The Leaders We Need, And What Makes Us Follow Read online

  CHAPTER 7

  Leaders for Health Care

  THE HEALTHCARE INDUSTRY is huge, making up from 13 to 16 percent of the U.S. economy. It’s a knowledge industry that should provide solutions rather than just products and services, but its mode of production and the social character of many of its key professionals lag behind the times. Health care is an industry desperately in need of visionary leaders who partner with operational and network leaders to transform organizations and even influence the social character of physicians.

  The troubling issues concerning health care in the United States are becoming better known: zooming costs; the increasing numbers of uninsured as companies drop coverage of employees; significant variability in diagnosis and treatment as complexity of new knowledge and technology outraces the learning abilities of doctors; hundreds of thousands of lifethreatening, avoidable mistakes in hospitals. Although other industrialized countries provide health insurance for all their citizens, they suffer the same problems of cost, complexity, and quality of care. The United States boasts some of the best doctors and hospitals in the world, yet, while we spend twice the amount per person than does the United Kingdom, we don’t see corresponding benefits in terms of health. Rather, the evidence indicates we’re worse off.1

  To improve health care and make it available to all Americans, crafting a new national policy is essential, but it’s not enough. Effective organizations are needed to deliver health care, and, as the chapter will show, there are different excellent models. As with all knowledge work, there’s no one best way to organize health care. We’ll see that while even the best of healthcare organizations can’t copy each other, they can learn from each other.

  Since the late 1980s, I’ve worked with executives from medical groups, businesses, government, unions, and religious organizations to help craft national policy on health care. I’ve also studied and consulted to some of the best healthcare organizations in the United States, and shared observations and ideas with researchers from the United Kingdom, France, Italy, and Sweden.2

  I was first recruited to this field by Dr. Henry Simmons, a visionary leader who put together a high-level group from business, government, academia, and medicine to explore the issues, digest knowledge from the experts, and shape policy. Simmons asked me to facilitate the process, and so began my learning journey.

  Simmons was trained as an internist at the University of Pittsburgh Medical School, but practicing medicine didn’t satisfy his ambition. Like many visionary leaders, he felt he should be doing more to make a difference, to change the world for the better. While still practicing in Boston, he got a degree in public health from Harvard. He looked for experts he could learn from and one of them, impressed by his idealism and energy, offered him a job as deputy assistant secretary for health in the Nixon administration. He stayed in government through the Ford administration, serving as director of the Office of Professional Standards where he instituted the first national standards review, and director of the Bureau of Drugs at the Food and Drug Administration (FDA). In these jobs, he was shocked to see the quality problems in medicine and wanted to find out how to solve them. After leaving government, he took a job at Booz Allen Hamilton, studying how to improve hospitals, and had a stint as CEO of Hunterdon Medical Center in New Jersey, where he got a taste of how hard it is to lead doctors. During the Reagan administration, he was a member of the Grace Commission to streamline government, where he got to know CEOs of big companies. When that service ended, he turned down a deanship and professorship because he wanted to create his own commission as a start to transforming American health care, and he persuaded the Pew Foundation to fund it. You have to be a productive narcissist to believe that without any formal power you can change the healthcare system of the United States.

  The National Leadership Commission Simmons organized learned that the problems of health care in America were systemic, meaning interrelated. For example, costs can be cut significantly if the quality and variability of treatments are controlled. And with universal coverage, care for the uninsured in emergency rooms would no longer be funded by higher insurance premiums for the insured. Also, a universal system would cut the time and cost doctors and hospitals spent filling out myriad insurance forms. Once the commission understood the need for a comprehensive solution, Simmons and his staff produced a policy proposal.

  At that time, the leaders of the Senate, Republican Bob Dole and Democrat George Mitchell, spoke before the commission and appeared ready to jointly back legislation making use of the commission’s work. But before they acted, Bill Clinton became President and Hillary Rodham Clinton was charged with overseeing healthcare policy. Incorporating some of the commission’s main ideas, she set up her own project to provide insurance for all Americans. The failure of her attempt is well-known. Strong lobbying and the “Harry and Louise” TV ads—paid for by the pharmaceutical industry—argued that with the Clinton plan, government would dictate our medical choices. This turned the public and Congress against what was already an overly complicated proposal.3 Furthermore, by not engaging key stakeholders—the hospital industry, healthcare professions organizations, the pharmaceutical industry, state governments, and of course, Congress—in crafting the plan, the Clintons lacked allies who had any commitment to it. I believe a major cause of their failure was that the Clintons didn’t want to share credit. Unless one party has a huge majority, as was the case during the Roosevelt years when the Democrats passed social security legislation, a national plan that increases the government’s role in providing coverage, controlling costs, and setting standards will pass Congress only if both parties share the credit.

