units also can become subcultures.

Systems involving participatory management and shared governance create organizational environments that reward decision making, creativity, independence, and autonomy (Kramer, Schmalenberg, & Maguire, 2010). These organizations retain and recruit independent, ac- countable professionals. Organizations that empower nurses to make decisions will better meet consumer requests. As the health care environment continues to evolve, more and more organi- zations are adopting consumer-sensitive cultures that require accountability and decision mak- ing from nurses.

What You Know Now • The schools of organizational theory include classical theory, humanistic theory, systems theory, contin-

gency theory, chaos theory, and complexity theory. • Organizations can be viewed as social systems consisting of people working in a predetermined pattern of

relationships who strive toward a goal. The goal of health care organizations is to provide a particular mix of health services.

• Traditional organizational structures include functional, hybrid, matrix, and parallel structures. • Service-line structures organize clinical services around specific patient conditions. • Shared governance provides the framework for empowerment and partnership within the health care

organization. • Accountable care organizations are recent additions to health care design. They can contract with a payer

to provide care to a specific group of patients. • The medical home is one of the patient-centered models where all services are provided by a group of

health care professionals. • Strategic planning is a process used by organizations to focus their resources on a limited number of

activities. • Organizational environment and culture affect the internal conditions of the work setting.

Questions to Challenge You 1. Secure a copy of the organizational chart from your employment or clinical site. Would you describe

the organization the same way the chart depicts it? If not, redraw a chart to illustrate how you see the organization.

2. What organizational structure would you prefer? Think about how you might go about finding an organization that meets your criteria.

3. Organizational theories explain how organizations function. Which theory or theories describes your organization’s functioning? Do you think it is the same theory your organization’s administrators would use to describe it? Explain.


4. Have you been involved in strategic planning? If so, explain what happened and how well it worked in directing the organization’s activities.

5. Using the six characteristics of a healthy work environment in the chapter, evaluate the organiza- tion where you work or have clinicals. How well does it rate? What changes would improve the environment?

American Association of Criti- cal Care Nurses (AACN). (2011). AACN standards for establishing and sustaining healthy work environments. Retrieved May 5, 2011 from http://www.aacn. org/WD/HWE/Docs/ HWEStandards.pdf

Ansel, T. C., & Miller, D. W. (2010). Reviewing the land- scape and defining the core competencies needed for a successful accountable care organization. Louisville, KY: Healthcare Strategy Group.

Armstrong, K., Laschinger, H., & Wong, C. (2009). Work- place empowerment and Magnet hospital characteris- tics as predictors of patient safety climate. Journal of Nursing Care Quality, 24(1), 55–62.

Ballard, N. (2010). Factors as- sociated with success and breakdown of shared gov- ernance. Journal of Nursing Administration, 40(10), 411–416.

Berenson, R. A., Hammons, T., Gans, D. H., Zuckerman, S., Merrell, K., Underwood, W. S., & Williams, A. F. (2008). A house is not a home: Keeping patients at the center of practice

redesign. Health Affairs, 27(5), 1219–1230.

Conway-Morana, P. L. (2009). Nursing strategy: What’s your plan? Nursing Man- agement, 40(3), 25–29.

Costello, D. (2008). Report from the field: A checkup for retail medicine. Health Af- fairs, 27(5), 1299–1303.

Gamble, K. H. (2009). Con- necting the dots: Patient flow systems are being leveraged to increase throughput, improve com- munication, and provide a more complete view of care. Healthcare Informat- ics, 25(13), 27–29.

Handel, D. A., Hilton, J. A., Ward, M. J., Rabin, E., Zwemer, F. L., & Pines, J. M. (2010). Emergency department throughput, crowding, and financial outcomes for hospitals. Academic Emergency Medicine, 17(8), 840–847.

Hayes, H., Parchman, M. L., & Howard, R. (2011). A logic model framework for evaluation and planning in a primary care practice-based research network (PBRN). Journal of the American Board of Family Medicine, 24(5), 576–582.

Hersey, P. H. (2011). Management of organizational behavior (10th ed.). Upper Saddle River, NJ: Prentice Hall.

Hill, K. S. (2009). Service line structures: Where does this leave nursing? Journal of Nursing Administration, 39(4), 147–148.

Institute of Medicine (2001). Crossing the quality chasm: A new health sys- tem for the 21st century. Retrieved October 24, 2011 from http://www. iom.edu/Reports/2001/ Crossing-the-Quality- Chasm-A-New-Health- System-for-the-21st- Century.aspx

Joint Commission (2011). Edition standards. Retrieved May 12, 2011 from http:// www.jcrinc.com/ E-dition-Home/Joosten, T., Bongers, I., & Janssen, R. (2009). Application of lean thinking to health care: Issues and observations. International Journal of Quality in Health Care, 21(5), 341–347.

Kalisch, B. J., and Curley, M. (2008). Transforming a nursing organization. Jour- nal of Nursing Administra- tion, 38(2), 76–83.

Pearson Nursing Student Resources Find additional review materials at www.nursing.pearsonhighered.com

Prepare for success with additional NCLEX®-style practice questions, interactive assignments and activities, Web links, animations and videos, and more!




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