THE US HEALTH care system is complex and constantly adapting to change. In fact, these changes are more rapid and turbulent than those in other industries. Ongoing challenges include rising health care costs, competition, managed care, advanced technology, aging of the population, and increased cultural and ethnic diversity. One of the critical components for organizational survival, growth, and development is effective leadership. Leaders must have an in-depth understanding of the nature of problems and organizational changes that are taking place. They must be able to adapt to changes, solve problems, and make rapid decisions. In the past decade, the US health care industry has focused on seeking new ways to reinvent itself to control costs and maximize revenue. Solutions such as the formation of large economies of scale through consolidated health systems were not realized, and fewer mergers resulted. Consequently, health care stakeholders began to search for new strategies to improve their organizations. One such strategy is to look to their health care leaders for continued organizational success. The purpose of this article is to address the importance of enhanced leadership as the key ingredient for organizational survival and success in the current competitive environment. Because new strategies require flexibility, innovation, and speed, then these are proposed to be entrepreneurial in nature. That is, health care leaders must recognize the need for entrepreneurship in their long-term strategic vision. Thus, this study intends to discuss the value of entrepreneurial health care leaders and the competencies they need to ensure the future success of health care organizations.

LEADERSHIP AND MANAGEMENT

There are numerous research studies on leadership and the various approaches range from traits, behaviors, and styles to contingency, transactional, and transformational theories.1 In essence, leadership is the process of influencing and supporting others to work toward achieving objectives.2 Leadership is an important aspect of the management process, and it works in concert with other management functions such as planning, organizing, and controlling.3 Leaders build commitment and enthusiasm and inspire managers to perform the functions of planning, controlling, budgeting, and organizing while working with human resources. In other words, leaders inspire and motivate others toward a shared and common purpose (the vision). Achieving the vision and producing results require effective leadership. Leaders must encourage innovation and provide a supportive environment for creativity. Leaders and managers may not be the same individuals. Some good managers may not be good leaders. Nevertheless, both leaders and managers are essential and needed to maintain and develop the organization.

Figure 1 shows that leaders work in concert with management functions. However, leadership is differentiated from managers in that managers direct the activities of others whereas leaders create vision and motivate others to achieve that vision by stretching themselves beyond their normal capabilities.2 Rubino4 explains that leaders take on an external approach whereas managers are internally directed. Although leaders understand the operational side of health care facilities, they devote more time and energy communicating and aligning with outside stakeholders so that they can benefit and influence their organizations. Furthermore, Manion5 points out that managers are focused on efficiency (getting things done right, better, and faster) whereas leaders concentrate on effectiveness (doing the right thing). She believes that management is about how to accomplish the work whereas leaders are concerned with the "what" and "why." For instance, in health care, the roles and responsibilities of managers focus on having the expertise and ability to compartmentalize work processes. On the other hand, leaders articulate what needs to be done and why the work should be done.

Figure 1. Leadership and management functions. Based on data from Lombardi et al.

Another major difference between managers and leaders is that managers concentrate on systems, controls, procedures, and policies, which together make up the organizational structure, whereas leaders emphasize people and relationships, and a leader influences others to act in a goal-directed manner.6 The relationship between leaders and followers is based on trust and not on authority as in management. Table 1 summarizes the differences between leaders and managers.

Table 1. Leaders versus managers

THE CHALLENGES OF HEALTH CARE LEADERS

Leadership is about making changes while influencing others and attaining goals, especially because organizations are constantly changing. In the health care industry, the pace of change is especially dramatic in the last 20 years. Figure 2 illustrates a multitude of challenges for health care leaders. New technologies, managed care, globalization, increased regulatory compliance, specialty health systems, telemedicine, virtual patients, outsourcing, cross training, forming partnerships, and competition are just a few examples of the changes taking place in the health care environment. For example, Manion5 presents several notable changes in health care that significantly require more enhanced leadership. The shift from traditional fee-for-service to discounted and capitated health plans and the rise of primary care providers as gatekeepers challenge the balance between quality and cost. At the same time, the transition from inpatient to outpatient care means that leaders need to build new relationships with key stakeholders. Another change is the shift from the illness and disease model to more preventive health, wellness, and holistic models of medicine.

