Question: Joy Pechum, CEO of California Anesthesiology Group (CAG), was sitting in her offi ce, preparing the agenda for the meeting of the board of directors
Joy Pechum, CEO of California Anesthesiology Group (CAG), was sitting in her offi ce, preparing the agenda for the meeting of the board of directors to be held next Sunday. She thought about what to offer the board as an explanation for why she would spend $ 20,000 to deploy standardized project management methodology. The board typically viewed these methodologies as unnecessary red tape quite the contrary to her own beliefs that having too many methodologies in a company was not productive but saw them as a prerequisite to having orderly business processes. At that moment the phone rang. She picked it up and heard the voice of Patrick, her VP of finance. He began, Joy, I have a vendor invoice here. It shows that Dr. Squirrel had bought a computerized patient management system, costing $ 250,000. Its deployment would cost us another $ 250,000, i.e., a total of half a million dollars! All I want to know is whether you have approved it. No, I have not , answered Joy hanging up angrily, trying to visualize the face of Dr. Squirrel, a big gun in the company, both as an anesthesiology expert and shareholder - owner, when she tells the board about this purchase. OUR UNIQUE PRACTICE CAG is a for - profi t company of 200+ medical doctors that provides their services by placing anesthesiologists in hospitals where they are needed; with annual sales of $ 90 million. CAG is an employee - owned company, where the largest shareholders are the most senior medical doctors in the company. Accustomed to being treated as royalty by the hospitals, these owners senior doctors often behaved fi nancially irresponsibly and ignored CEOs before Joy. Then, two years ago, Joy, with the reputation of the best CEO in town for mid - sized health organizations, was hired at CAG. The first order of business for Joy was to introduce financial discipline. She was successful in her mission but only after spending a lot of time and anguish. But, still some of these ownerssenior doctors behaved in the same old way. Being ownerssenior doctors, they often visited the premiere hospitals in the country, and, staying there a month or two, learned from the best in the business. Also, they often had the opportunity to see the best or newest professional software, usually for managing patient systems. In pre - Joy times, some of them would order the software without consulting anyone. The then CEOs did not object to these purchases because they feared the power of these ownerssenior doctors. EVIDENCE AND EVIDENCE Then came Joy, who did not tolerate this behavior. She, of course, tried to avoid confl ict with the ownerssenior doctors, but nevertheless brought two cases of such a purchase to the board s attention. That was an appropriate way, Joy thought, since all ownerssenior doctors sat on the board. Basically, she painted such purchases as an undesired attack on company profi ts. She thought that culprits were not aware of that, viewing the purchases only as CAG s technological improvement, which eventually is passed onto customers. The board was on Joy s side whenever she mentioned erosion of profi ts with such unplanned purchases. Simply, this was their money, and they did not like one to spend it, whether or not that someone was a colleague. HERE IS AN IDEA Good God, Joy thought to herself, Half a million dollars! Gone! Wasted! She remembered the last two software computerized patient management systems they had were never deployed! CAG did not have the skills to deploy the software, and doctors - owners appreciated making money working more than not making it and spending time deploying software. Then, she got an idea. What if she explains to the board that she needs standardized project management methodology to help prevent this purchasing behavior? Actually, she wanted to deploy standardized project management methodology exactly for this reason. Only, she could not tell the board earlier, and now that Dr. Squirrel made that dangerous move on the software purchase, she could. The first part of standardized project management methodology will be a standardized project selection process, mostly dealing with various patient management software projects deployed in order to improve service. Joy may use ZBB (Zero - Based Budgeting) or some other process that will prevent pet projects like this. The second part will be project life cyclebased project planning to secure that no one rushes into the project without first thinking it through. And, the third part will prescribe the project implementation procedure for Joy to know what is going on. Good idea? She once more scrutinized the idea and imagined how individuals on the board would react to how much of their money the system would save. Then, she concluded, Joy knows how to defend profits.
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