Theories of Healthcare Management

In the ever-changing world of health care, top managers work hard to stay on top of the needs of their organizations. New challenges create the need for new managerial methods and approaches. Knowing that there's no one way to approach health care management, leaders turn to a number of important organizational theories common to health care organizations and hospitals in particular.

Bureaucratic Theory

• The bureaucratic theory of management is one of the oldest in use today. Organizations of all sizes and in many industries use it. Bureaucratic management involves a few people at the top making decisions and a chain of middle managers and lower-level people below them carrying out specific functions with limited authority. Orders come from the top down in a manner mimicking the military.

  Health care organizations -- especially hospitals and insurance companies -- have traditionally used bureaucratic management because it creates consistency and precision. Through specialization, each member of the organization does a limited number of things frequently and ostensibly very well. For example, nurses take care of their patients and don't consider larger organizational issues. Similarly, nurse managers oversee their nurses, but don't concern themselves with issues involving the medical staff.

Patient-Centered Management

• Both changing attitudes toward patient care and the health care business environment have led many organizations to adopt a patient-centered approach to management. Instead of developing systems that top managers consider easiest to oversee or the most cost-efficient, hospitals and health care providers organize themselves in a way that enables them to deliver the best patient care possible. The idea is that through medical and service excellence, organizations will achieve the best financial results. Often top managers promote collaboration between departments and interdisciplinary approaches to medicine not seen in the traditional bureaucratic management style.

Scientific Management

• Managers who want specific results often rely on scientific management theory to guide their operations. Scientific management designs organizational structures to achieve particular benchmarks and outcomes. Authority is typically delegated to a larger degree than in a bureaucratic system, although departments are designed and staffed with specific purposes in mind. For example, a hospital using scientific management will design the management structure, staffing and number of beds allocated to a post-anesthesia care unit to care for a specific number of patients per year. In its approach to managing staff, a scientific-management-driven facility will typically evaluate nurses based on several objective performance indicators including productivity, number of patients seen, days absent and documentation detail.

Contingency and Resource Theories

• Health care is an industry in constant flux. Besides changes in medical practice itself, insurance, Medicare and regulations change regularly. Contingency management theory says management should stay flexible and remain capable of reorganizing structurally and procedurally as needed to keep up with demands and requirements. Resource theory compliments contingency theory by positing that organizations sometimes need to manage based on available resources in their environments. That means as costs, labor, supplies and specialists on staff change, so must health care organizations. Both theories carry the idea that, rather than allow outside forces to create organizational panic, organizations can adopt management approaches rooted in change.