  Once the Clinton plan was history, Simmons determined to build a bipartisan coalition, including organizations representing all stakeholders, to shape and support a comprehensive policy based on five principles:

  Healthcare coverage for all

  Cost management

  Improvement of healthcare quality and safety

  Equitable financing

  Simplified administration

  Simmons has had a remarkable ability to persuade others to join his ambitious project. Recognizing that success was much more likely if support was bipartisan, he recruited as cochairmen of the commission and coalition Democrat Paul G. Rogers, a highly respected former chairman of the Congressional committee on health at the time Simmons testified for the FDA, and Republican Robert D. Ray, a greatly admired former governor of Iowa. They in turn persuaded former presidents George H. W. Bush, Jimmy Carter, and Gerald Ford to become honorary cochairmen. Simmons, together with Rogers and Ray, then signed up almost one hundred dues-paying organizational members representing business, unions, providers, pension funds, religious, and interest groups like AARP. 4

  In the early years of the coalition, I attended some of the bimonthly meetings, in which coalition members were brought up to date on the many policy studies and initiatives coming from the Institute of Medicine, think tanks, and universities. But the coalition wasn’t able to agree on a new version of a comprehensive plan. The religious representatives, like those from the United States Conference of Catholic Bishops, were mainly concerned with coverage for all. Unionized companies, like Safeway, which provided expensive benefits to workers, wanted a level competitive playing field—and that meant getting Wal-Mart to bear the same costs. The businesses on the coalition called for cost control, but some of the medical groups, hospitals, and drug companies resisted any policy that threatened their revenues. GE had a schizophrenic attitude. The company liked the idea of paying less for employee benefits, but its healthcare division was a major engine of corporate growth, and cost control could hurt sales.

  In 2003, Simmons asked me to come back and facilitate a process to gain consensus on a set of interconnected specifications for reform. Meeting monthly with the coalition members, with many subgroup discussions in between, we were able to agree on a linked series of targets, criteria, and options. The process I used in fac
ilitating the agreement was:

  Get agreement on the problems and the state of knowledge.

  List the solutions offered by experts and coalition members.

  Get agreement on acceptable alternative specifications.

  It wasn’t easy to come to this agreement, but coalition members were willing to go along when there was two-thirds support for an alternative. However, if a member strongly objected to an alternative, that objection was fully discussed and we attempted to tailor the alternative, as long as it did not contradict the agreed-on five principles. In the end, almost all coalition members signed on to the specifications. Ideally, these should be adopted concurrently, but at the least, any steps taken to improve healthcare by national or state governments should be evaluated in terms of whether or not they advance the country toward these interrelated specifications.

  The report makes an important point that is not sufficiently understood by policy makers, particularly those who lack systems thinking:

  Partial or piecemeal reforms, even those conceived and implemented with the best of intentions, can produce unanticipated adverse consequences. For example, a dramatic expansion of access, implemented without accompanying measures to improve quality and manage costs, could produce an overloaded healthcare system that delivers worse care (albeit to more people) at higher costs. Similarly, constraints on costs (and reimbursements for care), pursued in isolation, could compromise both access and quality.

  We believe that a systemic approach can increase not only the substantive coherence of reform, but also its political feasibility. Thus, if constraints on healthcare cost increases were proposed in isolation, providers might understandably anticipate that their revenues going forward would be diminished. By contrast, if those same constraints were conjoined in a systemic strategy with an assurance of coverage for all Americans and financing for their care, providers would receive payment for care that they now provide, with little or no compensation, to uninsured patients.5

  After the report was published, Simmons contracted with economist Kenneth Thorpe, Robert W. Woodruff Professor at Emory University, to project the costs and savings of four scenarios consistent with the specifications: (1) employer and individual mandates, (2) expansion of existing public programs to cover the uninsured, (3) creation of new programs targeted at subsets of the uninsured, and (4) establishment of publicly financed universal coverage like the Canadian system. Taking into account cost management, improvement of quality and safety, and simplified administration, Thorpe estimated annual systemwide savings of $182 billion in the tenth year of implementing reform. Cumulative savings for that same ten-year period would range, across scenarios, from $320 billion to $1.1 trillion.6

  What will it take for Congress to pass a comprehensive program? Clearly, advocacy by the experts, churches, medical groups, unions, and a number of businesses hasn’t been enough to counteract a combination of free market antigovernment ideology and the self-interest of groups that fear losing profits.7 Maybe we need to wait until more people lose their coverage and start electing representatives committed to taking action. Clearly, it won’t happen without leaders in the White House and Congress who can educate the public and galvanize a response. Furthermore, public policy alone won’t improve the quality of care. That calls for great healthcare organizations with exceptional leaders. We’ll see that some do exist.

