Transformation that works

Why Leading in Healthcare is Hard, and Three Things That Can Help

Categories  |  Healthcare Leadership

Leading in healthcare today is like standing in two canoes, one for each foot, with the canoes heading in opposite directions. One boat, with a setting based on the assumption of more is better, heads in the direction of more healthcare. The other, with a new setting, heads toward better healthcare.

Traditionally, payments for healthcare services in the US have occurred on a fee-for-service basis. Each service or procedure was billable and the obvious incentive was to perform more procedures and offer more services. We all would agree that more healthcare services would be a worthwhile investment if the additional dollars spent were associated with better health. However, more spending does not always ensure better care. In fact, studies have shown that additional spending can sometimes lead to unnecessary, even harmful, care. This cycle of increased services, unsustainable costs and marginal health outcomes have led to efforts by payers to slow the growth of healthcare prices and utilization.

The solutions are politicized, and change has happened in fits and starts. Past efforts focused on decreasing reimbursements for healthcare services, but this led to higher volumes of care (an unintended consequence). Payers then placed limits on utilization, but patients interpreted this as rationing needed care and policy makers worried about healthcare providers and payers ‘cherry-picking’ the healthiest patients and refusing care for the sickest. The most recent attempts to slow the pace of growth in healthcare combine efforts to decrease reimbursement and limit utilization, while also requiring a focus on achieving high quality health outcomes. In short, better care is rewarded like never before.

Payers are now phasing in these changes with newer plans that incentivize excellent outcomes that matter to patients, the wise use of less expensive services and appropriately lower utilization rates with bonus payments provided to organizations that demonstrate an ability to produce superior outcomes and to simultaneously slow their health care spending.

Here's the two-canoe-problem for healthcare organizations - "phasing in" means some payment systems still reward doing more, even while the newer payment systems reward doing better. Moreover, “phasing in” means substantial change is happening not just daily, but from one patient to the next.

The unsteadiness created is leading to new efforts within organizations to optimize departmental workflows and decrease the costs of providing services and procedures. The unsteadiness also creates a need for new efforts between organizations. The new partnerships require sharing knowledge and data between previously independent systems.

Charting a steady path forward in this chaotic environment requires:

  • Innovative leadership skills
  • Information Systems Engineering
  • Inside knowledge


Leaders need to foster innovation and collaboration within and between organizations. This requires an ability to quickly search for and find the right innovators and the right communicators, at the right time, to bring needed parties together.

Leaders have traditionally relied on organizational hierarchies and personal networks to identify expertise. However, the best experts are not always the highest-ranking individuals within an organization, and personal networks do not always span multiple organizations. The traditional techniques are antiquated. Moreover, experts are not always the best innovators. Today’s experts are tied to their past experience in an environment that no longer reflects today’s situation.

If hierarchies and personal networks no longer work for identifying innovators and communicators, leaders on those techniques to guide their search will have difficulty locating change agents that can initiate and disseminate needed innovations.

Innovative leadership skills, therefore, include the use of network analysis techniques to define a strategy that incorporates the best innovators and communicators, regardless of title, and efficiently developing an operating rhythm that spans departments and organizations. While network analysis techniques are new to healthcare, the military established their usefulness, as have other industries1.

Information Systems Engineering

Charting a stable course in healthcare requires information. Whether the incentives are to do more or do less, healthcare leaders need to know utilization rates, reimbursement rates, the costs of providing care, as well as the health status of their patients and the population they serve.

In the past, steadily rising reimbursement rates masked the need to know costs; utilization rates were superfluous because doing more would help the organization’s bottom line and the health status of patients and populations were assumed to always improve from doing more. Today, reimbursement rates are slower than in the past so the drivers of costs must be understood and better managed. A major driver of costs is, of course, utilization and we’ve learned that more healthcare is not always better healthcare; yet, no one wants to lower utilization rates for fear of the risk that the health status of patients or populations might suffer.

These data streams of rates, costs, and health status are not commonly available to healthcare leaders. Without them, leaders are charting a course in the dark, so it is no wonder many of today’s leaders are cautious. Even healthcare leaders who have access to these data streams frequently find the data to be disordered and to offer little actionable information. Finding a way to merge these data streams together in a meaningful way is needed, but the data systems were designed to be secure and operate independently; the exact opposite of the interoperability needed today.

Interoperability problems have plagued other industries, as well. System Engineers have led the way in innovating methods to link independent data sets while maintaining the security of each cell within the combined set. They are also experts in optimizing workflows for maximum value2.

Inside Knowledge

Healthcare leaders can be reluctant to embrace advice or technology from outside the healthcare industry. Healthcare has a long history of mentorship, and doctors often feel they learn best from other doctors. Similarly, healthcare administrators often seek the counsel of other healthcare administrators. There is a strong need for doctors and administrators who have taken innovative risks to share their knowledge and experience.

Leading in healthcare is made difficult today because of opposing incentive models and the rapid pace of organizational change. The upheaval this creates makes the need for new leadership skills necessary. Navigating in this environment can be made easier with new skills and better information systems. To be accepted, these skills and information need to be introduced by pioneers within the industry3.

It is possible for healthcare leaders to chart a course that optimizes their organization’s ability to adapt, thrive, and deliver high value care to patients while reigning in spending. To do so, they will need to incorporate innovative leadership skills, information sharing, and systems engineering techniques from other industries. Collaboration with like-minded healthcare leaders who have already started on the course can help chart the course.


1. For an example, The McChrystal Group in Arlington, Virginia and started by former military leaders teaches these skills on the East Coast. The LGL Leadership Group is based in Kansas and teaches the stakeholder relationship management business model which values input from engaged stakeholders, regardless of title or hierarchy.

2. GCorp, a consulting group in San Diego, California specializes in turning multiple data streams into actionable information, optimizing workflows, and teaching others on the West Coast how to do the same.

3. Health Delivery Science is a diverse group of physician leaders and healthcare administrators from across the nation, based in Tulsa, Oklahoma. They specialize in advising healthcare organizations charting a path toward high value services and maximizing population health. The Connecticut Institute for Primary Care Innovation consists of scientists, physicians, and administrators working to disseminate, implement, and document “radical commonsense” innovations that increase the value of care delivered across the state. 

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