Figure 2. Challenges for the health care leader.

Furthermore, Rubino4 identifies 4 major challenges of health care leaders as laws and regulations, physicians, new technology, and the culture of safety. First, leaders must develop strategies to comply with laws. This is an especially challenging area because there are many constraints that can affect a health care organization's ability to affiliate with other organizations and providers. Second, working with physicians in the managed care environment is important. An effective leader must find ways to engage physicians in accomplishing organizational objectives. As Rubino4 points out, a leader must be willing to include physicians early in the planning process because their clinical expertise is crucial to success of the organization. Medical and informational technologies have enabled rapid and vast advancements and improvements to promoting health and wellness and prolonging patient lives. On the other hand, the high cost of technology is a major challenge. However, without expensive technology, a health care facility cannot compete and survive. Thus, leaders are responsible for assessing the need for new technology. Finally, safety concerns have shifted from management to a leader's area of responsibility. That is, new leadership standards have been created that focus on an organizational culture of safety with influence from the top-down approach rather than just sole reliance on management directives.

In the current period of fast-paced changes, the focus of organizations has moved from how to accomplish tasks to what must be done and why must these new tasks, methods, and processes be achieved. As a result, the paradigm has shifted from reliance on management to a greater demand for the skills and competencies of leaders.

Part of the challenge for leaders is knowing whether changes are necessary. For instance, during the 1990s, many health care organizations were intent upon reengineering or restructuring major processes. However, major redesign efforts were found to be unnecessary and created added confusion, which ultimately resulted in decreased effectiveness.7 Therefore, an essential role for leaders is being able to assess what changes are necessary and vital to achieving organizational goals.

The next part of the article discusses entrepreneurship and its relevance to the health care industry and specifically links it to the activities of health care leaders. First, entrepreneurship is defined and explained.

ENTREPRENEURSHIP DEFINED: RELEVANCE TO HEALTH CARE

Entrepreneurship is the pursuit of opportunities involving major risk, responsiveness to systemic changes, and the development of innovations. Previous studies have examined the issue of entrepreneurship in health care organizations. For instance, Kazemek and Grauman8 recognized the importance of entrepreneurship in health care, and they noted that leaders need to be more entrepreneurial because of the complexities in the health care environment. Responding to changes in a proactive manner requires a different kind of leader, specifically one who thrives on change and risk. Guo9 makes the linkage between entrepreneurship and health care by analyzing case studies of health care organizations that have engaged in entrepreneurial activities. She argues that in times of uncertainty, complexity, and resource scarcity, health care organizations rely on their managers to enable their organizations to gain the competitive edge. Managers must make rapid decisions in a flexible and positive manner. In other words, flexible decision-making processes, open channels of communication, and organizational innovations are more readily used by health care organizations as indications of the existence of entrepreneurship and the prevalence of entrepreneurial activities taking place at all levels of health care organizations.

Three primary reasons exist for entrepreneurial behavior in health care organizations.10 The first is that entrepreneurship is used because it has a strong impact on economic stability and strength. The reliance of entrepreneurship in health care is specifically for organizations to build, innovate, and grow in strength and power. A second major entrepreneurial activity is to create innovations for the purpose of benefiting society. New medical products and health services are produced to enhance the quality of patient lives. The final purpose of entrepreneurship in health care is organizational realization that entrepreneurial activities are more effective and should not only concentrate on efficiency as with previously developed strategies. Moreover, the entrepreneurial role of managers is to become involved in risk-taking strategies and serve as agents of change. Guo11 furthers her research and develops a comprehensive model that illustrates the relationship between entrepreneurship and health care management. This model reveals that the entrepreneurial management process consists of recognizing opportunities, creating innovation and change, investing in organizational resources, and converting to more flexible and adaptable structures.

Figure 3 summarizes the key factors that are associated with entrepreneurial health care organizations. Most commonly, the environment requires flexible and rapid decision making and more adaptable organizational structures that are readily responsive to changes in the system. As a result, entrepreneurial strategies include more open channels of communication, creative and innovative investment of organizational resources, and the development of risk-taking and opportunity-driven strategies for organizations to gain the competitive edge.

Figure 3. Key factors in entrepreneurial health care organizations.

