Management Case Study; the Midwestern Medical Group Journey
Introduction.
According to Plsek, P. E., & Wilson, T. (2001), management is a collection of ideas setting forth the general rules on how to manage a firm, business or organization addressing how managers and supervisors should relate their knowledge of the enterprise to the achievement of goals and motivation of employees to perform to the highest standard. In the delivery of health services, the following management theories and can be applied as given by The Midwestern Medical Group’s Integration Journey.
Models employed by MMG's management included: Selling MMG to an outside party, maintain status quo, with MMG as on MBS within the Hospitals & Clinics division, merging MMG and Midwest Health Plan, forming a Midwestern ambulatory company with all ambulatory services across Midwestern managed under one umbrella and selling clinics back to the physicians.
Merger and Acquisition theories.
According to Jansen (1988), the theory of merger and Acquisition is more relevant to Case studies involving inefficient plants and firms being taken over and efficient companies surviving. In many instances, though, hostile takeover otherwise known as management buyouts are common as smooth merger and Acquisition is typically bound to much resistance. The disagreement arises when the due diligence provides information that hints at the subsequent failure of the two firms. Under the merger and acquisition banner, there are two types of theories that are, disciplinary merger theory and synergistic merger theory. In the disciplinary approach, merging and acquisition are viewed to be championed by managers who pursue objectives at the expense of profit maximization. In this theory, there is a suggestion that the acquiring (parent) firm merge with the poorly performing ones to improve their performance and realize their full potential.
On the other hand, synergistic mergers theory holds that firm managers achieve efficiency gains by combining an efficient target with their business and then improving the target’s performance.
Taking the practical example of merger between Health Systems Corporation and the Midwest Health Plan to form the Midwestern Health System, the vision guiding Midwestern development was to “offer an integrated health care system to affordably enhance the health of people living and working in communities served” (Swayne, L. E., Duncan, W. J., & Ginter, P. M. 2012).The vision implied the priority of building an integrated health care system and the goal of improving community health. It is, therefore, vivid enough that the merger between the two firms mentioned above forming the Midwestern was primarily synergistic and not disciplinary. Just like many other mergers and acquisitions, Midwestern did not lack conflicts and tensions. It was this tension between MMG and the hospitals that made it necessary for Johanson to design purposely the MBS business model which was intended to end the conflicts. While officially unveiling the model in 1999, Johanson said, "We are learning more about integration. We assume that if we put them all together, they would see the need to talk and automatically coordinate. They do not, it is natural, and our new model acknowledges that and encourages integration more directly”. Citing another case when the merger was forming the Midwestern typically followed the synergistic theory of management, the board was more concerned with profits and expressed a new appreciation for MMG. Its performance and its value to the larger Midwestern system only when Erickson presented MMG’s favorable benchmark comparisons to the Western board. This over-concentration on profits at the expense of service delivery to the clients, primarily patients, ultimately led to a death of managers' morale. .
According to Swayne, L. E., Duncan, W. J., & Ginter, P. M. (2012), one of the directors summarized their feeling and was reported as having said "looking at MMG's bottom-line losses , and the hospital leaders started thinking that they must not be excellent managers and resented having to stabilize MMG they were making money before they became part of Midwestern and now they were getting fat and lazythe move to the MBS only reinforced that ‘what’s the problem’ mentality regardless of the data that showed MMG being set up to lose money, the data became almost irrelevant . There was no view that we were in this together”. Besides, there were complaints by the hospitals that MMG referred patients to non-Midwestern hospitals. However, Midwestern attempted to apply the disciplinary theory when they decided to hire an ophthalmologist to provide laser surgery in an MMG clinic to increase their service delivery and not just profits. Besides, MMG came up with a strategy to recruit an Independent spine surgeon as part of the larger scope of the plan.
Finally, Erickson went ahead to hire a general surgeon as the one present could not meet the needs of the clinic, signaling service delivery in the expense of profit making
The Scientific theory of management.
This theory was brought forward by Fredrick W Taylor (1856-1951). According to Taylor, efficiency in production was a priority using scientific models which greatly ignored the human aspect of employment. In a bid to increase effectiveness in the MMG in 1998, an ophthalmologist was hired to provide outpatient laser surgery services in an MMG clinic near one of the Midwestern hospitals and one year later MMG hired a general surgeon to practice at another of its clinics. Taylor suggested that managers should: Develop a science for operations replacing the rule of the thumb, determine scientifically the accuracy in timing to perform specific tasks, select and train workers and corporate with the employees. To improve efficiency in production, Taylor put forth that employees should: agree to be trained in the new methods, understand the connection between profits and wages and accept to be commanded that is the management should be left to determine what is to be done and how.
Neo-Classical Theory.
According to Max Weber (1864-1924), Bureaucracy was to be strictly followed, and he identified three main lines of authority that are the traditional authority where acceptance to obey the power was borrowed from the customs and tradition, Charismatic authority. Personal qualities of the ruler formed the primary basis of loyalty and regional legal authority where specific rules and procedures in the organization guide the person to the particular position. For example, In MMG, the managers established Clinical Care Improvements (CIC) initiative cross –functional team which was in charge of leading MMG on clinical care on the initiatives and all the workers were to obey and follow their recommendations. Weber highlighted that for the efficient running of the organization, there must be: functions bounded by rules, the hierarchical structure of the offices, separation of officials from the ownership of the organization and authority vested in the official position and not the occupants of those rooms.
Human Relations Theory
According to Elton Mayo (1965), the performance of employees was significantly affected by related human factors and not structure of the organization as suggested by Fredrick Taylor and Henry Fayol. In the case of MMG, Erickson wanted to bolster his team's morale by asserting that "MMG is a critical piece of the Midwestern Health System, and we are not underperformers." He conducted Hawthorns studies that included: the study of physical surrounding on production by using of different light levels, relay assembly room stage and employees attitudes to working environment to working conditions and supervision.
Neo – Human Relations Theory.
The theory was brought up by four social psychologists that included Maslow, McGregor, Linkert, and Argyris. According to Maslow, human beings followed a particular hierarchy of needs that affected their performance. Maslow explained the need passed through the stages of physiological needs, basic needs that are food, shelter and clothes, love, self-esteem and finally self-actualization. On the other hand, McGregor, through his theory X and Y, explained that human beings, employees, were naturally different as some, theory X, were lazy, avoided responsibility, needed control and were rational economic men. On the other hand, others, Theory Y, liked working, asked for duty, needed space to develop imagination and were self-actualizing men. Taking the case of MMG, Erickson was of theory Y as he brought forward the idea of MBS business model and consistently told his team that they were not underperformance. However, he resigned for what he described as the lack of belief in the MBS business model and did not want to put MMG in with the hospitals.
Conclusion.
Management theories and models are paramount as they vividly outline to managers the best courses of action and ways managers can use to increase their productivity, for example, the fourteen principles of management by Henry Fayol.
References
Swayne, L. E., Duncan, W. J., & Ginter, P. M. (2012). Strategic management of health cares organizations. John Wiley & Sons.
Plsek, P. E., & Wilson, T. (2001). Complexity, leadership, and management in healthcare organizations. British medical journal, 323(7315), 746.
