A Leadership Agenda: Collaborative for Change

The US economy and society continue to suffer from an overbuilt, under-performing and too costly arrangement for the organization and delivery of health care services. The costs of this policy and market failure now amount to as much as $700 billion annually, approximately the cost of the banking and financial liquidity crisis and remedy of the past two years. The only difference is that the financial fix was a one-time expenditure and has seen nearly two thirds of the funding returned to the Treasury, while the health care overpayment is an annual expenditure with no end in sight. The uncontrollable costs of health care delivery are now driving deep structural deficits at the state level, the steady evaporation of benefited health coverage by employers of all sizes and the direct exposure of individuals to the financial risks associated with irrationally priced and under-performing health care services. In the medium and long term the growth of health care costs will bankrupt the nation.

In fairness, the system is large, complex and connected in a manner that creates enormous transaction costs between the various components; costs that are reflected not only in dollars, but patient quality and safety losses as well. However, one of the central tragedies of the system is that evidenced based alternatives to the current practice patterns for organizing care exist, but policy makers, institutions, professionals and, to a large extent, consumers at the individual and corporate levels are unable to access, pursue or advance these innovations because of three reasons. Firstly, no single entity approaches the problem as a whole. Secondly, there is a core lack of financial, regulatory and information connectivity of the parts of the system. Finally, consumers, providers and insurers -- lacking a larger rational system or market opt out -- pursue individual schemes for avoiding or selecting risks they are exposed to. In the public sector, the seeming failure of even the first steps of reform exhibits this process; and the growing departure of consumers of all sizes expresses the same concerns in the market.

One useful way of framing the challenge of change in health care is to think of the entire system as a collection of functions to produce a unit of care. These functions include routine preventative primary care, management of an older patient with diabetes, an admission to the hospital. Behind each of these production units is a practice model which is either explicit or implicit. It is this practice model through which service is performed, professionals are involved in certain roles, technologies are used and outcomes measured. As costs for these units of care exceed the general Consumer Price Index (CPI), various actors in the system either limit access to the care units through utilization management or underinsurance -- or they negotiate lower reimbursement rates for unit costs through contracting and rate setting in the private and public sectors. Both of these approaches have significant downsides for consumers and providers, and neither approach has stopped the excessive growth in health care costs.

What we need is concerted action by the various organizations and institutions that make up health care. This means the clinics, health plans, hospitals, professional groups, and public agencies. It would be great to have the policy changes that will drive these institutions toward the needed changes and reforms, but leaders do not wait for every market signal or regulatory change. Leaders look to the changes in the environment and struggle to understand the impact of these changes on their traditional way of doing business. More importantly, leaders have the courage to step out and ask new questions and take unfamiliar actions. Because it is exactly questions and actions of these types that will drive us to new answers and then new solutions.

There are commitments to action in three core domains that every leader should plan to engage in order to be successful.

Coherence – these are times of great dislocation and change and it is the task of all leaders to struggle to provide the new frameworks, models and paradigms through which we understand this reality. This new coherence must be tied to the values that serve the interests of provider and consumer, but these must be cast in the light of the new realities of shifting health care, social and economic environments.   This vision of where we are headed does not need to be perfect, in fact it cannot be, a good enough vision to get us started will more than suffice to guide the exploratory nature of our first steps.

Efficacy – the change will only come about if we can actually deliver on the changes. We must think of the change in small steps that lead to the decade long path that must be taken to actually turn the ship. The organizations that lead this transformation will need adaptive business models that allow the switch from old to new financing to occur. The speed of the change will be marked by how quickly these organizations can see evidence based models and adapt it to their operation. Such translations will require a raft of leadership and political skills -- from teams, to conflict, to working through and with others. New skills will be needed at all levels, but particularly among those just taking up the leadership challenge.

Community – an odd word for a part of the economy in which each element has spent great effort to themselves apart from all others. There really can be no answer to the problems we now have without deeper integration across institutions, sectors, professions and between consumer and provider. Some of these efforts will be led by the incumbent organizations and others will come from public jurisdictions at the state and local level. We should encourage such Health Commons to emerge wherever the possibility arises. Such efforts have always represented the very best actions of our nation.

We need improvement at every turn, but the task is so great that we will perforce need a little reinvention and rethinking as well.