Research studies have shown that entrepreneurship can be found in health care organizations because the health care environment is a major force for entrepreneurial management to occur. The growth of competition in the health care industry necessitates entrepreneurial approaches such as innovative and risk-taking strategies developed by entrepreneurial managers. Studies on entrepreneurship in health care are very limited and only show a connection between entrepreneurship and health care management. In particular, evidence reveals that a health care manager plays a critical role in developing more entrepreneurial health care organizations. However, current and available knowledge has not associated entrepreneurship and leadership. What makes this study unique is that it furthers existing knowledge on leadership in health care by explaining the significance of leaders and the integral roles needed to perform entrepreneurial functions. Thus, this article adds value by offering new insight on competencies of health care leaders through the exploration of entrepreneurship processes. The next part of this article proposes to connect leadership and entrepreneurship, which are the 2 key elements required for enhanced organizational strengths.

ENTREPRENEURSHIP AND LEADERSHIP

Entrepreneurship is the process by which individuals identify and pursue opportunities and put useful ideas into practice. These tasks require creativity, drive, and a willingness to take risks. Entrepreneurs are persistent and risk takers, and they have strong character, independence, and personal drive.12 In addition, successful entrepreneurs are creative, innovative, and passionate pursuers of new opportunities by strategizing to make the best choices, whereas managers are intent on organizational efficiency and values.13 Entrepreneurs differ from managers in that managers focus more on establishing goals and offering directives and are considered cautious risk takers. Entrepreneurial activities in health care organizations are opportunity driven and aligned with the activities of leaders, whereas managerial activities are based on identification, allocation, and conservation of resources.14 Consequently, entrepreneurial activities are more related to leadership responsibilities than managerial roles. Management techniques focus on traditional approaches; however, entrepreneurship focuses more on the concepts of innovation, which are necessary in the turbulent health care environment. Therefore, leaders are required to perform entrepreneurship activities to generate innovative strategies that enhance organizational survival.

In the current competitive health care environment, entrepreneurial leaders are needed to enable their organizations to succeed. Successful organizations are not hindered by challenges in the environment; instead, leaders in these organizations are action oriented because they believe that they can influence events and individuals. Although it is easier for health care organizations to simply rely on managers to maintain the organization, however, it is ultimately leaders who make the difference by creating change that result in new opportunities for organizations.15 Health care leaders who are entrepreneurial must be initiators, promoters, deal makers, producers, and risk takers. They not only conceive the vision and recognize the merit of projects but also have the abilities to achieve success.8

Manion5 also supports the belief that leaders are more concerned with innovation and with creating new processes. They are not satisfied with status quo and constantly seek new ways to improve the organization. According to Shortell et al,15 high-performing organizations and leaders in health care must be willing to stretch themselves so that they are constantly striving for improvement. Leaders must continuously search for opportunities and threats. Leaders are risk takers who are willing to make changes and challenge uncertainty and ambiguity rather than be comfortable with normal operations. In fact, entrepreneurship can be interpreted as an attitude taken by leaders toward their environment, wherein as they face constant change, they must have the ability to spot new opportunities and be better equipped to respond in innovative way.16

CORE COMPETENCIES OF ENTREPRENEURIAL HEALTH CARE LEADERS

Competencies are characteristics of employees that are associated with successful performance of their jobs, whereas core competencies are those associated with the success of an organization. In addition, a competency model is a collection of competencies associated with successful performance.17 This study develops core competencies and a competency model specifically for entrepreneurial health care leaders based on a review of the literature found on competencies for health care leaders and managers. The core competencies of leaders and managers are different.4 Leaders are more forward thinking than managers. They set a direction for the organization by creating the vision and developing the mission, whereas managers make sure that staff members adhere to procedures. Leaders motivate not only their employees but also other stakeholders in the health care environment. Leaders determine strategies for the future, whereas managers oversee rules, regulations, and policies.

In addition, the core competencies of entrepreneurial health care leaders diverge from the traditional roles of managers. Specifically, in the volatile health care environment, certain competencies of leaders are more effective than others. The literature reveals several studies on leadership competencies with various models and assessment tools. For instance, Kirkpatrick and Locke18 identified 7 competencies that differentiated effective from ineffective leaders. These include a leader's drive or need for achievement and goal attainment, motivation, and ability to influence others, integrity, self-confidence, intelligence, and knowledge of the business.

