Lawton R. Burns

Adoption and Abandonment of Matrix Management Programs: Effects of Organizational Characteristics and Interorganizational Networks

Organizational design theorists argue that organizations adopt matrix (departmentalized) structures for technical reasons, to solve problems of internal coordination and information processing. Research on interorganizational networks suggests that organizations adopt new structures because of mimetic forces and normative pressures. We examined the effects of both sets of factors on the adoption of matrix management in a group of hospitals. Multivariate analyses revealed that matrix adoption is influenced not only by task diversity, but also by sociometric location, the dissemination of information, and the cumulative force of adoption in interorganizational networks. Such variables exert little influence on decisions to abandon matrix programs, however.

The effects of patient, hospital, and physician characteristics on length of stay and mortality.

This article compares the ability of hospital and physician characteristics to explain variations in length of stay and mortality, controlling for factors associated with severity of illness. The analysis is based on 54,571 discharges, covering 11 medical and five surgical conditions, from nonfederal general hospitals in one state during 1988. Results suggest that both hospital and physician characteristics are important predictors of both outcome measures. Contrary to previous research, the volume of patients with the same condition treated by the hospital increases both length of stay and mortality. The volume of patients with the same condition treated by the physician increases length of stay among patients with medical conditions, decreases length of stay among those with surgical conditions, and decreases mortality. One interesting finding is that the medical school attended by the physician influences the patients length of stay. Findings are interpreted in light of research evidence on factors affecting medical outcomes and recent federal efforts to improve quality of care.

Implementing evidence-based medicine: The role of market pressures, compensation incentives, and culture in physician organizations

Objectives.To assess the extent to which market pressures, compensation incentives, and physician medical group culture are associated with the use of evidence-based medicine practices in physician organizations. Methods.Cross-sectional exploratory study of 56 medical groups affiliated with 15 integrated health systems from across the United States, involving 1,797 physician respondents. Larger medical groups and multispecialty groups were overrepresented compared with the United States as a whole. Data are from two sources: (1) surveys of physicians assessing the culture of the medical groups in which they work, and (2) surveys of medical directors and other managerial key informants pertaining to care management practices, compensation methods, and the management and governance of the medical groups. Physician-level data were aggregated to the group level to attain measures of group culture and then merged with the data regarding care management, incentives, and management and governance. Stepwise multiple regression was used to examine the study hypotheses. Results.As hypothesized, the number of different types of compensation incentives used (cost containment, productivity, quality) was positively associated with the comprehensiveness of care management practices. The degree of salary control (ie, market-based salary grades and ranges versus the use of bookings or fees and individual negotiation) was also positively associated with the deployment of care management practices. As hypothesized, market pressures in the form of percentages of health maintenance and preferred provider organization patients seen were generally positively associated with the use of care management practices. Organizational culture had no association except that a patient-centered culture in combination with a greater number of different types of compensation incentives used was positively associated with greater use of care management practices. Conclusions.Both compensation incentives and managed care market pressures were significantly associated with the use of evidence-based care management practices. The lack of association for culture may be due to the relatively amorphous nature of most physician organizations at this point.

The impact of physician characteristics in conditional choice models for hospital care.

Recent research has investigated the determinants of the specific hospitals to which patients are admitted. Data limitations have led researchers to examine the effects of patient and hospital characteristics while ignoring the role of physician characteristics. In this study we analyze the effects of all three sets of factors on hospital choice in the greater Phoenix area during 1989. Our results suggest that physician characteristics are strong determinants of hospital choice, accounting for much of the explained variation. Differences in hospital quality and cost, on the other hand, exert significant effects on hospital choice but explain relatively little variation.

The effect of physician factors on the cesarean section decision.

The number of deliveries by cesarean section (c-section) has increased dramatically. Clinical and demographic factors have not adequately explained the increased rate, however. This study investigates the role of nonclinical (i.e., physician) factors in explaining variations in c-section rates, including the physicians training/experience, financial and convenience incentives, and practice characteristics. The study measures the impact of these factors on the decision to perform a c-section rather than opting for vaginal delivery, controlling for a host of patient and hospital characteristics. Physician effects are evaluated in terms of their overall contribution to the explanatory power of logistic regression models, as well as in terms of specific hypotheses to be tested. The analyses are based on 33,233 deliveries performed by 441 physicians in 36 hospitals in 1 state during 1989. As a set, physician factors contribute more to the explanatory power of the model than do hospital factors, despite being added last to the equation. Parameter estimates provide more support for the hypothesized effects of physician convenience incentives than background/training. The log odds of performing a c-section increase with the physicians rate of c-sections in the prior year, delivery on a Friday, and delivery between 6 AM and 6 PM, and decrease with the concentration of the physicians hospital practice. Patient factors appear much more important than both physician and hospital factors, however. Efforts to reduce unnecessary c-sections should focus on identifying the appropriate clinical indications for c-section and disseminating this information to physicians.

