Option #1: Memorial’s Healthcare System: Organizational Change and Workforce Management for the Future

Memorial Hospital System (MHS) has been facing many serious issues including leadership problems, staffing deficiency, and financial hardship. Challenges include:

• High staff turnover, which doubled to 20% in the past two years and is expected to rise.
• Healthcare costs that continue to spiral out of control, with plummeting reimbursement (overall margin is negative and working capital reserves are below industry standards).
• An inability to raise capital funding due to a bond rating that was lowered earlier this year to “junk” status.
• MHS is a union shop for non-managerial workforce staff and the contract between management and the union is up for renewal this fiscal year.
• MHS is in the process of implementing complex and expensive multi-year healthcare information systems such as Electronic Health Record and other critical-need clinical information systems.
• MHS is facing significant competition from other local healthcare facilities.

Last year, a new Chief Executive Officer (CEO) was hired. She identified the current organizational culture as apathetic, leaderless, and resistant to change. She also noted that the staff was under stress, resisting teamwork, accepting mediocrity, and compromising patient safety values and industry best practices. The CEO noted that critical human resources functions were broken and that financial performance was suffering. She attributed this to a variety of process issues as well as to the lack of focus on the core business of patient care.

In response, she decided to implement the following strategies:

• change the organizational culture;
• improve human resources and workforce practices and outcomes;
• ensure the organization’s solvency and financial viability in the long run; and
• cutting costs across the board including implementing a labor-reduction strategy (salary and benefits) with an aggressive timeline to turn around the financial bottom line.

Within a few months after these strategies were implemented, the MHS started to show less of a financial loss and seemed to stabilize financially. The morale of the staff, however, took a significant hit in the wrong direction. Staff turnover increased as the sense of job security decreased and as an increasing number of valued and critical staff, in all areas, left. Soon, MHS experienced an increase in patient complaints and lowered customer service, with signs of a negative impact on clinical patient outcomes.

Now the CEO, with approval and support from the MHS Board of Directors, wants to create a dynamic long-term organization and human resources strategic plan to put MHS on the right track. To formulate and implement this plan, the CEO hired a well-known consultant who is tasked with performing a system-wide organization and human resources assessment.

Within the scope of this assessment is the development and formulation of a multilevel strategic program. This new program is to be implemented system-wide with the goal to help MHS leaders understand the link among finances, employee morale, human resources functions, and patient satisfaction. The end result of this assessment is: to create a culture of accountability; to shift the culture to one of services after two years; to attract, hire, and retain staff; and to implement best practices in workforce management.

Instructions:

Assume that you are the consultant the CEO hired to do this assessment project. Your main task is to identify the key components involved in changing the organizational culture and to identify the steps needed to generate sustainable change.

Here are the deliverables that the board of directors and CEO want to see from you:

• Develop a comprehensive organization and human resources strategic plan. The plan has two major sections: organization development and human resources. The CEO and board of directors expect you to create your plan using benchmarking and by integrating human resources and organization development best practices from other healthcare organizations as well as from other industries.
• The organizational development section will address the following items:
  • workplace communication;
  • motivation;
  • leadership;
  • employee stress;
  • decision making;
  • conflict management;
  • team building and group dynamics; and
  • embracing change and change management.
• The human resources section will address the following items:
  • organizational and human resources systems that need to be in place to effect positive organizational outcomes;
  • the steps and decisions involved in recruitment, selection, and retention of staff;
  • performance management system;
  • compensation and reward systems;

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  • process of training and development, and the contribution to the organization’s bottom line;
  • relationship of organized labor and management in healthcare; and
  • the resources, key staff/roles, and steps required to develop a safe workplace.

Your submission will be 13-15 pages in length, not including the required title and reference pages and a table of contents.