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Journal of Organizational Behavior

J. Organiz. Behav. 27, 967–982 (2006)

Published online in Wiley InterScience

(www.interscience.wiley.com) DOI: 10.1002/job.417

*Correspondence to: A Hall, Room 476, 1841

Copyright # 2006

Leadership development in healthcare: A qualitative study

ANN SCHECK McALEARNEY*

Division of Health Services Management and Policy, School of Public Health, The Ohio State University, Columbus, Ohio, U.S.A.

Summary Challenges associated with leading a $1.7 trillion industry have created a need for strong leaders at all levels in healthcare organizations. However, despite growing support for the importance of leadership development practices across industries, little is known about leadership development in healthcare organizations. An extensive qualitative study comprised of 35 expert interviews and 55 organizational case studies included 160 in-depth, semi- structured interviews and explored this issue. Across interviews, several themes emerged around leadership development challenges that were particularly salient to healthcare organ- izations. Informants described how the relative newness of leadership development practices in a majority of healthcare organizations contributes to an overall perception of haphazard practices throughout the industry. In addition, respondents noted challenges associated with developing leaders who would be representative of the patient community served, and commented on the pressure to segregate different professional groups for leadership devel- opment. Framed by these challenges, I propose a conceptual model of commitment to leadership development in healthcare organizations as influenced by three factors—strategy, culture, and structure. These, in turn, influence program design decisions and can impact organizational effectiveness. In the context of inherently complex healthcare organizations where leaders must respond to multiple stakeholders and meet performance goals across multiple dimensions of effectiveness, addressing these reported challenges and consider- ing the importance of organizational commitment to leadership development can help ensure that programs are effectively designed, delivered, and sustained. Copyright # 2006 John Wiley & Sons, Ltd.

Introduction

A sense of crisis is building about how healthcare organizations will meet their leadership needs in the

future (Institute for the Future, 2000; Mecklenburg, 2001; Schneller, 1997). Yet few healthcare

organizations have made substantial investments in developing their leaders. Although bombarded by

constant and rapid change within the $1.7 trillion industry (Smith, Cowan, Sensenig, Catlin, & Health

Accounts Team, 2005), healthcare organizations are frequently slow to adopt best practices from other

industries. Instead, the industry struggles to respond to crucial needs including reducing unnecessary

medical errors (Kohn, Corrigan, & Donaldson, 1999), increasing investments in information

nn S. McAlearney, Division of Health Services Management and Policy, The Ohio State University, Cunz Millikin Road, Columbus, OH 43210-1229, U.S.A. E-mail: mcalearney.1@osu.edu

John Wiley & Sons, Ltd.

Received 30 January 2005 Revised 30 January 2006

Accepted 29 June 2006

968 A. S. McALEARNEY

technologies (Benchmarks, 2002), and addressing the glaring inequities and disparities in both access

to care and medical treatment (Kerr, McGlynn, Adams, Keesey, & Asch, 2004; McGlynn et al., 2003;

Smedley, Institute of Medicine, Stith, & Nelson, 2002). This article addresses the gaps in leadership

development within healthcare organizations and contextual factors that hamper closing these gaps.

Certain features of healthcare organizations are clearly unique to the industry (Ramanujam &

Rousseau, 2004). Although physicians play a central role in the delivery of healthcare services, they are

rarely employed by provider organizations, and are thus typically outside the purview of traditional

human resources practices and leadership development initiatives. In addition, the professional norms

and practice standards expected of physicians and other medical professionals create demands for

continued clinical education and development that the organization must facilitate, but that are rarely

linked to the education and development priorities of the healthcare organization itself. Further, the

multiple constituencies of healthcare organizations including patients, families, insurers, and

regulators that compete to influence healthcare have varied perspectives about care delivery and its

dynamics, and these divergent views contribute to considerable complexity around definitions of

organizational effectiveness and impact for healthcare leaders to interpret.

Challenges for leadership in the healthcare industry

Complexity in the healthcare industry undoubtedly creates special challenges for leadership and

leadership development, stemming from a combination of both environmental and organizational

factors. Environmentally, healthcare organizations are faced with a myriad of regulatory influences

largely out of their control. For example, most hospitals receive a majority of their reimbursement from

public sources, including the Federally-sponsoredMedicare program and the co-sponsored Federal and

State-funded Medicaid program. Yet these provider organizations rarely have much power or influence

over reimbursement rates, and reimbursement for both hospital and physician services may be below

the actual cost of providing care. As a result, hospitals are challenged to manage fragile budgets and

often shifting reimbursement rates, while needing to deliver high-quality care regardless of payment

source or adequacy.

