Goldfields and minefields: Changing management technologies and resources

Adminis t ra t ion in Menta l Heal th Vol. 14, Nos. 3 & 4, S p r i n g - S u m m e r 1987

S E C T I O N I

GOLDFIELDS AND MINEFIELDS: CHANGING MANAGEMENT TECHNOLOGIES AND RESOURCES

Anthony Broskowski, Ph.D.

Even the average citizen is now aware that there are major changes taking place in the health care industry, advertising being the most obvious "sign of the times." Behind the billboards touting better care at lower costs lurk a number of significant changes affecting both health and mental health care. While everyone has his or her own list, it will be useful for the purposes of this paper to give the reader my own sense of the trends that are driving current and future changes; changes which in turn ought to be reflected in the training and behavior of future generations of mental health administrators.

• Horizontal integration: a blending of formerly separate sectors of the industry; providers, insurers, and employers.

• Alternative financing systems that are intrinsically tied to alternative service delivery systems: self-funding, health maintenance organizations (HMO's) , preferred provider organizations (PPO's), with emphasis on alternatives to hospitalization.

• Greater "organization" of the existing providers, evidenced by corporate chains, mergers, consolidations, voluntary associations, and joint ventures among providers; individual private practice will slowly disappear.

• Increased vertical integration of the local service delivery system,

153 ~) 1987 Human Sciences Press

154 Administration in Mental Health

and the establishment of "regional networks" by the large corporate chains.

• An oversupply of beds, doctors, and other providers; some say an oversupply of capital also exists.

• Diagnosis related groups (DRG's): a movement from "time" sales

to "product" marketing.

• Emergence of the "aggregate consumer"; corporate benefits managers and employer coalitions.

• Continuing regulation and methods of utilization review by government, insurers, and employers.

• An increase in systems of "managed care" created by employers and insurers, especially for the "high-cost users."

• Increasing competition among the private, not-for-profit sector, and the private, for-profit sector. Competition intrinsically creates ad- verse selection and the clear emergence of a "two-tiered" system of care.

• Increasing advocacy by the historically neglected long-term and seriously disabled mentally ill.

• Lack of clear federal or state government leadership on issues of indigent care and increasing separation of the "public" and "private" systems of care; the "public" being limited to the most needy.

• A major reduction in the availability of prevention and education oriented programs within the publicly funded mental health system.

Most of these changes reflect the emphasis on health care cost containment, an issue driven by the past "cost-plus" and "deficit-financing" policies of earlier time periods. Therefore, another useful way to consider these trends is to con- trast the past, current, and future effects of the "primary payor" and payment methods on four critical functions: marketing, operations, financial management, and clinical/human resource management. These effects, as judged by Neely and Ray (1985) are presented in Table 1.

Clearly these changes have already begun to influence the ways that mental health administrators think about their responsibilities. In some cases we have even witnessed changes in management behaviors. It is difficult to decide what is the most important issue: management/staff resistance to the changes, or management/staff preparation and training to perform the new tasks required of us. In any case, the charge to this author is to consider the future uses of management technologies and resources within mental health administration, with a focus on the implications for future training and education of administrators.

Encompassed within any generic technology or skill domain are a host of specialized skills and technologies. In fact, the generalist versus specialist dimension of future management bears careful consideration beyond a simple enumeration of specific skills and technologies. Elsewhere I have argued for the

Anthony Broskowski 155

importance of the generalist (Yessian and Broskowski, 1977; Broskowski, 198 lb). I remain convinced by my own experiences that a manager-leader must first and foremost be a generalist, but one with indepth mastery of some fundamental skills and knowledge that lend themselves to a wide range of problems and the uses of technologies to solve them: (1) the mastery of a broad range of theoretical approaches to assist in the conceptualization of problems and solutions, (2) good command of written and oral language skills, mathematical and statistical skills, and a general knowledge of research methodologies, and (3) general in-

formation management skills, that is, the knowledge of the formal and informal mechanisms for searching, collecting, storing, and retrieving a wide range of data, coupled with ways to analyze, synthesize, and interpret the data in order to communicate information to others and control the allocation and use of a system's resources (Broskowski, 1981a, 1982a, 1986).

I believe these are some of the fundamental and basic planning, problem- solving, and learning skills that are critical for the mastery of new and ever- changing substantive technologies. The possession of such generalist skills will also assist with the selection, supervision, control, and coordination of the technical specialists and consultants upon whom the general manager inevitably comes to depend (Broskowski, 1984).

But as the title of this paper suggests, there are risks involved with the uses of technologies, the greatest risk being the loss of our traditional values for the consumers of our services. Because of these risks, the introduction of new technologies will raise considerble anxiety, and possible conflict, among the professional caregivers and managers within the system. Fortunately, the same generic skills suggested above as essential for leaders and managers are the skills that will ultimately support such important processes as the resolution of these likely conflicts.

