Managing Partnerships:
The Perspective of a Rural Hospital Cooperative

by Tim Size


Published by Health Care Management Review, Volume 18, Number 1, Winter 1993, pp. 31-41. Copyright © 1994, Aspen Publishers, Inc.


Due to the length of this article, it has been divided into Parts I and II. A link to Part II is at the bottom of this page.

Preface

While a dairy cooperative provided the bylaws, managing a cooperative of rural hospitals has been a learn as you go experience. This paper presents the management principles that have been learned over the last thirteen years. Their experience suggests that developing and managing partnerships requires behaviors different from those typically associated with the management of individual organizations.

Special thanks to Rural Wisconsin Hospital Cooperative hospitals and staff who continue after thirteen years to still teach me about cooperative leadership and to the Robert Wood Johnson and W. K. Kellogg Foundations who have made significant investments in our development.

Introduction

Cooperatives, alliances, coalitions, consortia, networks -- there are a variety of names for health care providers seeking collaborative approaches to common challenges, developing partnerships. While cooperatives of health care providers by any name are becoming more common, we still don't know much about how they are most effectively managed. This paper presents the experience of one rural hospital cooperative over the last thirteen years.

While it is unlikely that something as complex as the development of even one multi-organizational partnership can be reduced to single set of principles, the author believes that this paper is a reasonable summary of what has worked for management of this cooperative. While not the focus of this article, the author's experience with developing partnerships between the cooperative and other associations, a university and a state government leads him to believe that these principles do have a broader applicability. It is left to the reader to judge how applicable these ideas are to his or her work.

Brief Description of the Rural Wisconsin Hospital Cooperative

The purpose of the Rural Wisconsin Hospital Cooperative (RWHC) was and is to act as a catalyst for regional collaboration. Since its incorporation in 1979, it has tried to be an aggressive and creative force on behalf of rural health care. It has become nationally recognized as one of the country's earliest and more successful models for networking among rural hospitals. By actively sharing RWHC's experience and ideas, it has contributed to the implementation of similar efforts around the country. RWHC employs or contracts for the services of approximately 150 people (full and part-time) and has an annual budget of close to four million dollars, exclusive of affiliated corporations.

RWHC developed and provided the early administration of HMO OF WISCONSIN, one of the first rural based HMOs in the country, currently with over 40,000 members and operating on a consistently profitable basis. It developed and administered a Trust for indemnity health and dental insurance, which saved members over $360,000 in its first year alone and continued until recently as a dual choice option for RWHC Hospitals. With private investors and operators, the Cooperative implemented a Mobile CT and Nuclear Medicine Services to rural hospitals, reducing cost and improving access to this service for RWHC members and other area hospitals. It has established a pilot loan guarantee program for RWHC hospitals in cooperation with the Robert Wood Johnson Foundation and the Wisconsin Health and Education Facilities Authority.

RWHC staff provide some services directly in areas such as: advocacy, audiology, multi-hospital benchmarking (related to hospital specific Total Quality Improvement initiatives), grantsmanship, occupational therapy, physical therapy, physician credentialling and privileging, respiratory therapy, speech pathology and ongoing rural specific continuing education opportunities.

RWHC has negotiated special group contract arrangements for members to obtain high quality consultant services in areas such as: computer software services, legal services, personnel services, market research, patient discharge studies and consultant pathologist services. A hybrid between the two approaches of hiring staff or contracting for services is the Cooperative's regional program managed by RWHC staff to recruit and schedule physicians as independent contractors for the majority of RWHC hospital emergency rooms.

A particularly productive and popular RWHC activity has been Professional Roundtables that regularly bring together RWHC hospital staff of the same discipline for mutual sharing and problem solving, continuing education and advising the RWHC Board and staff on program and policy development. This has been recognized as one of the primary benefits of RWHC -- learning from each other. The number of these roundtable groups that are active has significantly increased and now includes 22 professional or managerial groups (i.e. lab, pharmacy, radiology, etc.).

The Cooperative began as the result of informal discussions among several hospital administrators in southern Wisconsin. The model of the dairy cooperative was chosen because it respected the autonomy of the sponsors and was a type of organization familiar to the community boards that would have to approve individual hospital participation. RWHC has been repeatedly studied as a national model for networking among rural providers, including several Federal agencies: the Federal Office of Technology Assessment, the US. General Accounting Office and the Office of the Secretary of Health and Social Service.

