Chapter

4

Stakeholder ManagementStrategies and Styles
John D. Blair, Timothy W. Nix, G. Tyge Payne, Timothy M. Rotarius, and Carlton J. Whitehead

The healthcare environment continues to undergo fundamental and somewhat revoluIiI inary changes. Even in the absence of ~\lvcrnment-driven reform, change is occurring. The ultimate effect of this change\>, hcther mandated by the government, driven by private sector initiatives such as managed care, or produced by the demands 1)1' powerful buyer groups wanting more health care for less money-is unknown. It is certain to affect the future of the industry, however, by leading to increasingly complex organizations and networks. The leaders of these changing organizations must manage an increasingly complex wen of relationships with a growing number or active, powerful, and sometimes competin); stakeholders (i.e., any individuals. groups, or organizations that have a stake in the decisions and actions of an organization and attempt to influence those decisions and ael ions). These stakeholders exert an influcncc on every healthcare management issue, and managers must recognize and evaluate these relationships for their potential to supPl In or threaten the organization and its competitive goals.

Organized healthcare networks and systems recently have been formed as the fundamental strategy for facing the uncertain future created by health care reform. Managers, seeking to position their organizations for optimal strategic responsiveness to a still poorly understood future, have turned to linkages with other organizations that until recently had often been competitors or adversaries. Thus, hospitals, physicians, and healthcare plans created vertically integrated organizations and systerns.':' This emergence of rapidly growing organized delivery systems and networks has changed the strategic web, that complex set of interrelated relationships, within which healthcare organizations find themselves." So far, these integrated systems have shown varying degrees of success. Some continue to grow, whereas others have found it necessary to divest themselves of various pieces of the organization." However, regardless of whether the ties between organizational stakeholders are formal or informal, the relationships continue to exist. Therefore, because the nature of those relationships is constantly changing, the need for managers to engage in effective strategic
10

157

158

STAKEHOLDER MANAGEMENT-STRATEGIES

AND STYLES

management of stakeholder relationships is more crucial now than ever before. 12

STAKEHOLDER MANAGEMENT STYLES AND PERFORMANCE
Recent research indicates that organizations adopt stakeholder management styles that dominate the management of all relationships, much as organizations adopt overarching competitive strategies." These styles, which are based on management's assessment of the potential for threat vs. cooperation, will be discussed in greater detail later in the chapter. They range from ignoring stakeholders to carefully diagnosing and applying different appropriate strategies to all stakeholders. These stakeholder styles of management have varying impacts on organizational performance. Areas of the company that require frequent interaction with stakeholders in order to perform their duties can be impacted by stakeholder management style. However, stakeholder management style will have a lesser impact on those areas of

the organization that have low levels of interaction with stakeholders. Figure 4-1 indicates how organizational performance is affected by applying stakeholder management styles to different areas within the organization. Technical performance is dominated by specific skills and abilities related to the technology used by an organization. Although relationships exist in this area of the organization, performance is less reliant on these relationships and more reliant on the ability of organizational members to operate the machinery that make up the technical piece of the organization. Therefore. applying stakeholder management principles to the management of the organization's technology will have a minor effect on the organization's performance." (See Figure 4-1.) Stakeholder management styles applied to competitive performance have a larger effect than when applied to organizational technology. Competitive performance refers to the ability of an organization to achieve its goals. Relationship performance refers to the ability to directly manage relationships with

powerful stakehok Stakeholder manag. largest effect on tht directly affect such ers, and employees

THE STRATEGIC
Today's strateg ment tools must b erful if executives care organizations strategic web of he become extremely pie, Figure 4-2 d care hospital (Hos] integrated system plating a strategic , group (Group E). : sort often are form all competitive g Figure 4-2 are m that come into pia; plated strategic : would have been v relationship has n number of key rek acknowledged. ac (Note that only ke in this strategic relationships. ) Figure 4-2 shov that need to be exa gic alliance bet Cardiology Group there is an array of hospital and the changed or called formalization of j alliance. The opposite ca of a physician grc ship from a tightly ization to a relat economies. This c

lYPes of organizational per10rmance

Impact of stakeholder management styles on specific type of organizational performance High

Relationship per10rmance Stakeholder management styles

1------+1

Competitive performance

Technical per10rrnance

Low

Figure 4-1 How Stakeholder Management Styles lmpact Multiple Types of Organizational
Performance

The Strategic Web

159

.. powerful stakeholder management groups. Stakeholder management styles will have the , largest effect on these types of activities that direCtly affect such groups as suppliers, buyers, and employees.

THE STRATEGIC WEB
Today's strategic stakeholder management tools must be sophisticated and powerful if executives are to lead their healthcare organizations effectively, because the strategic web of healthcare relationships can become extremely complicated. For example, Figure 4-2 depicts a private, tertiary care hospital (Hospital A) that, as part of an integrated system (System A), is contemplating a strategic alliance with a cardiology group (Group E). Strategic alliances of this sort often are formed to achieve some overall competitive goal. Also identified in Figure 4-2 are myriad other relationships that come into play because of this contemplated strategic alliance. What initially would have been viewed as a simple, dyadic relationship has mushroomed into a large number of key relationships that need to be acknowledged, addressed, and managed. (Note that only key relationships are shown in this strategic web figure, not all the relationships.) Figure 4-2 shows many key relationships that need to be examined in light of a strategic alliance between Hospital A and Cardiology Group E. As can easily be seen, there is an array of relationships between the hospital and the stakeholders that can be changed or called into question through the formalization of just one specific strategic alliance. The opposite can also be true. Divestment of a physician group may move a relationship from a tightly coupled integrated organization to a relationship based on market economies. This change in how a relation-

ship is managed can be crucial to the success of the whole healthcare system. The key relationships that Hospital A has with its stakeholders represent a pattern of formal and informal interconnected stakeholder relationships. Many hospitals have formed one or more strategic alliances with physicians-both in primary care and in medical or surgical specialties. Some hospitals have even formed alliances with both physicians and healthcare plans in order to present a more fully organized healthcare system. These relationships are a reflection of organizations' attempts to meet the challenges of the everchanging environment. Unique opportunities exist to explore the consequences of creating and managing relationships among key hospital, physician, and healthcare plan stakeholders. Few organizations have a fully developed, articulated strategic approach for managing their key stakeholder relationships. In most organizations, the stakeholder management perspectives of the executives are incomplete at best, and their approaches to stakeholder relationship assessment and management are haphazard. At worst, organizations have absolutely no systematic and effective stakeholder management approach. Healthcare leaders must develop a detailed. overall approach, along with specific tools and techniques. The strategic relationship management approach to stakeholders provides a means of properly identifying all the players, their roles, and their level of stake in the network.":" In other words, it can help identify those areas in which there are likely to be significant opportunities for cooperation or risks of conflict among key network stakeholders. Healthcare executives can develop more productive relationships with the key people -employees, physicians, community leaders, hospitals, competitors, managed care

coli blessing stake non supportive the marginal st • Implement the developing spe tics and prog stakeholder co: • Identify the ~ style of the 01 ship Eagle.) Cf. • Formulate gel management 0 tionship: invc holder. that affect a specific zation-hospitals. and 0 in the management organizations.160 STAKEHOLDER MANAGEMENT-STRATEGIES AND STYLES organizations.~ . 0 J i I • f 0( I i III 0 I I ~ J ~ ~ ~ . The ~ strategic stakeholdt the following: • Identify all rek and internal sta • Diagnose each potential for t cooperation.) ~ Ff -c l ~ . • Evaluate the rr effectively rna tionships from The examples U' discuss the varied . or mar... • Ensure that the holder relations cific issue facit the emerging is~ physician integt with a specialty • Classify each as mixed bless portive. Relationship F Ostrich. ~ I I .. (.

third-party payers. • Diagnose each stakeholder in terms of potential for threat and potential for cooperation. • Classify each stakeholder relationship as mixed blessing.Identification of Organizational Stakeholders 161 organizations. Without the organization or others like it. • Identify the stakeholder management style of the organization as a Relationship Eagle. (2) those that compete with it. • Evaluate the managerial implications of effectively managing stakeholder relationships from a strategic point of view. As such. Relationship Optimist. patients. the two parties cannot. collaborate with the mixedblessing stakeholder. interface.) In turn.g. and the financial community. defend against the nonsupportive stakeholder. They fall into three categories in their relationship to the organization: (1) those that provide inputs into the organization. or even openly hostile. For example. Whereas the internal and interface stakeholders often are at least partly supportive of the hospital. and internal stakeholders. do without one another. IDENTIFICATION ORGANIZATIONAL STAKEHOLDERS Exhibit 4-1 provides a listing of the typical stakeholders for a large U. Relationship Pessimist. and (3) those that have a particular special interest in how the organization functions. and internal. divided into three distinct stakeholder groups: external. • Formulate generic strategies for the management of each stakeholder relationship: involve the supportive stakeholder. (The degree of dependence of the organization on these stakeholders depends on the number and relative attractiveness of alternative providers of similar services. hospital. nonsupportive. • Implement these generic strategies by developing specific implementation tactics and programs for each strategyl stakeholder combination. the relationship between the organization and the stakeholders that provide necessary inputs is one of mutual dependence. and monitor the marginal stakeholder." OF External Stakeholders A healthcare organization must respond to a large number and a wide variety of external stakeholders. The steps in this approach to strategic stakeholder management include the following: • Identify all relevant external. or do not want to. the emerging issue of increasing hospitalphysician integration through an alliance with a specialty physician group). however. Consequently. The relationship between the organization and the external stakeholders is a symbiotic one. The examples used throughout this chapter discuss the varied and complex relationships that affect a specific type of healthcare organization-hospitals. or Relationship Ostrich. conflict may develop between a . because the organization depends on them for its very survival. non supportive. many of the external stakeholders may be neutral. They may experience conflict in finding ways to cooperate. supportive.S. these stakeholders depend on the organization to take their outputs. and others-who hold a stake in the management decisions of healthcare organizations. • Ensure that the diagnosis for each stakeholder relationship is relevant for the specific issue facing the organization (e.. The first category includes suppliers. interface. or marginal. the stakeholders providing inputs could not survive.

