1 July 2016
Dear Interested Readers,
An Introduction to This Week’s Letter Plus Some Comments on The Complexity of Ownership of the Nation’s Care Delivery System
My “standard work” is for this letter to hit your “inbox” at 3 PM on Friday. I will wager that this week at 3:01 my inbox will be flooded with “out of office” notifications. I hope that by 3 PM you will be on your way to the mountains or the beach, or that you will already be at home and parked in a comfortable lounge chair on your deck and ready for the long Fourth of July weekend. The really fortunate among you may be planning to take next week off!
I suspect that although you put that “out of office” notice on your email, many of you suffer from the same disease that I have and will be sneaking a look at your mailbox sometime over the weekend. My challenge is to offer you something that will capture your interest enough for you to invest a few of these precious holiday weekend minutes reading what follows. If I fail there is a good possibility that this letter will end up with a lot of the other emails that get deleted after a long holiday weekend.
The meat of this week’s letter is a discussion of the future challenges that face managers at every level in the healthcare enterprise. Last week’s letter examined those challenges for nonprofit healthcare boards. If you missed last week’s missive you can read an abridged version on strategyhealthcare.com. In that letter I spent some time talking about nonprofits versus privately owned and government owned healthcare entities. It feels like the dissection of the collective delivery system needs more attention than nonprofit, for profit and government owned.
One clarification that I should add is that within “for profit” and “nonprofit” healthcare enterprises there are many subtypes so generalizations can be difficult. I find that many healthcare professionals and perhaps a majority of patients have never given much thought to the diversity of legal entities that together deliver care to the country. There are several ways to divide up each category, and yes, there are hybrids. Some nonprofits have for profit subsidiaries and some have fixed contracts with for profit medical groups or management companies. Kaiser-Permanente is perhaps the largest and best example of the mixed model. All of the physicians in the Permanente Medical Group are part of a taxable physician owned entity. The Kaiser side of the hyphen is a complex structure that is a network of mostly nonprofit organizations, although I would not be surprised to learn that there are some for profit entities dangling here and there from their org chart.
The public thinks of Tufts Health Plan as a nonprofit insurer which it mostly is, but if you look closely at its reported structure you see that Tufts is a collection of companies with a for profit management structure. Small medical practices tend to be owned by their professionals and larger ones are often nonprofit organizations, but both publicly traded companies like DaVita, a Fortune 500 behemoth, and private investors are buying medical practices. Steward Health once was Caritas Christi and owned by the Archdiocese of Massachusetts and is now owned by Cerberus which is a private investment house or hedge fund. I am only scratching at the surface in my description of the complexity of ownership in our national system of care delivery.
Nonprofits vary in many ways including size and the culture or organization from which they emerged. In size they vary from national organizations like some of the large “faith based” systems to small local hospitals and VNAs. Recently, some faith based systems that have not been sold to private equity or publically traded companies or other for profit entities have developed partnerships with them while attempting to maintain their mission. All of these different legal structures and ownership models in healthcare add to its complexity. Before we are finished with this high level look at the structure of healthcare I should remind you that there is state to state variation in the acceptable legal structure of medical practice. “Foundation states” like California or Texas would not allow organizations like Atrius Health because they have laws against the “corporate practice of medicine”.
All of this detail may be boring and a review of what you may already know, but I believe that the governance and ownership of any healthcare entity must be understood to appreciate how it works and how it is likely to respond to the challenges of the future. Specifics about an organization's ownership are particularly important in the discussion of the challenges that face its managers. I think that each type of organization has some special concerns and requires specific considerations. Being the CMO of a hospital owned by a for profit corporation that is really owned by a private equity fund probably is different than being the CMO of a nonprofit hospital that is owned by a faith based organization, and both of those jobs are probably radically different than being the CMO of a safety net hospital with a board appointed by the mayor or county commissioners.
For several weeks I have planned to write about the challenges that managers face in the future. It has been on my writing schedule as part of the current project about the future of healthcare, but a little more than a week ago I got an email request that was sent to several healthcare executive asking for some help:
....exploring the top five challenges healthcare executives are facing and how these challenges will impact the industry in the next five years.