With an understanding that knowledge of the industry is crucial, therefore, a model specific to the health care industry would be valuable for understanding and coping with the dynamics of the health care system.19,20 The assessment tool developed by Robbins et al19 provides a long list of technical skills, industry knowledge, analytic and conceptual reasoning, and interpersonal and emotional intelligence. Similarly, Ross et al20 recommended systems competencies including governance; strategy development; physician relationships; ethics and values; quality and value enhancement; public health and community involvement; health policy and law; and alternative, complementary, and integrative medicine. They also indicated additional personal leadership competencies such as decision making, risk taking, team building, conflict management, and professional mentoring. Furthermore, Guo and Anderson21 describe a paradigm shift from health care management to the new health care leader to allow for more flexibility, risk taking, creativity, and fluidity. They indicate that the 4 new leadership competencies are conceptual, participation, interpersonal, and leadership competencies. They believe that leaders are struggling with challenges in the health care environment, and preparing the organization for growth can be greatly enhanced through the comprehension and practice of these 4 leadership competencies.

A comprehensive set of leadership competencies across various health care leadership positions and health care organizations was developed by the Healthcare Leadership Alliance (HLA) made up of 6 major US health care leadership professional associations in administration, nursing, and medicine. The HLA's competency model is made up of 300 competency descriptions, which are categorized into 5 competency domains: business knowledge and skills, communication and relationship management, knowledge of the health care environment, professionalism, and leadership.22

Using the literature on health care leadership competencies as a foundation, this study identifies and modifies existing competencies by tailoring them specifically for entrepreneurial leaders in health care. Moreover, a set of core competencies, along with a competency model, is created. Because entrepreneurship encompasses risk-taking, innovative, and opportunity-driven strategies, then entrepreneurial leaders must be competent in the development of such strategies. Figure 4 illustrates the 3 overlapping domains of core competencies required by entrepreneurial health care leaders: (1) external focus when coping with environment and systemic changes, (2) internal intent when leading the organization through conflicts and crises, and (3) self-directed or interpersonal competencies. To be successful, the entrepreneurial leader must be knowledgeable and must practice skills found in all 3 domains because mastering only 1 or 2 areas of core competencies is inadequate for effective organizations. Thus, it is essential for leaders not only to be cognizant of these competencies but also to actively engage in the practice of these core competencies. With regular and consistent application of these competencies, then leaders can truly be entrepreneurial in exploiting new opportunities for enhanced growth and development.

Figure 4. Entrepreneurial health care leader competencies: a core competency model.

The first domain of competency for an entrepreneurial health care leader is to possess an in-depth knowledge of the external system in which the organization and individuals operate. In particular, core competencies for the entrepreneurial leader include (A) knowledge of the environment, system, community, and stakeholders and (B) development of risk-taking and innovative strategies to meet the challenges of the environment, system, community, and stakeholders. This involves managing change and innovation in response to trends and having the ability to recognize opportunities that target stakeholders (all the components of A). Being competent in developing strategies (B), an entrepreneurial health care leader should engage in strategic planning and marketing that focuses on understanding the market to move the organization to the greatest need and opportunity and on communicating services of the organization to consumers. Included in this area are defining the organization's mission and vision and strategically aligning the organization's goals with the mission and vision.17

The first domain of this model is consistent with the HLA competency classification, which also supports the competency of knowledge of the health care environment. It is defined as the understanding of the health care system and the environment in which organizations and managers function.17 Furthermore, Garman and Tran23 agree that knowledge of the health care environment is a major area of leader competency. They acknowledge that comprehension of the unique and complex context of the health care community and environment is imperative to the success of health care leaders. The authors also emphasize that understanding customers or patients provides the leader with a useful frame of reference, as well as having knowledge of the system and its regulations.23 Their study also endorses the domain of knowledge of the health care environment as one of the critical competencies specifically for entrepreneurial health care leaders. In addition to the HLA model, this article also proposes that the development of strategies to facilitate interactions with the system and environment is essential. For instance, the National Center for Healthcare Leadership identifies community and strategy orientations as 2 key leader competencies. To be community oriented, a leader must align one's own and organization's priorities with the needs and values of the organization. Similarly, being strategically oriented refers to the ability to draw conclusions based on the understanding of trends and being able to develop a vision for the organization.24