RWHC is governed by a Board of Directors consisting of one representative (usually the hospital administrator) from each RWHC hospital. Each RWHC hospital has one vote on the Board of Directors. While a consensus is usually sought, it is not required or always possible. The Board meets monthly, except in relatively unusual situations where the agenda is too light to justify a meeting. An Executive Committee is empowered to act on behalf of the Board between regular meetings and performs the functions of planning and personnel committees. A Finance Committee is responsible for setting and evaluating financial goals and performance. Ad-hoc Committees are created as needed for specific time-limited functions. RWHC is now connected to the HMO of Wisconsin through an interlocking Board of Directors and informal staff liaisons.

RWHC hospitals have two distinct roles in decision-making related to Cooperative activities. As a Director of RWHC, decisions are (usually) made from the perspective of what is best for the Cooperative. As a hospital administrator, decisions about participation in a RWHC program are made from the hospital's individual perspective that includes the judgment of the hospital board, medical staff and other local parties. Services provided to RWHC hospitals are based on written contracts between each participating hospital and RWHC. Apart from limitations within some of these contracts, RWHC hospitals are not required to buy services solely through RWHC.

A Framework for Describing the RWHC Management Experience

This paper makes the following assumptions:


The question of why consortia form was addressed by Howard Zuckerman and Thomas D'Aunno in a 1990 article on hospital alliances. (Zuckerman, H. S. and D'Aunno, T.A. 1990.) "Organizations often cannot generate internally all of the necessary resources or functions, therefore, they enter into exchange relationships with other elements in the environment." But providers can choose among a number of alternatives, why networking? Zuckerman and D'Aunno believe that the ability to maintain local autonomy while increasing their power as part of a group is a major attraction of consortia. While some work has been begun on developing a taxonomy for multi-hospital arrangements and collecting descriptive data about existing consortia, more work is needed in both these areas. Beyond that, those of us who work trying to develop and administer consortia are just beginning to learn what approaches are most effective.

James M. Carman, Director of the Graduate Program in Health Services Management at the University of California, Berkeley has written a yet to be published paper on strategic alliances among rural hospitals and other providers that in part begins to address the issue of alliance management and governance. It is hoped that more of academe will begin to investigate and describe the administrative and leadership principles that are most consistent with the successful development of consortia.

Riane Eisler in THE CHALICE & THE BLADE, Our History, Our Future describes two basic models used throughout history for organizing human relationships: a dominator model emphasizing the vertical ranking of individuals and organizations and a partnership model emphasizing horizontal linkages. (Eisler, R. 1988.) While both are ancient alternatives, the current development of practical partnership models in health care is still seen as innovative.

Cooperatives are abstractions, paper entities that are made up of other abstract corporate entities that are lifeless without the work of many people. The productivity of both local organizations and cooperatives are in large measure dependent upon meeting the needs of these individuals. Models of collaborative intra organizational relationships are a good source of models for inter organizational relationships as in both cases the outcome depends on the effective motivation of individuals.

Max DePree, chairman of Herman Miller, Inc. and author of Leadership is an Art offers a model for employer to employee relationships based on his experience that productivity is maximized by designing work to meet basic employee needs. (DePree, M. 1989.) His vision of the art of corporate leadership is bringing employees into the heart and soul of the organization. DePree's experience is primarily within the world of the Fortune 500, but he provides a useful framework for non-profit and public sectors. He describes eight fundamental interdependent conditions that workers need to have met within a company if the company is to be effective. They are used here to organize the principles found or "invented" over the author's thirteen year experience managing a rural hospital network.