Stockholdersn 5. External Stakeholders 1. 5.g. not-for-profit.. External stakeho special interest gr: those aspects of th that affect their int interest groups th.g.g. Patients • Private pay patients • Insured patients . 3. veterans' organizations for VA hospitals.Through contract with managed care organization .Pay through prospective payment . Nonmanagement Medical Staff • On staff only at this hospital • Also on staff at other hospitals • Partners in joint venture with hospital 2. related healthcare ' tors do not necessurvive. singlespecialty. Hospital Board continues .Pay at discounted rate .Group's 0 indirect' Source: Challenges in If permission of John WilL.g. for certification of hospital professionals at the national. public. investor-owned • Physician practices: solo. The competing es to attract the focal OJ These competitors n for patients (e. Interface Stakeholders I. hospital and its charged for certa: wishes to sever al other. synods or dioceses) • Local churches/synagogues • Pastors/priests/rabbis Local Community 11. 6. not-for-profit..Residents . Media • Local • National Financial Community • Including joint venture investment partners Special Interest Groups (e. multispecialty medical group • Nursing homes • Pharmacies • Home health agencies Government RegulatorylLicensing Agencies • Federal • State • Local Private Accreditation Associations (e.Through direct contract • Business coalitions • Insurance companies • Managed care organizations (as purchasers of hospital services) 9. Related Healtl.Federal . medical group.State . B. diagnostic. or instant care centers) Related Healthcare Organizations • Other hospitals in region (noncompetitors): private.Pay at full rate .. medical grot group .Local • Regional employers . government regu' 12. public. freestanding outpatient surgery.162 STAKEHOLDER MANAGEMENT-STRATEGIES AND STYLES Exhibit 4-1 Stakeholders for a Typical Large Hospital Exhibit 4-1 continue. Competitors 2.g. • Other hospitals: private. 13.Direct contract with employer . investor-owned • Physician practices (for outpatient services) • Other alternatives (e. may be competing 1. or local level) Unions • National/international • Indigent patients . ners in alliai. state.Through managed care contract . 4. owned • Physician pr. or Alcoholics Anonymous for psychiatric/substance abuse programs) Religious Organizations • Denominational organizations (e.. Joint Commission on Accreditation of Healthcare Organizations) Professional Associations (e.Through indemnity insurance .Nonresidents • Patient families 8. Although 'pitals and their con recent years. Hospital Suppliers to.g. so.Pay through capitation 14. • Local 7. not-. Third-Party Payers • Governments .. as part of an i! • Other hosp: private. Competitiveness. American Association of Retired Persons. A. Parent Compan Religious OrM' 4. I best defines the n most of the time. • Trustees wu • Advisory on 3..

and Hospitals B. surgical specialists C. private accrediting associations.• marketing. the hospital board of trustees. regional services. C. are concerned with those aspects of the organization's operations that affect their interests. investorowned • Physician practices as strategic partners in alliance: solo.g. Internal Stakeholders 1. StockholderslfaxpayerslContributors 5. Compromise. the local community. the media. Because of the nature of the special interest. taxpayers. These competitors may be direct competitors for patients (e. Competitiveness. professional associations. other hospitals). or . labor unions. and F are all representative of external stakeholders for Hospital A. Inc. permission of John Wiley & Sons. multispecialty medical group Group's own internal stakeholders as indirect stakeholders: administrative Source: Challenges in Htalth Cart Managtment. rather than cooperation. and stockholders. Copyright 1990 Jessey-Bass. D. has competition. not-for-profit. In Figure 4-2. but neither wishes to sever all relationships with the other.. Interface Stakeholders Some stakeholders function on the interface between the organization and its environment. practice management services) • Clinical functional managers • Clinical product line managers 2. best defines the nature of the relationship most of the time. The major special interest groups that relate to hospitals are government regulatory agencies. medical group. primary care physicians. single-specialty.g . so. Although cooperation between hospitals and their competitors has increased in recent years. External stakeholders in the third category.g. the corporate office of the parent company. Network B Health Plans. medical specialists. financial. related healthcare organizations). The competing external stakeholders seek to attract the focal organization's dependents. too. and various political action groups. The major categories of interface stakeholders include the medical staff. generally resolves the conflict.. staff. public. as part of an integrated delivery system) • Other hospitals in regional network: private. E. special interest groups.. conflict most often defines the nature of this relationship. LongTerm Care Facilities.g. or they may be competing for skilled personnel (e. Competitors do not necessarily need one another to survive. and in some cases overt collaboration. Related Healthcare Organizations (e. Nonmanagement Employees • Professional • Paraprofessional • Support personnel JD Blair and MD Fott1er. Management • Top managers • Physician managers/medical director • Nonclinical managers (e. Reprinted with hospital and its patients over the price charged for certain services. PrurentComprulie~cngrulization~ Religious Orders 4.Identification of Organizational Stakeholders 163 Exhibit 4-1 continued • Trustees with policy authority • Advisory only 3. organizations as part of an integrated delivery system or network.

The organization may restructure the situation (i. Unless both the organization and the stakeholder believe an agreement will be mutually beneficial and of fair value (relative to alternatives). the Hospital Board. 'The challenge facing healthcare organization executives is the creation of consistency and effectiveness in all of these individual stakeholder episodes. access (taxpayers). : Managers of lu to anticipate and actual or potenti DIAGNOSIS OF KEY STAKEHOLDER RELATIONSIDPS To manage stakeholder relationships strategically. Sv potential to thr denying it need. Stakeholder PO' any particular issi tion's managers potential for threat tion of the depend the stakeholder. often a group that does pressure on bosr impact on the ho management. internal stakeholders operate almost entirely within the generally accepted bounds of the organization and typically include management and professional and nonprofessional staff. These tend to be among the most powerful stakeholders in health care organizations. They must go beyond the traditional issues in strategic management. No longer can l1l8Dagers be concerned only with those stake. but the lack. the Hospital-Based Management Service Organization. bargaining. Instead. the rounded corners on the boxes identify internal stakeholders to their respective focal organizations. such as the likely actions of competi- . Management attempts to provide internal stakeholders with sufficient inducements to gain continual contributions from them. Medical Group A.e. 25-26 Lt ipated threat inhen a particular stake: holders is similar I scenario and prote< ant surprises. but are easily misunderstood because they are thought of as "us" or "them" when they are both. the exchange partners can be expected to attempt to obtain as high an inducement as possible while giving as Iowa contribution aa possible. and System A Affiliated Regional Hospitals. healthcare executives must learn to manage a portfolio of stakeholder relationships. When resources are scarce. It is vital that the leaders of healthcare organizations see the strategic implications of these stakeholder portfolios. Rather. Even so.. Alternatively. Internal Stakeholders Finally.27 ( ent the organizati more powerful t: the power of ph: hospital's depend. and coalition activity in order to protect both their own interests and those of the coalition (including unions or professional associations) to which they belong. and special services or benefits (contributors). healthcare managers must be involved in a continuous process of internal and external scanning.23 orgamzatlon. holders that fall within their specific functional responsibilities. individuals in the organization may engage in manipulation.164 STAKEHOLDER MANAGEMENT-STRATEGIES AND STYLES other contributors. patients. mane: cal assessments abc their potential to t and (2) their potent • • 22.. and the Administrative Staff. Stakeholders' Pott Hostility or threa in several fonnulat rooment-strategy r for example. In figure 4-2. of such things as a structured human resource system or adequate management authority can make it difficult to provide such inducements. the organization may offer professional autonomy (medical staft). these managers must be cognizant of all the other relationships that are influenced by their oneon-one specific stakeholder interactions. institutional prestige or political contacts (hospital board). Clearly. Specific examples of interface stakeholders for Hospital A in Figure 4-2 include System A Health Plans. The stakeholders determine whether the inducements are sufficient for the contributions that they are required to make.. offer a better compensation and benefit package) to induce or persuade employees to make the needed contribution. and neither. good financial returns (corporate office). The internal stakeholders to Hospital A include the Clinical Staff. and internal st to influence the org noted earlier. The organization must offer each interface stakeholder sufficient inducements to continue to make appropriate contributions. there will be no agreement. partly on the basis of alternative inducement/contribution offers received from competitive organizations. tors or the attractive They must also look face. healthcare organizations do not face just one or a few stakeholders. altemati use of hospital be' pital services. them to another.

