Jessica Casserra’ s Task Force:
Hospital Integration in the Region of Erie
Jessica Casserra stretched back from the monitor and rubbed her eyes. Technology had
made it possible to be home in the evenings with her family, but as they pointed out, that
didn’t mean they saw much of her. For the past two months, most evenings and
weekends had been spent pouring over internal reports, briefs, governmental documents,
spreadsheets, and consulting studies concerning the integration of hospital services in the
Region of Erie.
The taxpayers of the Region had received far more than their fair share of her time, but
she wasn’t sure that was translating into added value. Budgeting, control, program
integration, human resource and organization design issues had not been resolved – they
had only festered as senior hospital management, board members and key stakeholders
groups squabbled and continued to avoid making difficult decisions.
Hospital Services in the Region and Their Response to Integration
The combined hospital services in the southeast region of the Province responded to the
needs of 250,000 people in their catchment area of approximately 30 miles by 60 miles.
Metropolitan Hospital was, by far, the largest facility, with 150 beds and 700 employees
or 493 full-time equivalents. Metropolitan specialized in primary care and offered a
fairly full range of hospital services, from emergency to surgical, basic cancer care and
dialysis. The specific services offered varied depending upon the medical specialists they
were able to attract to their area at any particular point in time. However specialized
needs in such areas as neonatal, advanced trauma, MRI and more complex cardiac and
cancer care interventions were transferred to a larger hospital.
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Each of the hospitals in the region had strong local support and good reputations for the
quality of care and services they provided. In recent years this support had been tested as
waiting periods for medical procedures increased, and emergency care lineups
lengthened. Shortages of funds and health care workers (nurses, specialists and general
practitioners) were stressing the system and there was a growing concern over the future
of public health care in the region.
The prospects of the forced integration had not been met with open arms. While the
Metropolitan Board was largely supportive of the idea, the boards of the other five
hospitals had all opposed the move. They saw it as usurping local control and as code
language for the maintenance and enhancement of urban services at the expense of local
services. They believed it would lead to service degradation in rural areas, culminating in
the closure of some of the facilities they had worked so hard to develop and sustain. In
addition, four of the five rural hospitals perceived this to be a blatant cash grab on the
Jessica Casserra’s Appointment
Following the decision of the Ministry of Health to require the realignment of hospital
service in the southeast region, Jessica Casserra was approached to lead the initiative by
the chief administrative officers of three of the hospitals involved (including
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Metropolitan). Jessica was a former nurse with a Masters in Health Administration and
she was a Certified Management Accountant. She was the head of Finance,
Administration, and Ancillary Services at Metropolitan. She was 47 years old and had a
stellar reputation as an honest and creative hospital administrator who understood the
health care issues of the region. When approached privately, most senior administrators
at all six hospitals admitted that Jessica had, by far, the best chance of any administrator
in the area of managing the integration successfully. In addition to her technical and
managerial talent, she was politically astute and in possession of excellent facilitation
skills.
The Taskforce Design
When Jessica agreed to chair the taskforce, the Ministry of Health had already decided
upon its membership structure. In addition to the chair (formally appointed by the
Ministry of Health), each hospital nominated three members, the local physician’s
association nominated 3 members, the nurses’ association nominated 2 members, and the
member communities each nominated 1 member of the public. Further, the Ministry of
Health appointed 2 non-voting, ex-officio members to represent its interests. In addition
to the chair, the task force had 29 voting members and two non-voting members. The
taskforce was expected to seek consensus and act in an advisory role to the involved
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reckoned that since that first meeting, task force duties had taken 20 to 30 hours per week
of her time and about 10 hours per week of the time of other members.
The taskforce had adequate funds to hire professional staff, consultants, and support
personnel to help them in their deliberations. They had a full-time staff of 8 including
two hospital planners, an information systems specialist, a human resource specialist, a
financial specialist, and 3 staff supports. These employees were hired directly by the task
force through the efforts of Jessica and her staff sub-committee. In addition, consultants
had received contracts from the task force to assist in the needed background work and
analysis. They included two well-respected retired hospital CEO’s who were contracted
to investigate service structure and delivery options. Once implementation of the plan
became the focus, an implementation taskforce would be formed. It was anticipated that
most implementation taskforce members would be drawn from the existing hospital staff,
but it had yet to be designed.
The staff of the task force was housed in office space supplied by the Region of Erie and
the task force used Erie’s council chamber for its meetings. In addition, there was
temporary office space and a board room available to task force members, and Jessica
had permanent office space available to her there.
Following the initial task force meeting a month ago and a half ago (a session hosted by
the Ministry of Health), the taskforce had been meeting one day per week and working
fairly well on exploratory matters, but they had not yet had to face difficult questions.
