Thursday, June 4, 2009

The "In" Crowd

Triangulation. That’s really what this project is about; I grab a thing from here, a thing from there, some stuff from over yonder and find a thematic link that intrigues me (at least) and you (hopefully).

Today’s exercise in triangulation is just that – two articles on similar topics that spark imagination and discussion.

The first appeared in the Harvard Business Review Blogs where Umair Hague posed the question, “Is Your Innovation Really Unnovation?” His premise: “In the race to innovate, most organizations forget a simple but fundamental economic truth. A new process, product, service, business design, or strategy can only be described as an innovation if it results in (or is the result of) authentic, durable economic gains.”

From there: “Most innovation, well, isn't: it is "unnovation," or innovation that fails to create authentic, meaningful value. The biggest stumbling block to innovation is unnovation: most companies are too busy unnovating to ever learn how to truly innovate.”

His post provides some examples of “unnovation” – The Hummer, Collateralized Debt Obligations, carmakers getting into the financing business – and challenges that “innovation today demands more substance and less hype. [My favorite line coming next!] A bigger SUV with even worse mileage or a razor with yet another blade are only innovative if wearing my socks inside out is too. All three create roughly the same amount of economic value.”

The second point on the triangle, and how this becomes healthcare-relevant, was an editorial piece in HealthLeaders that appeared, coincidentally, the next day titled, “Hospitals May Need Operators, Not Innovators.” In this article, the oft-engaging Philip Betbeze puzzles over the need for innovation in the ranks of hospital leadership. His hypothesis goes, “Maybe we're better off with people who are good at executing, but who are not necessarily idea people. With drastic healthcare reform proposals on the horizon, are we better off with a majority of operators versus innovators? It's possible we are. The industry is already the most regulated on the planet, and I include financial services in that assessment, even with recent unprecedented government intervention in that sector. As government works to further regulate healthcare, are innovators really what is needed? I'm not sure, but…[w]ith further regulation, I'm coming down on the side of the efficient operators.”

There’s certainly merit to Philip’s point-of-view. “So bring on the operators. People who can effectively navigate through bureaucratic hoops and chart a path to profitability without sacrificing patient care. Those are the people healthcare is going to need in the immediate future, where the line between surviving and thriving might live on the razor's edge.” If you don’t have excellent operators at your hospital, you quite possibly guilty of a degree of professional malfeasance.

That said, it led me to wonder, though, what is true innovation in health care delivery? For guidance, go back to Umair Hague’s guideline: “A new process, product, service, business design, or strategy can only be described as an innovation if it results in (or is the result of) authentic, durable economic gains.”

This led me to Michael Porter and Elizabeth Olmsted Teisberg’s 2006 doorstop, “Redefining Health Care.” It’s excellent (but dense), focusing entirely on the question of value and how the health care delivery system has systemically destroyed (unnovated?) value more often than it has created it.

[Sidebar: Maybe another time we can digress on both the destruction of value and the role of non-provider elements within the system have played in creating real value, but I don’t want to get too far off topic right now.]

On page 111 Porter and Teisberg offer a nice guideline in this discussion, “Value in health care delivery is created by doing a few things well, not by trying to do everything. Yet, health care delivery is currently not organized this way—indeed, the current system encourages just the opposite.” When they say "current system" they largely mean reimbursement - both private insurance and Medicare - although other elements, like research funding, professional compensation, rewards and recognition, etc. certainly also contribute.

Further on, they suggest, “The combined effects of experience, scale, and learning create a virtuous circle in which the value delivered by a provider can improve rapidly.” They draw a believable connection between deeper specialization, efficiencies, practice development, innovation and better results, with better results aiding reputation and compelling even greater volume.

The conclusion they suggest, which conforms to Hague’s definition of real value creation and innovation, is that if the US health system encourages and rewards value-based competition on results, the inevitable output will be better product and better quality of life at a lower cost. Real value.

Realists, they do point out, “The relationship among experience, scale, and results is not automatic, especially when providers do not have to compete on results. An important factor is learning.” This sparked a thought…is that like quality? If it’s not planned for, if it’s not an organizational strategic priority, is high-octane, propelling learning unlikely? “Learning requires an active process of review and improvement.”

So, to be part of the “In” crowd, that is the “innovating” crowd, my a-ha was organizational commitments to specialization and active learning with an eye on value creation.

At first I thought I’d end up thinking tools like EMRs, Accountable Care Organizations, and the like would be examples of innovation in health care. But, now, I’m compelled to think that strategic decisions around specialization, delivery system integration and business process tools are just means to an end. Real value creation, real innovation, is the role of learning and the strategic commitment to pursue learning within such a system.

That’s a durable challenge under any regulatory scenario. Operators are necessary, for sure. Innovators are welcome, and needed.


  1. I like the bit about unnovation as it seems we often respond to customer needs and values in the short term without ‘doing stuff that matters’ (i.e. Band-Aid). Personnel shortages are affecting a bunch of healthcare disciplines and at the same time many patients are experiencing inadequate outcomes. Without effective case management to appropriately direct patients to our resources how can we advance care AND shrink costs? It feels like many patients get lost while trying to find their way about this uncoordinated system, which in turn burns up a lot of potential value for the provider and payer as well as the patient. Patients need and deserve advocates who are healthcare ‘insiders’. Those of us on this blog probably serve as this role for friends and relatives in suggesting physicians, facilities, etc, but shouldn’t/couldn’t the system be easier to navigate?

  2. I found the "...Operators, Not Innovators" section a complete contradiction to the insights from Kotter's HBR article "What Leaders Really Do." Perhaps instead of trying to change leaders into "operators," there should be a shift in organizational direction for the time being. Or at the very least, leaders should ensure that the proper people are in place to "operate" the organization so that they can continue to understand the big picture of health care and anticipate the next change on the horizon.

  3. At times, I think that the pro-reform and anti-reform advocates are more focused on prevailing on their respective polar positions ("no" to reform vs. "yes" to reform) than reaching an effective compromise (by definition some common, middle ground). Why? I think the issue is political pragmatism born of the Clinton failure to reform health care. The Clinton plan failed and it took more than a decade for the issue of health care reform to float back to the top of political consciousness. From the pro-reform perspective, the thinking is "let's force reform through now while we have the mandate and we can clean it up later." From the anti-reform camp the thinking is "if we can stop the train now, we won't have to deal with this for another decade." This issue is symbolic of politics at the federal level -- it is difficult to make change in a reasoned and step-wise way if there is little agreement on the long-term endpoint. It's either "all" or "nothing at all."

  4. In our Quality class we just discussed the reform efforts in China and basically that the political leaders may push "reform" through, almost regardless of whether it is an actual improvement to the system...