Question

What are the solutions that must  taken into consideration of reducing the challenges of implementing the decision making?

Article

It had been a long week and it was only Tuesday. At 2:30 p.m. on a Tuesday afternoon in Prairie City, a small town located in a rural area in the upper Midwest, all indications were that this was going to be a difficult week. Ann Smith, the new clinic administrator for Prairie Health Services, had just finished taking her third call from a frustrated patient and each of the calls was related to Prairie Health Services’ multiple billings. What the patients did not understand was that Prairie Health Services had four divisions: hospital, clinics, nursing home and nursing service. Although they were housed together, each division functioned independently and had separate billing processes.

Over the years, Prairie Health Services had grown from a small county-owned hospital to an organization that provided a broad range of services, operating a community clinic and a satellite clinic, a nursing home, and a home healthcare agency in addition to the hospital. It was that growth and the comprehensive range of services that had first attracted Ann to the position of clinic administrator.

When Ann accepted her position two months ago, the CEO and chairman of the board had charged her with reducing clinic losses. As a result, when she was not fielding calls from frustrated patients, she spent much of her time working on reducing the time from providing service to receiving payment for service,reducing bad debt and increasing cash flow. She was also beginning to realize that the multiple billing issue was just one aspect of the problems faced by Prairie Health Services and one of many reasons that monthly financial reports continued to show losses.

Ann decided to raise the issue of multiple billing the following day at the monthly administrators’ meeting.At that meeting, she learned that the other division administrators (Nick Hamm, nursing home administrator; Bonnie Little, nursing services director; and Carl Nord, CEO and hospital administrator) had also been receiving patient complaints about multiple bills. During the course of their discussion, Ann learned that Nick, Bonnie, and Carl were also extremely concerned about the continued viability of their Prairie County-owned healthcare facility, which had been bleeding financially for some time.

The division administrators and their staff knew that the information technology environment at Prairie Health Services provided basic system functionality at best, and was outdated at worst. The software packages used by each of the four divisions were entirely separate from the software used by other divisions, and any data transfer from one system to another had to be accomplished manually. Each division was required to enter all the patient demographic and insurance information. This was not only inefficient; it resulted in duplication of effort and in creased the likelihood of inaccurate information due to clerical error. It was also inconvenient for those patients who were seen on the same day by two or more divisions. They were required to repeat their demographic and insurance information two, three, or even four times in a single day. Ultimately, lack of integrated technology was one of the primary reasons that Prairie Health Services was incurring large losses.

Ann, Nick, and Bonnie wanted to integrate and update their information technology with a software package that had the capability to link all four divisions in order to increase efficiency and timeliness, and ultimately to reduce financial losses. Carl agreed to present the administrators’ concerns to the board of directors and propose a capital expenditure for a new software system. The board of directors was supportive of this capital investment because board members had also received complaints from patients regarding the multiple bills.

EGOS AND COUNTY POLITICS COLLIDE

The political nature of the organization’s governance added yet another layer of complexity for administrators. The board of directors of Prairie Health Services was comprised of the five elected Prairie County commissioners and two board-appointed community members — most of them small farmers or small businessmen whose families had lived in the county for generations. Their intentions were good, butt hey had little formal business background and were ill equipped to oversee what had become a complex,comprehensive healthcare system. Although Carl was the CEO, he was not originally from Prairie County,and members of the board often bypassed him to speak with Nick or Bonnie,who had both grown up in local communities.

It had not taken Ann long to see that the relationship between Carl and the division administrators was strained. The fact that board members sidestepped Carl in their efforts to understand the financial issues of their healthcare system left Carl feeling angry and in secure. He perceived this as a subversion of the chain of command and forbade Nick, Bonnie and now Ann from talking with board members unless he was present. In fact, while Nick, Bonnie and Ann were expected to attend all board meetings, they kept their opinions to themselves, allowing Carl to speak about anything related to Prairie Health Services. In spite of his insecurity, Carl was politically astute and skilled at verbal manipulation. This meant that his presentations to the board were not always entirely forthright. It also meant that Ann, Nick and Bonnie faced ethical challenges. By keeping silent, they gave tacit approval to Carl’s questionable behavior, but they were too intimidated by him to speak out.

CARL’S POWERS OF PERSUASION

The process of searching for potential software vendors was complex, and despite the fact that he was the CEO and hospital administrator, Carl declined to participate in the process. His explanation was that he did not understand information technology. Instead, he asked that Ann, Nick and Bonnie gather all the necessary preliminary data and make recommendations to him. After several months of research, the administrative team determined that five software companies had products with the capabilities to integrate the four Prairie Health Services divisions. Representatives of these software companies each came to Prairie City for two days to demonstrate their software to the administrators and support staff. Carl was absent from the demonstrations, but met privately with representatives from each of the firms. Most of these meetings were held in his office to discuss the costs and implementation process associated with purchasing particular software pack ages. However, the representatives for Southern Healthcare Software also entertained Carl at private dinner meetings at a local upscale dinner club.

Following the interviews and demonstrations, Ann, Nick and Bonnie determined that two vendors (Pine and Prairie Software, headquartered in the same state as Prairie County, and Southern Healthcare Software, headquartered in a Gulf Coast state) had appropriate integrated software packages that were also in line with what the organization could afford to pay. While neither package met all the specifications of Prairie Health Services, Pine and Prairie Software, with a price of $550,000, was more user-friendly, more closely matched Prairie Health Services’ needs, and was Windows-based. Southern Healthcare Software was judged to be more cumbersome and less flexible, seemed to be somewhat outdated as well as a step down from current software, and was not Windows-based. However, Southern Healthcare Software claimed to have the ability to integrate all four divisions, although it appeared to be best suited for hospital use. The cost of Southern Healthcare Software was $750,000.

