HA580 Unit 5 Strategy Alignment Analysis Example

Paid for Visits, Asked for Outreach: An Alignment Analysis Tracing a Composite Five-Hospital System's Strategy Map Into Physician Pay, the Monthly Operating Report, Department Budgets and Decision Rights, and Finding Where the Machinery Works Against the Strategy

[Student Name]

Purdue University Global

HA580: Leading Health Care Transformation With Strategy Integration

Unit 5 Alignment Analysis

[Instructor Name]

[Date]

The system, its plans and every rating are composite and bracketed for the writer's own data; the frameworks and research cited are real.

The Strategy Map

Following Kaplan and Norton's layout adapted for a nonprofit, the mission, keeping the service area's older adults healthy at home, sits at the top, above the financial perspective (Kaplan & Norton, 2004). Five objectives sit below it, joined by cause-and-effect arrows: Financial: grow shared-risk revenue. Patients: reduce avoidable admissions. Internal process: close care gaps in primary care. Learning and growth: build care management capacity; give clinicians usable data. The arrows read upward: usable data and care management capacity let primary care close gaps, which reduces avoidable admissions, which earns shared-risk revenue.

The Four Questions

For each objective: Which behavior does pay reward? Which measure appears on the report managers receive each month? Which budget bears the cost, and which keeps the benefit? Who can say yes? Each answer rests on a document, a pay plan, a report or a budget, not an interview impression, so the ratings can be checked.

Matrix Summary

Of [20] cells: [four] aligned, [seven] neutral, [nine] opposed. Compensation opposes three objectives; the operating report opposes two; budgets oppose three; decision rights oppose one.

Findings by Machinery

Compensation. Work relative value units make up [85] percent of primary care pay; the rest is a quality bonus based on [three] measures. Outreach calls, care plan meetings and portal messages earn nothing. A national study of physician organizations in health systems found volume-based pay to be the most common base component for primary care physicians, averaging about two-thirds of compensation (Reid et al., 2022), so the system is not unusual, but its share is higher than typical. Rating: opposed to closing care gaps, reducing admissions and building care management capacity. The pay plan asks physicians to see more patients, while the strategy asks them to keep patients from needing to be seen. Monthly operating report. Managers receive admissions, patient days and margin by hospital. Admissions appear as volume to be grown. Total cost of care per member does not appear at all. Rating: opposed to reducing admissions and to growing shared-risk revenue. Department budgets. Care management costs sit in the ambulatory budget, while the shared savings return to a corporate line. Hospitals lose budgeted revenue when admissions fall. The ambulatory vice president bears the cost and sees none of the benefit; hospital presidents see the benefit as a loss. Rating: opposed to three objectives. Decision rights. Hiring care managers requires the approval of the flagship's finance officer, not the population health vice president who owns the objective. Rating: opposed to building capacity.

What Physicians Said

In [six] interviews, primary care physicians described the conflict plainly. One said that a forty-minute call with a care manager about a frail patient cost her the equivalent of two visits, and that the quality bonus was too small to notice. Another said she had stopped using the portal for complex questions because every message she answered was unpaid time after clinic. Two physicians who joined the system from a group with a capitation contract said they had worked this way before and were frustrated to be paid differently now. None opposed the strategy; all said the pay plan made it hard to follow. Their accounts confirm what the documents show and suggest the change will be welcomed if no one loses income in the transition.

An Old Problem in a New Setting

Kerr (1975) documented how often managers build reward systems that pull against the very results they say they want. Here the system hopes for prevention while rewarding volume in pay, reports and budgets.

Recommendations

Compensation: move primary care pay in two steps to [60] percent productivity, [25] percent quality and panel management and [15] percent total cost of care performance, with a guaranteed floor in the first year so no physician loses pay during the change. Operating report: add total cost of care per member per month and avoidable admissions per thousand members to the first page, and stop showing admissions as a growth target for attributed members. Budgets: credit shared savings back to the budgets that bear the cost, and hold hospitals harmless for lost admissions among attributed members for [two] years. Decision rights: give the population health vice president authority to hire within an approved budget.

Sequence

Pay first, because physician behavior drives the other objectives, and because the downside risk year begins in [24] months. Reports and budgets can change within a quarter.

Limits

Ratings are judgments; some neutral cells could be argued either way. The analysis did not examine nurse or manager incentives, which may also need change.

Conclusion

The strategy is sound, but the machinery still runs the old business. Aligning pay, reports, budgets and decision rights is the work that makes the strategy real.

References

Kaplan, R. S., & Norton, D. P. (2004). Strategy maps: Converting intangible assets into tangible outcomes. Harvard Business School Press.

Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management Journal, 18(4), 769-783. https://doi.org/10.2307/255378

Reid, R. O., Tom, A. K., Ross, R. M., Duffy, E. L., & Damberg, C. L. (2022). Physician compensation arrangements and financial performance incentives in US health systems. JAMA Health Forum, 3(1), e214634. https://doi.org/10.1001/jamahealthforum.2021.4634