It’s the Culture, Stupid

This post’s title is what I reminded myself of when I read the recent interview Megan McArdle did with Delos (“Toby”) Cosgrove, CEO of the Cleveland Clinic.  In that article, Can the Cleveland Clinic Save American Health Care? Dr. Cosgrove shares and explains several of the core elements behind the Clinic’s success. I was able to identify two concepts discussed by Dr. Cosgrove that I believe are more important to redefining healthcare in the United States than anything else: alignment of incentives and change management.  Both of these concepts are, in turn, major pillars of organizational culture.

And both are concepts, which transcend the argument that comparisons to organizations like the Cleveland Clinic, the Mayo Clinic, MD Anderson Cancer Center, Memorial Sloan Kettering, Johns Hopkins, et al) are often misguided and counterproductive because of the unique positioning and market advantages those organizations hold.

As Ms. McArdle writes in her article,

”Great institutional cultures can accomplish great things.  But in some ways, that’s a problem for the rest of us. It’s natural to want to emulate the achievements of [the] Cleveland Clinic in our policies. But you can’t make a culture out of rules. Culture is an organic outgrowth of an organization’s history, it’s people, its successes and failures. It cannot be ordered from the top, or nurtured by simply altering the financial incentives. Cosgrove speaks of maintaining the institution’s culture in much the way that he talks of maintaining their electronic health records system: a constant process of checking in, re-evaluating, and upgrading.”

But Cosgrove also believes the Clinic’s success can be replicated.  In the article he states that, “yes, other people can do it. One of the things that is beginning to drive this is the patient satisfaction scores that is now becoming part of the pay for hospitals ….” but “both the incentives and the culture matter. They’re inexorably tied.”

Creating a culture that instills and motivates behavior, which reflects incentives tied to desired outcomes – whether those are measured in terms of access, cost or quality and safety – is a difficult challenge that really does not get substantially easier or harder in relation to the size of an organization.  This is because – as my friend and colleague, Craig Anderson (National Director of Healthcare at Dixon Hughes Goodman) is fond of saying – “organizations don’t, never have and never will change – people change, one person at a time.”

And individual change is very hard for all of us.  It means being even more uncomfortable in a world of constant uncertainty.  It means not having the level of control you mistakenly thought you had in the first place.  It means letting go of some very deep-seated beliefs on how your environment should be ordered, arranged and understood.

To create the kind of culture that has been successful at the Cleveland Clinic requires an artful infiltration of the organization’s psyche. Careful attention must be given to long-standing relationships and patterns of behavior.  It is quite easy to do more damage than good. But if done right, the payoff can be a remarkable transformation from a healthcare organization inexorably floundering in reaction to its environment – to an organization that is emulated for proactively achieving great success, like the Cleveland Clinic.


Accelerate! ~ Or Be Eaten

In the November issue of Harvard Business Review, John Kotter makes his latest contribution to an already authoritative body of work on organizational change management in the article, Accelerate!  I found the article to be very insightful and particularly well timed in lieu of my post earlier this week on the Healthcare Value Equation

In that post I wrote about the importance of healthcare organizational leadership being able to manage through transformational change as a condition of future survival in an era of Healthcare Reform.  In our practice at Artower we are already witnessing an acceleration of meaningful efforts to explore, understand and promote clinical integration by and between acute and post-acute/long-term care providers.

For me, an analogy of what this process looks like so far is two American Indian tribes from the 18th century, each living peacefully in adjoining valleys – communicating good wishes now and again for decades via smoke signals.  Then one day the leaders from the two tribes decide to meet face-to-face and find they can no longer communicate because of not sharing the same language.

Those familiar with Kotter’s work will recall his seminal article and then book, Leading Change, and the eight steps of an effective organizational change process.  Now, in Accelerate! Kotter introduces eight accelerators that form the backbone of a strategy network, which he suggests should work in parallel with an organization’s existing operations.   The accelerators differ from the eight steps in their being nonlinear, more organizationally encompassing and ideally facilitated independent of the traditional organizational hierarchy.

Kotter argues that for an organization to maintain the highest levels of operational performance and efficiency while concurrently being able to resiliently embrace and adapt to an increasingly complex environment what is required is a, “dual operating system – a management-driven hierarchy working in concert with a strategy network.”  The applicability of this model to healthcare organizations desiring to survive the burgeoning maelstrom seems rather self evident; thinking strategically isn’t sufficient – acting swiftly will also be necessary, and that typically requires a significant change effort.

So what Kotter has done in this article is tie together two concepts that I have argued for the past decade must be more effectively merged within and by organizational leadership if planning efforts are to result in tangible results: that is, the critical connection between strategy and organizational change management.  Specifically, he notes that, “strategy should be viewed as a dynamic force that constantly seeks opportunities, identifies initiatives that will capitalize on [those opportunities] and completes those initiatives swiftly and efficiently.”  I tried to make this point in my white paper earlier this year and have sought to reinforce it in presentations on strategic planning and positioning for Healthcare Reform.

The key takeaway here for healthcare providers – and particularly for providers of post-acute and long-term care – is that organizational leadership must sponsor and promote both operational efficiency AND strategic flexibility.  Achieving both requires being able to look at the same organization from unique perspectives.  One is a structural framework that aligns individual performance incentives with the organization’s top line goals of improving outcomes while reducing costs (remember: VALUE), while the other is a network framework that is able to leverage the organization’s group genius in ways that facilitate rapid strategy deployment.

The same people in your organization can be high level performers under both frameworks – and can do so concurrently, with the right leadership.  I have seen it accomplished in the organizations we have worked with – and I have observed the tangible results those leadership teams have achieved.