Ann, Nick and Bonnie spent approximately two months evaluating both software proposals. They talked with administrators of other healthcare organizations that used either Pine and Prairie Software or Southern Healthcare Software and determined that their clear preference was for the adoption of the Pine and Prairie Software product and implementing a gradual integration of the divisions to ensure a successful transition from four unique software systems to one.

At the same time, representatives of Southern Health care Software returned to Prairie City several times and had further private dinner meetings with Carl. Based on these meetings, he determined that Prairie Health Services should adopt Southern Healthcare Software. He was in favor of an immediate integration of all four record-keeping systems, despite the fact that, admittedly, he did not understand information technology, the challenges that an immediate integration could present, nor the resources required to accomplish the task successfully.

Once Carl’s relationship with Southern Healthcare’s salespeople became known to his administrative staff, it was obvious that he was going to recommend purchasing Southern Healthcare’s software regardless of what his administrative staff’s recommendations were, even though the administrative staff had actual expertise. Despite the expressed preferences of the majority of administrators and staff of Prairie Health Services, Carl recommended Southern Healthcare Software to the board of directors. He also made it clear that he expected the unqualified support of the Prairie Health Services administrators.

Carl knew that he had to play his hand carefully in order to ensure that the board would adopt his software preference without question. In his presentation, he highlighted the fact that some of the software packages reviewed had cost well more than $1,000,000. He did not, however, indicate that the Pine and Prairie Software bid came out at $200,000 less than the $750,000 Southern Healthcare Software bid. Further, he neglected to state that the administrators and staff had overwhelmingly preferred the Pine and Prairie Software. On the contrary, he was adamant that the Southern Healthcare Software was the best fit for Prairie Health Services.

Answer 1

There appear to be several gaps in the flow of information from the people who are the daily users to the people who are making the decisions for the users. It appears that all four divisions are in agreement about the issues that are plaguing the hospital and patients - the lack of an integrated software system that will reduce effort for all divisions while making it easier to generate a single bill for a patient. The current information system is old and outdated and can result in erroneous data due to human error as the same information has to be entered into the systems multiple times.

Challenges :

1. While all the division admins want to present these concerns to their board of directors, only Carl seeks to do so due to his treatment by the board (bypassing Carl to talk to other admins). This has affected his attitude towards the board and lead to him forbidding the other three reps from talking to the board members unless he is present, while expecting them to attend all meetings.

2. This has led to only Carl presenting to the board and not the others, leading to a one-dimensional presentation of the issues. Carl could choose to accentuate some issues while downplaying others as he thinks appropriate.

3. The other admins attend but keep silent at these meetings and appeared to give tacit approval to Carl's words, despite not agreeing to them. They gave into the intimidation by Carl and decided to ignore the possible ethical violations that he might commit and that they appear to condone.

4. Carl declined to participate in the search for an appropriate IT solution and instead asked the other admins to do the research and present findings to him. He therefore got no first hand information about the requirements and the solutions.

5. Carl met privately with the software reps where they could have swayed him towards selecting their software without having to justify the details in front of someone who understood IT better.

6. Having sales reps entertaining the CEO at upscale restaurants also smacks of ethical considerations for the CEO as he should not be accepting these gestures or at least not alone as it can be seen as exerting undue influence on the buyer.

7. Post a second round of entertaining by the sales reps Carl made a unilateral decision to go with a solution that the others had already deemed unsuitable and too expensive for their needs.

8. Carl then presented this unsuitable option as the most suited to the board of directors highlighting only what would result in it being accepted and not disclosing facts that would lead to further questions such as higher costs.

9. Carl also intentionally omitted mentioning the fact that the other admins were all in favour of another lower priced and far more suitable option.

This exercise shows up the way bad or damaging decisions are made by boards when they are not in receipt of all the facts. Ensuring knowledge and inputs from all relevant parties reach the decision-makers is a key factor in successful decision-making.

The solutions that can be implemented to ensure the right decision is taken in this case are :

- The board needs to follow a chain of command in dealing with hospital business. Bypassing the CEO can lead to hurt egos and that can skew the way they then perceive the board members. The chain of command should be enforced especially from above.

- The CEO needs to work with the admins to present his case to the board. In this, he should not be able to muffle the voice of other members in the meetings even if they do report to him.

- As silence can be taken as tacit approval, the admins should speak out in meetings to ensure that critical aspects are shared and discussed at that level.

- The CEO might not need to conduct research himself in areas he does not have expertise in, however he should then defer the decision making to the ones with the expertise and experience, in this case the admins who did the ground-work in finding suitable choices for the IT solution. This should be strictly enforced within the senior management (CFO, CTO).

- Sales reps will seek to influence buyer's decisions however this should not be accepted by the buyer as it would violate the ethical standards of the office he holds. Carl should decline all such private entertainment and insist on presentations within the firm and to all the admins. Any violations should be tracked and counted as ethical violations of key roles.

- The final decision of which IT solution to go with should rest with the people who will use it the most - the users. They are the ones that will spend the most time using this solution so their inputs should carry more weight. The admins should be encouraged to come up with their own independent preference and choice to understand what each division values in the solution.

- The board in hearing the alternatives should ask all admins for their vote/reports on which solution to go with so that any objections can be brought out in the meeting and discussed. Omissions that exclude pertinent information can lead to wrong decisions being made and should be strictly caught. If Carl is the only voice the board hears then they are likely to not understand the complete picture which is essential for good decision-making.

- The board might get multiple votes for different solutions and can then take a decision on which one to choose based on the price and suitability.