Workforce and Organizational Change in Critical Care: Lessons From Managed Care
Special Feature
Workforce and Organizational Change in Critical Care: Lessons From Managed Care
By Gordon D. Rubenfeld, MD, MSc
Fundamental changes have occurred in the financing of medical care in the United States during the past decade. Until recently, healthcare providers increased their income by increasing the services delivered to patients under fee-for-service reimbursement. Enthusiasm for a top-down government-organized restructuring of healthcare delivery in the early days of the Clinton administration gave way to a complex and geographically fractured set of market-based reforms. Market-based meant that cost reduction occurred without government-imposed regulatory reform, but through competitive market forces. Payers turned to providers and, in effect, said, "We’re going to pay this much. Who wants the job?" An alphabet soup of contractual arrangements and incentives, the details of which are beyond the scope of this article, evolved to meet this challenge.1 Clinicians, as well as hospitals, nursing homes, and other entities that provide clinical service, found themselves, uncomfortably and for the first time, scrambling to survive in a newly competitive marketplace.
The decade preceding this era of healthcare reform, the 1980s, presented American manufacturers with a similar dilemma. American industries with previously unchallenged hegemony in timber, steel, electronics, and automobile manufacturing found themselves competing with inexpensive and high-quality goods from around the world. In rapid succession, the modern management mantras of restructuring, downsizing, rightsizing, reengineering, team-based management, outsourcing, partnering with the customer, cross-training, role interchageability, and total quality management were born in an effort to cut costs and compete.2 These reflected essential changes in the workforce (who made the product) and organization (how they worked together). The thesis of this essay is that the same organizational and workforce changes that played out in American industry during the 1980s have changed and will continue to influence health care.3 These include downsizing, outsourcing, and team-based management (see Table).
| Table-Workforce and Organizational Changes in Managed Care | ||
| Change | Definition | Examples |
| Downsizing | Reducing the number of jobs to perform a task, usually by reorganizing or changing the skills of the workforce | Reduced number of physicians. Decreased nurse:patient ratios |
| Outsourcing | Subcontracting a set of tasks to an outside firm for a negotiated fee | Disease management carve-out for end-stage lung disease. Center of excellence for the management of cystic fibrosis. Regionalization of trauma care |
| Team Management | Group of workers who share a common goal, respect each others' skills and autonomy, and work collaboratively | Closed ICUs managed by ICU team. Inpatient acute care teams. Disease state management of asthma by team of nonphysician clinicians and pulmonologists |
Downsizing
Downsizing cuts costs under the fairly simple assumption that if you can serve the same number of customers with fewer employees, then downsizing your workforce will make your services cheaper. In the early 1980s companies such as Xerox, AT&T, and Ford cut their workforces by tens of thousands of employees. Except in extremely inefficient organizations where wasted labor is common, most downsizing is accompanied by other interventions that allow a reduced workforce. For example, a company might buy its managers laptop computers so that secretaries can be fired, or use financial incentives and training to increase the productivity of the workforce that remains after downsizing.
Does managed care use a downsized medical workforce? Healthcare is a difficult industry to monitor for employment changes. When large corporations downsize workers, the Wall Street Journal carries a front-page story. However, shifts in physician employment occur less visibly than in other industries and changes in marketplace demand are more difficult to track.4 Because of the public investment in training clinicians, the public health implications of inadequate supply, and the economic effect of physician-induced demand, health policy analysts have devoted a great deal of effort to understanding the medical workforce.
A common methodology used to predict workforce requirements takes current physician use patterns under different reimbursement strategies and then, using estimates about future growth and aging in the population, makes predictions about the requirements for different specialties. Essentially, this is the method used by the COMPACCS (Committee on Manpower for Pulmonary and Critical Care Societies) group to estimate pulmonary and critical care physician requirements in the future.
