This is a collaborative piece written by:
Roy Bejarano, Co-Founder & CEO of Scale Physician Group and
Kyle Knopik, Columbia Business School ’20 MBA Candidate and Intern at Scale Physician Group
At Scale Physician Group, we love to research and apply lessons learned to the projects we are working on. Recently, we read The Global Economy As You’ve Never Seen It: 99 Ingenious Infographics That Put It All Together by Thomas Ramge and Jan Schwochow. We made immediate connections between the visuals depicting team size and business structure with the organization of physician platforms.
How are teams organized, decisions made, processes implemented, and resources allocated in your physician platform? As a physician group begins to scale, implementing the right organizational structure can be the key to its success.
At Scale Healthcare, we partner with our physician platforms to discover the underlying issues that are keeping our platforms from achieving their fullest potential. In any and every case, it’s often worth simply drawing what structure best describes the organization in its current form and where there may be opportunities to tinker (just a little).
Is your platform currently structured to achieve optimal performance? We can help you discover the right team size and organizational structure for your business.
The Optimal Team Size Varies Depending on the Goal
In our experience working with physician groups, we have seen a reluctance to restructure the size or makeup of the Board or the Administrative Team as the platform grows. Ramge and Schwochow depict five team size scenarios and what each is best equipped to achieve.
2 People: Often managers find that the skills and tasks required to reach an organizational goal can be covered by 2 or 3 people. Research suggests that, when it comes to team size, bigger isn’t always better. Individual members tend to become less productive as team size grows, a phenomenon known as the Ringelmann effect1. How big are your Board subcommittees?
7 +/- 2 People: For projects, organize teams of 5 to 9 members with complementary skills. If the need for voting is anticipated, keep the team size odd for the sake of forming majorities.
15 People: Teams and business with up to 15 people have minimal need for strict organizational hierarchy. Everyone knows and can talk to everyone else when the team is kept to 15. Harvard psychologist J. Richard Hackman found that it wasn’t necessarily the number of members of a team, but rather the number of communication links that made it successful. Consider the number of Partners in your platform and how often they communicate.
150 People: Anthropologist Robin Dunbar theorized that the average person can keep track of up to 150 names and essential relationships3. For healthcare organizations, once you get to 150 employees, things get complicated and an organizational structure strategy is critical.
1,500 + X People: At this stage, many smaller teams need to form larger, but still effective, units.
The Right Organizational Structure Leads to Successful Growth & Development
As your platform scales, its organizational structure also needs to evolve to facilitate effective management and innovation across a more complicated service ecosystem and reach. Ramge and Schwochow illustrate six organizational structures with their pros and cons.
Functional Line Structure
Classic top-down structure. Commands flow top-to-bottom and organizational responsibility is divided by function – sales, marketing, manufacturing, etc. Its simplicity makes it best for smaller companies with a modest range of products or services3. This structure is commonly found across provider platforms, for example a large group of OBGYN providers would be managed by an MSO whose verticals are defined by function, RCM, Payor Contracting, Ops, Finance.
As organizations grow in size or complexity, this structure makes assigning responsibility, making decisions, and cross-department communication more difficult. This could explain why cracks in communication and chasms of inefficiency might develop within ever larger provider platforms, exasperated on occasion by further growth.
Departmental Line Structure
Similar to functional line structure, but organizational responsibilities are divided into sectors or areas of business. A goal of this structure is to combine similar services, technologies, or customer segments into one unit3. For example, within a given division, there are lines of business for each specialty. An ancillary business unit such as pharma or pathology might also include expertise in RCM, Marketing, Corp Dev, Finance and Reporting.
As provider platforms continue to grow and become national we would anticipate further use of departmental line structures that incorporate multiple functions. The influence and need for local market knowledge and presence should further increase the need for duplication. One could envisage a payor contracting team located in multiple regions and interacting with other verticals in different ways depending on given circumstances. The cookie cutter one size fits all and single function org structures will be less common and managers will need to curate bespoke models based on real time opportunities and constraints. This will require a lot of care and consideration.
Simple Multiline Structure
Adds complexity by allowing specialists to issue commands in various directions3. While it can reduce decision-making processes and allow experts to make important decisions in their subject areas, management must make an extra effort to clarify procedures, responsibilities, and reporting hierarchies upfront.
Ultimately, provider platforms should migrate to this multiline structure – this will maximize information flow and expertise across the platform and best practice – but it will require a great deal of investment in building reliable communication channels, quality reporting, cross-training, and culture.
Line and Staff Organization Structure
Another way of highlighting the growing evolution of provider platform structures is through the examination of decision making. In the below org structure the functional command and control line is augmented by advisory staff functions. This staff is intended to relieve the burden of excess responsibility and decision-making on management. Conflict often arises between line and staff management3. The hierarchical nature of this structure can often allow for the blockage of communication and corresponding frustrations. We find in provider platforms a similar reliance on outsourced silo’d decision making to also correspond with a higher rate of friction.
Network Organizational Structure
A relatively recent development in organizational theory, network organizational structures allow high levels of autonomy to their individual units. The traditional management function (i.e. headquarters) is more narrowly tasked with cross-unit coordination and long-term vision development compared to traditional structures3.
For a physician platform spanning multiple states, this structure could benefit efficiencies. At Scale, we always value communication and transparency, which would need to be clearly defined in this structure. This type of structure while more complex allows for more combinations of communication flow and may well be a worthwhile endeavor.
1De Rond, Mark. “Why Less Is More in Teams.” Harvard Business Review. July 23, 2014. Accessed April 06, 2019. https://hbr.org/2012/08/why-less-is-more-in-teams.
2“Is Your Team Too Big? Too Small? What’s the Right Number?” Knowledge@Wharton. Accessed April 06, 2019. https://knowledge.wharton.upenn.edu/article/is-your-team-too-big-too-small-whats-the-right-number-2/.
3Ramge, Thomas, Jan Schwochow, and Adrian Garcia-Landa. The Global Economy as You’ve Never Seen It: 99 Ingenious Infographics That Put It All Together. New York, NY: Experiment, 2018.
4Threllfall, Daniel. “What’s the Ideal Team Size to Maximize Productivity?” TeamGantt. August 29, 2016. Accessed April 06, 2019. https://www.teamgantt.com/blog/what-is-the-ideal-team-size-to-maximize-productivity.
5Weller, Jennifer, Matt Boyd, and David Cumin. “Teams, Tribes and Patient Safety: Overcoming Barriers to Effective Teamwork in Healthcare.” Postgraduate Medical Journal90, no. 1061 (2014): 149-54. Accessed April 07, 2019. doi:10.1136/postgradmedj-2012-131168.