Once the more contentious strategic and operational questions came to the table, Jessica
was concerned that they might simply defer to the public positions of the various groups
that had selected them for membership. This was not a recipe for success. If they were
going to really add value, she believed that they had to seize this unique opportunity to
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The Strategic Questions
From a strategic perspective, Jessica continued to ponder what would be the best way to
integrate hospital services and configure their management and governance structures,
systems, and supports. There were a range of options, but all came with strings attached.
When thinking about the integration challenge, Jessica was very aware of the fact that
Metropolitan had a well-developed strategic plan that had already contemplated some of
these questions. However, she also believed these documents would likely be more of an
impediment than an aid at this time. Two of the smaller hospitals had made some attempt
Integration Options
Option A: From the perspective of the Board and CEO of Metropolitan, full integration
was the preferred way to approach hospital integration. This approach would rationalize
services and lead to higher levels of resource use. This would mean moving to a single
board and CEO, a consolidated budget and governance structure, a complete realignment
of services and roles, control over all ancillary services, access to accumulated surpluses
and contingency funds, and the possible consolidation of all hospital foundations into one
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smaller hospitals would view the approach very negatively. Staff resistance would likely
come in the form of absenteeism, less willingness to work overtime and extra shifts, and
resignations by nurses and physicians. Only the staff at Metropolitan, most of the
medical specialists and some of the GP’s would be likely to view this option positively,
due to their beliefs concerning the need for the infusion of funds to shore up their ability
to supply new and higher quality leading edge medical care to citizens in the region.
Option B: At the other end of the integration continuum was a model that would allow
all hospitals to retain their independent structures and boards, with member hospitals
each nominating representatives to a supra Board that would act as a planning and
coordinating body. This was the option that was favored by the smaller hospitals and
towns, because it allowed continued local access and control of the institutions that the
smaller communities had been instrumental in developing and supporting. Neither
Competition
Competition was becoming more intense – somewhat surprising because this was not
supposed to happen in a publicly funded system. Competition came from several
sources. Private clinics had opened in or near the southeast region and were offering a
number of services that had previously been supplied by Metropolitan.
Hospitals had found that these specific services were financially attractive to supply
because they were relatively easy to perform, in many cases patients (or insurers) paid for
the service themselves, and in other cases the provincial reimbursement rate greatly
exceeded the costs of supplying the services. Cosmetic surgery, routine hernia treatment,
rehabilitation services, CT services, and diet and lifestyle counseling were the types of
services that were coming under increased competitive pressure.
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Ancillary Services
Ancillary services represented both a competitive opportunity and threat. Metropolitan
Hospital, in particular, was in the catering, vehicle repair, fundraising, payroll services,
security, housekeeping/cleaning, hazardous material handling, homecare and laundry
businesses, to name just a few. These were services that they could potentially
commercialize and/or privatize and spin off. While Jessica had only begun inspecting
these opportunities, she already knew that some were fairly efficient and effective
operations – laundry, payroll services, and food services, in particular. Others
(custodial/cleaning services and homecare) were less efficient and cost effective than
Control and Information Systems
With the exceptions of Metropolitan’s computerized accounting and payroll systems,
computer information systems represented a serious point of concern. Each hospital had
its own system or systems and the systems did not communicate with each another.
Some of these were clearly antiquated and even within Metropolitan there was
duplication of information entry, difficulties with information flow, and far too much
reliance on paper.
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requirements drove much of the activity in this area, but Jessica felt that this would be an
ideal time to sort through and establish the management control information that could
really benefit managers and the organization. For example, there was little to no
consistency in the boundary, belief, diagnostic or interactive control systems in operation
in the various hospitals. Metropolitan’s system was the most developed, but even here
Jessica believed improvement was needed with both its design and use. She believed the
new organization would be well served if it approached the design of the control system
with an open mind and then insured that their managers were literate in the effective use
of the information emanating from it.
People
Managing hospital employees during the transition represented a key point of risk.
Hospitals in the region were already short of nurses and the area had been classified as
under-serviced by general practitioners and specialists. Little in the way of strategy had
guided hospital activities, with the exception of Metropolitan that had a fairly well
developed strategic plan. For example, three years earlier Metropolitan had developed
detailed and sophisticated initiatives aimed at attracting and retaining general
practitioners and specialists. They had also developed initiatives to improve management
practices and employee satisfaction and performance by moving to team-based
management. Their efforts had met with some limited success in the areas of attraction,
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well below national norms. None-the-less, the Board of that hospital was highly
supportive of its practices and the performance of its senior managers. They attributed
observed shortfalls to unique issues in their catchment area, but Jessica felt that this
assessment didn’t stand up to closer scrutiny. The fact that the hospital CEO and the
head of nursing were respectively 62 and 60 years old might make change easier to
manage at this site, if they should chose to retire early.
Next Steps
Jessica mulled over her options but then stopped and laughed. For many years she had
been a vocal advocate of strategic thinking, accompanied by action, execution, supportive