As noted earlier. For example. evaluate threats that face their supportive stakeholders. Achieving the maximum benefit from an organization's relationship with its stakeholders clearly directs attention to potential stakeholder management strategies that go beyond the merely defensive or offensive in confronting stakeholder pressures. They must also look for those external. Although the hospital may encounter potential threats from some physicians who send patients to another hospital in a larger city. alternative sources of patients. For example. two competitors who are facing a common threat from a given stakeholder. the more dependent the organization is on a stakeholder. to influence the organization's decisions. thereby having an impact on the hospital's effective strategic management." Generally. and internal stakeholders that are likely .Diagnosis of Key Stakeholder Relationships 165 · tors or the attractiveness of different markets. the organization and the stakeholder are very interdependent. the more dependent the stakeholder is on the organization. Managers of healthcare organizations need to anticipate and systematically evaluate the actual or potential threats in their relationThe stakeholder's dependence on the organization and its relevance for any particular issue facing the organization determine the stakeholder's cooperative potential. managers must make two critical assessments about these stakeholders: (1) their potential to threaten the organization and (2) their potential to cooperate with the organization.23 ships with stakeholders and." Physicians. in some cases. often are explicitly identified as a group that does or could apply extensive pressure on hospitals. in a small town with one hospital and a limited number of physicians. participation in decision making. Alternatively. Such power introduces a clear potential to threaten the organization by denying it needed resources and providing them to another. however. Cooperative strategies that focus on the actual or potential contributions that are valued and needed by the organization should be developed. Generally. the higher the potential for cooperation. Stakeholder power and its relevance for any particular issue confronting the organization's managers determine the stakeholder's potential for threat. for example. Stakebolders' Potential for Threat Stakeholders' Potential for Cooperation Hostility or threat appears as a key variable in several formulations of organization-environment-strategy relationships. these threats may focus on undermining the fundamental viability of the organization.P:" Looking at the current anticipated threat inherent in the relationship with a particular stakeholder or group of stakeholders is similar to developing a worst-case scenario and protects managers from unpleasant surprises. For example. such as a competitor. such as a third competitor who has purchased a helicopter to aid in rural market . 22. Often. the more powerful the stakeholder. it may also have cooperation from most other physicians who want to keep their patients in the community. the hospital and the physicians usually have high levels of mutual dependence. These threats may focus on obtaining inducements from the organization which could include financial resources. and enactment of particular organizational policies. interface. the power of physicians is a function of the hospital's dependence on those physicians for patients. Power is primarily a function of the dependence of the organization on the stakeholder. the use of hospital beds. and the provision of hospital services.

..f. contro formation. With unprofitable hospitals falling by the wayside. and the PPO cannot threaten to send its members elsewhere.. then . .. Reprinted by .. then .. a be able to assess the t tive potential of the IT context of how com managing their mediorganization has treat the past. and influence organizatior Table 4-1 Stakeholder Relationship Assessments: Impact of Specific Assessments Stakeholder's Potentials to Threaten and/or to Cooperate on Relationship Assessment Factor If stakeholder is more powerful than your organization.duding your organization. and ready access..'" your organization. pWmIiIIkIn 01 John Wiley & Sons. then . may well be potential allies in counteracting such a move through a joint venture helicopter of their own. however. Healthcare executives need to anticipate the likely reaction of regulators. unless the sta' both supportive and is likely to form a organization and ott. .. high quality. Inc. then ... If stakeholder is unlikely to form a coalition ~ lX. Although the Antitrust Division of the Department of Justice is carefully monitoring these types of mergers... which have been able to demand price concessions from hospitals in markets where several hospitals compete for market share.. Exactly how a factc tial for threat or coop the specific context an zation's relations wit! (2) the historical an with other key stakeh tion. Threat and Coopen Healthcare executi variety of factors that stakeholder's potentia tion. After looking at the relevant situation or cooperative poten make a qualitative jud ative importance of tl ing the final stal diagnosis most approj tion at that time. then . executi analyses and manager Federal. Copyright 1998 Jessey-Bass. Factors Affecting th. who represent the public's stake regarding prospective mergers. For example. ingly aware that in order to meet the three criteria of reasonable cost. Jfstakeholder is likely to form a coalition excludlng your organization. then . competitors may join together to reduce the bargaining power of preferred provider organizations (PPOs). both the public and regulators are increas. JD Blair and MD Fattier. potentially nonsuppo tion.. If stakeholder is unlikely to form a coalition . If stakeholder is less powerful than your organization. 11 stakeholder does not control key resources... then . then . the remaining hospitals can merge. Leadership for Medfca/ Groups.two different bas ble-threat or coope one situation will apr tion's relationship w holder. and likelih of potential stakehold LOr. Such a merger leaves the PPO in a very weak position because there is only one dominant organization with which to negotiate.166 STAKEHOlDER MANAGEMENT-STRATEGIES AND STYLES penetration. these types of mergers may be necessary. 11stakeholder controls key resources (needed by your organization). ~'•. Stakeholder's Potential to Threaten Your Organization Increases Decreases Increases Decreases Decreases Either Increases Decreases Stakeholder's Potential to Cooperate with Your Organization Either Increases Increases Either Increases Decreases Decreases Either It staiqmolder Is likely to form a coalition with your organization. Similarly. state. By carefully in Table 4-1. with »}.. Table 4-1 focuse relative power.

'holder's potential for threat or cooperanon. and (6) physician-hospitalhealth plan. According to this model. t1~C political activities to alter the strategic dCI. physician-hospital. A model by Coddington. two different basic situations are possihlc---Ihreat or cooperation.'ISlOllS that organizations make (e. and local governments can influence organizations in at least two differ- ent ways: through political actions and through regulations. ~K . By carefully considering the factors in Table 4-1. integration among physicians ranges from early-stage independent practice associations (lPAs) and physician-only management service organizations (MSOs) to mid-stage integration of large single-specialty or multispecialty groups (which may serve as a hasis for fully organized systems). Each form occurs at different stages of integration: early stage. a manager must make a qualitative judgment to weigh the relative importance of the four factors in making. (3) physician-health plan.'arc executives should examine a \ arkly 01 factors that can affect the level of a ~la"I. After looking at the probahle impact of the relevant situation on overall threatening or cooperative potential. antitrust issues vis-a-vis physician-hospital alliances l. One other major player must be added to the integration puzzle in order to have a fully organized healthcare system. Table -+-1 focuses on four major factors: rclativc power.. mid-stage. (4) hospital-hospital. Moore. and Fischer highlighted six basic structural forms of both vertically and horizontally organized systems: (I) physician-physician. Changing Levels of Integration in Health Care Delivery A wide range of organizational forms exists in today's turbulent healthcare environment. These three forms of integration (physician-physician. and hospital-hospital) are useful for classifying typical healthcare delivery systems in the United States. Medicare forms and rules). For each facIOI'. or later stage.Diagnosis of Kev Stakeholder Relationships 167 factors Affecting the Potentials for Thrt'at and Cooperation Ikallhl. Federal. a hospital manager may be "hie to assess the threatening or cooperative potential of the medical staff only in the context of how competing institutions are managing their medical staffs and how the organization has treated its medical staff in the past. state. (2) physician-hospital. Generally. unless the stakeholder is likely to take hoth supportive and nonsupportive actions or is likely to form a coalition with both the oQ!Jnization and other stakeholders that are potentially nonsupportive to the organization. Exactly how a factor will affect the potential for threat or cooperation depends on (1) the specific context and history of the organization's relations with that stakeholder.. control of resources. Integration forms among hospitals are considered primarily early-stage integration. only one situation will apply to a given organizarion« relationship with a particular stakeholder. (5) hospitalhealth plan. Governmcnt-. and (2) the historical and contextual relations with other key stakeholders in the organization. For example. coalition formation.g. Regulations can also cause organizations to change operational activities (e.g . and likelihood and supportiveness (II plltclllial stakeholder action. the final stakeholder relationship diagnosis most appropriate for that organization at that time. executives can fine-tune their analyses and management of stakeholders. Integration between hospitals and physicians ranges from hospitalbased MSOs (early stage) to shared equity physician-hospital organizations (PHOs).

. For example. A direct stakeholder deals directly with the organization. and they become more of a threat to the hospital. physician-health plan and physician-hospital-health plan forms occur at mid. Most hospital-health plan forms occur at early. ~~ ~! u. Therefore. to deal with the environment. the necessity of effective strategic stakeholder management becomes apparent. Normally. The closer a hospital moves toward the fully integrated healthcare system. and physician-hospitalhealth plan.. however. Formal integration may remove incentive to maximize cooperation from the physicians. physician-health plan. In Figure 4-3 Sta 01 Diagnoses Based Assessments Sfru fhre High til" g~ j High The mil blessing rele "fE ~ II) . In addition. For example. but exerts influence through an intermediary.to later-stage levels of integration. what stakeholders do or do not do. the physicians may not believe that the hospital will have the potential to cooperate beyond the contract to which it has been agreed. Stakeholder relationships initially categorized in one cell might move to another cell as a result of what the organization does or does not do. For example. figure 4-2. Or. That third player is the health plan. As mentioned earlier in the chapter. As physicians become more integrated among themselves and as health plans begin to integrate with hospitals and/or physicians. there aJ who hold this double ple. Regional HO-. and marginal. what new information the organization has that would change the classification. and what issue currently faces the organization and its stakeholders. both strategically and opportunistically. hospital executives need to understand how their direct competitors use these new organizational forms to their own best interests.168 STAKEHOLDER MANAGEMENT-STRATEGIES AND STYLES however. as competition becomes more and more integrated.! Low The nonsu relatiol" Source: Strategic Leade and MD Fottler. rela blessing type includi medical staff.to mid-stage levels. all the organizational players need to have carefully designed stakeholder management strategies in order to stay competitive. Copyri permission of John Wile . the addition of the health plan in the healthcare delivery system increases the extent of integration. the better prepared that hospital is. nonsupportive. once on a salary. the healthcare tion in which the su both types of potem tion. they may feel that the hospital offers no real threat to them. changes in integration level include not only increasing integration. but als cians not on the s13 TYPES OF STAKEHOLDER RELATIONSIDPS The two dimensions-potential for threat and potential for cooperation-make it possible to characterize four types of healthcare stakeholder relationships (Figure 4-3): mixed blessing.. Hospital management must understand this phenomenon fully in order to manage their strategic issues effectively. For example. Identifying and predicting stakeholder relationships is key to properly managing them. thereby reducing productivity below levels that existed before the formal integration took place. what happens when physicians initiate their own physician-physician integration? Their power relative to the hospital becomes stronger. a hospital such as Tertiary-Care Hospital A in Figure 4-2 might want to disassociate from a physician group such as Cardiology Group E. An indirect stakeholder is still a stakeholder. One stakeholder can be both a direct and an indirect stakeholder." There is a dynamic process occurring at all times. the physicians may feel free to cut down on long workdays. !i . The final three forms of integration in the model developed by Coddington and associates include the hospital-health plan. Only when the health plan is integrated at a high level with the PHO-type organization will an organizational form be created that can meet all the healthcare needs of a given population. supportive.I Group E are both di holders of Hospital P Type 1: The Mixed Relationship With mixed blessi ships. In each case. but also decreasing levels of integration.

