HCI3 Update from the Field: Land of the Blind

Submitted by francois.debrantes@hci3.org on Friday, March 22, 2013 - 01:49

Newtown, CT – March 22, 2013

There's an old (therefore politically incorrect) saying that in the land of the blind the one-eyed man is King….or in the land of mediocre health care, the Kaiser – So sayeth and admits George Halvorson in an insightful article in the New York Times. And this brings us to a larger and more fundamental observation: should we expect disruptive innovation to come from the incumbents? Research suggests not, yet that's what Halvorson states. He sees the future promise of the Kaiser as being a decentralized organization that uses HIT to push care out into the community and away from the centralized nexus of today's (expensive) care, the hospital. However true and bold that aspiration, it remains just so. That shouldn't surprise us, in much the same way that we shouldn't be surprised that, as stated by David Lansky, "they (Kaiser) have not translated some of their strengths into better prices". It's really tough to disrupt one's core business model unless threatened with oblivion, and even harder when everyone is fawning over you. Companies outside of health care that have had to compete viciously to survive and thrive have reinvented themselves, and in the process have learned how to create a culture that drives out waste and rewards contributions to margin. And that brings us to the second important point for today, how to change a culture and create the right incentives for employees. Tom Lee and his colleague offer some suggestions, or at the very least a framework, to tackle this new environment in which getting internal incentives right is as important as getting the external ones right.

What this means to you – There's no question that the challenges ahead for the current pretenders to the throne are massive. Unlike Kaiser, they don't have decades of history and culture that they can build on, and that might be good or bad. They're also mostly large organizations with lots of overhead. And while the current system fails to punish the largess of unneeded overhead, value-based payment will. If you're going to win the competition to deliver a high quality service at an affordable price, waste becomes an enemy, not a friend. High fixed costs become a significant barrier to internal change as opposed to a barrier to entry for others. Teamwork and autonomy are both important and must be carefully balanced to avoid teamwork turning into groupthink and autonomy turning into chaos. Professionals will thrive in an environment in which their individual contribution is valued and recognized, and the organization will thrive if the individual professionals also recognize that together they can accomplish far more than when acting alone. Good internal incentives will avoid tilting the balance too far in one or the other direction, and that's really tough. It gets tougher as the organization gets larger, and even tougher if you want the organization to be highly innovative. So there's a good chance the California Kaiser will end up like the Old World Kaiser, that the current pretenders will always only be that, and that some upstart will disrupt and displace the incumbents. So look for those disruptors, take a chance with them, learn from their successes and failures, and keep the innovations flowing.


Francois de Brantes
Executive Director
Health Care Incentives Improvement Institute, Inc.
w: www.hci3.org