Even though DePree is acknowledged as a strong and successful businessman, a cynical "real-worlder" may dismiss him as a "dreamer," notwithstanding his business success. Robert Greenleaf in Servant Leadership presents a pragmatic suggestion that may be helpful in thinking through the tension that DePree's principles can inspire. (Greenleaf, R. K. 1977.) "For optimal performance, a large institution needs administration for order and consistency, and leadership so as to mitigate the effects of administration on initiative and creativity and to build team effort to give these qualities extraordinary encouragement." Rosabeth Moss Kanter in When Giants Learn To Dance offers a similar vision of the future for corporate America. (Kanter, R. M. 1990.) "The years ahead will be best of all for those who learn to balance dreams and discipline. The future will belong to those who embrace the potential of wider opportunities but recognize the realities of more constrained resources -- and find new solutions that permit doing more with less."

Principle #1: There is Mutual Trust

Develop a relationship based primarily on mutual trust so that the cooperative is not limited to the minimum performance inherent in written agreements.

While responding to a rapidly changing market in 1984, the implementation in six months, "from scratch", of a rural based HMO in Wisconsin was only possible due to the prior existence of a basic level of trust among the key actors. RWHC has been able to recruit and retain top talent in a relatively small non-profit organization in large part by making the development of mutual trust a key part of its corporate culture. RWHC board/staff discussions are occasionally quite vigorous but staff has a reputation that they can be trusted to implement the board's final decision.

RWHC's Emergency Room Physician staffing program has worked well for a number of reasons that relate directly to the cooperative's commitment to developing mutual trust. The development of a network of physicians willing to work in this program and the development of an efficient central credentialling process are key components of the success of this program. Physicians, even resident physicians, know that they will be well treated by RWHC staff whether it be negotiating last minute schedule changes or recognizing birthdays. Hospitals have had faith in the ability of staff to develop a good system, cooperating with the need for more uniform credentialling forms and processes.

Contracts defines minimum performance and penalties for failure, they are limited by yesterday's knowledge and vision. In contrast, mutual trust assumes the potential of limitless performance and visions not yet fully formed. These relationships fill deep needs, enable work to have meaning and to be fulfilling. True mutual trust, however, is risky because it requires individuals to depend on others, to be vulnerable to their performance.

Rosabeth Moss Kanter characterizes "in-house" competition as usually counter-productive: "the minute people need anything at all from the efforts of others or share a future fate, cooperation has all the advantages." (Kanter, R. M. 1990.) However, she is quick to add that while cooperation inside a group is the path to greater productivity, competition leads to higher performance when it is among unrelated organizations. The understanding of who shares a common future or dependency clearly becomes a critical issue when trying to develop cooperative relationships.

Participants within a successful cooperative, sharing a common future, can develop a higher than "average" trust for each other, because a tradition of successfully working together has developed. Even in an era of uncertainty, participants trust that they can continue to be successful, together again overcoming barriers in a way that is mutually advantageous, accomplishing more together than they can separately. When it can be developed, mutual trust provides a security well beyond contracts and the limitations of numerous but necessarily finite contractual provisions.

Trust among multiple health care providers and other organizations is absolutely necessary to the timely implementation of significant new RWHC ventures. It is a fragile element between organizations, constantly in need of regeneration as key individuals and circumstances change. Initiatives that require the cooperation of many actors, whether individual or corporate, bog down if they require proof and underwriting every step along the way. Development of systems of any complexity requires collaboration, and collaboration requires trust.

Beyond legal contracts, there is a need to develop relationships based on a reasonable degree of trust that cooperative participants can do what is "right" if afforded the opportunity to do so. Relationships among multiple organizations are certainly equivalent in complexity to that found within any family, while many families rely on prior agreements regarding individual responsibilities and dispute resolution, this is not what makes a family "work." It is the commitment to each other and shared goals that transcends rules held by a magnet to the refrigerator door.

Cooperative Behaviors to Encourage

Behaviors to Discourage

 

Principle #2: Commitment Makes Sense

Participants may join a cooperative to explore its potential, they remain only if they perceive that they are receiving a good return on their investment of time and money.

RWHC started with a shared service mission to which advocacy was quickly added. The Cooperative offers a broad array of shared services from which hospitals pick and choose according to their individual needs, on the other hand, support for the Cooperative's rural advocacy role is relatively more consistent. Commitments have been made and continued to be made to the Cooperative because they have been structured in a way that attempts to maximize the "fit" for each individual participant.

