Healthcare organizations had a great run. The past four decades, post-implementation of Medicare and Medicaid, have been a boom time. As healthcare spending grew rapidly, all parts of the industry flourished. Just trying to keep up with growing demand was a major challenge for many organizations.
In a booming economy, the need for innovation is low. Organizations prosper just by fulfilling needs, providing adequate quality and customer service, and by avoiding doing the wrong things, like severe mismanagement and taking major unfounded risks. Most healthcare organizations, especially non-profits, pursued strategies that were incremental — follow the money and play between the lines. Reinforcing this posture were organizational cultures that were risk averse and committed to the view that success was found in the tried and true and by not making errors, large or small. Even the job title for our industry's executives for most of this period — administrator — suggests an overseer or steward rather than a leader and active manager.
First, healthcare executives must recognize that their organizations' cultures are at odds with this new posture and work to reshape the cultures to make them more adaptable, flexible and risk-bearing. Second, every executive must accept the responsibility for innovation as part of their core role, moving this from the periphery of leaders' concerns to the center. Third, then, how do we operationalize the search for innovative opportunities and successfully implement them?
Healthcare organizations can look to other industries for guidance on how to identify and implement innovative opportunities. Peter Drucker's Harvard Business Review article, "The Discipline of Innovation," identified seven sources of innovation, four that are internal — unexpected occurrences, incongruities, process needs, and industry and market changes — and three sources that are external — demographic changes, changes in perception and new knowledge. He suggests that "an innovation has to be simple, and it has to be focused. It should only do one thing...Above all, innovation is work rather than genius."
1. Rally senior leaders. Beyond the case for change, clarify the importance of individual and organizational innovation as a critical element of success in the future.
2. Reexamine and begin to modify your organization's culture to be more risk-bearing. Recognize and reward innovation, encourage experiments and pilots and create a non-punitive environment.
3. Make innovation a theme of day-to-day operations. Building on #2, support, highlight, emphasize and celebrate innovation in daily operations.
4. Consider structural changes to support innovation. For large organizations, a chief innovation officer would be a symbolic and substantive commitment to progress; for any organization, an ad hoc committee or subcommittee of a board or senior management group could be charged with keeping innovation visible and moving forward.
5. Just do it. Don't study and discuss innovation to death; accelerate implementation of small- (and larger-) scale innovations and demand that all senior leaders visibly support such changes.
Isn't it time we got to the hard work of innovation in healthcare organization leadership and service delivery and move it to a central role in organizational growth and development?
Alan M. Zuckerman, FACHE, FAAHC, is president of Health Strategies & Solutions, Inc., a national health care strategic planning firm headquartered in Philadelphia. During his 35-year tenure as a management consultant, he has developed strategic and business plans for over 150 providers, including many of the top health systems and academic medical centers in the country. A nationally recognized author and speaker, he is actively involved in researching emerging trends in health care strategy.
Spurring Innovation in Healthcare Delivery: 5 Best Practices of Health System Leaders
7 Noteworthy Developments for Healthcare Innovation During 2011
In a booming economy, the need for innovation is low. Organizations prosper just by fulfilling needs, providing adequate quality and customer service, and by avoiding doing the wrong things, like severe mismanagement and taking major unfounded risks. Most healthcare organizations, especially non-profits, pursued strategies that were incremental — follow the money and play between the lines. Reinforcing this posture were organizational cultures that were risk averse and committed to the view that success was found in the tried and true and by not making errors, large or small. Even the job title for our industry's executives for most of this period — administrator — suggests an overseer or steward rather than a leader and active manager.
New era/New imperatives
So, what has changed? Mostly the economy and healthcare reform, but an emerging oversupply of certain profitable services played a part as well, fueling hyper competition in many markets. The 2008 recession dealt the final blow to the old healthcare economy, removing the artificial support that allowed spending to grow without limit. With the economy stalled out, spending increases above the rate of inflation become unaffordable to governments and private buyers alike, setting the stage for healthcare reform. Reform's principal emphasis, both that of the federal government, but also the less obvious reform of the deficit-riddled states and struggling private businesses, is to get their costs under control. We are entering an era of no- or low-growth reimbursement. Like many other industries, the call to action is how do we do more, or even the same, with less? And with the artificial prop of 5 to 10 percent increases in rates and spending no longer guaranteed, how do we maintain the vitality of our organizations?A healthy shake-up
As unsettling as the last four years have been for healthcare leaders, there is an upside. The rules of the game have changed. Opportunities to be bold are emerging and innovation in healthcare organization management and service delivery, when executed well, will be rewarded. Slowly reacting and adapting to scientific and payment/regulatory modifications won't be enough. Busting the status quo, challenging long-held assumptions, envisioning the possibilities when uncertainty is converted to action and forging a new path – that’s what true innovation in healthcare could look like.Getting started
How can innovation be fostered? How does the industry move to a culture where innovation is valued? Where will innovation come from? These questions lie at the heart of successful adaptation to this new era of healthcare.First, healthcare executives must recognize that their organizations' cultures are at odds with this new posture and work to reshape the cultures to make them more adaptable, flexible and risk-bearing. Second, every executive must accept the responsibility for innovation as part of their core role, moving this from the periphery of leaders' concerns to the center. Third, then, how do we operationalize the search for innovative opportunities and successfully implement them?
Healthcare organizations can look to other industries for guidance on how to identify and implement innovative opportunities. Peter Drucker's Harvard Business Review article, "The Discipline of Innovation," identified seven sources of innovation, four that are internal — unexpected occurrences, incongruities, process needs, and industry and market changes — and three sources that are external — demographic changes, changes in perception and new knowledge. He suggests that "an innovation has to be simple, and it has to be focused. It should only do one thing...Above all, innovation is work rather than genius."
5 actions to launch the innovation journey
Here's what the agenda for innovation could look like at your organization.1. Rally senior leaders. Beyond the case for change, clarify the importance of individual and organizational innovation as a critical element of success in the future.
2. Reexamine and begin to modify your organization's culture to be more risk-bearing. Recognize and reward innovation, encourage experiments and pilots and create a non-punitive environment.
3. Make innovation a theme of day-to-day operations. Building on #2, support, highlight, emphasize and celebrate innovation in daily operations.
4. Consider structural changes to support innovation. For large organizations, a chief innovation officer would be a symbolic and substantive commitment to progress; for any organization, an ad hoc committee or subcommittee of a board or senior management group could be charged with keeping innovation visible and moving forward.
5. Just do it. Don't study and discuss innovation to death; accelerate implementation of small- (and larger-) scale innovations and demand that all senior leaders visibly support such changes.
Isn't it time we got to the hard work of innovation in healthcare organization leadership and service delivery and move it to a central role in organizational growth and development?
Alan M. Zuckerman, FACHE, FAAHC, is president of Health Strategies & Solutions, Inc., a national health care strategic planning firm headquartered in Philadelphia. During his 35-year tenure as a management consultant, he has developed strategic and business plans for over 150 providers, including many of the top health systems and academic medical centers in the country. A nationally recognized author and speaker, he is actively involved in researching emerging trends in health care strategy.
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7 Noteworthy Developments for Healthcare Innovation During 2011