Along with strategic development, the entrepreneurial leader must also be competent in understanding the needs of key stakeholders in health care. Stakeholders are vitally important in the determination of positive or negative consequences for organizations. Ross et al20 identified that health care stakeholders are those who are responsible for delivering services, benefit from those services, and have clout affecting the decisions of the organization. These include employers and purchasers, insurers, customers or patients, physicians and medical groups, and government regulators. Sometimes, the interests of one group of stakeholders are in direct conflict with those of another group. For example, providers seek higher reimbursement from payers while attempting to offer more comprehensive services to their patients. On the other hand, payers are intent on controlling costs, whereas customers are demanding more choice. The entrepreneurial leader must balance multiple demands of these various stakeholders. Thus, entrepreneurial leaders must develop a continuous stream of strategies that sets the direction for the organization and addresses opportunities and threats. As part of the environment and systemic emphasis, an entrepreneurial leader should possess the abilities to align the needs of the organization with the external environment. This leader analyzes a number of macroenvironment factors such as economic, cultural, demographic, regulatory, ethical, and political trends and makes use of these trends in the development of a vision for the organization. An entrepreneurial leader must take these trends into consideration and be competent in strategic planning and marketing because they collectively impact the performance of the organization.11

The second competency domain that an entrepreneurial leader should master is the internal organization. This involves the execution and implementation of that strategic vision already developed in the first area. Here, optimal organizational performance is dependent upon a competent entrepreneurial leader who is skilled in (A) innovative decision making and (B) performance management especially in the areas of (i) information, (ii) financial, (iii) risk, and (iv) quality management. Performance management is the ability to understand and use statistical, financial, and outcome-based methods to set goals and measure organizational performance, and innovative decision making is the ability to apply complex concepts, develop creative solutions, or adapt previous solutions in new ways for breakthrough thinking in the field.24

This second domain is similar to that of the HLA model, which classifies knowledge of the organization/business and also identifies financial, risk, and information management; human resources; organizational dynamics; strategic planning and marketing; and quality improvement.22 Unlike the HLA model, the domains of human resource and strategic planning and marketing are not outlined in this area on knowledge of the business. Instead, this article suggests that strategic planning and marketing are more appropriately aligned with the first domain of knowledge of the system and environment and that the management of human resources should be grouped into the third domain of interpersonal skills. At the same time, it should be noted that the competency of strategic planning and marketing is one of the overlapping areas of skills, which spans both the first and second domains.

Garman et al25 indicate that the application of financial management skills such as financial analysis and planning, reimbursements, and outcomes measures is useful for attaining short- and long-term organizational goals. Furthermore, they note that information management is the use of computer and software applications to enhance the efficient and effective delivery of health services and that leaders should be skilled in understanding law and safety and comprehensiveness of risk such as liability, compliance, malpractice and be competent in making the linkage between risk management and quality management. Especially in the complex health care environment, gaining competence in these areas-information, risk, financial, and quality management-and having the ability to make rapid and sound decisions to address these areas can optimize organizational performance. Thus, in conjunction with performance management, this model recommends that the competency of innovative decision making should be added to this second domain, which was lacking in the HLA model. Innovative decision making is an essential entrepreneurial leader competency, and this enables leaders to think critically in the analysis of difficult organizational problems and in the development of creative solutions to resolve conflicts. As these leaders learn to become better decision makers, they can become more effective and knowledgeable about themselves, about others with whom they work, and about the organization and the environment. Organizational awareness is the ability to understand and learn the formal and informal decision-making structures and power relationships in the organization and with stakeholders.24 Entrepreneurial health care leaders should possess the ability to identify the multitude of economic, legal, ethical, organizational, and technical changes taking place in the health care environment because understanding these factors has a direct impact on leadership decision making and its resulting positive effects on financial success, customer satisfaction, and long-term viability for the organization.

