What was the influence tactic that Carl used to convince thePrairie Health Services Board of Directors to approve the softwarepurchase? Plus Discuss the ethics of Carl’s professionalbehavior.
It had been a long week and it was only Tuesday. At 2:30 p.m. ona Tuesday afternoon in Prairie City, a small town located in arural area in the upper Midwest, all indications were that this wasgoing to be a difficult week. Ann Smith, the new clinicadministrator for Prairie Health Services, had just finished takingher third call from a frustrated patient and each of the calls wasrelated to Prairie Health Services’ multiple billings. What thepatients did not understand was that Prairie Health Services hadfour divisions: hospital, clinics, nursing home and nursingservice. Although they were housed together, each divisionfunctioned independently and had separate billing processes.
Over the years, Prairie Health Services had grown from a smallcounty-owned hospital to an organization that provided a broadrange of services, operating a community clinic and a satelliteclinic, a nursing home, and a home healthcare agency in addition tothe hospital. It was that growth and the comprehensive range ofservices that had first attracted Ann to the position of clinicadministrator.
When Ann accepted her position two months ago, the CEO andchairman of the board had charged her with reducing clinic losses.As a result, when she was not fielding calls from frustratedpatients, she spent much of her time working on reducing the timefrom providing service to receiving payment for service,reducingbad debt and increasing cash flow. She was also beginning torealize that the multiple billing issue was just one aspect of theproblems faced by Prairie Health Services and one of many reasonsthat monthly financial reports continued to show losses.
Ann decided to raise the issue of multiple billing the followingday at the monthly administrators’ meeting.At that meeting, shelearned that the other division administrators (Nick Hamm, nursinghome administrator; Bonnie Little, nursing services director; andCarl Nord, CEO and hospital administrator) had also been receivingpatient complaints about multiple bills. During the course of theirdiscussion, Ann learned that Nick, Bonnie, and Carl were alsoextremely concerned about the continued viability of their PrairieCounty-owned healthcare facility, which had been bleedingfinancially for some time.
The division administrators and their staff knew that theinformation technology environment at Prairie Health Servicesprovided basic system functionality at best, and was outdated atworst. The software packages used by each of the four divisionswere entirely separate from the software used by other divisions,and any data transfer from one system to another had to beaccomplished manually. Each division was required to enter all thepatient demographic and insurance information. This was not onlyinefficient; it resulted in duplication of effort and in creasedthe likelihood of inaccurate information due to clerical error. Itwas also inconvenient for those patients who were seen on the sameday by two or more divisions. They were required to repeat theirdemographic and insurance information two, three, or even fourtimes in a single day. Ultimately, lack of integrated technologywas one of the primary reasons that Prairie Health Services wasincurring large losses.
Ann, Nick, and Bonnie wanted to integrate and update theirinformation technology with a software package that had thecapability to link all four divisions in order to increaseefficiency and timeliness, and ultimately to reduce financiallosses. Carl agreed to present the administrators’ concerns to theboard of directors and propose a capital expenditure for a newsoftware system. The board of directors was supportive of thiscapital investment because board members had also receivedcomplaints from patients regarding the multiple bills.
EGOS AND COUNTY POLITICS COLLIDE
The political nature of the organization’s governance added yetanother layer of complexity for administrators. The board ofdirectors of Prairie Health Services was comprised of the fiveelected Prairie County commissioners and two board-appointedcommunity members — most of them small farmers or small businessmenwhose families had lived in the county for generations. Theirintentions were good, butt hey had little formal businessbackground and were ill equipped to oversee what had become acomplex,comprehensive healthcare system. Although Carl was the CEO,he was not originally from Prairie County,and members of the boardoften bypassed him to speak with Nick or Bonnie,who had both grownup in local communities.
It had not taken Ann long to see that the relationship betweenCarl and the division administrators was strained. The fact thatboard members sidestepped Carl in their efforts to understand thefinancial issues of their healthcare system left Carl feeling angryand in secure. He perceived this as a subversion of the chain ofcommand and forbade Nick, Bonnie and now Ann from talking withboard members unless he was present. In fact, while Nick, Bonnieand Ann were expected to attend all board meetings, they kept theiropinions to themselves, allowing Carl to speak about anythingrelated to Prairie Health Services. In spite of his insecurity,Carl was politically astute and skilled at verbal manipulation.This meant that his presentations to the board were not alwaysentirely forthright. It also meant that Ann, Nick and Bonnie facedethical challenges. By keeping silent, they gave tacit approval toCarl’s questionable behavior, but they were too intimidated by himto speak out.
