My Healthcare Reform Fear - It's Not Who Pays, It's What We Get

I have studied disruptive innovation and the management of companies who managed complex, dynamic, unpredictable work. When these companies were most effective they did not follow the top-down, industrial management approach.
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I share President Obama's commitment to healthcare reform and greatly value his leadership. I have been a physician, healthcare executive, academic scholar, advisor, author and, most importantly, a patient once deeply immersed in our healthcare system with a critical injury. In all those roles, I have consistently seen the need for change.

However, I fear we are losing momentum fighting over an issue that is not central to solving our healthcare woes. The key to reform isn't figuring out new ways to pay for healthcare. It's figuring out how to get more from what we already pay.

I very much fear that no one can afford the cost of U.S. healthcare, including the U.S. government. We pay way too much for way too little.

This cost/quality mismatch is not new. It has been present the entire 40 years I have been a physician. In the 1970's and 80's, we started to try to solve it with a collection of big solutions. Stoking my fear for healthcare reform today is the realization that these 40-year-old fixes are the exact same solutions proffered to Congress by healthcare industry leaders, academics, experts and the Administration in the last few weeks - simplifying administrative costs, developing new kinds of healthcare insurance, making hospitals and doctors more efficient, reducing hospitalizations, managing chronic illnesses more effectively and improving healthcare information technology.

I fear trying harder on new versions of these 1978 ideas will deliver exactly what it has already delivered -- less care at higher cost.

I appreciate the President's focus on a public health plan. It's what the experts prescribe because we need a big fix. And for healthcare experts since 1978, big problems have always required big, top-down solutions. My fear is that is exactly the kind of thinking that has delivered the cacophony of results that is our current system.

The root cause for this jumbled dissonance is actually quite simple -- we work in an antiquated industrial management model inherited from the 19th Century. This system depends on moving data up to decision makers who analyze, plan and predict before ultimately implementing back down on the workplace.

That system works well until the work becomes too complex, dynamic and unpredictable. Once that happens, you can't get enough data up fast enough to analyze and predict quick enough to implement solutions before the conditions have changed. As such, the best intended efforts of management do not meet the needs of the workplace. Please think back to the ill-fated "Managed Care Revolution" of the 1990's.

As a Visiting Scholar at Harvard Business School, I studied disruptive innovation and the management of companies who excelled at managing complex, dynamic, unpredictable work -- companies like Toyota, Intel and Southwest Airlines. When these companies were most effective they did not follow the top-down, industrial management approach. They worked differently. I call this new way of working adaptive design because companies working in this fashion are designed to adapt.

The key to adaptive success is, rather than move more information up, management develops new critical thinking skills and coordinates new, real-time decision-making capability as close to the frontline as possible. In healthcare, adaptive design creates learning centers and innovation incubators inside current healthcare units at the point of care. This model has been proven to work in a multitude of healthcare environments.

Now, if you work in government or the policy arena, you may be thinking, "Well and good, Kenagy, but so what? We have big problems. We need a big fix. We need a big policy initiative."

I appreciate that need. So here's a suggestion. Do something big. Just make that big thing something different. Rather than design and implement another big fix, government could create the safe harbors for innovation and clarify rules for testable, verifiable improvement that would create new innovative capacity that never stops improving healthcare systems.

Here are five policy guidelines that will create true healthcare reform.

  1. Start with a clear, simple, meaningful direction. When I talked to people who worked in transformational start-ups, I heard a persistent refrain, "We knew where we were going." Adaptive leadership creates the new, but the direction must simple, clear, consistent and meaningful. In healthcare, the direction should be, "Get patients exactly what they need at continually lower cost." Period.
  2. Get the right people involved, then develop them. In complex, dynamic, unpredictable work, the right people will rarely be found in a meeting room. The right people are the ones close to value-adding work because they are the only experts on what's happening now. Management is essential, but reading reports in offices and studying spreadsheets in conference rooms are not. As the medical educator, Lawrence Joseph Henderson, said. "The only method that has ever succeeded widely and generally [in accomplishing change and improvement in healthcare ... is hard, persistent, intelligent, responsible, unremitting labor in the sick room, not in the library."
  3. Don't design and implement anything without experimentation. Instead, problem-solve the system when it fails by creating safe, testable, viable and improvable experiments as part of every day work.
  4. Problem solve with ingenuity rather than technology. Link with technology after the work has been simplified. Clear pathways will be essential to a few technology companies driven by problems not solutions, and linked with rapid feedback loops to insure the problem solve, test, validate, improve cycle continues.
  5. Replicate what works, relentlessly, but not as a best practice. There are no best practices in healthcare, only the opportunity to make the current best practice better.

To conclude, true healthcare reform will be a disruptive innovation, and the most important policy guideline for a disruptive innovation is to protect it from the experts, particularly those who "know what to do." Why? Because it's not what you do that's important. It's what you do when you don't know what to do that really makes the difference.

If we start to develop and capture the knowledge, creativity and problem solving ability at the front line of healthcare, I can guarantee the result - patients will increasingly get what they need at continually lower cost. It's making the small, very big. I'm no longer afraid.

Dr. John Kenagy is a former Visiting Scholar at Harvard Business School and the author of the forthcoming book Designed to Adapt: Leading Healthcare in Challenging Times (Second River Healthcare Press, September 2009).

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