there are several stakeholders who hold this double distinction. These groups have a significant stake in the hospital's program and its therapeutic approach. Normally. the supportive relationship. Later in this chapter.Tvpes of Stakeholder Relationships 169 Figure '+-2. For example. JD Btair and MD Fouler. and hospitals with complementary. Cardiology Group E is a classic example of a direct mixed blessing stakeholder for Hospital A.' Strategic Leadership for Medical Groups. Such groups can either enhance referrals to the program or undermine the program. relationships of the mixed blessing type include not only those with the medical staff. Regional Hospitals and Cardiology Group E are both direct and indirect stakeholders of Hospital A. but also those with other physicians not on the staff. One arrow is directed toward type 2. the healthcare executive faces a situation in which the stakeholder ranks high on both types of potential: threat and cooperation. Physician-hospital relationships probably are the clearest example of this type of relationship. Figure 4-3 also shows a question mark and two arrows under the mixed blessing relationship type. insurance companies. Although physicians can and do provide many services that benefit hospitals. Inc. and the quality of care. thereby having a great impact on its clinical and financial viability. but not competing. 1)'pe 1: The Mixed Blessing Stakeholder Relationship With mixed blessing stakeholder relationships. physicianentrepreneurs can create organizations and alliances that threaten the hospital. the utilization and provision of different services. . appropriate relationship management strategies for each type are discussed. Figure 4-3 Stakeholder Relationship Diagnoses Based on Pattern of Relationship Assessments Stakeholder's potential to threaten the organization High Low High The mixed blessing relationship ? The supportive relationship Low The nonsupportive relationship The marginal relationship So/{rce. Hospital A recognizes two different kinds of mixed blessing stakeholders: direct and indirect. In this example. Copyright 1998 Jessey-Bass. Reprinted by penn ission of John Wiley & Sons. Some special interest group relationships also are a mixed blessing. Even though Hospital A is contemplating a strategic alliance with Group E. The other is pointed at type 3. These arrows imply that a mixed blessing relationship could become either more or less supportive. Some of the relationships are those between Hospital A and mixed blessing stakeholders. the physicians are still of the mixed blessing variety of relationships. In addition. the nonsupportive relationship. insured patients. For example. physicians also can threaten hospitals because of their general control over admissions. services. groups such as Alcoholics Anonymous influence substance abuse programs at hospitals.

or parking consor- tium typifies the concept of the supportive stakeholder relationship. Managers wish all their relationships were of this type. Although government agencies and patients may have mixed blessing relationships with hospitals in the indirect sense. they also are a potential for threat. laundry.. Therefore. the same stakeholder can assume different stakeholder postures according to the contextual or situation. agree with the Medical Set partner with Hospital ral source could be es petition's network sir. governments and patients tend to be supportive because they have everything to gain by being supportive. the federal ~ ernment regulator} patients. Clearly. Assuming Hospital A does not have its own rehabilitation facility. Type 2: The Supportive Stakeholder Relationship The ideal stakeholder relationship is one that supports the organization's goals and actions. These regional hospitals represent the rural-type healthcare provider facilities in the region surrounding Hospital A. Special im prove to be nonsuppe pro-life demonstratio halted normal busi ambulatory women's Figure 4-2 shows major nonsupportive that with the Medical and competing Hospi ( own integrating netwc holders have similar with Hospital A. Relationship Although marginal a stake in the organiz . its managers. In many large medical centers with multiple healthcare facilities. as is the principally refers patie pital (which is a hig largely due to its sin the competing netwoi for any cooperative ag If. For example. a managed care organization) obviously creates some potential for threat that does not exist when these stakeholders are dealing directly with the provider. Because of their referral ties. Such a stakeholder is low on potential threat. several supportive stakeholder relationships surface. Both groups desire to have available the services that the hospital provides when they need them. would be in a supportive relationship because Hospital A feels little or no direct competitive threat from Hospital F. Relationships of healthcare providers with government agencies and patients are indirect mixed blessing relationships. its staff employees. which sets up cr behaviors. Typical nonsupportive relationships for hospitals include those with competing hospitals. it may come from the very nature of the intermediary. the relationships of a well-managed hospital with its board of trustees.e. However. They are high on potential for threat. Because each of these relationships often is supportive in a direct sense. but high on potential cooperation. however. but low on potential for cooperation. the news coalitions. For e manage the same key: A. if Hospital A did have a rehabilitation facility or was planning on adding one. which attempts to control or influence this indirect stakeholder relationship. which is a rehabilitation specialty hospital. Type 3: The Nonsupportive Stakeholder Relationship The most distressing stakeholder relationships for an organization and its managers are the nonsupportive ones. competition. and nursing homes are of this type. Because the regional hospitals also compete directly with Hospital A. employee unions. This potential for threat may arise from the historical conflict of interests between the hospital and the managed care organization. the introduction of an intermediary (i. the local community. Hospital F. freestanding alternatives such as urgicenters or surgicenters. In the continuing example of Hospital A. then Hospital F would cease to be a supportive relationship and would likely become a nonsupportive one due to the competitive nature of their relationship. Type 4: The Margin. affiliated regional hospitals indicate potential for cooperation. This represents the m ing today's healthcai manage nonsupportii tively today so that tl: will be less threatenin in the future. a common support facility such as a power plant. attributes of the stakeholder issue. Hospital F has every reason to be supportive to Hospital A in the hopes of maintaining a good referral contact. In fact. its parent company. they have supportive relationships with hospitals from the perspective of their direct relationships.170 STAKEHOLDER MANAGEMENT-STRATEGIES AND STYLES Relationships with competing institutions such as regional hospitals also can be mixed blessings. even if the regional hospitals happen to be relatively minor competitors. The Me( Group is clearly a no) through its strategic I Teaching Hospital C.

For a well-run hospital. they both try to manage the same key stakeholders as Hospital A. marginal stakeholder relationships are high on neither threatening nor cooperative potential . For reasons such as geographic location. Although not in direct competition. It should be noted that Hospital E is not affiliated or identified as a key relationship with any other stakeholder in the figure. which is part of its own integrating network. Issue-Specific Diagnosis Stakeholder Relationship Although marginal stakeholders may have a stake in the organization and its decisions. and deteriorating physical plant. the news media.Types of Stakeholder Relationships 171 unions. as in the case of pro-life demonstrations that have slowed or halted normal business. including that with the Medical School Practice Group and competing Hospital B. which sets up confrontational types of behaviors. it principally refers patients to a competing hospital (which is a high threat to Hospital A largely due to its strategic relationship with the competing network). particularly for ambulatory women's centers. as is the case with Hospital B. Of all the possible stakeholders for a given healthcare organization. however. Figure 4-2 shows several examples of major non supportive relationships. quality of medical staff. Thus. indigent . it is not perceived as being either cooperative or threatening. Certain issues such as cost containment or access to care could activate one or more of these stakeholders.holders have similar types of relationships with Hospital A. coalitions. increasing their potential for either threat or cooperation. a new referral source could be established and the competition's network simultaneously damaged. Therefore. Hospital E is not viewed as playing an important part in the strategic plans of any other organization depicted in the figure. This represents the major strategic issue facing today's healthcare executives: How to manage nonsupportive relationships effectively today so that those same stakeholders will be less threatening and more cooperative in the future. the federal government. The most important issues facing organizations and their managers at a given time change constantly. This more than likely resulted from Hospital E's mismanagement of its relationships or its lack of unique strategic value as a partner. typical relationships of this kind may include those with volunteer groups in the community. Both of these stake•. leaving little room for any cooperative agreements. the particular ones that are relevant to its managers depend on the corporate/competitive strategies being pursued. If. The Medical School Practice Group is clearly a nonsupportive relationship through its strategic partnership with Public Teaching Hospital C. other government regulatory agencies. stockholders or taxpayers. and professional associations for employees. Figure 4-2 shows a marginal stakeholder relationship between Hospital A and Hospital E. For example. patients. agreements could be made with the Medical School Practice Group to partner with Hospital A instead. as well as on the specific issue. however. This investor-owned hospital is a small-scale general facility that does not directly compete at the large-scale tertiary care level with Hospital A. Special interest groups may often prove to be nonsupportive. Type 4: The Marginal Relationship Stakeholder most issues do not affect them. The stakeholders concerned with cost containment will be different from . and employer .

