Porter and Lee published a perspective on “Why Strategy Matters Now” earlier this year. As they define it, strategy is about making choices and suggest six questions that need answers if healthcare organizations are going to survive. The most basic, of course, is what is our goal?
Having participated in many discussions with several different healthcare organizations, I find that many leaders answer this question by saying “To stay in business.” But if the industry is, indeed, undergoing transformational change, a thesis which can be challenged, then that won’t suffice. Porter and Lee suggest the only viable answer for the future is “to create value for patients.” While that seems fairly obvious, my experience suggests it is not really central to organizational thinking. Part of the problem, of course, is that all of those words have different meanings to different people. As I discussed in the series on the quality paradox, there is good evidence that as organizations improve their ability to account for their work and demonstrate improvement in the quality of care, the quality of their caring often goes down. Yet if we ask what patients want, it is usually the latter. Why the breakdown.
I suggest the primary problem is one of scale. Numerous headlines have pointed out that in response to the Affordable Care Act, meaningful use electronic health record requirements and other Federal mandates, the trend toward mergers and acquisitions has accelerated. While we are not yet at the point of monopsony that characterizes the airline industry, we are getting to the point where a handful of insurance carriers and the government are going to be dealing with a handful of providers in each state. As these organizations become larger and more complex, it becomes harder for those near the apex of the pyramid to have a granular understanding of the actual care delivered. The focus necessarily becomes bureaucratic and often internal. The “customer” who gets the focus is not the patient, it is the payer, or CMS with its detailed and intrusive requirements backed by the force of law.
Now CMS would argue it is forcing unwilling providers to measure up and provide value to the beneficiaries and at the margins that may be true. But most organizations are beginning to recognize that dealing with CMS quality mandates is a zero sum game. Consider just two examples. In the hospital industry, part of the payment is withheld and the hospital must “earn back” the withhold by meeting targets. But some of the targets are percentiles, and there is no extra money, so if you get a “bonus” payment, the money was generated by someone else’s penalty. As a result, almost half of hospitals are in a penalty of some sort. The second example is the dialysis facility comparison rankings. The proposal places all dialysis units on a five point scale and forces rankings based upon percentiles. Thus a specified percentage of units will be “one star” and a specified percentage will be “five star.” In both of these instances, an organization is not really trying to exceed some specified target in order to achieve a better outcome, it is trying to avoid being “below average.” In my view, the only rational conclusion in such a system is that the goal is to be average, since statistically, beating the norm consistently is unlikely.
The second problem is what Porter and Lee describe as thinking based on the legacy structure—how do we solve a problem for the hospital, for instance. They suggest organizations have to stop doing this and focus on patient outcomes and operational performance at the patient level. While I agree that might be a good thing, I also don’t think it is very likely to happen. Consider the problem of the electronic health records. In theory, they are supposed to facilitate communication. What I have observed is that for hospitals, most of them automate legacy functions and are organized around hospital needs. Tracking patients horizontally, that is across episodes of care, is quite difficult if not impossible. In the doctors’ offices, the electronic record is generated, but then is sent to the consultant by FAX. The only real difference I can see is that there are more pages to the FAX than there used to be and I can read the notes. I still end up having to transfer useful data to my electronic record, and when I send my note back to the referring doctor, she has to do the process in reverse.
Furthermore, how are people supposed to stop thinking about the “legacy systems” when that is the organization that writes their paycheck and is the one that organizes their work? We have a lot of department managers, but how do we find the money and the expertise to have “patient managers” who can redirect organizational energy? If it were that easy, then insurance company “case managers” would actually be helping patients as opposed to sending me computerized messages reminding me that somebody is due for “an evidence-based” lab test
While I do think we need to make changes and I agree with the notion that we are spending a lot of other people’s money doing things that really don’t help individual patients, I am constantly reminded of the power and persistence of “how we do things around here.” Grand reform schemes seem better in op-ed pieces than they do on the ground. Do you have any ideas about changing organizational habits to further improvements in real patient care?
23 September 2015
 Porter ME, Lee TH. Why Strategy Matters Now. N Engl J Med 2015;372(18):1681-84.
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