I also find it necessary to state the caveat that the mix and use of particular skills, technologies, and resources will vary as a function of the manager's level within the organization, the auspices of the employer (e.g., for-profit, not-for- profit, government), size, type of services, and myriad other factors. One could also make distinctions between skills and technologies needed for micromanage- ment, running the day-to-day operations; macromanagement, coordinating longer term internal and external tactics; and metamanagement , knowing or influencing factors in other sectors, such as tax and banking trends that affect the organization (Neely and Ray, 1985). Generally, I have moved across all levels and tried to assume the skills and technologies to be exercised by a proto- typical senior level administrator in a direct service organization with several different programs and/or locations (i.e., moderate complexity).

Strategic Planning I have found it useful to conceptualize the interdependent processes of stabil-

ity and change as a "step function": relatively longer periods of stability followed


Table 1 Impact of Primary Payors Upon Mental Health Center Management:

A Historical And Evolutionary Matrix

1960-1970 1980 1990 Federal/State Driven Customer Driven Outcome-Oriented/ Delivery System Delivery System Payor-Driven

Delivery System

I. Market Management

Product:

Price:

Place:

Promotion:

12 federally mandated services.

Not important -- price arbitrarily determined; sliding scale most important.

Geographically important accessible to nonpaying client.

Agency and public talks plus traditional consultation and education.

Local consumer market, determined services.

I m p o r t a n t - market driven, oriented to customer.

Very important-- customer "user friendly" environment.

Very important-- paid advertising. Traditional C & E either deleted or reframed as earned income.

Initially, local consumer market determined services, moving to regional and national payor determined products.

Very important--cost drive price oriented to payor.

Very i m p o r t a n t - combination customer "user friendly" plus corporate/payor acceptable environment.

Continued paid advertising to customers marketing interactions with payors.

II. Operations Management

Orientation: Clinical

Controls: Loose/informal; not strategically focused; passive; reactive; structures developed in regulated environment, poor adaptability to change.

Marketing

QAC focus; market share,

Financial/Marketing

Utilization review; clinical outcomes; productivity management , market share.

(Table 1 continued on next page)


T a b l e 1 ( c o n t i n u e d )

1960-1970 Federal/State Driven Delivery System

1980 Customer Driven Delivery System

1990 Outcome-Oriented/ Payor-Driven Delivery System

III. Financial Management

Orientation: Budget driven: "How much do we have available to spend?"

Results: "Spend it all and ask tot n l o r e .

Reporting: Funder dctermined; expense focused; accountability driven.

Income in excess of costs driven; diversification of revenue base; asset protection.

Enhance collections; increase volume; examine costs.

Departmental cost/ revenue center approach.

Margin driven: achieve profits through market share and control of COSTS.

Control margin, yeild profit.

Tough cost control of production and delivery; expansion of revenues through market share.

IV. Chnical Human Resource/~lanagement

Orientation: "Primus lnterpares" QAC/JCAH focus; peer QAC, outside-review: collegial model: review. Transitional precertification EEO/Affirmative focus: from public to concurrent, retroactive action; training ground third-party reimbursable review. Location and for private practitioners, practitioners. Retention retention of "payor

of skilled staff against eligible" practitioners; proprietaries, contingent

compensation; true merit/performance appraisals.

Controls: Internal; traditional Internal; tbrmal review Internal and external staffing, process, review.

JoAnn S. Neely and Charles G. Ray, taken from Preparing for the Outcome-Oriented, Payor-Driven Markel- place (work in progress) 1985; 2900 Hospital Drive; North Kansas City, Missouri, 64116. Not for reproduc- tion or distribution without the express written permission of the authors.

by shor t e r pe r iods of t r a n s i t i o n or c h a n g e before a new, m o r e s table p l a t e a u

is once a g a i n ach i eved (Broskowski , M e r m i s , a n d K h a j a v i , 1975). Such step

func t ions , for e x a m p l e , can be app l i ed to p h e n o m e n a of l i fe-stage d e v e l o p m e n t ,

as well as the g rowth stages a n d life cycles of o r g a n i z a t i o n s . U s i n g this m e t a -

phor , I w o u l d a r g u e tha t the last 100 years of the h e a l t h / m e n t a l hea l t h i n d u s t r y

cou ld be c h a r a c t e r i z e d by i n c r e a s i n g l y shorter per iods of s tab i l i ty , a n d inc reas -

1.58 Administration in .~lental Health

ingly steeper rates of change. This type of step function, if extrapolated indefinitely', produces an exponential curve. Experientially', that is what it feels like to many of us who are trying to manage the current waves of change. One barely masters an understanding of one new wrinkle before another one comes along.

