Why Leadership Is More Important in Healthcare than in Other Industries (And Why It Shouldn’t Be)

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In a lecture I heard by Rulon Stacey, American College of Healthcare Executives chairman, he said that health systems are the most complex organizations devised by man. Yes, it may be true. (Think: doctor relations, dealing with mounds of existing regulation and changing regulation, uncertain revenue streams, constantly changing technologies, complex patients, complex care processes, dealing with a science that is still more of an art, thousands of patient pathways, trying to manage the care process, lives on the line, board/corporate relations, media relations. . . .)

And all that would make leadership really important in healthcare, but that’s not why I’m convinced leadership is so much more important to earning a world-class reputation in healthcare. No, I think it’s because, to become world class, you have to have the courage, vision, and charisma to go against financial incentives and do what’s right (i.e., always choose what’s best for patients, even when you know you will lose revenue for doing so). Oh, and while fighting the good fight, you have to convince the rest of your employees to put the future of their jobs on the line by joining with you. In a world where people more and more take care of themselves first, this is an incredible task.

I saw this quest in nearly every session I attended at the recent IHI National Forum–good people trying to make care better for patients, even when it leads to reduced profits.

But it shouldn’t be like this. Why shouldn’t doing what’s best for the patient be the same thing as doing what’s best for your profits?

This misalignment is what leads many people to be cynical about profit motives in healthcare, asserting that there should instead be no profit motives in healthcare. I disagree. Align financial incentives and unleash all the creativity and ingenuity the good people of this industry have to offer in innovating in ways that improve the value of care for patients. How else are we going to make care affordable enough to offer it to every citizen without making our country go bankrupt?

3 thoughts on “Why Leadership Is More Important in Healthcare than in Other Industries (And Why It Shouldn’t Be)”

  1. Great post Taylor!

    I agree. In healthcare we are quite averse to any mention of profit. A pure profit motive is certainly not what the profession needs. However, I’m concerned that we are not exploring all the options. I would love to see a frank and open discussion about the future of healthcare (especially in our home and native land).

    Hopefully as next generation of physicians we will have the courage to fight the good fight and address the huge issues that face healthcare today.

    1. Andrew, I’m interested to hear what you’re thinking about when you say “other options.” Do you mean options other than using profit motives to stimulate innovation toward higher-value care?

      As for the future of healthcare in Canada (and elsewhere), I have a guess as to what will start happening. (This is the subject of a future post, by the way.) Quality data is starting to proliferate, which is great. And as patients start to rely more and more on quality data, they’ll start choosing higher-quality providers for their treatment. But that will exacerbate wait times for high-value providers. Low-value providers will see their volume start to drop, so hopefully that will stimulate them to start improving their quality. But what we really need if healthcare is to become affordable and higher value everywhere is for the high-value delivery systems to be able to spread to other regions and steal market share from lower-value delivery systems, and I fear that, with Canada’s administered prices, that won’t happen easily. This may be confusing cause I’m not explaining myself thoroughly, but rest assured I’ll be writing about it sometime soon.

      1. Hey Taylor,

        That’s a very interesting thesis! I think you are right, lower volumes in low-value organization should encourage improvements in value or these players will cease to exist in the market place.

        A promising development in Ontario is a model of funding that ties quality to healthcare dollars. In the next few years we will see hospitals that are not meeting the quality benchmarks lose their funding. Which hopefully will stimulate the kind of innovation you describe above.

        As for my mention of “other options,” I think we need to consider everything. The discussion often centers around for-profit and not-for-profit but what other models could we implement that really shake the foundation of healthcare? Is there a happy middle ground? Is the financing of healthcare really the problem?

        I look forward to your next post!

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