After years of healthcare reform, one might wonder whether the goal can ever be satisfied. Some in the industry say forget the reform because what healthcare needs is transformation. The difference is an important one with which current and future industry executives will have to terms.
Russell L. Ackoff, who was an organizational theorist and a professor at the Wharton School, had an interesting take on the difference between reformation and transformation when it came to how people thought of and managed global systems:
Reformations are concerned with changing the means systems employ to pursue their objectives. Transformations involve changes in the objectives they pursue. Peter Drucker put this distinction dramatically when he said there is a difference between doing things right (the intent of reformations) and doing the right thing (the intent of transformations).
To put it differently, when a system is designed to do the wrong thing, reform results in continuing to do the wrong thing, only in a more effective or efficient way. To do the right thing, the system needs to be transformed. As a trauma surgeon wrote in 2006, “The problem with describing the needed changes in Healthcare as ‘reforms’ is that it limits those changes to perceived defects or faults.”
So, for example, focusing revenue on services rendered, while a traditional model, results from an implicit assumption that the real value in healthcare is treating diseases. Minimize systemic issues or cure problems and suddenly lines of revenue are eliminated. “The fact is that the so-called healthcare system can survive only as long as there are people who are sick or disabled,” Ackoff wrote. “Therefore, whatever the intent of its servers, the system can only assure its survival by creating and preserving illness and disability. We have a self-maintaining sickness- and disability-care system, not a healthcare system.”
That is a perfect example of the difference in thinking between reform and transformation. A healthcare system should be concerned with keeping people well – and then taking actions, when necessary, to return them to a state of health. But the actions, and the business model, must revolve around that concept of wellness.
Another example is the use of technology. A common business mistake not limited to any one industry is to use new technology as a tool to improve business processes. However, the result can easily become, as the IT industry calls it, paving over old cow paths. Essentially, the organization locks old ways of doing business into place. That is the essence of reform. Under transformation, the organization would review its mission, ensure that its strategies supported that mission, rework processes to carry out the mission, and then automate the processes through technology.
To make the changes necessary that a healthcare organization will need requires more than the usual assumption of increased innovation, because there are two types. One is an incremental process to improve something that exists, and the other is a breakthrough type of idea that can stand an organization and an industry on its head. Manage the current problems, of course, but be sure you’re reaching for transformative breakthrough innovation, because that will determine who wins and loses in the long run.
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