CARL’S POWERS OF PERSUASION
The process of searching for potential software vendors wascomplex, and despite the fact that he was the CEO and hospitaladministrator, Carl declined to participate in the process. Hisexplanation was that he did not understand information technology.Instead, he asked that Ann, Nick and Bonnie gather all thenecessary preliminary data and make recommendations to him. Afterseveral months of research, the administrative team determined thatfive software companies had products with the capabilities tointegrate the four Prairie Health Services divisions.Representatives of these software companies each came to PrairieCity for two days to demonstrate their software to theadministrators and support staff. Carl was absent from thedemonstrations, but met privately with representatives from each ofthe firms. Most of these meetings were held in his office todiscuss the costs and implementation process associated withpurchasing particular software pack ages. However, therepresentatives for Southern Healthcare Software also entertainedCarl at private dinner meetings at a local upscale dinner club.
Following the interviews and demonstrations, Ann, Nick andBonnie determined that two vendors (Pine and Prairie Software,headquartered in the same state as Prairie County, and SouthernHealthcare Software, headquartered in a Gulf Coast state) hadappropriate integrated software packages that were also in linewith what the organization could afford to pay. While neitherpackage met all the specifications of Prairie Health Services, Pineand Prairie Software, with a price of $550,000, was moreuser-friendly, more closely matched Prairie Health Services’ needs,and was Windows-based. Southern Healthcare Software was judged tobe more cumbersome and less flexible, seemed to be somewhatoutdated as well as a step down from current software, and was notWindows-based. However, Southern Healthcare Software claimed tohave the ability to integrate all four divisions, although itappeared to be best suited for hospital use. The cost of SouthernHealthcare Software was $750,000.
Ann, Nick and Bonnie spent approximately two months evaluatingboth software proposals. They talked with administrators of otherhealthcare organizations that used either Pine and Prairie Softwareor Southern Healthcare Software and determined that their clearpreference was for the adoption of the Pine and Prairie Softwareproduct and implementing a gradual integration of the divisions toensure a successful transition from four unique software systems toone.
At the same time, representatives of Southern Health careSoftware returned to Prairie City several times and had furtherprivate dinner meetings with Carl. Based on these meetings, hedetermined that Prairie Health Services should adopt SouthernHealthcare Software. He was in favor of an immediate integration ofall four record-keeping systems, despite the fact that, admittedly,he did not understand information technology, the challenges thatan immediate integration could present, nor the resources requiredto accomplish the task successfully.
Once Carl’s relationship with Southern Healthcare’s salespeoplebecame known to his administrative staff, it was obvious that hewas going to recommend purchasing Southern Healthcare’s softwareregardless of what his administrative staff’s recommendations were,even though the administrative staff had actual expertise. Despitethe expressed preferences of the majority of administrators andstaff of Prairie Health Services, Carl recommended SouthernHealthcare Software to the board of directors. He also made itclear that he expected the unqualified support of the PrairieHealth Services administrators.
Carl knew that he had to play his hand carefully in order toensure that the board would adopt his software preference withoutquestion. In his presentation, he highlighted the fact that some ofthe software packages reviewed had cost well more than $1,000,000.He did not, however, indicate that the Pine and Prairie Softwarebid came out at $200,000 less than the $750,000 Southern HealthcareSoftware bid. Further, he neglected to state that theadministrators and staff had overwhelmingly preferred the Pine andPrairie Software. On the contrary, he was adamant that the SouthernHealthcare Software was the best fit for Prairie HealthServices.
What are the challenges that you have encounter inimplementing the decision making in the case?
What are the solutions that you have taken intoconsideration of reducing the challenges?
What are the 4 decision making styles leaders can taketo make a decision? And in your opinion, what is Ann Smith’sleadership style????????
