1. Organizational and Institutional Change in Health Care: From Turbulence to Integration Jim Goes, Ph.D. School of Advanced Studies, University of Phoenix October 2013

2. 2Page© 2012 University of Phoenix, Inc. | All rights reserved Theories of Change

3. 3Page© 2012 University of Phoenix, Inc. | All rights reserved Drivers of Change in Health Care Regulatory change (Certificate of Need, Obamacare) Technological change (mobile apps for care, telemedicine) Social and Economic Change (graying population, loss of employer coverage)

4. 4Page© 2012 University of Phoenix, Inc. | All rights reserved Evolution of Healthcare Organization

5. 5Page© 2012 University of Phoenix, Inc. | All rights reserved Environmental Turbulence and Organizational Change Disruption and Turbulence Adaptive Capacity First order evolutionary change (expanding the domain of hospitals) Second order revolutionary change (rethinking the role and domain of healthcare) Sensemaking

6. 6Page© 2012 University of Phoenix, Inc. | All rights reserved Turbulence and Adaptive Capacity Proposition #1: Perceptions of environmental turbulence vary with the prevailing level of complexity and change in an industry, and the relative adaptive capacity of firms within the industry. Firms adapt to environmental changes based on their individual and collective perceptions of change.

7. 7Page© 2012 University of Phoenix, Inc. | All rights reserved Jolts as triggers of change and revolution Proposition #2: Dramatic, second-order increases in turbulence (“jolts”) are associated with metamorphic changes within organizations and revolutions within industries. Jolts stimulate strategic reorientation and reconfiguration in firms, variation in new organizational forms, and the formation of collective strategies and network structures within industries.

8. 8Page© 2012 University of Phoenix, Inc. | All rights reserved Change at industry and organization level

9. 9Page© 2012 University of Phoenix, Inc. | All rights reserved Collaboration and Partitioning Proposition #3: Successful collaboration between organizations lessens perceptions of environmental turbulence. Failure to successfully collaborate heightens perceptions of environmental turbulence. As turbulence escalates beyond the range of collective adaptive capacity (hyperturbulence), social triage and environmental partitioning ensue as elite firms seek to protect scarce resources.

10. 10Page© 2012 University of Phoenix, Inc. | All rights reserved Institutional Shifts and Sensemaking Proposition #4: During periods of dramatic environmental changes (jolts or great turbulence), existing norms, laws, and conventions are challenged and sometimes de-legitimated. Old institutions become less embedded, and new practices become legitimated and eventually become new institutions. Proposition #5: Environmental jolts create opportunities for organizations within an industry to socially reconstruct industry institutions through collective sensemaking and shared enactment of new industry practices.

11. 11Page© 2012 University of Phoenix, Inc. | All rights reserved Institutionalization as a means of dampening turbulence Proposition #6: Once a new institutional practice has been legitimated and widely adopted by firms in an industry, executives will collectively work to further embed the practice, even if the environmental change that triggered the adoption of the new institution has subsided.

12. 12Page© 2012 University of Phoenix, Inc. | All rights reserved Social Consensus and Stability Proposition #7: When dramatic environmental changes invalidate prevailing institutional practices within an industry, social consensus around new legitimate practices within the industry will act to stabilize the environment and lessen perceptions of turbulence. Failure to achieve consensus on new institutional forms will lead to hyperturbulence, partitioning, and eventual organization and system failure.

13. Turbulence and Institutionalization: A Cycle of Change and Stability

14. 14Page© 2012 University of Phoenix, Inc. | All rights reserved Two Naturalistic Field Studies Environmental Jolts and Ambulance Circling in California (1988-1993) Turbulence and Social Construction in Minnesota Hospitals (1993-1995)

15. 15Page© 2012 University of Phoenix, Inc. | All rights reserved Revolution, Adaptation, Isomorphism

16. 16Page© 2012 University of Phoenix, Inc. | All rights reserved Coming Soon to a Health System near you Turbulence due to Obamacare and state reform Technology continues to shape new forms of organization and delivery in the direction of efficiency and accountability Longevity and consumption drive change Medicare/Medicaid funding dilemmas create further turbulence and adaptation Consolidation, integration, adaptation