As health care reform gains momentum, the Cooperative as a whole has been forming partnerships with other organizations and networks. A notable example is the development of an alternative regulatory model for its member hospitals. Through prior political initiatives, a consensus had developed in Wisconsin that an alternative provider type called Rural Medical Centers should be available for diversified rural hospitals. However such reform demands significant State staff time to implement and a State budget deficit had become an implementation barrier. In response, the state hospital association and RWHC developed an alternative funding strategy. A consortium application was developed for a Federal Rural Transition Grant with two-thirds of the grant allocated for hospital specific diversification projects and one-third allocated as a sub-contract to the State in order to help finance the necessary rule redrafting. The state hospital association and RWHC receive no money from the grant but receive assistance with one of their major policy initiatives. Each member of the consortium became committed to the collaboration because attention was paid to constructing a win-win scenario for each participant.

While its not a new idea that most people want to do well, want to make a contribution, the recognition is less common that organizations can or should promote an environment where these commitments are willingly made. A fundamental choice for every cooperative is whether to try to build a network on subtle (or not so subtle) coercion or with participants given the opportunity to discover and develop their individual commitment. As our country's systems have become more complex, decisions are seen as more impersonal and less rational. Individuals and even individual communities have become in too many cases too small a portion of the larger picture for that larger picture to be seen by them as a coherent whole. Most people don't work for an abstraction, but for themselves and other people, the benefit must be made concrete.

Networks of rural hospitals that are on a scale that can be identified, known and "touched" allow for individual participants to understand how their commitment can make sense. In an analogous manner, cities once made sense to their inhabitants when they were networks of neighborhoods or communities, cities don't make sense and consequently don't work when they try or pretend to be a single community. It is the rare large, well financed health care system that can match the supportive cooperative environment potentially available in the more modest scale of local cooperative with strong leadership.

Cooperative Behaviors to Encourage

Behaviors to Discourage

 

Principle #3: Participants Needed

Each organization must know that it is needed for the success of the cooperative.

RWHC has benefited from a good deal of recognition within the "industry" but has tended to take a low profile with respect to local public relations. When RWHC staff or Emergency Room physicians work at a rural hospital they are providing patient services on behalf of the hospital, not on behalf of the Cooperative, the success of RWHC is ultimately determined by the success of the participating hospitals. Staff intends to present every new program and each annual budget with the same energy and focus as if it was the first potential sale to a new client. It is considered by staff as a major mistake to ever take for granted the participation or commitment of any hospital. The RWHC communication budget is amble testimony to the RWHC belief in the importance of early and frequent communication and consultation. RWHC hospitals are involved in all stages of grantsmanship by staff beginning with idea generation and throughout the application and project implementation process.

Much of the need for hospital participation is obvious and reflects the ongoing challenge to have group participation large enough to justify joint action. RWHC is developing a Wisconsin franchise for the Iowa based Patient Care Expert System (a computer-based resource for clinical nursing information and individualized planning of care). By individual hospitals making the effort to move forward together, multiple benefits are obtained: a group discount, local training sites, focused input into subsequent software modifications and franchise revenue from sales to non-RWHC hospitals. Even more to the point, this major innovation is not currently available to individual rural hospitals. This type of scenario is not unusual and regularly makes clear why each hospital's participation is necessary for the good of the whole.

RWHC hospitals need to know that their work and the work of their organization is critical to the success of the Cooperative, the cooperative must develop a culture that continually communicates that the maximum potential contribution from every participant is critical to the organization's success. RWHC hospitals and related organizations must know they are needed by the network as a whole. This contrasts sharply with the mixed messages frequently heard by RWHC communities, many of which have significant economic and social challenges. These mixed messages - we are here to help but you need to do it our way, can leave them and their organizations feeling confused and belittled. For example, some regional medical centers talk about not working to "takeover" rural health care, while proceeding to aggressively expand their market share at the expense of local access and services.

For health care providers in a network to be effective they must be given an unambiguous message that they are needed even while they are being asked to undertake significant change. All health care providers are a meaningful part of the nation's health care agenda and are a valuable resource, both individually and collectively, for the innovation of more cost effective and accessible health care. They need to know it.

Cooperative Behaviors to Encourage

Behaviors to Discourage


"Managing Partnerships: The Perspective of a Rural Hospital Cooperative" - Part II



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