The request continued by saying:
... we would like to hear about some of the challenges you faced as executives, how these challenges are affecting the industry…
I wrote back with the suggestion that they read this week’s letter. I hope that you find that it gives you a little more perspective working with management either as an employee or as a consultant. If you are a manager in any capacity from team leader to CEO I hope that this letter will be particularly helpful for you in some way.
I made a decision last Thursday night not to talk about Brexit. The decision was partly because I was upset and did not know what I really thought even though I knew the result of the vote. I was listening to the BBC news feed that is on late at night on NPR as I was writing. I decided to pass and see what happened. The confusion of the last week tells me that I made the right choice. This week we have had a lot of news beside Brexit. The West has suffered yet another shared atrocity on its Eastern border in Istanbul where East and Middle East has always met the West. There is a little “week in review” at the end of the letter. Can you believe that in the month of June the Red Sox lost sixteen games and only won ten?
Exploring the Top Five Challenges Healthcare Executives Are Facing
Last week I summed up my presentation about the issues that would face nonprofit boards with the concept or prediction that I called the “Quadruple Challenge Plus One”. I introduced the idea by saying:
Looking into the future for all boards and management teams I can predict that we can count on for sure what I facetiously label as the Quadruple Challenge Plus One:
- There will be continuing downward pressure on revenues.
- Increasing regulatory complexity and persistent audits for compliance and the detection of fraud.
- Continuing demands from all payers, the government and patients for efficiency and value. These demands may force some boards to consider mergers and affiliations.
- Operational costs will continue to rise disproportionate to revenue.
- The “plus one” is the evolving professional workforce shortages and growing professional stresses relative to current work flows and the workforce shortages. This negative workforce reality will occur on top of the growing problem of “burnout”. We are moving toward the day when there will be less than one primary care physician for every 10,000 American adults. There will be more elderly patients and more patients with complex medical problems. The boards of nonprofits may discover that this is a bigger issues than the pressure on revenue.
It is absolutely true that boards are and will continue to face these issues in the present and the near future of at least the next ten years. I did say “all boards and management teams” but these are only the very high level concerns and do not really give management any guidance in thinking about the specifics of what will change for them in the proximate future and what new management skills and competencies they will need to acquire to successfully lead their organizations.
Boards and management will be challenged to understand and implement the changes that will insure the continued success of the organizations that they lead. There has been a lot written about leading change and why it is so hard to do. Recognizing the need for change is the easy part. Deciding what to change and how to engage everyone in the process of change is the hard part, especially when so many people are already running hard to survive for a lack of change.
Perhaps you have read John Kotter and know all about “burning platforms” and the necessity to create a sense of urgency. Kotter certainly believes that our usual response to a need to change is to first create strategy and that is wrong for many reasons. His first point is that pausing to create a strategy is a delay in the involvement of most people and shields the majority of the people in the enterprise from either the necessity or the opportunity to do anything. For Kotter, job one in his eight step program of change management is to create a sense of urgency. Step 2, building a guiding coalition also proceeds strategy which for Kotter is something that a larger group does.
The first challenge for you as a part of management, or as an “informal leader” who is concerned about the future of healthcare and the proper response of your organization, will be to lead others to understand that the defining characteristic of our time is the continuous need for change in an environment of almost universal uncertainty. As I have said many times, healthcare is a pure VUCA environment characterized by volatility, uncertainty, complexity, and ambiguity. That is for healthcare, which is just a fractile of our larger world, and it is also true of our whole world from the issues of global warming, through international relations, and right down to the lack of prosperity and safety that people feel in their neighborhood and describe in terms of “inequality”.
The second challenge is to recognize that what has worked is not working well now and may well not work at all in the future. The need to respond to the changes that are being forced by the downward pressure on revenue and the increase work created by changes in the regulatory environment will be with us for a long time. We will continue to need to deal with getting paid less while suffering from the annoyance of being scrutinized more. To those demands add the requirement for increased transparency about how you do business and the quality of the results that you get. If you can deal with all those demands, know for sure that you will also soon feel the compulsory shove coming from CMS and other payers forcing you to make the transition from “volume to value” and acquire the competency to feel comfortable accepting increased performance risk for the care of populations.
The third challenge is to put your personal interest after those of clients, community, and the organization. This is perhaps the hardest challenge. Not many people want to go through a change, especially if the system is working for them, if not others. Management at every level and sometimes even non management professionals have a personal stake in the status quo even when the outlook for future success is limited in the current configuration. We like what we know. We fear what we do not know. Some people whom I know have had the courage to say that their goal or hope is to ride out the last few years before retirement and leave the change to those who follow. I have never had the audacity to say, “You should retire today and get out of the way!”.