Two decades of organizational change in health care: what have we learned?

The 1980s and 1990s witnessed a substantial wave of organizational restructuring among hospitals and physicians, as health providers rethought their organizational roles given perceived market imperatives. Mergers, acquisitions, internal restructuring, and new interorganizational relationships occurred at a record pace. Matching this was a large wave of study and discourse among health services researchers, industry experts, and consultants to understand the causes and consequences of organizational change. In many cases, this literature provides mixed signals about what was accomplished through these organizational efforts. The purpose of this review is to synthesize this diverse literature. This review examines studies of horizontal consolidation and integration of hospitals, horizontal consolidation and integration of physician organizations, and integration and relationship development between physicians and hospitals. In all, around 100 studies were examined to assess what was learned through two decades of research on organizational change in health care.

Trends and models in physician-hospital organization.

Physicians and hospitals have developed new models for aligning their incentives and integrating their activities. These models serve numerous purposes, including unified contracting with managed care organizations, improved access to capital and patients, and strengthened competitive position. The more advanced models carry the added potential of providing comprehensive, community-based care with less duplication of services. The new models raise several important issues that providers need to consider before embarking on these strategies.

Hospital purchasing alliances: Utilization, services, and performance

Background: Hospital purchasing alliances are voluntary consortia of hospitals that aggregate their contractual purchases of supplies from manufacturers. Purchasing groups thus represent pooling alliances rather than trading alliances (e.g., joint ventures). Pooling alliances have been discussed in the health care management literature for years but have never received much empirical investigation. They represent a potentially important source of economies of scale for hospitals. Purposes: This study represents the first national survey of hospital purchasing alliances. The survey analyzes alliance utilization, services, and performance from the perspective of the hospital executive in charge of materials management. This study extends research on pooling alliances, develops national benchmark statistics, and answers important issues raised recently about pooling alliances. Methodology/Approach: The investigators surveyed hospital members in the seven largest purchasing alliances (that account for 93% of all hospital purchases) and individual members of the Association of Healthcare Resource & Materials Management. The concatenated database yielded an approximate population of all hospital materials managers numbering 5,014. Findings: Hospital purchasing group alliances succeed in reducing health care costs by lowering product prices, particularly for commodity and pharmaceutical items. Alliances also reduce transaction costs through commonly negotiated contracts and increase hospital revenues via rebates and dividends. Thus, alliances may achieve purchasing economies of scale. Hospitals report additional value as evidenced by their long tenure and the large share of purchases routed through the alliances. Alliances appear to be less successful, however, in providing other services of importance and value to hospitals and in mediating the purchase of expensive physician preference items. There is little evidence that alliances exclude new innovative firms from the marketplace or restrict hospital access to desired products. Practice Implications: Pooling alliances appear successful in purchasing commodity and pharmaceutical products. Pooling alliances face the same issues as trading alliances in their efforts to work with physicians and the supply items they prefer.

The business of healthcare innovation

List of figures List of contributors 1. The business of healthcare innovation in the Wharton School curriculum Lawton R. Burns 2. The pharmaceutical industry: re-booted and re-invigorated Jonathan P. Northrup with Marina Tarasova and Lee Kalowski 3. Pharmaceutical strategy and the evolving role of mergers and acquisitions (M&A) Lawton R. Burns, Sean Nicholson and Joanna P. Wolkowski 4. The biotechnology sector - therapeutics Cary G. Pfeffer 5. Biotechnology business and revenue models: implications for strategic alliances and capitalization Stephen M. Sammut 6. The medical device sector Kurt H. Kruger and Max A. Kruger 7. The healthcare information technology sector Adam C. Powell and Jeff C. Goldsmith 8. Healthcare innovation across sectors: convergences and divergences Lawton R. Burns, David M. Lawrence and Stephen M. Sammut Index.

Owned vertical integration and health care: promise and performance.

This article examines the alleged benefits and actual outcomes of vertical integration in the health sector and compares them to those observed in other sectors of the economy. This article concludes that the organizational models on which these arrangements are based may be poorly adapted to the current environment in health care