Organizational Structure / Strategy at Erasmus MC

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Organizational Overview

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Figure 1: Erasmus MC Organisational Structure positioning in the Adaptive Cycle

Three dimension of uncertainty

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Figure 2- Three dimension of uncertainty

In this case study an organization in a constant state of change is being investigated. In many aspects they could be facing a challenging environment and to that respect we can see different dimensions of uncertainty. Various areas of organization can be affected by different types of crisis or “black swans”. First of all, the “stormy present” of this company is inside the broader context of global financial crisis:

Prof. Robert J. Baatenburg’s response: in this era we have to respond ad hoc to all kinds of influences from the outside world. Budgetary restraints, transparency, accountability, etc. Continuous cost reduction and increasing demand are currently the most important. Consequently there is no room for reflection or true innovation.

Another challenge arrives from the social context. It requires a philosophical level of analysis.

Prof. Robert J. Baatenburg’s response: The society expects state of the art medical care, optimal treatment of difficult cases, research and education from the university hospitals. These expectations are sometimes contradictory and/or conflicting. E.g., since topclinical care requires a lot from people and resources, education of residents and students requires a high volume of less complicated pathology. In addition, in a setting for low volume but very demanding care it is harder to be cost-efficient when compared to general hospitals.That is unfortunate since we also have a business to run, and we have to make money.

Curiosity team reflections: At this level it is crucial to notice the existence of the tension between the business to run and the educational needs of the organization. We have to take into account that the healthcare organizations have a delicate mission that affects lives of many individuals. The environment puts additional stress on the organization that needs to retain a balance between the external factors and the patients’ well-being.

A third dimension of uncertainty is connected to logistics issues. This part requires concrete plans to guarantee continuity in case of a break down.
Prof. Robert J. Baatenburg’s response: Logistics are now main concern in our department..

Philip Backx’s response: Our level is much more strategic […] At our level we are planning for other kinds of black swans […] not for problems in supply of clean instruments or medicine.

Curiosity team reflections: Considering the latter response we proceed into the analysis at the “strategic level”, without taking into account the black swans related to logistic concerns. However, logistic concerns are not less important than other aspects, for instance, logistics processes are the key dynamics for budget savings.

Equilibrium

Healthcare sector is strongly affected by the environment turbulences, especially due to the financial crisis. New challenges appear on the horizon and this requires innovative and courageous reactions. The critical point is that healthcare organizations show a tension between the social mission and the business that they have to run. The phase of equilibrium in this type of organization resembles a typical situation of an organization “resistant to change”. In the specific case another aspect of this resistance could be found in the academic character of the organization.

Philip Backx’s response: I started here five years ago […] so I remember my introduction to one of doctor, I said you know how the outside world knows what we are, or how do you know what the outside world wants? And he said if the outside world wants to see us it has to come to my lectures.

Curiosity team reflections: The scarce attention to the outside world stresses that “the equilibrium should not be disturbed” (Abcouwer-Parson). The equilibrium trait is that people in organization are focused on the present, on what they are doing. This in turn could be a clue of fossilization, which could prevent the organization from being flexible or resilient in the advent of crisis situation in the long run.

Gestalt Switch

Philip Backx’s response: “so we try to introduce the outside world into the company”

Curiosity team reflections: In the adaptive cycle theory is important to understand what happens in the quadrants, especially in the phase when the organization is changing its position in the adaptive cycle. It is not possible to detect the passage as “black & white” phenomena, but there are some signs that reveal that the changing process is ongoing. “The transition from one to the next phase does not mean a true change of the system’s circumstances. Often this involves an essential change to the manner of looking at things” (Abcouwer-Parson). The Gestalt Switch might have happened in a previous moment. This idea is based on the company’s decision to hire an external consultant.

Perception of the status quo

Prof. Robert J. Baatenburg’s response: I think we are ad hoc responding to all kinds of crisis that the world is inflicting upon us.

Curiosity team reflections: The department shows a strong and effective way to deal with critical situations. It is a prompt response. The focus is not on the potential crisis but is on the prompt reaction that is being adopted. In a way this answer could be seen as a clue of a proactive approach to crisis.

The tension between organizational mission and competition

The mission of the organization

Philip Backx’s response: Within competition you get hospitals that are specialized in certain areas of non-complex care but we have a much broader scope and much more difficult mixture of patients. We don’t have the ‘luxury’ of selecting a homogenous group of patients. Patients coming here often have not only one disease; they have several diseases linked to one another.

Curiosity team reflections: This tension could be considered as point of force. It means to deploy this tension focusing on the quality of healthcare provided. The particular mission (education) can be used as an important value for a marketing purpose, this way attracting patients with various level of disease complexity.

Competitors

Prof. Robert J. Baatenburg’s response: There are regular hospitals (providing less complex care) in the neighborhood and they take care of part of our patients.

Curiosity team reflections: The department confronts two types of competition. One of them is hospitals which are specialized in less complex care. The other one, and even stronger, are clinics specialized in much more complex treatments. However, for the educational purpose that Erasmus MC is pursuing, they need less complex patient as well as the difficult ones. This fact creates a tension between the business goals and the educational goals. How can this tension create resilience? As briefly discussed above, it can be converted into a positive adaptive force for the organization. A possible way could be the improvement of the communication with the outside world, emphasizing this particular mission aspect as a major value for the patients.

