Understanding Change Management

Abstract

R W D The U.S. health care system is experiencing an unprecedented degree of change, some of which is potentially disruptive. Factors that drive change are reviewed, and 3 theoretical models of change management are summarized for both individual behavioral change and organizational transitions. The ability to manage change effectively is presented as a core competency for success in the emerging health care environment. The skill of recognizing these factors and managing individual practice or organizational change is, and will be, critical for practice survival. Leadership of major change in an organization presents substantial challenges. Managing the process of large-scale organizational change requires an understanding of factors that lead to change as well as a construct around which to organize the change process. This article briefly explores the dynamics that make organizational change challenging and increasingly important. Change in the health care industry has been a fact of life for decades. The 1960s established the government as a major payer of health services with the establishment of the Medicare system; the 1980s produced prospective payment for acute care; the 1990s led to managed care and capitation; and, in the 2000s, prospective payment spread to the world of inpatient rehabilitation. However, the nation is currently experiencing a confluence of events that have the potential to dwarf both the extent and speed of change that the industry has experienced in the past 5 decades. Myriad factors are driving this probable change. Health care reform, the rise of consumerism, the aging population demographic, the looming federal deficit crisis, and the accelerating pace of technologic development are but a few of the dynamics that have the potential to fundamentally alter the care delivery system. Health care providers will be expected to deliver more services more effectively, with increased quality and enhanced patient satisfaction, all of this while simultaneously constraining or reducing costs. Many providers believe that organizations will need to pursue rigorous expense reduction to maintain economic viability. Coyne et al [1] describe how meaningful cost reduction typically requires significant organizational change. A modest level of expense reduction (5%-10%) can be achieved without significant organizational disruption through traditional methods of consolidation of staff and enhanced efficiencies. To achieve a more substantial level of expense reduction (15%-20%), an organization must look at fundamental redesign of the delivery model. These models could include shifting care to incorporate more group visits, care provided by nonphysician providers, or virtual care models that leverage technology and remote interactions. These actions represent significant change and require a high degree of interdepartmental, interspecialty, and cross-discipline collaboration. All of these actions have the great potential to be disruptive. On the positive side, done well, fundamental care redesign also has the potential to decrease cost, to improve quality, and to improve the patient experience. As a backdrop to the factors that drive change in the care delivery system (or, more accurately, because of these factors), health care is increasingly delivered by large organizations. As payment constraints tighten, it is likely that consolidation of providers will accelerate, with smaller hospitals being absorbed into larger systems. On the physician practice level, although independent physician practices remain the predominant practice model in the United States, the trend is rapidly moving toward an employment model. There is a strong suggestion that physician preferences are beginning to shift toward employment. A recent survey of 2011 first-year residents indicates that 32% prefer to be employed by a hospital, up from 22% in 2008 [2].