. however. if a manager identifies all relationships for any particular issue as nonsupportive. Given the issue-specific scenario of Hospital A's attempt to form a strategic alliance with Cardiology Group E.172 STAKEHOWER MANAGEMENT-STRATEGIES AND STYLES those concerned with access to health care. the potential strategic alliance between Hospital A and Group E may challenge the way that the System A Medical Group traditionally conducts business. System A Medical Group is clearly in a supportive type of relationship with Hospital A. The introduction of the physicians from Group E may threaten the smooth operations and referral patterns of System A Medical Group.. In this capacity. For example. similarly. nor that a stakeholdernonsupportive on one issue will be nonsupportive on another. Defend proae in the nonsupport relatlonsh: Strategy 1: Collaborate Cautiously in Mixed Blessing Relationsbip The best way to manage the mixed ing relationship. The inherent issue in classifying stakeholder relationships into a typology suggests that relationship diagnosis is an ongoing activity for hea1thcare managers. Each of the strategies sented in Figure 4-4 can be either nm. whatever the classification of a particular relationship on a specific issue. Stal« redu< High Collabora cautiousl inihe mixed bleS! reJatlonsh GENERIC STRATEGIES FOR MANAGING STAKEHOLDER RELATIONSIDPS Stakeholder relationship diagnosis of type attempted in Figure 4-3 suggests generic strategies for managing reUltlO]nsmps! with different levels of potential for threat for cooperation. explicitly classifying stakeholder relationships brings inadvertent managerial biases to the surface. the proposed alliance between Hospital A and Cardiollog: . then the manager should critically examine his or her assessment the relationship between the organization and its stakeholders. these tially threatening stakeholders will find supportive endeavors make it more to oppose the organization. all executives need to combination of strategies at anyone time.. System A Medical Group performs important duties to maintain the vital links between Hospital A and the patients being seen by group physicians. a manager who always sees' Ii stakeholder as cooperative may be running the risk of underestimating the potential . The diagnosis of the relevant stakeholder relationships in terms of the four types will also probably differ based on these two issues. may be cautious collaboration. Because executives cOIlltimmihi manage a wide variety of stakeholder tionships (in terms of their potential for and cooperation). For example. of this strategy is to turn mixed blessing tionships into supportive reianonsmps . Therefore. If a manager always thinki of a particular stakeholder as threatening. because Cardiology Group E may have previously been viewed as a direct competitor. acting as a "supplier" to Hospital A. System A Medical Group now faces the introduction of Group E into its company's (Systems Ns) network. the manager may be missing opportunities for capitalizing on potential for cooperation. Moreover. threat on a specific issue. They cannot assume that a stakeholder supportive on one issue will be supportive on every issue. executives seek to maximize their staJceh()ld ers' potential for cooperation. the System A Medical Group may react harshly and choose to become a less supportive stakeholder regarding this specific issue. high on the <l1DtlenISlOJDS . For example. In other words.:wnWOI or reactive. O both potential threat and potential tion.

their cooperative potential may be ignored as well. from building a center themselves and thus competing with hospital-based invasive cardiology or diagnostic procedures. Source: Strategic Leadership for Medical Groups. these contractual covenants could be viewed as a defensive . they are likely to be ignored as a relationship to be managed. It has a higher level of trust (and lack of risk) on the part of the organization. if this type of stakeholder relationship is not properly managed through the use of a cautious collaborative strategy. such collaboration effectively stops the cardiology physicians. It is important to distinguish between collaborating with a stakeholder and involving a stakeholder. Involvement and collaboration are different.. '. Copyright 1998 Jessey-Bass. but the collaborative relationship is often confused with the involving relationship. the collaborative strategy used with them may well determine the long-term stakeholder-organization relationship. because its potential is low. JD Blair MD Fattier. If ze their stakeholdtion. e the mixed bless. Relationships for Managing Stakeholder's potential to reduce stakeholder threat High Low who always ive may be ing the potential High Collaborate cautiously in the mixed blessing relationship Involve trustingly in the supportive relationship [ESFOR [OLDER Low Defend proactively in the nonsupportive relationship Monitor efficiently in the marginal relationship posture of the organization. therefore. involves much more of a give and take between the organization and the stakeholder. these potenlers will find their ~ it more difficult oposed strategic <\ and Cardiology GroupE (see Figure 4-2) represents a collaborative strategy. The hospital can contribute its name and capital resources. By involving supportive stakeholders in relevant issues. while the physicians will presumably send their patients to the hospital where inpatient services are needed. It includes an element of caution due to cutives conti )f stakeholder ~potential for threat utives need to use a. Both the hospital and the physicians potentially will benefit. Reprinted by permission of John Wiley & Sons. The use of this kind of collaborative strategy requires caution because of the inherent instability of mixed blessing stakeholder relationships vis-a-vis the organization.~ at anyone time. healthcare executives can maximally capitalize on these stakeholders' cooperative potential. Hospital A has again effectively used the collaborative strategy. However. the instability of these types of relationships could tum a mixed blessing relationship into a nonsupportive one. If this alliance took the form of a joint cardiology diagnostic and care center. Therefore. however. The emphasis is not on reducing threat. Involvement further activates or enhances the supportive capability of an already supportive stakeholder.. If Hospital A can use creative contracting covenants to ensure some form of referral pattern from the regional hospitals. Collaboration. Collaboration and "win-win" strategies often are prescribed as the basic solution to problems in healthcare management. Cautiously ship in the. Inc. Strategy 2: Involve Trustingly in the Supportive Relationship Because supportive stakeholders pose low potential for threat. In other words. on the other hand.Generic Strategies for Managing Stakeholder Relationships 173 Strategies _""VI"". the dimensions of : potential cooperaiboration. with whom the hospital has a mixed blessing relationship. The goal ixed blessing relarelationships.

. ence that forms the ers' interest in stakeholder terms involves proactivel holder from imposi ·.agencies is to explc . 30. Called strategic human resource management. This is a classic case of the hospital misdiagnosing the physician stakeholder relationship as nonthreatening and supportive. As such. most appropriate del :: with the federal gl . If hospital executives try to exert typical hierarchical authority and typical involvement strategies over the physicians in the newly acquired practice. many group practices and hospitals are explicitly involving their supportive employees and in-house volunteer stakeholders in strategies by training them to manage mixed blessing relationships. either by decreasing threat and/or by increasing cooperation. This can strain the hospital-physician relationship. or by engaging in other tactics to increase the decision-making participation of these stakeholders. . The success of this type of strategy requires managers to enlarge their vision of ways to further involve supportive stakeholders in higher levels of cooperation.Nonsupportive Rl Stakeholder rela · ening potential but are best managed t . For example. it is a powerful mixed blessing. they may view themselves as employees with little or no interest in making the organization successful. hospital hopes to n Also. example. Strategy 3: Defen . Or. they would expect to be involved in strategic decision making at the highest levels.... pital. Guest or customer relations pro- grams are designed to enhance the management of one or more potentially threatening stakeholders by increasing the cooperative potential of a key internal stakeholder.indigent patients. At this time. .=" It is very consistent with the strategic relationship management approach because it increases involvement of a generally supportive internal stakeholder (employees) in furthering the strategic goals of the organization.. Managers can operationalize the involvement strategy by using participative management techniques. However. From a hospital perspective. all the physicians become employees of the hos.. the public an ·. their cooperative potential may not have been fully tapped. . the technique only recently has been introduced into the field of healthcare management. hospital management may invite clinical managers to participate in the analysis and planning for the elimination of redundant programs. or human resource shortages can make their continued service problematic under certain circumstances.. how doomed.centives-on the ( executives should I · totally their depem relationships. and physicians.174 STAKEHOLDER MANAGEMENT-STRATEGIES AND STYLES the high potential for threat inherent in mixed blessing stakeholder relationships and may require the organization to give up or expend certain key resources or change important policies to gain stakeholder support.. in fact. Another explicitly strategic utilization of involvement systematically links human resource management systems and practices to overall strategic management.3 1 Employees do not pose a great deal of direct threat to the organization. The clinical managers are more likely to become committed to achieving such an organizational objective if they have been involved in establishing it. the perception of poor third shift conditions. with the demands i 'government at the 'Diagnosis-related grc duce a surplus for tb areas of distinctive c( ·pita! executives mil approach to the delivs : ifying the services th and process accounti effective managernen > . and hospital executives often use involvement strategies to manage them. For example... such as those with funded patients. framework on ex defensive strategy t .. if a hospital buys a physician practice. even if the physicians have become employees of the hospital. although union activism. they may view themselves as partners in the venture.:will almost surely t< · public hospital that t .. by decentralizing authority to clinical managers. either faili negative image fOJ •. patient families. relationships with physicians are generally mixed blessing relationships. trying to sc eral government is . Collaboration may even have a defensive element to protect the organization against potential threat. the physicians will most likely rebeL Even worse. Nonmanagerial professional and support employees represent another class of relationships that belong in this category and for whom an involving strategy might be effective. Hospital executives need to be aware of physician perceptions when entering into alliances with physicians. Relai government and il supportive stakehol healthcare organiza .•sive strategy.. when. Given the regulati .

either failing outright or creating a negative image for the organization. numerous special interest groups are opposed . In terms of Kotter's framework on external dependence. involving many traditional marketing and strategic notions for handling competitors. Relationships with the federal government and indigent patients are nonsupportive stakeholder relationships for most healthcare organizations. Hence. Diagnosis-related groups (DRGs) that produce a surplus for the hospitals define their areas of distinctive competence.JJ It ~gicrelationbecause it ally supportlees) in furirganization.nships. For example. a defensive strategy involves proactively preventing the stakeholder from imposing costs--or other disincentives-on the organization.As such. Also. utilization of inks human and practices lent. are all part of this defensive strategy vis-a-vis a nonsupportive. the defensive strategy tries to reduce the dependence that forms the basis for the stakeholders' interest in the organization. it is t Stakeholder relationships with high threatening potential but low cooperative potential are best managed through a proactive defensive strategy. the connection of stakeholder management to broader strategic management is very clear. Although the stakeholders still would be high on threatening potential. J2. modifying the services they offer based on cost and process accounting." In stakeholder terms. the public and the local government will almost surely take a negative view of a public hospital that tries to deny access to all indigent patients. In these examples of the defensive strategy.Generic Strategies for Managing Stakeholder Relationships 175 relations pro: the managely threatening ! cooperative iolder. On the other hand. Called agement. Given the regulations hospitals face. Healthcare executives should not attempt to eliminate totally their dependence on non supportive relationships. all . This generic strategy also can drive out or reduce competition. at least there would now be some element of cooperative potential. and nvolvement ill strain the For exampractice. hospital executives might adopt a case-mix approach to the delivery of health care. and recruiting and paying for more highly skilled medical records personnel. they may ith little or ganization Strategy 3: Defend Proactively Nonsupportive Relationship in the te become may view e. the n introduced gement. of the hosexert typiid typical iysicians in physicians :. Relationships with indigent patients often are thought of as nonsupportive by hospitals. be aware of atering into 1 a hospital rysicians are . For example. As a defensive strategy to reduce the use of expensive emergency department facilities by these types of patients. to reduce competition with urgicenters or surgicenters. Hospital A could build new ambulatory facilities or restructure existing facilities. This is a nosing the ) as non1fact. Investing in more effective management information systems and specialized medical records "grouper" software. however. demanding third-party payer and/or regulator. trying to sever all ties with the federal government is counterproductive if a hospital hopes to market to older patients. Hospital A (Figure 4-2) might be able to drive out competition from Hospital B (another private tertiary care hospital) by securing a monopoly over a particular market segment through further PPO contracting. Such efforts are doomed. Strategy 4: Monitor Efficiently in the Marginal Relationship Monitoring helps manage those marginal relationships in which the potential for both threat and cooperation is low. especially county facilities. n strategic s. a county hospital could open more primary care clinics in surrounding regions and inform the indigent population about the services provided at the clinics. their most appropriate defensive tactic in dealing with the federal government's regulatory agencies is to explore ways of complying with the demands imposed by the federal government at the least possible cost. For example. Such an approach might change these nonsupportive relationships to mixed blessing relationships.