  LEADERS FOR HEALTHCARE ORGANIZATIONS

  Policy makers function in a rarified atmosphere, far from the organizations that have to implement their policies. Listening to the reports about the poor quality of health care, I asked myself whether some healthcare organizations were doing things right, especially improving quality and controlling costs. In the healthcare business, where there’s a huge variation in management approaches, someone somewhere is usually ahead of the curve, and you can always learn from the best cases. In 1998, Dr. Paul Griner, an old friend and Harvard classmate had just retired as CEO of Strong Memorial Hospital in Rochester, New York, and moved to Washington, D.C., where he was a vice president of the Association of American Medical Colleges (AAMC).8 He had been visiting academic health centers and had reported the problems of leaders in developing a vision.9 It was Griner who encouraged me to study the organizational practices and leadership of the best health organizations in the country to see if there was a good model for others to follow. Dr. Roger Bulger, then president of the Association of Academic Health Centers, also supported the idea, as did Henry Simmons. They recommended the project to the Robert Wood Johnson Foundation, which was at first skeptical about whether the healthcare organizations would let me in, but they were persuaded because Griner, Bulger, Simmons, and the other medical luminaries on the project’s advisory committee offered to pave the way.10

  A project team—myself and research associates Richard Margolies, Barbara Lenkerd, Doug Wilson, and George Casey—made study trips to the University of Rochester Medical Center; Intermountain Health Care in Salt Lake City; Aetna Healthcare; the University of Michigan Medical Center; Penn State Milton S. Hershey Medical Center; the Geisinger Clinic; Shands HealthCare (“Shands-University of Florida”); the Mayo Clinic (in Rochester, Minnesota, and Scottsdale, Arizona); Scripps Health (in San Diego and La Jolla, California); Vanderbilt University Medical Center; and Kaiser-Permanente Medical Center in Oakland, California.11

  We found that leadership is essential to improve the quality of patient care and cut unnecessary costs. In some of the most prestigious healthcare organizations, we found an angry clash between doctors practicing an obsolete craft-based mode of production, and hospitals, organized like industrial bureaucracies, whose administrators were attempting to force the physicians into the iron cage.

  The result was a cold war in which all the parties—doctors, hospitals, patients—were losers. In contrast, we met visionary leaders who were transforming both the medical mode of production and hospital bureaucracies into learning organizations, self-organizing and adaptive to the changing technology and markets.

  To fully grasp the leadership challenge, we need to understand the social character of doctors. Traditionally, medicine has been much like a craft, organized like a cottage industry with sole proprietors and small partnerships, based on the physician’s reputation and personal relationships with colleagues and patients. Doctors reinforce their professional identity within a guildlike structure that determines membership and monopolizes functions. There are, to be sure, some important differences: unlike artisan crafts, medicine depends on a widely shared, relatively open scientific knowledge base. Yet the parallels are striking. Although the doctor’s education begins with formal training, specialization is gained through apprenticeship.12 The ideal leadership model, as with other crafts, is the most accomplished practitioner, the master craftsman who represents the interests of his peers. If he does that effectively, he creates a strong transferential followership. The physician-patient relationship has depended on the patient’s trust of the doctor’s expertise and caring attitude. For centuries, the technology has been hand tools—stethoscope, scalpel, needles, etc.—and a limited number of useful medicines. The model of care has been biomedical, with a strong dose of positive transference to the doctor as a parental figure to cement trust and strengthen a placebo effect that aids natural self-healing.13

  Historical studies have shown that the model of the autonomous professional physician in America has been institutionalized through a long process starting in the nineteenth century, driven in part by the need for doctors to establish a solid basis of prestige to replace the image of unregulated quackery of the time. The establishment of medical education and licensing was crucial to creating a sense both among the public and among physicians themselves that their use of up-to-date scientific knowledge and their professional ethics warranted respect and financial reward. During the twentieth century the AMA (American Medical Association) worked for this professional autonomy, repeatedly fighting off regulators. 14 Although physicians now use more comple
x tools, many remain in a kind of cottage industry type of organization. Even when specialists are professors in academic health centers, these centers become like feudal kingdoms, where the vice president for health affairs is king, the dean of the medical school is lord of the manor, department chairs are the barons, and the local practitioners (LMDs)—who send their patients to the specialists in the castle—feel they are treated like lowly serfs.

  The explosion of medical knowledge, new drugs, and new technologies calls for standardization and collaboration among experts. But the craft mode of production resists standardization. Each craftsman does things his own way, which is why there is so much variability in medical care, and so much misdiagnosis and needless cost.

  Inevitably, this craft mode has been attacked by bureaucracies. As the doctors have held on to their traditional model, cost-control efforts such as health maintenance organizations (HMOs) and medical protocols imposed by insurance companies have weakened their autonomy and pushed many into joining group practices or becoming employees of healthcare organizations. Furthermore, both the changing social character of patients and the information revolution have also undermined the doctor’s unchallenged authority. Interactives, used to parents who served them, are less likely to project an uncritical, idealized transference on to the doctor. Interactives are also more likely to surf the Net for the rich lode of medical information and question a doctor’s diagnosis. These assertive patients are aware that what the doctor learned in medical school may now be out of date. If this were not enough to ruin the doctor’s image of what practicing medicine should be like, lawyers lie in wait, ready to file for malpractice if the doctor makes a mistake.