MHA 520 Week 2 Determining Which Relationships Are Vital Example

Sixty Relationships, Time for Twelve: Using Power, Legitimacy, Urgency and Referral Data to Decide Which Alliances a Community Hospital Cannot Lose

[Student Name]

University of Phoenix

MHA/520: Sector Stakeholders: Identifying and Cultivating Alliances

Week 2 Assignment

[Instructor Name]

[Date]

The hospital, its relationships, referral figures and rankings are composites written for a model paper; research findings come from the sources cited.

Three months into the job, the same suburban Atlanta hospital's community relations vice president had a list of sixty relationships and a problem. She could cultivate perhaps twelve well, maintain another twenty and only monitor the rest. The chief executive asked her to decide which relationships the hospital could not afford to lose and to justify the choice objectively. This paper describes her method and results.

Why Objective Criteria

Leaders tend to spend time with people they like, people who call most often and people who resemble them. Those are not the same as the relationships that matter most. An explicit framework, applied the same way to everyone, makes the reasoning visible and open to challenge.

The Salience Model

The vice president used a model from stakeholder theory that identifies stakeholders by three attributes: power, the ability to impose one's will on the organization; legitimacy, a socially accepted claim on it; and urgency, the degree to which a claim calls for immediate attention. Stakeholders holding more of these attributes are more salient to managers, and those holding all three are definitive stakeholders (Mitchell et al., 1997).

Scoring

Each of the sixty relationships was rated from one to three on each attribute by the vice president and two colleagues independently, then discussed where ratings differed. Power reflected control over patients, money, approvals or reputation. Legitimacy reflected formal or moral claims, such as those of patients, regulators and the medical staff. Urgency reflected time-sensitive issues.

Bringing in Data

Ratings of power can rest on impressions, so she added data. The hospital's admission records show which physicians admit patients and which share patients through consultations and referrals. Research has shown that patient sharing identified in administrative data is an informative test for predicting whether physicians actually have relationships, performing reasonably well against physicians' own reports (Barnett et al., 2011). The analysis mapped the hospital's physician network by patients shared.

What the Data Changed

The data overturned an assumption. The largest primary care group, which leaders considered the hospital's most important physician relationship, sent many patients but mostly for routine admissions that had no alternative nearby. An independent orthopedic group of eleven surgeons accounted for 14% of the hospital's inpatient and outpatient surgical revenue and shared patients with nearly every primary care practice in the network. The relationship leaders mentioned least turned out to hold the network together.

Why the Orthopedic Group Was Urgent

The orthopedic group had been approached by a larger system in Atlanta offering to buy its practice. Health systems have been acquiring physician practices, and research found that increases in the market share of hospitals owning physician practices were associated with higher hospital prices and spending for the privately insured (Baker et al., 2014). The findings suggest why systems pay to acquire practices: integrated physicians bring patients and bargaining power with insurers.

The Definitive Stakeholders

Five relationships held all three attributes at high levels: the orthopedic group, the medical staff's elected leadership, the county health department in the months before the needs assessment, the largest commercial insurer, whose contract was up for renewal, and the foundation's board chair, who was leading a capital campaign for a new outpatient center.

Dominant and Dependent Stakeholders

Other relationships held two attributes. The state hospital association and major employers had power and legitimacy but little urgency. Community organizations serving immigrant populations had legitimacy and, given rising interpreter demand, urgency, but limited power; the model calls them dependent stakeholders, who rely on others to advance their claims.

Why Dependent Stakeholders Still Matter

A purely power-based ranking would neglect community organizations. The vice president argued that the hospital's mission and its federal duty to seek input from underserved populations gave them a claim the hospital must honor, and placed two of them among the twelve.

Tier One: Twelve Vital Relationships

The twelve vital relationships were the orthopedic group, medical staff leaders, the county health department, the largest commercial insurer, the foundation board chair, the chief nursing officer's nurse leadership council, the largest primary care group, the school district's health services director, a Korean community association and a Vietnamese mutual aid society, the regional federally qualified health center and the county's largest employer.

Tier Two and Tier Three

Twenty relationships were placed in tier two, maintained with quarterly contact, and twenty-eight in tier three, monitored through the relationship log and annual contact.

Owners and Plans

Each tier one relationship received an executive owner. The chief executive and chief medical officer owned the orthopedic relationship and began discussing a co-management agreement for the orthopedic service line that would reward the group for quality and efficiency without acquiring the practice. The vice president owned community partners; the chief financial officer owned the insurer.

Internal Stakeholders Count Too

The first draft of the list focused on outside parties. Colleagues pointed out that the hospital's own nurses, through their shared governance council, held power over whether new services could be staffed, legitimacy as caregivers and urgency given turnover near 20%. The nurse leadership council was added to tier one, a reminder that alliances inside the organization can matter as much as those outside.

Testing the Ranking With Scenarios

To check the ranking, the executive team asked what would happen if each tier one relationship failed. Losing the orthopedic group would remove a seventh of surgical revenue and weaken ties with referring primary care practices. Losing the insurer contract would push thousands of patients out of network. Losing a community organization partner would leave the hospital unable to reach a growing population. Each scenario confirmed that the relationship belonged in tier one.

Managing Conflicts Among Stakeholders

Stakeholders' interests conflict. The insurer wanted lower prices; the orthopedic group wanted investment in operating rooms. The prioritization did not resolve these conflicts but made them visible, so the executive team could address them together rather than one at a time.

Communicating the Ranking

The ranking itself is sensitive. Partners placed in tier three might feel slighted if they saw it. The vice president shared it only with the executive team and kept the relationship log confidential, while making sure every partner, whatever the tier, received courteous and timely responses.

Reviewing the Rankings

Urgency changes quickly. The rankings will be reviewed every six months, and immediately after events such as a contract renewal, an acquisition offer or a leadership change at a partner.

Limits

Scoring people and organizations can feel impersonal and may miss informal influence. The vice president shared the method with the executive team and invited challenges, and several ratings changed after discussion.

Conclusion

Sixty relationships could not all be vital. Applying the salience model consistently, adding admission and referral data validated by research and considering evidence on why systems acquire physician groups produced twelve vital relationships, several of them different from what leaders expected. Tiers, owners and regular review turn the ranking into a way to spend limited time where the hospital most needs it.

References

Baker, L. C., Bundorf, M. K., & Kessler, D. P. (2014). Vertical integration: Hospital ownership of physician practices is associated with higher prices and spending. Health Affairs, 33(5), 756-763. https://doi.org/10.1377/hlthaff.2013.1279

Barnett, M. L., Landon, B. E., O'Malley, A. J., Keating, N. L., & Christakis, N. A. (2011). Mapping physician networks with self-reported and administrative data. Health Services Research, 46(5), 1592-1609. https://doi.org/10.1111/j.1475-6773.2011.01262.x

Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. The Academy of Management Review, 22(4), 853-886. https://doi.org/10.2307/259247