Health Care Organizations from the Inside-Out EPI 247: Week 4 Organizational Environments

1. Health Care Organizations from the Inside-OutEPI 247: Week 4Organizational Environments Laura Schmidt, PhD, MSW,MPH Professor

2. Defining Organizational Environments Environment supplies resources to organizations (money, people, power, legitimacy) Organizations must engage with their environments for resources to survive Orgs are “inescapably bound up with the conditions of their environment” (P&S)

3. Environments Matter Humans are generally biased towards attributing causality to the actions of individuals within organizations Feelings of control reinforce the cognitive bias After a success, we tend to attribute causality to human behavior; if it’s a failure, it was the environment This may lead to spurious associations in research on healthcare performance

4. What Do Environments Do? Allow some organizations to survive… …but they must conform to the constraints of the environment to do so. They also stabilize organizations by providing regular resources and standard scripts and routines defining the “right way to business”

5. Two Parts of the Environment • Technical: Outside forces that shape the organization by providing resources, specialized knowledge, new technologies that impact day-to-day tasks • Institutional: Outside forces that shape the organizations by requiring the organization to conform to laws, values, norms, and taken-for-granted assumptions

6. Organizations and Environments Blue Cross of CA City of SF CMA CPMC UCSFSOM Pacific Business Group on Health FEDS: NIH, CMS, FDA CNA

7. Responding to the Environment: An Imperfect Process • Monitoring key sources of money, power, legitimacy • Attending to cues from the environment • Gathering, selecting, screening, retaining information on the environment • Strategically conforming and influencing

8. Standards of Performance

10. The External Problem for Healthcare Organizations • They operate in highly “institutionalized environments” (lots of rules, values, assumptions—see Meyer and Rowan) • Sometimes conforming to all these rules makes it harder to just get the job done • Appearing effective makes it harder to actually be efficient

11. How Do Orgs Solve this Problem? • DECOUPLING: The organization separates what it really does on a day-to-day basis from what it appears to do from the outside • CREATES GOOD FAITH: The organization engages in ceremonies and creates myths that allow others to overlook this

12. Consequences of Decoupling • Organizations operate by “two sets of rules:” the official ones and the real ones • Activities must be performed beyond the purview of managers • Goals become ambiguous or vacuous (e.g., hospitals treat, not cure, patients) • Decoupling makes it hard to integrate divisions and subunits (result=“organized anarchy”) • Human relations become the main way to coordinate things and solve problems

13. How Do Orgs Influence Environments? • More concentrated industries (where a few large orgs dominate) make this easier • Orgs can manage distribution channels • Orgs can form groups that provide more leverage (e.g., cartels) • Orgs can try to get the rules and assumptions changed by using their influence