There are many concerns about these predictions. For example, if ICUs routinely adopt a "closed" status and only allow critical care specialists to attend patients there, this could have a profound effect on workforce predictions. Changes in scope of practice can also influence the demand for different types of physicians. If nurse specialists are allowed greater independence in diagnosing and prescribing in the ICU, the demand for intensivists could drop. Generally, these population-based predictions are driven by the profound demographic change that our society will experience in the next 30 years as the baby boomers grow into their disease-prone years. While an aging population and increased technologic capabilities will increase demand for critical care services, a declining economy could reduce a society’s ability to fund them.5 With uncertainty in all of these factors, it is not surprising that studies investigating the effect of managed care on the physician workforce do not always agree.6,7
Outsourcing
Companies have always relied on outside help to handle specific services or production beyond their area of expertise. Boeing uses 1300 suppliers to make parts and subassemblies for the 767 commercial airliner. During the 1980s, American companies learned to outsource all sorts of activities, including information processing, accounting, and even sales. Companies gain a number of advantages by outsourcing: using the best service provider, purchasing only the amount of goods and service required to meet their needs at less cost than it would take to produce internally, and allowing the company to focus on its own core competencies. Hospitals already outsource a variety of services, including laundry, medical records, billing, and laboratory services.8
Outsourcing is an ideal complement to the managed care concept of sharing risk. Outsourcing allows the provider to further distribute the risk of certain types of care. A staff model HMO may take on a capitated contract for 50,000 individuals. Fearing large critical care use and noting their own inadequate capacity in this area, the HMO decides to outsource critical care services. They negotiate with a physician group to provide all of the critical care services to their patients for a fixed fee. Now the physician group is at risk for overuse by the HMO’s patients and the HMO knows exactly how much its critical care services will cost. Companies that provide specific "carve-outs" are growing, and currently exist for mental health, oncology, and AIDS, among other specialized services.9
Outsourcing has several important implications for critical care specialists. Since specialty care is expensive, managed care companies may prefer to outsource certain services to physician groups or academic centers of excellence for specific negotiated fees. To realize cost savings and improve patient outcomes, outsourcers develop patient management protocols, provide incentives to use resources economically, and, perhaps most important, incorporate nonphysician clinicians and experienced specialists into patient management teams.
Team-Based Management
An old adage has it that the whole can be greater than the sum of its parts. Team-based management relies on this principle to organize a group of individuals into a team that works together to accomplish a shared goal.10 Borrowing from the seminal work of W. Edwards Deming and Joseph Juran, the Japanese developed a management technique later termed "Theory Z" by Professor William Ouchi. Theory Z includes, in part, a notion of teamwork that is based on mutual respect and empowerment of workers at all levels to improve quality.11 The post-World War II turnaround in the Japanese economy has been attributed to the success of these organizational and quality reforms. Although some of the early enthusiasts of Theory Z have moved on to embrace newer management fads, the importance of self-directed teams and their role in enhancing productivity has changed the way people are managed.
The intensive care unit relies on the expertise of nurses, respiratory therapists, multiple subspecialist physicians, nutritionists, and pharmacists to deliver quality care to the sickest patients in the hospital. In many ways, the ICU offers an ideal illustration of multidisciplinary team care. Unfortunately, this idealized view is tempered by a more traditional, if somewhat inaccurate, caricature of imperious physicians battling over clinical turf and ruling by edict.
A growing body of literature attests to the benefits of team-based care. Patients with congestive heart failure, risk factors for coronary disease, AIDS, diabetes, and spinal cord injury have all benefited from coordinated team-based care. Nonphysician clinicians acting autonomously or guided by protocols can improve patient outcomes and reduce costs. Respiratory therapists can wean patients more quickly and less expensively when the feedback loop that requires physician interaction is removed.12
The organization of healthcare delivery into patient management teams has several important implications for the critical care provider. Under fee-for-service arrangements, physicians received financial incentives to care for their patients in the ICU. This had the advantage of maintaining continuity of care from the outpatient setting but allowed some physicians who lacked sufficient ICU volume to sustain their skills to practice in this arena.