such as the aged. In addition. In the continuing example of Hospital A (Figure 4-2). dissatisfied patient families that go unnoticed potentially can cause significant problems for an organization. Typically. such as a marginal relationship. For example. stakt . Many orga holders engage it and countermanaj age these relation tively. or are concerned about certain patient groups. and their general thrust is to "let sleeping dogs lie. An Alternative Relationship Management Strategy In addition to using the four strategies specifically tailored for relationships in the four diagnostic categories. stak react as the strateg although organizat integration (i.e. thus necessitating greater involvement of managerial time and other organizational resources. rather than simply defending itself against the news media as a nonsupportive relationship. may require an organization to engage in ongoing public relations activities and to be sensitive to issues that could make these groups an actual threat. the new stru out social and culti cal integration) as Of course. grated. these groups have only a marginal stake in the activities of the organization and affect operations only indirectly by advocating a specific moral or ethical viewpoint. healthcare executives may employ an alternative strategy to move the relationships from a less favorable category to a more favorable one. Hospital A also may have successfully turned a mixed blessing relationship into a less threatening supportive one." Keeping them asleep. as illustrated by the arrows in Figure 4-3. and allow it to be managed by means of a monitoring strategy. Thus. If the hospital is willing to invest enough time.176 STAKEHOLDER MANAGEMENT-STRATEGIES AND STYLES to certain procedures. Even if mixed blessing relationships are collaboratively managed. Often. What it takes to keep a particular marginal stakeholder minimally satisfied may increase over time. the proposed strategic alliance with a mixed blessing stakeholder (Cardiology Group E) can present an opportunity for Hospital A. Leaving this key marginal relationship unmonitored ignores the possibility of developing a supportive relationship that can make a decisive difference in the course of patient care. threatening age organization versa. skill. relationships with patient families are considered marginal. Stakeholders in marginal relationships should be minimally satisfied in most cases. In relationship m . Assigning specific responsibility for monitoring this relationship to a member of the patient care team can avert disaster for the organization's management. Managers must monitor such expenditures of inducements or disinducements to determine whether they have become excessive or whether they are perhaps inadequate because the marginal stakeholder has become a key stakeholder. the media relationship might even become a supportive one. The relationship can then be managed by using the generic strategy most appropriate for that new diagnostic category.. however. while keeping the use of financial resources and management time to a minimum. a hospital could implement an aggressive program of external relations to foster openness with the media. just sit still and all aged. If Hospital A effectively manages Group E with a collaborative strategy. The underlying philosophy for managing these marginal relationships is proactively maintaining the status quo. Executives address issues on an ad hoc basis. they can move into anyone of the other three types of relationships if the particular issue is of enough importance to the organization. energy. If successful. and money in the effort. they may not becornesupportive. executives the procedures to match their rel: appropriate strate STRATEGYIM ANDOUTCOM Given the imp relationships fOJ business strategy tation of the sta cept should pro\ competitive advr ship manageme executives are approaches to : underdeveloped these executive explicit awarene systematic and agement approa systematic at approaches. such as abortion or the placement of artificial implants. such as building a cardiology center for the group of physicians. st early. the program could change the news media relationship to a less threatening category. er in this new era • not voluntarily bee. in general or on a particular issue. marginal relationships are unstable. Stakeholder hence. In essence. Relationships with taxpayers and stockholders are also marginal.

but interconnected. however. stakeholders do not always as the strategy suggests. such as'.. integrated with still broader relationship management issues. and their approaches to stakeholder assessment are underdeveloped and haphazard.ionships are y may not issue in all strategic action is the implementation of a planned and articulated strategy. a systematic and effective relationship management approach. supportive relationships. the System A Headquarters. The healthcare delivery system is more complex and complicated than ever before. the relationship management perspectives of hospital executives are incomplete.. At best. the successful implementation of the stakeholder management concept should provide the organization with a competitive advantage. Even with the formal development of this organized healthcare delivery system. STRATEGY IMPLEMENTATION AND OUTCOMES Given the importance of key stakeholder relationships for an organization's overall business strategy. Every playin this new era of health care delivery is voluntarily becoming involved and inteThus. is the coordinating centerpiece for the primary system components. Group A. the procedures to identify stakeholders and match their relationship diagnoses with appropriate strategies. The shading of the boxes (as the legend shows) represents the hospital's different stakeholders and the nature of their relationships. the original patterns (prior to system integration) of informal.. :"""UVL'.""'. Stakeholders who are powerful and.Strategy Implementation and Outcomes 177 rents or :her they they are narginal takeholder. No longer do the old. threatening are as likely to try to manage organizational relationships as vice versa. a large multispecialty physician group. The organized delivery system still has embedded within it many formal and informal networks (Figure 4-2).. Assuming all the various stakeholder relationships are effectively managed and formalized into this specific vertical integration. and new and varied partners have emerged. and involvement in.holders engage in continuous management and countermanagement strategies. internally oriented human resources approaches to solving production problems suffice. Stronger competitors (by virtue of the network). To man." A key rpermess rograrn [ship to a narginal managed' If the UV"IJJ. A fourth component. . given the strategic alliance among the components of Hospital A. executives should periodically repeat . a quite fully organized healthcare system can develop. At worst. Furthermore. ( Of course. With a consistent and conscientious relationship management implementation strategy. stakeholder relationships now serve to structure network relationships and systems. and System A Health Plans. these executives display a total lack of explicit awareness of.e. r oortunity {ely manages itegy. . tactical integration) as well.e. sophisticated healthcare executives know that new stakeholder challenges have been raised. The number of relationships has grown geometrically. stakeholders generally do not sit still and allow themselves to be managed.-U organizations can create structural (i.. It is essential to develop systematic and strategic stakeholder approaches. age these relationships prudently and effectively. For example. strategic integration) fairly the new structure may not work withoutsocial and cultural integration (i. the three necessary components of organized delivery networks are shown in Figure 4-2: a hospital. The context of the stakeholder changes every time an organization makes structural changes and every time that any stakeholder relationship within the web changes. Many organizations and their stake. the group of . lave success" uionship into' " . and a health plan.

In Figure 4-2. Hospital B has attempted to imitate the successful strategic alliances of System A by establishing its own strategic alliances. should be part of this team to ensure that the real and important issues of System A. Hospital A is not content with being the first to form a healthcare network. No longer can specific managers be concerned with only those obvious relationships that fall within their own specific responsibilities. however. Hospital A hopes to maintain that lead in strategic alliance formation.178 STAKEHOLDER MANAGEMENT-STRATEGIES AND STYLES Executives at Hospital A do not have the same level of hierarchical control.PRIORITIES Stakeholder m 'defined by stakeho ties. the Prospect a. it becomes obvious that organizations do not face just one or a few relationships. Once all relationships have been identified. those organizations affiliated with the emerging Network B. but that are possible partners for either system/network. 'with key stakeholde means taking a hard about relationships. "~'dealing with'" specific '. relationship management tactics such as joint strategic teams composed of players from both fields are necessary in order to begin the process of jointly facing the new challenges in the environment 'be aware of all the othe 'influenced by their or . The well-known MiJ to business strategy fo types of organizatior Analyzer.. propensity of an " stakeholder relati the potential for tJ Types of Organi: Stakeholder Ma' Figure 4-5 ilh organizations be managing effect stakeholders are " cooperation pric priority. As a direct competitor and nonsupportive stakeholder for Hospital A. but at significant cost to independence and control. In contemplating a strategic alliance with Cardiology Group E (an independently owned and unaffiliated specialty group). executives must learn to manage a portfolio of relationships. and the hospital can no longer be independent as a result of developing alliances. are being met With the consummation of a strategic alliance. org ceptualized in terms ( "relationship managen focusing only on the ~ :holder relationship. If the proposed strategic alliance is formalized. strategic approaches necessary for managing their key relationships. Instead. Rather. as a whole. primarily from the System A Medical Group. these managers must . Rather. '~n opportunities (pot on threat (potential j the web of relations] STAKEHOLDER . the administrative staffs are in mutually supportive relationships and are now strategically involved in each other's organizations. Hospital A executives should consider the impact such an alliance would have on internal system relationships (System A owned and affiliated) and on direct competitors (Network B owned and affiliated). Additionally. Executives must coordinate with and be acceptable to strategic partners. and ret . The formalization of a strategic alliance does not mean that all the employees and managers of each respective organization will instantly function as supportive stakeholders. a or dominant wayan' 'navigating the rang. The overall power of the hospital has increased. The patterns of actio . It is even more important that they sort out the strategic and operational implications of those portfolios. and those organizations that have yet to be included in either system/network.. a joint strategy team composed of primarily administrative staff from Hospital A and Cardiology Group E should be developed to facilitate the smooth transition of Hospital A and Group E from a mixed blessing stakeholder relationship to a strongly supportive one. representatives from the other system components. similar fashion. On the contrary. actions. It is vital that the leaders of medical group organizations see their strategic webs as relationship portfolios. These prioritk management "int "organization. They should also consider the possibility that if Hospital A does not make an alliance with Cardiology Group E. the formation of systems and networks has effectively divided the entire healthcare delivery system for the area represented into three components: those organizations affiliated with System A. however. All of this requires the development of additional tactics and stakeholder management strategies to manage these complex and radically changing relationships. Four STAKEHOLDER MANAGEMENT STYLES: CHANGING THE FOCUS TO TYPES OF ORGANIZATIONS Few organizations have fully developed and articulated the highly integrated. Hospital B might do so.