Different profits for different treatments

Philip Backx’s response: In the surrounding hospitals they (the doctors) send the patient to OR […]. In our hospital, half of patients will go to the OR and the other half is treated with medicine. If you treat (patients) with medicine your profit is very marginal. Instead, if you go to OR the profits are good. It is a bit cynical but we see the difference.

Curiosity team reflections: As discussed in the article by Abcouwer & Parson, the mission of this company is threatened by business logic. It is necessary for this organization to find a balance between profits and appropriate treatments. It is possible to see how new combinations require compromises.

Reaction to the environment turbulences and challenges

An adaptive organization

Philip Backx’s response: In a sense we are proactive in the change but it is creating a problem here. We also ask for a bit of flexibility on the side of the organization. We need to experiment (even though) we are in a very conservative kind of surroundings.

Curiosity team reflections: The organization is making a prolonged effort to be flexible in rigid settings of conservatively oriented sector. This is a trait of an adaptive organization.

Another indication of this tendency is the fact that the department fosters adaptive management techniques.

Prof. Robert J. Baatenburg’s response: We have a completely different philosophy. We have a broader scope. You mentioned Taleb, I think he is right. I think monocultures are much more vulnerable than multicultural organizations.

Openness to the outside world

Philip Backx’s response: We try to introduce the outside world into the company itself. We aware that there is an outside world and that business as usual is not good enough anymore. We are looking for alternatives.

Curiosity team reflections: The awareness of the change urgency of is the starting point for proactive solutions. It is especially obvious in a plethora of new combinations deployed by the organization in order to cope with the environment challenges. These reactions involve all the dimension of uncertainty, as mentioned in paragraph 2. First of all, new combinations are not just a result of brilliant problem solving. New combination phase is prepared by a mind shift, already mentioned before.

Responsiveness to insurance companies changing

Prof. Robert J. Baatenburg’s response: The insurance companies are changing policies all the time we have to react to that and to keep business going.

Curiosity team reflections: This part put in the limelight the importance of the context. Since the organization is involved in the national healthcare system, there is a pressing need to understand the surrounding reality and a key process is communication with different stakeholders.

Suggestions: It is important to evaluate how the interaction with the stakeholders can influence the robustness and create resilience. The benefits of this direction of study can help the organization to improve its communication and negotiation skills.

Centralization in the next years

Prof. Robert J. Baatenburg’s response: I think centralization will be an issue for the next coming years. I think now most medical universities have to deal with all kinds of illnesses and in the future maybe one center should focus on specific conditions and another on other specific conditions. We will get more specialization and centralization. I think (they are) the elements of value for the coming years.

Curiosity team reflections: Through centralization and specialization the organization can increase its robustness and assertiveness creating resilience. Centralization and specialization are elements of value. This means that a centralized and specialized organization displays a clearer vision to the stakeholders (i.e. government, insurance companies, and patients) based on stronger healthcare service.

Suggestions: It is interesting to follow centralization and specialization in their evolution path. Excessive centralization or specialization could result in a new phase of business as usual. The danger is again fossilization. In order to prevent from this risk, the process of centralization and specialization should keep the focus on flexibility rather than rigidity.

Cooperation with other medical centers

Prof. Robert J. Baatenburg’s response: Our main focus of academic work is in the field of oncology. in the Netherlands, we have two and a half thousand new patients every year. Most of the universities don’t have a big expertise in one of those sub-groups. So I think it will be wise to concentrate each sub-group in specific (body of knowledge). We are now in a corporation with Leiden university hospital. […]We are complementary to that university.

Curiosity team reflections: Cooperation is a proactive way to cope with the environment turbulences. It helps companies to understand one another in a deep way. It could stimulate the creation of non-material values (i.e. curiosity, innovation) in order to make the organizations much more flexible and resilient.

Outsourcing operations rooms

Philip Backx’s response: We started with looking at doing operation outside the hospital. (There are) operation rooms that you can rent. This is a new concept. It is quicker and cheaper.

Curiosity team reflections: This might be an example of an interesting new combination in order to obtain a monetary saving margin and at the same time an improvement in the level of service. However, outsourcing could turn out dangerous for the organization, and become a crisis itself. For healthcare organization outsourcing is not a simple task. They have to consider constantly the ethical issues related. That requires a strong communication with the partners chosen to outsource services.

Restructuring of services

Prof. Robert J. Baatenburg’s response: Service was a neglected area in our field. We have to be good. We have to offer a good service, too. […]It is important to offer to people a lean process of care.

Philip Backx’s response: It is important the patients don’t wait too long […]. The patients come here for good healthcare treatment […]. We need to re-think the relationship with patients and we need to re-structure the appointment system […].

Curiosity team reflections: Nowadays healthcare services are not limited to providing accurate diagnosis and prescribing medicine or treatment. The emergent dimension of services poses different types of challenges to the organisation, one of which involves provision of improved contact channels. The restructuring of the appointment system is a good example as it is not a mere technical operation. It establishes a new way of communicating with patients. Through this technical novelty the organization shifts to another model of communication and provides an improved service quality level to its patients.



For further information regarding the Company, the Interviewees, the Interview Structure or Reflections obtained during the process, see Case study Group 2.

For further information regarding the role of Curiosity in the Adaptive Cycle go back to Group 2 Student Lecture.