Organizationally, healthcare organizations are notorious for seemingly chaotic internal

coordination. Multiple hierarchies of professionals, on both the clinical and administrative sides

of the organization, generate special challenges for directing the organization and coordination of

work in healthcare. Often noted is the cultural chasm between administrators and clinicians (e.g.,

Friedson, 1972; McAlearney, Fisher, Heiser, Robbins, & Kelleher, 2005; Shortell, 1992). Even

within clinical ranks, divisions exist associated with professional distinctions such as between

physicians and nurses, pharmacists and physicians, and so forth. Such differences create

considerable challenges for leadership as organizations struggle to manage their varied employed

and contracted worker populations.

Competing organizational priorities create constant challenges for healthcare leaders charged to

direct and appropriately utilize financial and human resources to best serve patients, communities, and

other stakeholders and constituents. The needs of multiple internal and external stakeholders often

conflict. An oft-repeated phrase is the notion of ‘‘no mission, no margin,’’ reflecting the fundamental

importance of maintaining the healthcare organization’s financial viability in order to serve the needs of

patients and the community. Though goals may be clearer in for-profit hospitals or healthcare systems

in which shareholder demands mandate a focus on financials, such settings still require professional

commitments and face ethical concerns.

Managerial and organizational learning receive relatively little attention in health care

organizations. Management mistakes in healthcare are rarely acknowledged or examined as useful

sources of organizational learning (Hofmann, 2005; Hofmann & Perry, 2005; Jones, 2005; Kovner

Copyright # 2006 John Wiley & Sons, Ltd. J. Organiz. Behav. 27, 967–982 (2006)

DOI: 10.1002/job

LEADERSHIP DEVELOPMENT IN HEALTHCARE 969

& Rundall, 2006; Russell & Greenspan, 2005). For example, the failed merger between Stanford

and UCSF Medical Center could have been predicted by a review of both general and healthcare-

specific management literature, yet several years and millions of dollars later, the two systems

separated to become independent systems once again (Russell, 2000). In healthcare settings, there

is often little attention given to how to improve management practice, increasing the likelihood that

previous mistakes will be repeated.

Conceptual Background

Healthcare leadership needs

Clinical and organizational challenges combined increase the need for strong leadership at all levels of

healthcare organizations. Considerable evidence supports the notion that leaders and their actions

affect organizational results (Fuller, Paterson, Hester, & Stringer, 1996; Lowe, Kroeck, &

Sivasubramaniam, 1996; Sashkin & Rosenbach, 2001; Smith, Carson, & Alexander, 1984). In

healthcare organizations, the impact of leaders extends to the lives and well-being of patients and their

communities. Features of healthcare delivery make these effects distinct. For example, in contrast to

other customers and consumers, the vulnerability of patients and the problem of asymmetric

information in healthcare delivery choices are frequently mentioned as contributors to patients’

position as a unique category of customers (Newhouse, 2002). The typically dual role of physicians as

both consumers of healthcare resources and controllers of organizational revenues in their ability to

direct patients and prescribe care, makes leader relationships with physicians fairly atypical in

comparison with key stakeholder relationships in other industries.

Further, researchers and authors have recently emphasized that great leadership must be

transformational, requiring leaders to be able to empower and motivate their workforce, define and

articulate a vision, build and foster trust and relationships, adhere to accepted values and standards, and

inspire their followers to accept change and meet organizational goals on multiple levels (Bass, 1985;

Bennis, 1989; Bono & Judge, 2003; Burns, 1978; Gardner, 1990; House, 1977; House & Shamir, 1993;

Kouzes & Posner, 1993, 1995). Yet a sense of how to best develop these great, transformational leaders

is far from established, especially in healthcare organizations.

Leadership development practices

Leadership development practices are defined as educational processes designed to improve the

leadership capabilities of individuals. These practices are rooted in the traditions of management training

programs designed to improve both individual managerial skills and job performance (Burke & Day,

1986), and can have important effects on both organizational climate (Moxnes & Eilertsen, 1991) and

organizational culture (Schein, 1985). Practices in leadership development are a variant of management

development practices which are defined as interventions that are intended to enhance effectiveness or

improve organizational culture by facilitating managers’ learning (Gray & Snell, 1985).

Conger and Benjamin (1999) outline four general approaches to leadership development that include

developing the individual leader, socializing company vision and values, strategic leadership

initiatives, and action learning (Conger & Benjamin, 1999). Within organizations, leadership

development practices commonly include activities such as 360-degree feedback, skill-based training,

job assignments, developmental relationships (e.g., mentoring

 

of the attachment. Additional references must be used to support the critique position. The narrated power point presentation must be no more than 10 slides in length, excluding title page, reference page and appendix. Create a slide for each heading in bold.must have title page and reference page.formal analysis and critique of the attachment. Additional references must be used to support the critique position. The narrated power point presentation must be no more than 10 slides in length, excluding title page, reference page and appendix. Create a slide for each heading in bold.must have title page and reference page.

 

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