If you accept the premise that the rate of change is increasing, then vou would also agree that the single most important generic skill of the future administrator/leader is that of strategic planning: the ability to monitor the multiple environments, seek out and synthesize multiple sources and types of information, and develop and implement a plan of action that anticipates trends before they are obvious. Some have gone as far as to say that strategic planning implies not only the early anticipation of change, but the creation of one's own future through the proactive modification of the organization's environments. For a good review of the literature on strategic planning as it affects human services, I would recommend reading Steiner, (1979); Quinn, (1982); Tichy, (1983); Wrapp, (1984); and Goodrick, (1985).

Associated with the generic skill of strategic planning are many types of planning and forecasting technologies (Wheelwright and Makridakis, 1985). A recent article in the Harvard Business Re~'iew by Georgoff and Murdick (1986), provides a foldout chart of 20 different forecasting methodologies, organized into four general classes: judgment methods, counting methods, time series methods, and association or "causal" methods. The authors assess each of the 20 techniques on 16 dimensions: time required, time span to be predicted, frequency of the updates; mathematical sophistication, computerization, and cost requirements; the requirements for past and future data inputs, including internal and external data consistency', and the stability of assumed relationships among input variables; and the types of output needed in terms of details, accuracy, format, and the ability to either reflect changes in direction, or anticipate them. They of- fer a series of critical questions to guide the manager in the selection of one or more methods.

The future administrator should be aware that such formal planning technologies exist, and when to use which ones for particular purposes, ranging from product-specific marketing research to long-range corporate planning.

Marketing and market research also are a subset technology of strategic planning. Further, there are particular concerns to address in the marketing of mental health and related professional services (Bloom, 1984; Winston, 1984). In the recent history of mental health we called similar activities needs assessment, program evaluation, and quality assurance. Marketing is more than advertising and sales. Marketing skills encompass the ability to clearly define a product or service, estimate the cost of producing it for purposes of establishing a minimum price, and understanding how the service or product must be introduced (promotion) and distributed (place) to the consumer. A good marketing study will go beyond saying there is a "need" for a service. Using some of the above forecasting methodologies, coupled with empirical product/service development and evalu-


ation, market research will estimate varying levels of actual "demand" for the service as the methods of promotion, distribution, or pricing are varied.

Because mental health programs are generally labor intensive and hard to standardize or systematically control planned variations, empirical mental health market research can be very expensive. We have historically called such efforts "demonstration projects." While such endeavors have proved successful in demon- strating the effectiveness of innovative clinical interventions, they frequently fail to explicitly take into account the economic and social dimensions of cost, pricing, location, "packaging," consumer preferences, and reimbursement potential. Hopefully, these deficiencies could be addressed by future researchers.

Marketing must intrinsically address the issues of product/service competition by others, and consider the tradeoffs between quality, quantity, and price or profit margins. Therefore, product or program evaluation is another necessary technology (Attkisson, Hargreaves, Horowitz, and Sorenson, 1978).

Finally, the implementation of the promotional dimension of marketing plans rests upon skills and technologies associated with modern media and public communications. Good writing skills, not exemplified by the usually wordy and com- plicated style found in this and other "professional" outlets, is a must. Filming and media advertising techniques are undoubtedly applicable but ones this writer knows little about.

Strategic planning and service marketing also requires an appreciation of"segmentation," the identification of highly specific subgroups of potential consumers. We already commonly segment patients by types of disability, income level, and age. Future marketing, however, will require even further refinement of the categories. For example, what are the specific types of mental health services most needed and demanded by single, upscale, young females? What is demanded by the middle-aged, married male who has plateaued in his chosen career and found himself alienated from every other endeavor? Specific skills and technologies in this aspect of long-range marketing and product development would obviously include ways to collect or retrieve and interpret demo- graphic and epidemiological data, as well as actuarial utilization data. I am not assuming the administrator needs to know how to do an epidemiological study, but I believe he/she should be capable of interpreting the validity of this and other types of research.

Program planning can also benefit from the technologies associated with the design and use of large information data bases, commonly found in most manufacturing and major service industries. The Key Performance indicator system developed by J im Sorenson and his colleagues is an evolutionary step in the right direction, although it is primarily focused on management indicators (Soren- son, Zelman, Hanberry, and Kucic, 1984). Mental health planners and managers desperately need reliable measures on treatment/service utilization rates as a function of variable personal characteristics, family and associated support systems, program variables, and the availability of community resource alternatives.

