03/18/2010 05:12 am ET | Updated May 25, 2011

Turning Health Care Reform Losers Into Winners

Recently, The New York Times identified a surprising group that may lose, and lose big, under health care reform - large urban medical centers. The Boston Globe ran a similar story two weeks ago on Boston Hospitals.

What's unusual is that the big losers are not just gritty, inner city hospitals, but some of the great stars in the medical firmament, such as Massachusetts General Hospital in Boston or Mt. Sinai Medical Center in New York.

This is how the best of the best get hurt. According to research from the Dartmouth Atlas of Health Care, part of Dartmouth Medical School's Institute for Health Policy and Clinical Practice, health care is much more expensive, but no higher quality, in New York, Boston or other major urban medical centers.

Over the years, the standard explanation by the big hospitals was always some combination of "our patients are sicker (or poorer)," or "we're better and deserve more money." But today, costs have grown so astronomically that policy makers are not accepting these 1970's answers to 21st Century health care problems. Instead they are calling for "efficiency" - dramatic and essential savings like the supposed $1.42 trillion Medicare could save by hospitals mending high cost and intensity habits.

Who can argue against "efficiency?" New York hospitals can. As the New York Times reports, they worry that increasing efficiency would reduce Medicare payments to "areas where the costs are growing fastest and increase payments to those who are best at controlling costs," thereby destroying major urban centers.

But we don't need to destroy expensive urban medical centers to control the exorbitant cost of U.S. health care. We simply need to start approaching the cost problem with a different mindset. Until we do, we won't succeed and those centers will be at risk.

Our current mindset focuses on the "big fix." We always say, "the system is dysfunctional (or broken) and therefore, the solution is to 'fix' it."

Then, since we want the biggest bang for our buck, we look for the biggest problems and fix them big - the bigger the problem, the bigger the fix. This is the path: gather lots of data; have many meetings with experts; implement a big fix.

The problem with this mindset is that, in my 38 years in health care, it has never worked. And it's not just a health care failure. In my years of research as a Visiting Scholar at Harvard Business School, the evidence showed that industries are not transformed by big, top-down fixes. Rather, they are transformed by a few organizations that begin to approach their problems with a different mindset and new, innovative methods.

Transformation in health care will begin when we realize Boston, New York and other high cost, high intensity systems are not lacking in brilliant, dedicated people, great technology, wonderful facilities, and - as all the data shows - money, so giving them more of what they have in abundance does not make good sense.

Instead, the leadership of a very few, pioneering organizations will admit they don't know the answers. They will start on a journey to find them.

First, instead of moving more information up to decision-makers, management will start to develop, coordinate and control new critical thinking skills and sophisticated decision-making close to where the information is, at the point of care.

Next, instead of fixing problems by designing better processes, management will capture the knowledge and creativity of those closest to the patient to continually problem solve when patients don't get exactly what they need.

Finally, they will replicate this capability with structure and discipline steadily, progressively and continually throughout the organization. The result? People and systems will address problems as they happen and then test, validate and replicate solutions in real time close to the patient. Everyone will work every day to increasingly get patients exactly what they need at continually lower cost. Everyone will be fixing health care.

It will work. It already has. An inner-city Massachusetts hospital increased surgical volume 16 percent while decreasing surgical staff overtime 14 percent by just focusing on rapidly problem solving the needs of patients. That's more care at less cost.

By building our system up from the patient rather than down from the top, we will never stop transforming health care, nor turning health care reform losers into winners, even in the big city.

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