..organization.. Do they primarily focus opportunities (potential for cooperation) or threat (potential for threat) when they see theweb of relationships? "'U . It they sort out the )lications of those cific managers be obvious relationir Own specific e managers must Stakeholder management styles are . JD Blair and MD Fattier. _L' dichotomous versions of the two dimensions (threat reducing and cooperation enhancing) allow one to assign each organization to one of four types of dominant stakeholder management styles:" • Relationship eagles-High on threat reducing. Copyright 1998 Jessey-Bass. ctics such as :d of players ~norder to begin the new challenges: aware of all the other relationships that are by their one-on-one episodes of with" specific stakeholders. and represent the underlying propensity of an organization to approach stakeholder relationships concerned with the potential for threat and/or cooperation. ~. Types of Organizations Based on Stakeholder Management Priorities Figure 4--5 illustrates how four types of organizations based on two priorities in managing effective relationships with key stakeholders are identified: the enhancing cooperation priority and the reducing threat priority... organizations can be con"". For executives..defined by stakeholder management priori.TIONS ully developed and . strategic nanaging their key ionships have been ous that organizaor a few relationst learn to manage It is vital that the organizations see onship portfolios. management styles.. low on threat reducing .. tegrated. Rather. . a style is the fundamental dominant wayan organization approaches the range of web relationships with key stakeholders. Inc. low on threat reducing • Relationship pessimists-High on threat reducing. low on cooperation enhancing priorities • Relationship ostriches-Low on cooperation enhancing. They also describe overall patterns of actions rather than specific actions.Stakeholder Management Priorities 179 mean that all s of each respec ly function as s wever. Reprinted by permission of John Wiley & Sons." Instead of ""'I'''ll'']."u . In fashion. high on cooperation enhancing priorities • Relationship optimists-High on cooperation enhancing.u_~. H .. These priorities define the relationship management "intentions" of a specific . in terms of different stakeholder ' .... Four different combinations of Relationship eagle Relationship optimist Style 3 Style 4 Relationship pessimist Relationship ostrich Source: Strategic Leadership for Medical Croups.. well-known Miles and Snow approach business strategy focused on four different of organizations (the Defender. this means taking a hard look at how they think relationships. and the Reactor). the the Prospector..u~~ Figure 4-5 Proposed Stakeholder Management Styles-Organizational Configurations Based on Differential Priorities in Managing Stakeholder Relationships Organization's priority on reducing stakeholder threat across multiple relationships High Style 1 Style 2 Low AGEMENT THEFOCUS ..ties. only on the stakeholder or the stakerelationship.

Organizational Type 3: Relationship Pessimists Relationship Pessimists place a high emphasis on reducing threat in their web of stakeholder relationships. of growing dependence.Relative." Evidence of Stakeholder Management Styles Blair et al. for example. Although these organizations certainly do not miss opportunities that other organizations might forgo. focusing primarily on the potential for cooperation. because of distrust of the motives or trustworthiness of others. of growing dependence on a strategic partner. for example.Capabilit goals • Technical p . Relationship Optimists act as if every relationship can be made into a "win-win" for both parties.180 STAKEHOLDER MANAGEMENT-STRATEGIES AND STYLES Organizational Type 1: Relationship Eagles Relationship Eagle organizations have a high priority both on reducing stakeholder threat and on enhancing cooperation in web relationships. they may be reluctant to explore key opportunities for what can. This focus is paired with a disregard for the potential dark side of stakeholder relationships.Capabilit vertical i . TypesofOrgru Performance evaluated in s across different When examinin are affected b styles." That is. and er not related to tJ ment styles.Relative ties for d These multip in the Facing t gically (FUF) s research design et al. in fact. analysis identi organizations b ties (or lack the er relationships They also foi ment style is it structure (e. these organizations have little regard for the positive side of stakeholder relationships. and these groups are consistent with expected pure stakeholder management styles based on the organization's levels of priorities to reduce threat andlor to enhance cooperation across multiple key stakeholder relationships. Hence. It recognizes that most relationships are a mixed blessing that will contain both opportunities and threats.. environment). They are optimistic about what they can do together. This style reflects the most sophisticated view of the organization-stakeholder web of relationships. However. be win-win relationships. other org • Competitiv . Leaders of these organizations certainly do not put their organizations at risk through ignoring or downplaying the implications. Relationship Optimists can assume unreasonable risks by ignoring or downplaying the implications. ~ tion size. J9 Cluster . These organizations' leaders appear unwilling or unable to think systematically about the potential threat and cooperation inherent in the web of stakeholder relationships surrounding them.g. Therefore. found that organizations within the same industry segment empirically cluster into identifiable groups. these organizations view relationships primarily in terms of their potential for threat. Organizational Type 2: Relationship Optimists Relationship Optimist organizations place a high priority on enhancing cooperation among the stakeholders in their web of relationships. Relationship Pessimists are at risk primarily in producing negative self-fulfilling prophecies. that is.Relative capabiliti . they believe that all stakeholder relationships are risk-laden. Organizational Type 4: Relationship Ostriches Most organizations that are Relationship Ostriches are probably unintended ostriches. they cannot establish a pattern of priorities for their organizations to reduce those threats and/or to enhance cooperative potential in the relationships. organi segment. they either do not seek to form useful strategic relationships or put excessively burdensome restrictions and contractual guarantees on potential partners. Blair et formance measi of skills and abi • Relationshi . As the mirror image of the Relationship Optimist.

g.." Cluster . Relationship Management Analysis Table 4-2 provides an overall assessment of the relationship between stakeholder management style and the types of capabilities..Relative stakeholder management capabilities . c based on their two key priorilack thereof) in managing stakeholdalso found that stakeholder managestyle is independent of organizational (e.. For example. Additionally.Relative information system capabilities for decision making These multiple indicators were measured in the Facing the Uncertain Future Strategically (FUF) study.. Each of the other types of performance have progressively lower measures in an organization may be ated in several different ways and different levels of the organization. The table shows that some types of performance are more amenable to stakeholder management style than other types of performance. based on: . size) or context (e. examining types of performance that affected by stakeholder management Blair et al. and the Pessimists outperform the Ostriches.Capability to achieve horizontal and vertical integration .g. Susceptibility of Performance to Stakeholder Management Style As Table 4-2 indicates. significant differences in performance measures are marked with an X..uu"' . the trend is constant in all cases. performance is higher for the Eagles and Optimists than it is for the Pessimists. stakeholder management style is more likely to influence those key firm resource indicators that need high levels of relationship management analysis and actions to create those specific organizational capabilities. used three types of perJonm3Jllce measures based on different types skills and abilities. relationship performance is more likely to be affected by stakeholder management style than competitive performance." lllizations within ~mpirical1y clusmd these groups pure stakeholdon the organiza) reduce threat In across multiships. Although performance measures are not indicated in the table.Relative capability to collaborate with other organizations • Competitive performance.Capability to achieve organizational goals • Technical performance. industry and environmental munificence are to the four stakeholder managestyles. based on: . based on: .. the greatest linkage between stakeholder management style occurs for the performance indicators under relationship performance (stakeholder management ability and collaborative ability). They are: • Relationship performance. For example. task V''''''~'''')' This indicates that organizaorganizational complexity. Although only the significant differences are noted in the table. and some types of stakeholder management styles are more effective at influencing performance than other styles are.Stakeholder Management Priorities 181 identifies four distinct types of o. and competitive performance is more likely to be affected by stakeholder management style than technical performance. where there are differences. in all cases.'?" An overview of the research design of the FUF study is in Blair et al." .

' Ostrich RELATIONSHIP PERFORMANCE Stakeholder Management Capabilities Eagle (Compared to .. chief. relation: Instead iU\'/H"'~' .. executive . Relationship Ostric fonnance levels in capabilities (all exr capabilities) .. ) Optimist Pessimist TECHNICAL PERFORMANCE Information System Capabilities Eagle (Compared to . in looking at the actual specific measures of this concept. . there are differences in . . Stakeholder management styles have mixed success in influencing competitive performance-based integrative skills and competitive capabilities. ) Optimist Pessimist Collaborative Capabilities Eagle (Compared to .. c. the relations} Table 4-2 The Impact of Stakeholder Management Styles on Organizational Competitive. compared to any . ) Optimist Pessimist x x X X X X X X X X X X X X X Stakeholder mar emphasize either ~ (Relationship Opti Pessimists) to redu< 'cooperation result i •fonnance than the s oriented priority C . the relationship with stakeholder management style becomes less important. .differences.:individual man.findings depending on relationship man to be very rele orientation and fulfil needs). ) Optimist Pessimist COMPETITIVE PERFORMANCE Integrative Capabilities Eagle (Compared to .05. '1t would be a .:... and Technical Performance (Compared to Competitors) Performance Indicator Optimist Pessimist Relationship. As organizational capabilities get less causally connected to what an organization does in terms of analyzing relationships or actions it might take to manage those relationships.system capabiliti. strong linkage gic management style tive capabilities. Although not shown here.STAKEHOLDE No two groups significantly different at 0. . Although Table 4 ~.. In ar 'management activitie~ relevant. This is both because relationship manage- ment activities can do less to build an organization's capability in that area and because an existing capability does little to make a stakeholder management style feasible. ) Optimist Pessimist Competitive Capabilities Eagle (Compared to . exarr mean score dllfe this discussion..182 STAKEHOLDER MANAGEMENT-STRATEGIES AND STYLES associated with the stakeholder management styles as they move toward the technical performance measures.. "show no statistic.05 level x = Indicates statistically significant difference between the means of these two groups using an LSD test with signif· icance level of 0.:unrelated type of . Relationship Eal "petitive capabiliti~~ "necessarilY supenc .. '~AGER1AL . < • .