160 Administration in ,~lental Health

Products/service "promotion" and "place" also require an understanding of "atmospherics," the influence of facility design, location, reception, and ambi- ance on consumer preferences and utilization patterns. Most community-based mental health organizations are severely curtailed in their ability to attract private clients because they are saddled with outmoded facilities, located in the least desirable areas, with waiting rooms frequented by indigent and severely ill patients, and requirements to fill out enough "accountability forms" to choke the average patient. The publicly funded community mental health centers (CMHC's ) were asked to raise funds from private care but were asked to believe the myth that private patients would use publicly funded facilities and all that such utilization implied. That may have been a reasonable assumption at a time when there were no service alternatives. The large scale training of clini- cians has certainly changed that situation in all but rural areas. In any case, organizations in the manufacturing and consumer service industries have learned a lot about how space design and associated physical features of the environment affect staff productivity and consumer preferences. Perhaps we are too wedded to our offices and traditional facilities. In-home programs and mobile resource vehicles may hold promises to rapid and cost-effective interventions.

In any form of planning we must remain sensitive to the differences between the front-end skills needed to develop a plan and the skills needed to implement it. Not unlike the strategic plan implementation problems experienced by large business corporations, Gray (1986), Goplerud, Walfish, and Broskowski (1984) have documented clearly parallel pitfalls with mental health planning, (e. g., ig-. noring the informal power structure, delegating imlementation to the "planner," over-centralization of the planning process, separating decisions on organizational structures and accounting from the strategic plan, etc. Managing the implementation and control mechanisms of the strategic plan are clearly priority skills for top level administrators. Again, management process skills (e.g., communications, delegation, etc.) are important, but efficient information and key indicator systems are equally important.

Another skill or technology I place within the domain of strategic planning is advocacy. More generally speaking, the future leader must be an effective spokesperson for the organization, effective to the extent that the leader can influence the environment to change in ways that are conducive to the organization's growth and viability. Advocacy may be called lobbying, public relations, or communications, but it is basically the task of trying to modify the organization's external environment. Again, large scale media technologies, mail and advertising technologies, and personal sales technologies can serve as useful resources from which to borrow.

Intraorganizational Skills The segmentation of markets with the attendant separation of special pro-

grams in special places, with special pricing and promotion methods, implies


increasing complexity in the differentiation, and subsequent integration, of the service organization. Matrix management, corporate restructuring, and subsidiary suborganizations, are just a few of the "management and organizational technologies" which administrators can borrow from other industries.

While most administrators understand that they must differentiate programs along such dimensions as time, turf, technology,, and targets, and occasionally "discipline," the more vital skills of the future will revolve around issues of integration: how does the executive make the many parts operate in a coordinated and efficient manner, what centripetal forces will balance the centrifugal forces to create a truly dynamic system. Corporate names and logos, mission state- ments, policies, management information systems, personnel incentive systems, and clinical record systems are just a few examples of integrative mechanisms or "technologies" available. They are generally under-used and under-appreciated as such by many current administrators. Many cannot name the top ten integration tools at their disposal. I think the multiservice health care corporations will add markedly to our knowledge of leading and controlling a complex, geographically and functionally diversified human service corporation. I predict we will see more organizational research on such firms emanating from the business schools and policy research centers in this country.

Furthermore, program differentiation, although a popular activity with many managers, should not be viewed as simply a matter of reorganizing the agency to match the peculiar preferences of the staff or managers. There are sound prin- ciples that govern the internal structures of organizations (Lawrence and Lorsch, 1967; Thompson, 1967; Mintzberg, 1979). Space limits a full exposition here, but the most general one is to structure the organization to "mirror" the critical differences that exist within the environment, (i.e. environmental differentiation drives internal differentiation). Most mental health administrators cannot systematically articulate the reasons why their organization is internally struc- tured as it is, nor specify the effects to be expected by alternative configura- tions. The technology of organizational "design," used extensively by the major service corporations in our economy (baking, entertainment/recreation, food products, etc.) could give us insight into the structure of our own organizations. As an "intensive" technology (Thompson, 1967) we cannot take full advantage of such simple but powerful mechanisms as standardization and strict schedul- ing. Nevertheless, I am convinced that most human service organizations are inefficiently organized and staffed, largely due to our inability to predict variable utilization and adjust resource allocations accordingly. Private hospitals have led the way with variable staffing patterns and now some mental health centers are experimenting with "contract therapists." I would expect there is more that can be done if we can work out the appropriate personnel incentive systems for both professional and support staff,

At a more microlevel of design, the future managers will have to appreciate the wide range of organizational "control systems" available to monitor and di-


rec ta complex organization. Of particular importance is an appreciation of the benefits and costs of alternative control mechanisms when applied within an organization heavily staffed by highly trained professionals, offering uniquely tai- lored services to individual patients (Broskowski, 1984). Professionals commonly resent many controls on their discretion. Good clinical practice commonly mitigates against a "cookie cutter" approach to service delivery, despite argu- ments of efficiencies to be gained by putting every patient through a standard operating procedure. These will not be trivial concerns as more physicians become salaried employees, or venture partners, of health care corporations, as illnesses are treated as DRG's , and as regulators, malpractice attorneys, and corporate headquarters impose more external controls and "standard of care" on clinical practice.

