THE BLOG
08/13/2009 05:12 am ET | Updated May 25, 2011

The Health Care Pundits Get It Right ... And Wrong

Last week, Alex MacGillis of The Washington Post and David Brooks of The New York Times both identified the crucial flaw in the current efforts at government-driven health care reform -- the failure to control health care inflation.

MacGillis admitted President Obama acknowledges there are limits to what we can pay for, but criticized him for failing to address those limits in the Administration's proposals. Brooks was more blunt: "What's the result [of health care reform] so far? Failure. Overwhelming, amazing failure."

Here's the gist of their arguments. First, the cost of U.S. health care is, in Brooks' words, "bankrupting the nation, walloping businesses and squeezing the middle class."

Secondly, no one is willing to speak out against exorbitant spending. "How will tough decisions be made about what to spend money on?" MacGillis writes. "In a country where "rationing" is a dirty word, who will say no?"

So, we're facing a huge problem, widely acknowledged to be of crisis proportions, with the lead of an administration elected on the promise of solving it. Yet we see no progress.

Some question how that can be. I say, what else should we expect? As we continue to repeat the solutions that have led these problems, I'm not surprised when we get nowhere.

I have been a physician, health care executive, scholar, advisor and most importantly, a patient, once deeply immersed in our health care system with a critical injury. That experience has shown me that the root cause of our nation's health care crisis is not pampered, unreasonably demanding patients or greedy doctors, hospitals and insurance companies.

It has also shown me that we are not stuck with failed health policy and management methods because the government and industry hasn't tried. In my 40 years in health care, we have never lacked for data, meetings, studies, task forces, improvement projects, investment in technology or incentive alignment.

I propose the root cause of our nation's health care crisis is an antiquated management system better designed for mid-20th century factories than the complex realities of 21st century health care. We won't be able to solve this problem until we deal with two myths that drive our current thinking.

Myth #1 - It's the patients fault. The problem is all those greedy patients who want more than what they need.

I have been a physician for 40 years and I can say with confidence that I have treated only a tiny handful of patients who wanted more than what they needed and they all had serious psychiatric conditions.

Patients don't want more health care than they need. Health care is not some sort of amusement park. It's not fun, energizing or rewarding. In my experience, it is the fear that we are not getting what we or our loved ones need that drives the demand for more.

Consider your last experience in health care. If you thought you got what you or your loved one needed would you demand more? The facts, documented in multitudes of studies, are that our antiquated management system, no matter what we spend, consistently fails to deliver.

How do we counter the mythology of greedy patients? We start by developing organizations that focus on getting patients exactly what they need and have the capability to deliver at continually lower cost.

That brings us to Myth #2 - We need to gather more data, have more meetings with experts, and design and implement more new systems, technology, aligned incentives and accountability.

The problem with this myth is that we need to transform a very large, dynamic and unpredictable industry. The data up/implement down approach has quite simply never accomplished that kind of transformation. It's better suited for managing straightforward work on an industrial assembly line than the complex work of health care delivery.

Here's my personal health care experience. In 1992, I fell out of a tree, broke my neck and found myself dependent on the diligent efforts of individuals working in a broken health care system. I recovered, but wanted to improve the many flaws I saw. So, with my industrial mind-set in which management makes the fix, I became an executive in a great, forward-thinking health system.

There, I discovered that I was constantly looking for better data and going to more meetings to chip away at the macro issues of a broken system -- quality, safety, financial sustainability, technology, compliance -- while staff and physicians continued to struggle with the small problems that broke the system in the first place. Those small problems, unsolved, became the big problems that not only filled the agendas of endless meetings, but also continue to fuel the waste, rework and inefficiency that drives health care inflation.

And not only was the data up/implement down approach a poor match for health care, but it was very expensive.

I studied a different approach as a Visiting Scholar at Harvard Business School. When industries undergo the type of large-scale transformation needed in health care, the solutions always come from simple ideas and organizations developed as "disruptive innovations" -- term defined and described by Harvard Professor Clayton Christensen.

I studied these transformations and the companies that led them -- companies like Toyota, Intel and Southwest Airlines. Then, borrowing and improving on their successful business practices, I then spent the next 12 years testing, validating and improving these concepts in health care.

The formula I arrived at is called Adaptive Design. It isn't complex -- just different. It involves two key steps. First, start by focusing the frontline on getting patients exactly what they need at continually lower cost. Then, capture the knowledge and creativity of the frontline and manage them to problem solve and improve the system when patients don't get what they need. All solutions must also lower the cost of care -- we can't buy our way out of this mess.

Adaptive Design works. One 44-bed nursing unit in a Midwestern hospital generated $1.7 million in savings in 13 months. They simultaneously won the award for most improved patient satisfaction in a 17-hospital system.

There are 5000 hospitals in America. Let's say just 20%, 1,000 hospitals, repeated this experience on only one nursing unit. It would equal $1.7 billion in savings in about a year and hundreds of thousands of happier patients.

MacGillis and Brooks are right: The cost of health care is the most pressing issue and current health care reform proposals don't address it. But telling more patients NO and gathering more data to implement more solutions are not the answers.

Let's focus on getting patients exactly what they need at continually lower cost and adaptively design our new systems back from the patient. The history of transformation makes it clear: That's the only way we will fix health care.

Dr. John Kenagy is a former Visiting Scholar at Harvard Business School and the author of the forthcoming book Designed to Adapt: Leading Healthcare in Challenging Times (Second River Healthcare Press, 2009).

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