The third most crucial domain of competencies that an entrepreneurial leader should possess is interpersonal or people skills using the principles of (A) communication, (B) human resources, and (C) motivation to develop oneself and others. Self-development is the ability to see an accurate view of one's own strengths and areas that need improvement, including one's impact on others.24 To inspire others in the workplace, an entrepreneurial leader must focus on relationship building to establish and maintain professional networks and on building high-performing teams in the organization.

Communication is the creation or exchange of thoughts, ideas, emotions, and understanding between senders and receivers and is essential to building and maintaining relationships in the workplace.26 Competent leaders understand human resources and realize that they are responsible for creating an organizational environment that values employees and empowers them to maximize their capabilities. The communication competence is the ability to effectively use communication behaviors.1 Leaders with good communication skills are better able to help others to make more innovative decisions. Another competency is human resources. Rather than the HLA's definition of concentrating on human resources policies and procedures, here, this competency refers to the degree in which an entrepreneurial leader demonstrates high concern for people, develops rapport with them, respects their feelings, is sensitive to their needs, and shows trust in them.2 In other words, an entrepreneurial leader involves human resources in the organization when making decisions, inviting participation and supporting teamwork. Team development is the leader's drive to build the breadth and depth of the organization's human capability.22 That is, the entrepreneurial leader possesses the desire to enervate and support top performers by taking personal interest to coach and mentor them.

Motivation is the impetus and initiative exercised by the entrepreneurial leader to direct others to pursue and attain personal and organization goals. Motivating forces found in the organization and in the environment are considered opportunities; thus, they are captured by the entrepreneurial leader to accomplish goals, acquire new knowledge, pursue challenging projects, and make contributions to society.27 All of these opportunities are seized by the entrepreneurial leader to create an atmosphere under which individuals continuously feel inspired to work hard and perform to the best of their abilities.

A competency model illustrating the core competencies of the entrepreneurial health care leader (Figure 4) shows that there are overlapping competencies. For instance, as leaders develop risk-taking and innovative strategies in the competency of system and environment knowledge, then leaders must also be competent in their decision making (which is part of the knowledge of the organization competency), and this also involves motivating and inspiring others (the interpersonal competency) to generate innovative decisions as a strategy to meet challenges in the system and environment. Consequently, entrepreneurial leaders must develop skills and be competent in all 3 major domains to be successful and high-performing leaders in their organizations.

RESEARCH AND PRACTICAL IMPLICATIONS

Research on entrepreneurship in health care is an area that is just beginning to be explored; therefore, this article contributes to the field by identifying specific entrepreneurial leader core competencies for more effective organizational performance. Studies have previously shown a variety of leadership competencies in health care and indicated that the development of leadership competencies is positively associated with better performance and more successful organizations. The purpose of this study was to facilitate the identification and understanding of entrepreneurial leadership competencies, which have not been studied or analyzed previously research. Thus, the recognition of these core competencies for health care entrepreneurial leaders spans research, academic, and practitioner settings. First, it furthers research on leadership competencies because prior studies have not been dedicated to this research area linking entrepreneurship to leadership in health care and even more specifically to core competencies. Second, additional research can investigate the extent of coverage of these skill sets in academic program curricula, so that practitioners can gain competence in these areas. Moreover, the approach for identifying core competencies and designing a competency model is especially useful for practitioners. For instance, early careerists who have 2 to 5 years of health care experience and who aspire to fill leadership positions in complex health care organizations should become proficient in these core competencies to enhance their entrepreneurial leadership skills. Furthermore, this study can also be used as a tool by health care organizations to understand leadership performance, and competencies can be used for the furtherance of the organization's strategic vision and for individual improvement purposes.

CONCLUSION

The health care environment and system are increasingly becoming more complex; thus, more than ever, health care organizations have a greater need to search for exceptional leaders. Leaders whose abilities have previously relied on directives and control mechanisms are no longer effective. New and different skills are required for the successful performance and growth of organizations. This study is based on a review of literature on leadership competencies in health care and the careful selection of specific core competencies required by health care leaders who are innovative, risk-taking, and opportunity-driven entrepreneurs. The development of entrepreneurial leaders is necessary for optimal performance, and this study provides the foundation for further exploration into more in-depth analysis of entrepreneurial leadership core competencies.

REFERENCES