Related to the issue of negative control systems, I think we will witness a greater shift toward positive incentive systems, requiring the not-for-profit administrator to learn ways to reward employees that do not threaten the organization's 501(c)3 status with the Internal Revenue Service. Private for-profit organizations will continue to refine their bonus and incentive systems, dependent upon the reimbursement incentives in the environment. On the assumption that these issues will be addressed in Stephen White's paper on human resource development, I will not addres it further here.

Control systems (positive or negative) imply the capacity to monitor a system and detect deviations from standards or goals. Consequently, managers must be familiar with such technologies as management information systems (MIS), key performance indicators (KPI), and quality assurance procedures. Methods of pretreatment authorization and real-time utilization review are critical if mental health organizations are to be included as providers in established H M O and PPO networks. There are very few systems of treatment preauthorization and concurrent review that are applicable to both inpatient and outpatient forms of mental health treatment.

Also at the micro level are such concerns as task design or job design, and the linkage among separate individuals performing separate tasks. Some of these skills are related to the technologies involved in designing control and feedback mechanisms.

The executive of the future is likely to be responsible for more than a single service program because the trends of vertical and horizontal integration will make most organizations multifaceted and extremely complex. Therefore, another skill, one that bridges the categories of strategic planning and intraorganizational design, is that of portfolio analysis, a form of planning that looks at the multiple "business units" or product/service lines within a diversified organization, and attempts to classify them simultaneously along such dimensions as projected future demand, current and future market share, internal expertise to produce and manage, profit margins, cash flow, and return on investment.


Such analyses are undertaken to guide the long-range growth of the parent corporation by determining which product lines will be enhanced, added, trimmed, or entirely dropped (Haspeslagh, 1982; Hamermesh and White, 1981, 1984).

Particularly within human service organizations operating at the local level, the degree of product/service interdependency across separate business units be- comes a critical concern. For example, when Northside C M H C (Tampa, Florida) used portfolio analysis to consider the future viability of its 23 different service programs, we had to take into account the degree to which one or two programs, though not viable on their own, were vital to the success of the others. Hospi- tals are quickly discovering that the new payment mechanisms provide incentives to control the services that either precede or follow their traditional core technology of hospital beds (i. e., vertical integration of ambulatory diagnostics and treatment, nursing homes, etc.). Many health care corporations will estab- lish such "loss leaders" as free or discounted health assessment programs, or employee assistance programs, simply as "feeders" into their other profitable service lines.

Related to the perspective of the organization as a multifaceted system facing multiple specialized subenvironments, is the clear trend for health and mental health corporations to reorganize themselves as two or more subsidiary corporations reporting to a "holding corporation" (Gerber, 1983; Hoch, 1984). This "corporate reconfiguration" allows the separate subsidiaries, some of which may be not-for-profit while others are for-profit, to pursue unique goals and markets, taking advantage of particular tax laws or isolating certain risks and/or regulatory constraints within separate subsidiaries. Many C M H C ' s are using this approach to increase services and revenues beyond the constraints imposed by governmental priorities, "last dollar funding" mechanisms, and other disin- centives to take risks and accumulate reserves in the interest of organizational stability and growth.

While the extensive pattern of vertical integration we witnessed in such industries as petroleum and communications may not be allowed in health care on a national level, it is already clearly evident at the local level. One of the few advantages currently held by community mental health centers in their competition with private psychiatric chains, is their existing networks and continuums of care, ranging from acute inpatient services through day treatment, outpatient, and in-home care. Unfortunately, most of the advantage is lost because these systems are heavily used by indigent patients and the centers lack the capital to build parallel private continuums. Once payors are more willing to reim- burse for these alternatives, probably through capitation mechanisms, we will witness a major emphasis on vertically integrated service models within the private psychiatric sector. Again, there is a rich literature in the business community on the pros and cons of alternative methods and models of vertical integration (Mintzberg, 1979).


Table 2 Environmental Condit ions That Inhibit or Facilitate

Interorganizational Relationships

E n v i r o n m e n t a l

C o n d i t i o n s

Effect on Interorganz~ational Relationships

I n h i b i t o r y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fac i l i t a t i ve

1. R e s o u r c e A m o u n t A b u n d a n c e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sca rc i ty

2. R e s o u r c e L o c a t i o n R a n d o m i z e d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . O r g a n i z e d

3. R a t e o f C h a n g e P lac id . . . . . . . . . . . . . . . . . . . . . . . . . . . . T u r b u l e n t . . . . . . . . . . . . . . . . . . . . . . . I n t e r m e d i a t e

4. C o m p l e x i t y Low . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H i g h . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I n t e r m e d i a t e

5. P r e d i c t a b i h y H i g h . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L o w . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I n t e r m e d i a t e

Already major corporations are conceptualizing their multiple hospitals and ambulatory health care facilities as parts of larger geographical "networks." In this model, many decentralized ambulatory services help to refer patients to a small, local general hospital. Several such local hospitals serve as controlled refer- ral sources to a regional "flagship" hospital, having a number of specialty diag: nostic and treatment services, too expensive to duplicate in every local facility.