Intensivists have long argued, and the data, though incomplete, are beginning to concur that ICUs should be "closed" to a few providers with demonstrated competence.13 But who should these providers be? Data from pediatric and neonatal ICUs demonstrate that it is feasible to use nonphysician clinicians in these settings.14,15 Most of the discussion surrounds using nonphysician clinicians to substitute for house staff; whether these providers can be used to substitute for some of the attending physician labor is unknown.
Inpatient acute care teams and hospitalists (physicians whose practice is limited to the care of inpatients) are still too new to know how they will interact with intensivists, ICUs, and other medical subspecialists. There will be a tendency for the pulmonologists, cardiologists, and nephrologists who have cared for the sickest inpatients for years to feel as if they are being invaded by general internists looking for employment outlets. Here, as in other turf battles, it will be essential to define competencies and outcome measures and to try to elevate the discussion to an empiric level. Ultimately, the sickest and most vulnerable patients will benefit by having the most expert clinicians available to them 24 hours a day in the hospital.
Team building does not occur spontaneously. In the corporate world, executives go on rafting, mountain climbing, and other retreats to figure out how to work together as a team. Similar, although perhaps not quite so extravagant, investments will be necessary to build coordinated teams in medical care. One of the most important investments in future healthcare teams is the development of interdisciplinary education curricula for healthcare providers. When future nurses, physicians, allied health personnel, physicians’ assistants, and social workers train together, their future collaboration will be enhanced.
Conclusion
Inevitably, we must address the question: Have the workforce and organizational changes that have occurred from managed care "succeeded"? At least with regard to the cost of medical care, the answer would have to be a tentative, and perhaps temporary, yes. From 1966 to 1993, medical expenditures increased, on average, 11.7% per year. From 1993 to 1996, this annual rate declined to an average of 5% per year, with the most recent year showing a medical inflation rate of only 4.4% (not much greater than inflation for all goods and services). Paralleling these changes are increases in the percent of physicians reimbursed through managed care contracts and an increase in the size of physician groups.16 It seems as if the changes brought by managed care have been successful at cutting medical inflation. Now the question is, will these savings persist?
It is important to recognize that some workforce and organizational changes may be beneficial, even if they don’t reduce costs. For example, clinicians who practice in the ICU and in the operating room have long appreciated that the best care is provided by a team approach in which expertise is shared. Even if collaborative team care does not reduce costs, it is likely to improve outcomes for patients and job satisfaction for providers. The "volume-outcome" relationship is a reliable finding in health services research. More experienced centers have better outcomes. This has been shown with bypass surgery, angioplasty, and trauma care.17,18 Regionalization of complex care may improve outcomes enough to justify outsourcing to these centers even if it doesn’t save money.
I have argued that cost competition in the 1980s led to new business principles in the American manufacturing industry and, ultimately, in the industry of health care. Some would argue that it also brought a top-heavy middle management layer, a bottom-line ethic, and a general loss of what distinguished medicine as a caring and compassionate field.19 Certainly the media have portrayed it this way. There are clear conflicts between the commercial ethic of a publicly traded company and the professional service ethic of a clinician. There is nothing new about the conflict between personal enrichment and public good in medical care. Certainly these conflicts existed in the past, but they were obscured by the "more is better" technological imperative facilitated by fee-for-service incentives. Managed care, if it accomplishes nothing else in its role as a transitional health-care delivery system, has made the choices between cost and outcome explicit for a society used to the idea of having it all.
Which one of the following statements is false?
a. Health care cost-cutting techniques reduced the rate of increase in health care costs.
b. Team-based management is impossible in critical care.
c. Fee-for-service provides incentives to physicians to provide more medical care.
d. Outsourcing is the subcontracting of specific medical services to a specialized group of providers.
e. Downsizing is reducing the number of jobs to perform a task, usually by reorganizing or changing the skills of the workforce.
References
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