Review of Health Care Will Not Reform Itself, by George Halvorson

George Halvorson is the CEO of Kaiser Permanente, the largest not-for-profit health plan and care system in the U.S., and has been a leader in the industry for over 30 years. Health Care Will Not Reform Itself is his attempt to spell out what he thinks are the key problems and most promising solutions to the health care problems we face.

For Halvorson, as the title of the book suggests, we cannot expect our health care system (which he calls a “nonsystem”) to spontaneously, organically transform to become more efficient, less expensive, and more effective. He would disagree with Christensen that disruptive innovation is acting like some invisible hand, making care more affordable and effective day by day over the long haul. The only invisible hand Halvorson sees at work in the U.S. health care nonsystem is profit…and our nonsystem is structured to reward things most folks would consider less than desirable for the country as a whole and its citizens as individuals.

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Review of The Innovator’s Prescription, by Clayton M. Christensen

So, at long last, I’ve finished The Innovator’s Prescription by Clayton Christensen. This was a bit of a slog, but worth it. In every section, Christensen delivers solid ideas and compelling frameworks to understand and address some of the main problems facing health care in the U.S. I definitely recommend it to anyone looking to dig in more deeply to this issue.

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Individuals and systems

The reason why integrated health systems have all implemented proprietary electronic medical record systems is that their processes of care, compensation, costing, procurement, and management are interdependent—in unique and proprietary ways. Rather than force their processes to conform to a standard-format electronic medical records system, it is much more natural and cost-effective for them to develop a system that conforms itself to their own organization’s established processes, not the other way around.

In addition, just as doctors are individual actors within a larger system, so are those hospital systems—they’re subsystems within a larger system. It is simply not in their best interest to force-fit their operating processes into a standard format so other providers in other systems can easily care for their patients. In other words, we cannot expect entities whose scope is that of individuals within a subsystem, or subsystems within a system, voluntarily to invest to solve higher-level systemic problems. We have gotten exactly what we could expect.

Christensen, The Innovator’s Prescription, pp. 137-138

Although my review of Christensen’s The Innovator’s Prescription is still forthcoming (I have about 100 pages left to finish the book), I keep finding gems along the way that raise important issues for leadership.

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The banality of health care reform

Insurance…will pay for the amputation of a limb to treat diabetes-related gangrene, but not for the conscientious follow-through that can lessen the probability of needing such costly and tragic remediation. This is not the fault of physicians or insurers. The fault is in the misapplication of a business model that was designed for the practice of acute medicine long ago.

Christensen, The Innovator’s Prescription, p. 164

I’m almost finished with Christensen’s The Innovator’s Prescription, and I still can’t shake the feeling I had 75 pages into the book: although I agree with his assessment of health care in the technical sense, I feel that there’s a moral/ethical dimension to the health care problem that he ignores that simply can’t be ignored.

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Be careful what you wish for

I’m hitting the real meat of The Innovator’s Prescription by Clayton Christensen and came across an example of disruption that I think poses an interesting challenge for leaders in general. It occurs in his larger consideration of the future of the pharmaceutical industry on pages 261 – 309, and concerns supply chain disruption.

Christensen believes that the trend among big pharmas to outsource R&D, clinical trials, manufacturing, and marketing is a mistake–it essentially amounts to emptying an organization of its value-adding activities and handing them over to smaller firms who will eventually come to the fore as market leaders.

As usual, I’ll leave weighing in on this kind of stuff to the experts. But what I do want to discuss is Christensen’s story of the relationship between Dell and ASUSTeK, because I think it’s emblematic of challenges many leaders across a rage of markets face.

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Leadership, focus, and the confusion of business models

As technological and scientific progress enabled standardized processes and treatments for precisely diagnosed disorders, hospitals commingled value-adding processes and solution shop activities within the same institution—resulting in some of the most managerially intractable institutions in the annals of capitalism…”We will do everything for everybody” has never been a viable value proposition for any successful business model that we know of—and yet that’s the value proposition managers and directors of general hospitals feel they are obligated to put forth.

Christensen, The Innovator’s Prescription, p. 75

As I continue to make my way through Clayton Christensen’s The Innovator’s Prescription and deepen my understanding of his take on U.S. health care, I keep stumbling across concepts and analysis that have applicability outside of health care to leadership more generally.

In this post, I want to look at the concept of mixed business models, i.e., “doing everything for everybody”, which Christensen sees as central to how hospitals and doctors can improve the delivery of their services. Here, however, I want to move the discussion beyond health care to consider how mixed business models present a challenge for leaders in any industry.

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Morality versus the marketplace

This post may be jumping the gun a little, because I haven’t finished The Innovator’s Prescription yet, but I found myself drawing some interesting contrasts already between Christensen’s work and T.R. Reid’s (see my review of The Healing of America for a fuller consideration of his ideas).

The most striking contrast to me so far has been the different grounds from which each writer believes health care reform will emerge.

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