If a patient's medical bills exceed this preset amount. cost-effective manner. others. Hospital A has assumed a much greater portion of the system's financial risk than it previously had. MANAGERIAL RESPONSIBILITY STAKEHOLDER RELATIONSHIPS FOR It would be a mistake to assume that the chief executive officer or any other single individual manages all the diverse stakeholder relationships in today's healthcare system. for example. Nonetheless. Effectiveness of Different Stakeholder Management Styles Stakeholder management styles that emphasize either action-oriented priority (Relationship Optimists or Relationship Pessimists) to reduce threat or to enhance cooperation result in higher levels of perfonnance than the style with neither actionoriented priority (Relationship Ostriches). the evolution of some of these organizations has seen the development of management specialists whose major purpose is to manage particular relationships. a medical staff director or vice president for medical affairs has the major responsibility for managing the medical staff relationship. In areas where relationship management activities are likely to be very relevant (such as service orientation and fulfillment of stakeholder needs). In some organizations. for example. are available to help handle nonroutine problems. Relationship Eagles are superior in competitive capabilities to Pessimists. which functions as a managed care organization. the relationship does not exist.Managerial Responsibility for Stakeholder Relationships 183 findings depending on the measure. In areas where relationship management activities are probably not very relevant. but are not necessarily superior to Optimists. By forming this healthcare delivery network. Relationship Eagles show no statistically significant differences compared to any of the other three styles. the health plan. Relationship Ostriches have the lowest perfonnance levels in four of the five key firm capabilities (all except information systems capabilities ). Although Table 4-2 only shows significant differences. This person also is integrally involved in medical staff development and recruiting. Their roles are typical of managers who have responsibilities for several stakeholder relationships. with capitation. four executives typically devote much of their time to managing several key relationships. The director of regional services can work collaboratively with the director of physician practice management services to provide service to regional physicians affiliated with rural hospitals in Hospital A's regional network. Instead. the hospital agrees to treat all the patients in a given population for a preset amount of money. For example. As a result of this increased financial risk. The director of physician practice management services. strong linkage exists between strategic management style and specific competitive capabilities. is responsible for developing a physician provider network capable of delivering health care to the insured patient base in an efficient. examination of the patterns of mean score differences are consistent with this discussion. In the continuing example shown in Figure 4-2. In the most unrelated type of performance (information system capabilities). including the chief executive officer. The chief financial officer and the vice president of marketing will work closely with Hospital A's network partner. the chief financial officer is quite involved with the . the healthcare providers absorb the excess cost.

. managers must make two critical assessments about these relationships: their potential to threaten the organization and their potential to cooperate with it. the development of these webs requires some agreement among the various managers concerning who will manage which stakeholders on which issues. and internal stakeholder relationships. . h~a: 'recognize that the ill gic stakeholder II requires a thorough t ation strategies-?" C organizations their relationship: stakeholders as I . Executives alse relationship be. in itself. In order to manag ~hlps effectively.OIIlekey nonsupp< 'tColntrom the organizal Cfontributions. and most cost-effective health care for a given population. The "all-in-one" concept of health care delivery is still new to the purchasers of health care. Obviously. 46-<9 ~gement process. likelihood and supportiveness of potential stakeholder action. Using the wrong strategic stakeholder relationship strategy can be very detrimental to an organization." Instead. and a key responsibility of the vice president of marketing is to counter any actions by competing healthcare networks. this technique provides a way to incorporate relationship management into an executive's job description. " Such goal settm and consid ~. If a relationship is incorrectly classified. healthcare executives must better manage their external. When determining the stakeholder's orientation. They need to satisfy their key rela- by offerin~ in exchange f . CONCLUSION To survive the turbulent and revolutionary changes facing the healthcare industry. .l1.". the chosen strategy for managing that relationship will be wrong also. Based on the general stakeholder web developed during stakeholder assessment.Stakeholder II ~~vigating operat relationships. They must proactively develop or enhance their organization's capacity for the strategic management of stakeholder relationships. and coalition formation. To satisfy key stakeholders. they must embrace the new healthcare network mentality of providing the highest quality. Incorrectly classified relationships will be more likely to move from whichever type they are to a type that has a greater potential for threat. interface. Stakeholder webs that show the potential opportunities and responsibilities of each stakeholder manager can aid in managers' understanding of the strategic stakeholder process. indicative of a lack of stakeholder relationship expertise. Each of these specific hospital executives must let go of the old hospital mentality of "filling beds" and thinking.184 STAKEHOLDER MANAGEMENT-STRATEGIES AND STYLES network risk management functions. When a ~ded in the mind 01 be impeded. the relationship can be managed using the generic strategy most appropriate for that "new" diagnostic category. easiest access. "If we own it. The vice president of marketing has direct responsibility for promoting Hospital A's interests (both individually and in the network). we can control it. Incorrectly categorizing a stakeholder relationship into the wrong classification type is. coupled with even less potential for cooperation.'U's the st and ?~ Strategy is pI managerial dec tency and pattern ' :~on that exhibits ) strategy less. Executives need to do more than merely identify stakeholders or react to stakeholder demands.. inn > what managers 1 '"and . managers should account for factors such as control of resources. It aids in clarifying and communicating unique and overlapping managerial roles and responsibilities.a:l vision. Entre like blinders and b .(. Then._' he way an orga t " manage its portfo '. managers should try to change their organization's relationships with each stakeholder from a less favorable category to a more favorable one. As an alternative strategy. relative power.lL(l'LJ. These factors should be interpreted in light of the specific context and history of the organization'S relations with it and other key stakeholder relationships influencing the organization as well as that stakeholder. This process typically involves internal negotiations and the development of organizational policies and procedures.. Organizations have to rethink their strategies and operations as they face increasing and potentially conflicting demands for effectiveness and efficiency from these stakeholders.51 Alte strategic orientatic i ity (a potential ad' can be attained or reinforcing t and implemented.

Those healthcare organizations that take an active lead in managing their stakeholder relationships and that consciously build stakeholder relationships into their strategic plans will increase the accuracy of their relationship diagnoses and will begin to gain from the effectiveness of their strategies for managing stakeholder relationships.>vo and consideration of both the orga. Even the most cursory glance at the sheer number of industry stakeholder subgroups suggests the many complex and dynamic relationships that must be managed as organizational leaders. patient relations. The specific nature of organization-stakeholder relationships and in what specific form the general industry stakeholder appears to a given organization in a given segment will differ.on's and the stakeholder's goals. relationships so that they do not key non supportive relationships and ".aJ. healthcare executives must urecozmze that the implementation of stratestakeholder management strategies ~c(IUlfles a thorough understanding of negotistrategies. There is growing evidence that an organi. although their penetration of the market will vary.egy can be very anon..vucuv" ..J.lllJ:. change can be impeded. If a relationified. The unpredictable and. of a lack of stakeise. The same may be said for the wayan organization does or does not manage its portfolio of key stakeholders. ..lan. integrates in a systematic way what managers have often dealt with sepa- rately: marketing. Even with effective strategic management of stakeholder activities.entially c eholders. organizations should establish goals fortheir relationships with current and poten~hlstakeholders as part of the strategic man'agement process. the specific context lization's relations". yes. Not only are the day-to-day operations of organizations affected. Stakeholder management.. the organization with undesired dis.":" Clearly... the importance of managed care organizations as buyers may be common to all. exciting times are not over for the healthcare industry.zation's stakeholder management style is the result of a series of activities and managerial decisions that coalesce into a pattern and logic. Strategy is present when a sequence of top managerial decisions exhibits a consistency and pattern over time.. but also their strategic planning efforts depend on their specific configurations of relationships with these stakeholders." An organization that exhibits no pattern in decisions is strategyless. Government reforms will continue. tegy... For example.. the chosen t relationship will ! wrong strategic at. assessments potential to threa ir potential to ermining the s managers reb as Control likelihood and stakeholder 'hese factors should.. to survive in the future. plan and act strategically for the future.w" Such goal setting should include clear ·. When a strategy becomes embedded in the mind of the strategist.. ! managed using )ropriate for that Jre than merely t to stakeholder vely develop or capaciry for the akeholder relay their key rel a- by offering appropriate inducein exchange for essential contribuExecutives also should monitor their . The specific pattern of those relationships among the organization's industry stakeholders and the strategic and operational implications for organizational leaders will be somewhat different for each organization and will change across time. ng a stakeholder ong classification ... and social responsibility issues..u . Entrenched strategies may act like blinders and block out a firm's peripheral vision. lkeholder relation-l nization as well as. but this advantage can be attained only if a strategic orientation and reinforcing tactics are then developed and implemented.Conclusion 185 ." Alternatively... Incorrectly be more likely to they are to a type or threat.·."" . human resources management. healthcare executives will face many challenges. managed care will become a stronger force. Coupled cooperation. as a tool for navigating operational and strategic webs of relationships. managers ganization's rela-Ider from a less e favorable one. having no initial strategic orientation or tactics allows flexibility (a potential advantage).:. media and public relations. employer coalitions will gain in strength and demand concessions from healthcare providers and administrators.In order to manage stakeholder relationeffectively.. hopefully.

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