Magazine

FM College ~ News & Articles

Revitalizing organizational health in the care delivery sector

Sep 12, 2024 | Public | 0 comments

Research conducted over two decades has continually affirmed that organizational health (how you run the place) is a valuable, competitive differentiator across industries. Organizational health has been linked to value creation, profitability, resilience, and safety metrics (see sidebar “How to assess organizational health”).

Organizations in the care delivery sector are no exception: those that prioritize and invest in building a healthy culture, even as they confront persistent internal and external pressures in the aftermath of the challenges of COVID-19 pandemic, are better positioned for success than those that do not.

Organizational health has been linked to value creation, profitability, resilience, and safety metrics.

Our Organizational Health Index (OHI) research conducted with organizations in the care delivery sector has identified a statistically significant correlation between three outcomes and patient satisfaction: employee motivation, a positive work environment, and external orientation, which is the organization’s ability to effectively engage with external stakeholders to deliver value now and in the future (Exhibit 1).

Patient satisfaction positively correlates with external orientation, motivation, and work environment scores.

Additionally, investments in building a healthy culture are linked to addressing a chronic challenge in healthcare: attracting and retaining talent. Our research finds that employees who perceive their organizations as healthy compared to those who do not are 3.9 times more likely to endorse their employer to others, 1.5 times more likely to plan on staying, and 2.1 times more likely to feel energized by their work. Looking specifically within healthcare settings, a 2023 McKinsey workplace survey of registered nurses (RNs) cited several culture-related factors as key drivers of their likelihood to stay in their current position, including meaningful work (82 percent), positive interactions (69 percent), and having caring and trusting teammates (69 percent).

This article distills insights from the past decade of OHI surveys to understand the current state of organizational health in the North American care delivery sector, overall effectiveness and management practice priorities, and changes over the course of the two time periods examined (2014–18 and 2019–23).

Organizational health in the care delivery sector is at a critical juncture

According to our OHI database, employees in the care delivery sector reported a decrease in organizational health of 11 percentage points between the 2014–18 and 2019–23 time periods. Hospital Consumer Assessment of Healthcare Providers and Systems scores before and after the onset of the COVID-19 pandemic suggest similar declines in patient experience. Between the same time periods, the benchmark of organizational health globally across industries increased by three percentage points (Exhibit 2).

North American care delivery organizations’ motivation-related practice scores are declining.

Broader industry trends and enduring repercussions from the COVID-19 pandemic have likely contributed to a decrease in organizational health.

Broader industry trends and enduring repercussions from the COVID-19 pandemic have likely contributed to this decrease in organizational health. For example, the United States has experienced accelerated clinical labor supply challenges because of an increase in demand due to an aging population, COVID-19-related burnout causing clinicians to leave the field or workforce, and graduation rates that have not kept pace with demand. For example, we project a 10 to 20 percent gap in direct patient-care nursing supply and demand in 2025. In addition, health systems have faced challenges with rising costs driven by high interest rates, high inflation, and supply chain disruptions. For example, between 2021 and 2023, overall inflation grew by 12.4 percent, more than double the 5.2 percent growth rate for Medicare reimbursement of hospital inpatient care.

Organizational health scores that are lower than the global benchmark and these industry headwinds are a call to action for leaders to take meaningful steps to improve organizational health. The same three outcomes that were significantly correlated with patient satisfaction—work environment, external orientation, and motivation—also saw major declines compared to the benchmark in the aftermath of the pandemic; this suggests they are particularly important areas of opportunity.

Accordingly, a set of management practices or behaviors (as assessed by respondents on a frequency scale) drive each outcome. For example, practices that drive the external orientation outcome are prioritizing the needs of customers, including patients; operating in a socially responsible manner; building and maintaining relationships with external business partners, the government, regulatory agencies, and industry groups; and scanning the competitive landscape to inform business decisions.

Therefore, to gain deeper insight into declining scores on these three outcomes, we analyzed the relevant management practices aligned with each and identified those with the most substantial declines (see sidebar “Declines in outcomes and their implications”). Although all management practices associated with the outcomes showed a decline from the first survey period to the second, several stood out for the magnitude of their decline, including the following:

  • Related to the work environment outcome, performance transparency declined by 15 points.
  • Related to the external orientation outcome, customer orientation declined by ten points.
  • Related to the motivation outcome, four of the five management practices—career opportunities, rewards and recognition, meaningful values, and financial incentives—declined by more than ten points compared to the previous survey (Exhibit 3).
North American care delivery organizations’ motivation-related practice scores are declining.

Rewiring culture to reflect the needs and aspirations of the current healthcare workforce

Organizations can move at two speeds to address cultural priorities. First, they can mobilize quickly to execute a set of no-regrets moves. Second, and in tandem, they can embark on a slower-paced, more holistic and sustainable culture transformation journey. Although organizations in the care delivery sector have their own culture priorities, our findings suggest that there are several common pain points in management practices.

Establishing sustainable working models with results that are clearly visible to improve the work environment. The COVID-19 pandemic called for unprecedented working norms and performance metrics, and we continue to see that employee mental health and well-being has suffered in the healthcare sector. A 2023 McKinsey and American Nurses Foundation survey of more than 7,000 nurses found that 56 percent reported experiencing symptoms of burnout, such as emotional exhaustion. Organizations in the care delivery sector have an opportunity to renormalize ways of working, including by making performance results visible to enable labor productivity. This transparency, coupled with establishing sustainable working models, can help address worsening burnout of clinical staff that also puts patient care at risk.