The fourth challenge is to recognize that cosmetic changes will only make the issues worse. The change needs to be transformative and will touch everyone and every process. Workflows from the past are not consistent with the needs of customers, the resources available or mission of the organization. Some axiomatic foundational principles, like individual clinical autonomy, will change. The culture of organizations will need to change. The core of the fourth challenge is to recognize that leaders and managers must demonstrate the change they advocate. The old management tools, processes and attitudes will not work. The first manifestation of change should be observable in leaders.
The fifth challenge is for managers and leaders to discover, learn, and teach the competencies that will be the platform upon which the transformation for a better future occurs. It’s been over a quarter of a century now since Peter Senge and others talked about the learning organization. The Fifth Discipline was published in 1990. Ironically, in 1990 the fifth discipline on the list was systems thinking. You can find a list of the five disciplines in many places but Wikipedia’s list will do:
- Personal mastery is a discipline of continually clarifying and deepening our personal vision, of focusing our energies, of developing patience, and of seeing reality objectively.
- Mental models are deeply ingrained assumptions, generalizations, or even pictures of images that influence how we understand the world and how we take action.
- Building shared vision - a practice of unearthing shared pictures of the future that foster genuine commitment and enrollment rather than compliance.
- Team learning starts with dialogue, the capacity of members of a team to suspend assumptions and enter into genuine thinking together.
- Systems thinking - The Fifth Discipline that integrates the other four.
This list of five challenges for the future is surely imperfect. It’s one man’s list looking at the future from the perspective of someone whose professional future is in the past. Looking through the rear view mirror of life I think that I can say without much fear that this list of five challenges for the future is the same list I have followed with a growing awareness since 1985. I am sure someone else might describe the five challenges for management for the future from a different perspective, but I am equally convinced that there is some merit to this offering.
How is your current leadership style working for you? Is it up to those challenges. My approach has been to look for advice and to try on the offerings and the experiences of others to see if they work for me and give me something to offer to those I am trying to serve. Management theorists have been looking for new approaches for a while and the shelf on change leadership in any bookstore or library is one the longest shelves. Daniel Pink impressed us with a need for “right brained thinking” in his book A Whole New Mind: Why Right-brainers Will Rule the Future. One of my favorites guide books has been Leaders Make the Future: Ten New Leadership Skills for an Uncertain World by Rob Johansen. Johansen is a futurist who suggests that we need new competencies to successfully manage in the future. It is an interesting list as you discovered if you looked at the link. If you did not check out the link, here is a list presented by the author of that review:
- Maker Instinct: Leaders should approach their responsibilities with a commitment to build and grow their ideas and connect this energy with others.
- Clarity: Leaders should be clear about what they are creating, but be flexible about how it is accomplished.
- Dilemma Flipping: Leaders should turn problems that cannot be solved into opportunities.
- Immersive Learning: Leaders must be learners, especially by doing.
- Bio-empathy: Leaders understand, respect, and learn from nature
- Constructive Depolarization: Leaders must be able to calm tense situations and bring people from different backgrounds together for constructive engagement.
- Quiet Transparency: Leaders should be open and authentic about what matters without engaging in self-promotion.
- Rapid Prototyping: Leaders should work quickly to create early versions of innovations.
- Smart Mob Organizing: Leaders must create, engage, and maintain social networks.
- Commons Creating: Leaders should stimulate, grow, and nurture shared assets that benefit others.
If you want to hear more, let me recommend that you spend 10 minutes looking at a video that begins by articulating the responsibility of management to lead through an environment that is volatile, uncertain, complex and ambiguous.
My favorite competency for the future is “dilemma flipping”. I frequently have said that the shortages in clinicians at all levels that are evolving and are exacerbated by the longevity of the population, and our attempts to give everyone access to the care they need, will be the greatest dilemma facing us in the future. It is the “plus one” in the Quadruple Challenge Plus One. Well if our dilemma is that it we can’t continue what we have been doing let’s flip the dilemma and come up with changes in work flows and with new innovations that make the professional workforce available to be more than enough to give good care to everyone!