Another step in vertical integration is achieved when private corporations form "joint ventures" with medical schools and other professional training programs to assure a steady stream of professional personnel for their other facilities. This variation naturally leads us into the next major skill/technology domain.

Interorganizational Skills

Since the mid-1970s there has been a growing appreciation for the influence of interorganizational relationships on the effectiveness and efficiency of mental health services. The diffuse boundaries affecting the diagnosis and treatment of mental disorders required the administrator to initiate and maintain relationships among multiple organizations. Space limitations do not allow for a comprehensive review of this domain, but its complexity is suggested by my own review of the empirical and theoretical literature on the subject of health and mental health linkages (Broskowski, 1980, 1981a, 1982b). I found over 32 variables that can influence the development and maintenance of interagency relations. These are summarized in Tables 2, 3, and 4.

While not all variables were equally important, the Simple enumeration does not even hint at the multiple ways they may interact with one another. I think you will agree it is a potentially complex set of considerations.


Table 3 Intraorganizational Conditions That Inhibit or Facilitate


I n t r a o r g a n i z a t i o n a l

C o n d i t i o n s

Effect on Interorganizational Relationships

I n h i b i t o r y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F a c i l i t a t i v e

1. R e s o u r c e A m o u n t

2. R e s o u r c e C o n t r o l

3. L e a d e r s h i p S ty le

4. C o r e T e c h n o l o g y

5. I n t e r n a l C o o r d i n a t i o n

6. I n f o r m a t i o n H a n d l i n g

C a p a b i l i t y

A b u n d a n c e . . . . . . . . . . . . . . . . . . . S c a r c e . . . . . . . . . . . . . . . . . . . . . . . . . . I n t e r m e d i a t e

H i g h . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L o w

I n s u l a r / O r t h o d o x . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I n n o v a t i v e

I n t e n s i v e . . . . . . . . . . . . . . . . . . . . . . M e d i c a t e d . . . . . . . . . . . . . . . . . . . . L i n k e d

W e a k . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S t r o n g

P r i m a t i v e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A d v a n c e d

Now the latest developments in health care delivery are hinged on the successful establishment of service networks, populated by independent organizations, group and solo providers. Such networks are generally described as "preferred provider arrangements." Open-panel HMO's and independent practice associations (IPA's) are similar creatures to the extent that they forge more or less formal alliances among otherwise independent entities. Recently we have seen examples of networks of private mental health practitioners become organized, in some cases in concert with a mental health service corporation, to market themselves to insurers and employers as a preferred provider system.

In addition to PPO's and other network models, we now routinely hear about joint ventures between two, and sometimes as many as four or five, separate entities (Valentine, 1985). Many of these ventures are organized to complement each party's deficiency or handicap with the relative strengths and advantages of the other. One party may have tax advantages by virtue of its corporate auspices, while the other has access to equity financing for capital construction. Some large joint ventures between hospital chains and insurance companies have as their goal the mutual assurance of each organization's market share. Joint ventures between hospitals and groups of doctors are not uncommon in health care and may soon be seen in the mental health sector. In some cases the joint venture is a planned, or unplanned, prelude to a total merger.

Administrators must combine multiple skills in the negotiation and development of H M O and PPO contracts, and joint ventures. In addition to understanding the financial risks and benefits, the administrator must be knowledgeable


Table 4 Intraorganizational Conditions That Inhibit or Facilitate


I n t r a o r g a n i z a t i o n a l

C o n d i t i o n s

Effect on Interorganizational Relationshzps

I n h i b i t o r y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F a c i l i t a t i v e

A . C o m p a r a t i v e D i m e n s i o n s

1. E n t i t i e s I n v o l v e d

2. I n t e r d e p e n d e n c y

3. P r i o r E x p e r i e n c e

4. G o a l s / D o m a i n s

5. A u s p i c e s / S p o n s o r

6. S a n c t i o n s

7. P h i l o s o p h y / V a l u e s

8. C o m p l e x i t y

a. S ize

b. S t r u c t u r e

c. T e c h n o l o g i e s

B. R e l a t i o n a l D i m e n s i o n s

9. P l a n n i n g / N e g o t i a t i o n s

10. I m p l e m e n t a t i o n

11. C o m m i t m e n t / F o r m a l i t y

C . E x c h a n g e D i m e n s i o n s

t2 . B e n e f i t s E x c h a n g e d

t3 . U n i t s E x c h a n g e d

t4 . L e v e l s o f E x c h a n g e

15. I n f o r m a t i o n

16. R a t e o f E x c h a n g e

17. D i s t a n c e

M a n y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F e w

N o n e . . . . . . . . . . . . . . . . . . . . . U n i l a t e r a l . . . . . . . . . . . . . . . R e c i p r o c a l

