New York Medicaid Reform

Organizational change is not a new process.  For as long as organizations have been operating, there have been numerous techniques to instill change. At some point leaders are required to make changes in their organizations to keep up with the ever changing world around them. One tool to use for organizational change is the McKinsey 7S Model.  

This paper will study the changes at the New York Medicaid program and will give an overview of issues that were tackled during its Medicaid reform.  The McKinsey 7S model will be explained and used to analyze this case.  This paper will show any limitations that the 7S Model has while working it into the New York Medicaid reform case study.

New York Medicaid Reform

Medicaid was created in 1965 when President Lyndon B. Johnson signed amendments to the Social Security Act. Medicaid is a federal program that is overseen by each individual state in the United States to include the program in New York (Koba, 2011).  Medicaid is health insurance for people with restricted incomes and limited assets.  As of 2014, Medicaid served approximately 80 million people at a cost of $438 billion dollars (Policy Basics, 2015).

The United States spends more on health care than any other country in the world. With the rise in health care costs, mandatory insurance (Obama Care), and the country fighting through a recession, more and more citizens find themselves looking to Medicaid for health insurance.  

New York has the largest Medicaid program in the country and was in desperate need of an overhaul to its system.  Upon taking office in 2010, Governor Andrew Cuomo identified the problem with the New York Medicaid system.  The Governor cited that within the complexities of the program there were numerous policies which had lead to a huge increase in costs. These costs would need to be contained, and the issues would need to be curtailed, or New York’s Medicaid program would no longer be sustainable (Health.ny.gov).

A plan was put in place for New York’s Medicaid program to undergo an organizational change. At the forefront of this change was a plan to continue to serve the community while the change was taking place. While the system was being overhauled, services, and organization, still needed to be in place to serve the customers. Solving this problem can be illustrated using the McKinsey 7S Model.

Analysis using the McKinsey 7S Model

        The McKinsey 7S Model basically says that organizations need to look at more than the structure of an organizational change.  One also must look at the framework which includes many factors.  The 7S Model uses seven different elements.  Singh describes them as:

• Strategy - Improper communication flows give rise to conflicts and hamper the organization's image. It is important to make the right communication strategies for conflict resolution and sustainable advantage.
• Structure - Most organizations use formal channels of communication. This results in choking of essential information giving rise to grapevines. The organizational structure has to be designed in a way that information is not choked.
• Systems - The internal processes and procedures facilitate good communication and it is important to understand how effective they are in maintaining the correct flow.
• Skills - Communication can flow smoothly if the staff possesses the right skills.
• Staff - The staff can facilitate effective communication and value needs to be attached to communication skills during recruitment and selection.
• Style - The management is responsible for promoting a culture of open communication.
• Shared values - The organizations' belief system and attitude towards communication is at the core of other elements (2013).

The McKinsey 7S approach is to ultimately use the other six elements to supplement the strategy of organizational change.  The McKinsey 7S model is concerned with “HOW” the strategy will be implemented by using the other six factors to reach the most favorable outcome. In this system all of the elements are intertwined with each other.  If you change one element; it will affect another one.

Identify the 7S Model

Strategy is the communication flow to set an idea in motion; a line of attack to fulfill a desired end result.  During the reform of the NY Medicaid office, co-optation strategies were used.  Management used a process where frontline leaders designed the changes that needed to be made.  Management understood that these leaders knew the problems first hand, and would have the best ideas for a solution (Lipsky, 1980).