Over the years I looked for answers in books and articles. I developed my own ideas and adopted better ideas when I came across them as presented by others, but I am certain that until I was introduced to Lean I had not come across any coherent approach to the most significant problems that faced the organizations that I cared about. Lean begins with the respect for the customer and for the people who do the work. It fosters collaboration ( the fundamental strategy for success in our species), and is fueled by the joy of continuous improvement and learning. Lean has incorporated all of the power of the scientific method and focuses on proof through objective measurement. Lean teaches that solutions follow an analysis that includes a search for misconceptions and biases. Perhaps the sixth challenge for managers for the future is to keep looking for something better than Lean. What they will find is Lean, because Lean is continuously improving. Lean is not a philosophy or management mindset written in stone. Lean is itself in a process of permanent continuous improvement as we all must be.
Jumping To Solutions: From the Frying Pan into the Fire
The solutions to complex social problems are not nativism, isolation, walls, exclusions, semi automatic rifles or withdrawal from complex international problems in a fit of national self interest. Wannabe autocrats who proclaim they have the answers worry me. Across the country and around the world we have a fictitious image of a world that never existed. Carnies and demagogues offer to restore this dreamland as a way of quickly solving complex problems of inequity.
I am not a Buddhist but I am told they have a saying. “If you met the Buddha on the road, kill him!”. The reasoning behind such a violent statement is that if you meet someone who has all the answers, that person can not be the real Buddha, and is dangerous. I for one hope we can find some leaders who do not have all the answers but do have the competence of leading all of us toward solutions that might work.
There has been a lot written about Brexit. Will it ever happen? Probably. Will it be the beginning of something better? Probably not. Many of the people who voted for it are suddenly wondering what they have done. Did it arise from an enormous example of political self interest with fuzzy thinking by self serving politicians on both sides of a complicated question? It sure looks that way. A Prime Minister let a couple of demagogues push him to a decision that was an ill advised solution.
David Cameron’s ill advised referendum for something he did not want and did not have to do represents a painful example of jumping to a solution. It was a self interested solution to pressure he was feeling. For many in Britain it was an enormous example of yielding to an emotional expression of frustration for a momentary rush of satisfaction at the expense of long term loss. Cameron forgot he was a leader and invited others to exercise the same lack of judgement and a majority took him up on the offer. I am reminded of the late Jim Croce’s song “Five Short Minutes” where he has the line:
Istanbul is a crossroad of the world. Old meets new, Europe meets Asia, and Eastern and Middle Eastern culture meet Western ideas and culture in Istanbul. The currents in the Straits of Bosphorus are a metaphor for the realities of our world of tumult. The airport is one of the busiest in the world and through it pass people of every nation and religion. It is hard to imagine a more symbolic target to remind us all of our collective vulnerability. My worry beyond when and where the next “attack” will occur is to what other “jumps to solution” these atrocities stimulate. There has been a lot ink used in discussion about the similarities between the emotions behind Brexit and the emotions of those voters in the American electorate who are willing to accept the quick solutions of a self proclaimed answer man that they “met in the road”. I hope that our reliance on reason and experience carry more influence in our selection process for leaders than Tweets and claims on social media.
June Finished With A Flourish of Beautiful Weather and a Sox Collapse
By my back of the envelop calculations David Price is paid a million dollars every time he pitches a baseball game. SInce most pitcher throw about a hundred pitches a game, that means he is paid $10,000 every time he throws toward home plate no matter what the outcome. Some end up as strikes, some end up as balls, a lot seem to leave the ballyard as home runs or rattle around in the outfield as doubles. No matter the outcome of the pitch, the cash register goes “ka ching, ka ching”. Every time the total outcome ends up in the loss column my heart sinks just a little.
Last Sunday I exercised good judgement. Rather than watch the Sox put up a disappointing effort in Texas I took a walk with my wife and friends in Marion down on Buzzard’s Bay. After the walk we had a great time “quahogging”. As you can see from the header, the walk was worth a million bucks, and since I put in a little over 10,000 steps between the walk and the quahogging then every step was worth at least $100. I left the money on my account for better mental and physical health.
The forecast for this long holiday weekend could hardly be better. I hope that the Sox begin a better July and that you start a terrific month of summer. Remember that summer is short. It really ends after the picnic on Labor Day. Make every moment count!
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