N e g a t i v e . . . . . . . . . . . . . . . . N o n e . . . . . . . . . . . . . . . . . . . . . P o s i t i v e

C o m p e t i t i v e . . . . . . . . . . . . I d e n t i c a l . . . . . . . . . . . . . . . . . C o m p l e m e n t a r y

A n t a g o n i s t i c . . . . . . . . . . . . N e u t r a l . . . . . . . . . . . . . . . . . . S u p p o r t i v e

N o n e . . . . . . . . . . . . . . . . . . . . . R e q u i r e d . . . . . . . . . . . . . . . . V o l u n t a r y

C o n f l i c t u a l . . . . . . . . . . . . . . S i m i l a r . . . . . . . . . . . . . . . . . . I d e n t i c a l

D i s s i m i l a r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S i m i l a r




U n i l a t e r a l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

S u d d e n / S p o r a d i c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

U n m a n a g e d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

R e c i p r o c a l

G r a d u a l

M a n a g e d

U n e q u a l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E q u a l

H e t e r o g e n e o u s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S t a n d a r d i z e d

F e w . . . . . . . . . . . . . . . . . . . . . . M a n y . . . . . . . . . . . . . . . . . . . .

L i t t l e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

S e l d o m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

G r e a t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I n t e r m e d i a t e

M u t u a l F e e d b a c k

F r e q u e n t

S m a l l


about such issues as tax and labor law implications, contract rights, patients rights (e.g., confidentiality), arbitration, actuarial utilization rates, and limitations to organizational discretion in marketing and other services, to name just a f e w .

The values of cooperative and coordinated organizational behavior can also be seen in the establishment of associations of similar organizations, such as the Voluntary Hospital Association, and the Mental Health Corporation of America. These systems have been established tor many benefits, ranging from giving their members greater "clout" in such straightforward tasks as "purchas- ing," to advantages in "marketing" their services to large, geographically distributed corporations seeking to find a common distribution channel for their employees' health care. Such associations are now assisting their members by creating offshore insurance companies, or "pooled financing" packages for capital acquisitions. While not technologies in the strict sense of the word, these methods can have a significant positive benefit for the organizations involved.

Generally speaking, as the environments relevant to health care become in- creasingly "organized," such as employer health care coalitions, it can be predicted that health care organizations will "organize" themselves to match their "task environments." The future administrator must understand these phenomena and know how to assess whether it is in the organization's best interest to cooperate or compete with such endeavors. One of the more fascinating phenomena to observe is the effort at such cooperative behaviors among organizations that also ordinarily compete with one another in other areas. (This pattern may suggest "gaming" as a useful skill for the future.)

Finally, computer bulletin boards, information utilities, and new methods of voice and written communication will help to support even greater degrees of geographical decentralization and interorganizational network building. Many of us may find we can work at home or out of our cars without the need for an office. There are several large firms that currently employ thousands of individuals without the need for a central corporate office. Employee morale needs are handled through special events and team activities.

Financial management skills

I am reluctant to give this category separate status as a generic technology/skill domain because one could argue that financial systems are simply ways of ex- pressing other functions in terms of currency (e.g., a "budget" is only a program plan expressed in dollar terms.) On the other hand, money seems to be what truly makes the world go around, and even if it is only a way of express- ing other values and functions in terms of a common denominator, dollars, the future mental health administrator will certainly need to be much more con- versant with this international language.

Of course, the financial skills that have been stressed in the past will be no less important in the future, and perhaps more so. Cost-finding, cost-accounting,


and rate-setting are critical functions, especially in an era when you will be asked to provide discounted services in exchange for guaranteed volume and rapid payment (the typical PPO incentive). For example, to negotiate a PPO discount implies one knows what the real costs are, the amount of costs that are fixed or variable, the percentage of your revenue stream affected by the agreement (volume), and the marginal contribution of that revenue stream to the organization's overall profit. Against the discount, one must know how to put a value on rapid payment and positive cash flow. (Parenthetically, decisions to enter into a PPO or capitation payment system must take into account a myriad of other considerations about how such arrangements will affect existing service practices - another illustration of the importance of being a "systems-thinker.")

New reimbursement mechanisms will also dictate some new definitions of a "unit of service." Capitation payments will highlight the critical importance of such variables as the individual subscriber/user, and the "mix" of actual and potential pathologies among the capitated population. Even in the publicly funded sectors I expect to see cases of capitation funding and preferred provider agree- ments applied to such populations as the long-term severely disturbed adult, and the severely disturbed child/adolescent. If State and local governments are willing to help the nonprofit sector build the appropriate facilities through grants, or guaranteed bond issues, I expect we will see some major innovations in the methods of reimbursing such long-term care programs.