Many organizations in the care delivery sector are instituting new, flexible operating models to improve productivity and employee satisfaction. For example, Trinity Health recently announced plans to expand the staff of virtual nurses; care teams comprise a direct-care RN, an on-site nursing assistant or licensed practical nurse, and a virtual RN.

An academic medical center introduced dynamic staffing in which small teams of four to six colleagues (called pods) coordinate their schedules internally to meet the required staffing levels for each shift. This model emphasizes flexibility and individual preferences within the pod. By moving away from the rigid 12-hour-shift paradigm, this approach ensures adequate coverage while empowering staff to have more control over their work–life balance.

Taking a consumer-centric approach to improve external orientation. Leaders of care delivery organizations are facing the need to mirror the increasingly personalized experiences consumers have with sectors such as retail and banking to build enduring relationships with their patients. In contrast, patients express frustration with the healthcare system. According to the 2022 McKinsey Consumer Health Insights Survey, 21 percent reported that their clinicians do not listen to them or understand their needs, 22 percent reported feeling treated with less respect than other patients, and 28 percent reported that clinicians have made assumptions about them that have influenced the way they were treated.

Organizations in the care delivery sector could take steps to improve their external orientation by focusing on the management practices that drive this outcome. For example, customer orientation includes prioritizing patient needs and satisfaction, gathering feedback with clearly defined metrics, and using it to improve services offered (for example, with personalized communications). One regional care delivery organization launched a consumer-centric transformation that included embedding new ways of working focused on customer experience and understanding care journeys at moments that matter to patients (such as when scheduling appointments online). As a result, the organization was able to increase performance metrics, including a 20-point increase in customer satisfaction.

Given the rapid changes in healthcare, organizations in the care delivery sector could also prioritize continually monitoring industry trends and making decisions accordingly. Competitive insights are one of four foundational behaviors—along with role clarity, strategic clarity, and personal ownership—that have an outsize impact on organizational health. Adopting any of these practices that are not already in place is a no-regrets move to improve organizational health.

Boosting motivation through opportunities for recognition and advancement. Broken motivation practices could compromise patient outcomes and exacerbate widening talent gaps. For example, the Association of American Medical Colleges (AAMC) estimates a shortage of up to 86,000 physicians by 2036. In the face of chronic labor shortages and worsening burnout—especially among physicians and nurses—organizations in the care delivery sector are challenged to improve their employee value propositions, including career opportunities, rewards, and recognition.

Many companies are partnering with higher education institutions and certificate programs to offer career opportunities to frontline clinicians. For example, a regional health system launched a self-service tool for employees to find internal career advancement opportunities, leading to a threefold increase in open roles being filled with internal talent. In addition, rewards and recognition, supported by a formal structure, are critical to drive motivation. Bon Secours Mercy Health leverages an annual recognition initiative to meaningfully recognize nurses and staff in real time, and it saw a 10 percent retention increase with this program in place.

Getting started on a holistic and sustainable cultural transformation

Our research and experience points to a structured approach for making culture change stick.

Aspire and assess. Leaders can choose from various methods to assess employee sentiment and gather their feedback. They could deploy survey tools to diagnose organizational health, conduct focus groups and interviews, or use people analytics to assess the strength of informal employee networks. These efforts could identify which critical practices to prioritize—such as career opportunities or customer orientation—and the strengths worth preserving.

Once the diagnostic is complete and a deep understanding of the organization’s culture has been established, it is crucial to align on specific objectives, including the behavioral shifts needed to accomplish the aspiration, and to develop a consistent plan for achieving them. For example, to accomplish a goal such as all employees prioritizing creating the best experience for patients, priority practices might include ensuring customer orientation across the organization and encouraging a focus on harnessing competitive insights.

Architect. When designing performance improvement initiatives, it is paramount to actively involve the workforce in shaping the future culture. Creating customized culture transformation journeys, complete with skills development and a targeted communications strategy, can effectively cater to groups across the organization such as nurses, physicians, and administrative personnel, thus fostering greater support and momentum for organizational initiatives. As part of this effort, organizations could also take steps to improve individual accountability for results by clarifying roles, responsibilities, and performance management guidelines.

Act and advance. Prioritize, sequence, and deliver interventions in waves to institute the behavior shifts needed to achieve the aspiration. Check on progress against initiatives and health goals regularly. Keep a pulse on employees through continuous listening efforts to allow for rapid adjustment and refinement of efforts as needed, and proactively communicate updates along the journey.


Essential actions for transforming institutional norms include effectively engaging clinical and nonclinical staff throughout the organization to test and innovate, increase buy-in, and tailor cultural practices to stakeholder groups, as well as empowering leaders to model and prioritize proven cultural practices. By deepening their understanding of current organizational dynamics, acknowledging what needs to change, and having the courage to transcend norms, organizations in the care delivery sector can elevate their own performance and contribute to a more stable and effective healthcare system overall.

The post "Revitalizing organizational health in the care delivery sector" appeared first on McKinsey Insights

0 Comments

Submit a Comment

Are Scents a True Indicator of Cleanliness?

Editor’s note: FM Perspectives are industry op-eds. The views expressed are the authors’ and do not necessarily reflect...

The Impact of Lighting on Aesthetics and Atmosphere in Healthcare

Lighting manufacturers discuss how lighting affects the look and feel of healthcare facilities. While not usually talked...

IFMA publishes accessible guide for leveraging AI

The International Facility Management Association (IFMA) released a publication for understanding and leveraging AI in the...

Hidden dangers

Conor Logan, Technical Director, Colt International on the hidden dangers of neglecting smoke control system maintenance In...

How to Improve Facility Operations with Visual Management Strategies

Visual management enables businesses to communicate important information about processes and procedures. Where...