In the dynamic healthcare industry, organizations must adapt their structures to sustain growth and meet market demands. Healthways Corporation, a leading provider of specialized disease management services, underwent a significant transformation by implementing a process-based structure. This case study explores how Healthways navigated this structural change and the impact on its operations and growth.
The Context of Healthways Corporation
Healthways Corporation (HC), founded in 1981 as American Healthcorp (AMHC), initially owned and managed hospitals. By 2002, HC had shifted its focus to providing specialized disease management services to health plans and hospitals, achieving revenues of $122 million. The company's history includes notable milestones such as offering its first diabetes management service in 1984 and expanding to cardiac and respiratory disease management programs in the late 1990s .
Emergence of Structural Challenges
As HC's health plan business grew, the organization recognized that its existing structure was inadequate to support the expected growth. The shift from hospital management to disease management for health plans necessitated a more flexible and efficient organizational design. To address this, HC initiated a structural change process aimed at implementing a process-based organization structure .
The Role of the OD Practitioner
A university-based OD practitioner recommended a task force and workshops guided by a self-design philosophy. This approach was chosen to build the organization's capacity to change itself and to involve a broad range of functional areas in the redesign process. The self-design model was deemed the best approach due to HC's lack of experience in operating a large organization .
Implementing the Process-Based Structure
Three Organization Design and Development (ODD) task forces were established to guide the transformation:
Laying the Foundation: The first task force focused on acquiring knowledge about organizational design, conducting diagnostic activities, and clarifying the organization's vision and strategy. This phase highlighted the need for a clear vision and strategic intent, leading to a recommendation for a process-based structure .
Designing the Structure: The second task force detailed each of the core processes, conceptualized the corporate office organization, and created design principles. They developed roles, reporting relationships, metrics, and control mechanisms for the new structure .
Implementation: The third task force, consisting of senior management, focused on implementing the new design and developing long-term implementation templates. This phase included renaming the senior management team to the executive leadership group and appointing key process owners .
Core Processes in the New Structure
The new structure was defined by five core processes:
Understand the Market and Plan the Business: Scanning the external environment for business opportunities, trends, regulatory changes, and competitive intelligence. Generating new product ideas and driving strategic planning .
Build Value Solutions: Translating business opportunities into reproducible products, developing business cases, devising performance metrics, and creating marketing materials .
Acquire and Retain Customers: Finalizing marketing materials, identifying new customers, developing relationships, and responding to proposals .
Deliver Solutions and Add Value: Delivering on contractual commitments, managing accounts, maintaining product integrity, and building delivery capacity .
Manage the Business: Handling human resources, financial governance, IT standards, medical leadership, and corporate branding as a shared services organization supporting the value-adding processes .
Outcomes and Reflections
The process-based structure provided several benefits:
Improved Operational Efficiency: The new structure enabled better coordination of workflows and reduced redundancies, leading to increased efficiency.
Enhanced Strategic Alignment: Clarifying the vision and strategic intent helped align the organization's efforts towards common goals.
Increased Customer Focus: By organizing around core processes, HC could better meet customer needs and adapt to market changes .
Implications for Organizational Development
The case of Healthways Corporation demonstrates the importance of adopting a process-based structure to manage growth and complexity in a dynamic industry. Key lessons include the value of involving cross-functional teams, the necessity of a clear vision and strategy, and the importance of continuous learning and adaptation.
Conclusion
Process-based structures can significantly enhance organizational efficiency, strategic alignment, and customer focus. Healthways Corporation's successful transformation highlights the effectiveness of this approach in achieving sustainable growth and meeting market demands. At OrgEvo Consulting, we specialize in facilitating structural changes and providing organizational development services to help companies navigate complex transformations and achieve their strategic objectives.
Connect with OrgEvo Consulting
OrgEvo Consulting offers comprehensive services in organizational development, including structural design, change management, and strategic planning. Our customized interventions are designed to enhance operational efficiency, foster collaboration, and drive organizational success. Contact us today to learn how we can support your organization.
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