A vital "technology" that has not been stressed in mental health, but should be, is that of capital financing for equipment and facilities (Ashworth, 1985). Remember ing what was said earlier about the importance of marketing, (product, place, price, and promotion), the success of a venture may hinge on the ability to secure the right land, build the right facility, and use the right equipment.

There are numerous ways to raise capital, including joint ventures with capital- rich partners or investors, venture capital, equity financing, pooled bond financing, and philanthropy. Unfortunately, many mental health centers are handi- capped in very competitive environments by their lack of capital reserves (caused by federal and state "last-dollar" financing systems), and their lack of knowledge/skill in the alternative ways of raising capital. The problem may also become more serious for administrators of government entities as legislators become more reluctant to build expensive facilities. While the for-profit sector has made good use of equity and debt financing, the past benefits of tax-exmpt bond issues and tax supported construction are being rapidly eroded by government tax and financing policies. I expect more nonprofits will seek joint ventures with proprietary chains to blend the advantages of an installed, locally and vertically- integrated service network with the capital resources of the large firm. When this step takes place, however, government should expect to see an erosion of the historical commitment of such centers to the high risk and financially poor patient populations.


Related financial technologies and skills include the development of business plans, blending marketing research with complex "pro formas" indicating sources of revenues and expenses projected years into the future. These projections can become very complex as they take into account the net present value of reserves and alternative rates of return on different investments. Simple lease versus pur- chase decisions must also be incorporated. Consequently, the use of standard financial analyses, econometric models, simulations, and operations research may be needed. Knowledge of key economic indicators used by the banking and investment communities, such as various liquidity and rate of return ratio, is also important (Cleverly and Rohleder, 1985).

Summary

I am reluctant to end this paper because I feel so much more needs to be said about the requisite values, knowledge, skills, and attitudes of future mental health leaders and managers, coupled with concerns about our uses of these "technologies" and resources. I am not pessimistic or cynical, but a little wor- ried about the typical practices in other industries to separate the "management" functions from the critical service/production functions of the enterprise, to re- move a fair share of control from those who know most about the firm's core technologies. Recently we have heard stories about American enterprises redis- covering the values of line staff and flat structures. It seems many of us are headed in just the opposite direction. I believe our organizational leaders need to be drawn from the ranks of clinically trained professionals, albeit a major respon- sibility then rests on the clinician to learn the tools of management.

Let me try to summarize, however, by stressing what I believe will be dis- tinctly different about the future and what implications that has for the management of mental health organizations and the training of future administrators.

The future will be characterized by increasing rates of change, complexity, and uncertainty. We are truly a world of corporations and exist within a global economy. To manage this set of affairs the future administrator will have to take the job responsibilities seriously, and self-consciously invest time and energies into gaining and maintaining the technical skills and technological advances of contemporary business management. To cope with the rate of change, strategic planning will be important to the organization and continued education and on the job training will be necessary for the individuals. Both personal and corporate resources must be dedicated to the task of continuous organizational renewal and personnel training and education.

The increasing intra- and interorganizational complexities and interdepen- dencies will dictate an ever-increasing application of contemporary hardware and software technologies for gathering, storing, organizing, retrieving, and syn- thesizing data, and communicating information, perhaps best summarized by the metaphor of the automated office. The human brain and its cognitive storage

1 70 Administration in Mental Health

and processing skills cannot keep pace with contemporary organizational developments. Managing information will be as important as managing people.

At the same time the manager must realize that all information, whether de- rived from formal or informal systems, is basically a simplified encoding of real world objects, events, and people. Data and their derivative information should not be permanently confused with reality.

There will be increasing tensions and struggles between change, innovation, and risk-taking on one hand, and stability, accountability, and control on the other. Technologies can serve both sides of the equation. To date I believe the use of technologies for control and accountability functions has clearly outpaced their use for innovation and job enrichment. While balancing these tensions in the use of technologies, the successful leader will be both a "stay-agent" and a "change agent," continuously balancing the needs for stability and growth. Knowledge of law, finance, personnel, electronic information technologies, and organizational, small group, and individual dynamics will come into play daily.

Most importantly, we must master the widest possible range of generic technical, interpersonal, and cognitive skills necessary to absorb and manage the systemic complexities and uncertainties within and without the organization, while not losing sight of our primary service missions and the ethics which have historically guided our profession. I predict that our ethics will also change, but that should be a self-conscious process. If it happens any other way, these technological goldfields will become dangerous minefields.

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Goldfields and minefields: Changing management technologies and resources