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Hospital Culture and Surviving the New Landscape

A recent flight on Southwest reminded me of the importance of culture in navigating change in a rapidly evolving environment like we have in health care in the United States today. It is all too easy to focus on all the technical issues hospitals face in setting up Accountable Care Organizations to handle the inevitable global payments that will replace the current fee for service system. This blog is a plea for hospitals and doctors and consultants to pay attention to both the technical and the cultural or adaptive challenges we face in transforming a $2.5 trillion American industry.

Recent articles on companies outside of health care have highlighted how important culture has been to the success or failure of Southwest Airlines, QVC, and Zagat to respond to changing business conditions. Southwest’s COO states “our culture is our biggest competitive strength,” and the flight attendant and pilots’ union worry about how the recent purchase of AirTran will affect their unique culture. I have seen Southwest pilots help clean up the cabin, and the flight attendant on my recent trip told me she was giving up her day off because the company needed her help. QVC is trying to use the same methods and culture that made selling on TV popular with Internet customers. And Zagat, which had cultural troubles moving from book format to online, is now hoping that smart phone applications will reinvigorate their business model.

Harvard’s Ron Heifetz differentiates between technical and adaptive work and I have found this concept useful in working with health systems responding to payment reform. Everyone involved in hospital physician integration efforts will need to undergo a cultural (adaptive) shift because the healthcare reform law and the transition from fee for service to global payments mean the old ways of doing things are not sustainable.

Even if all the technical tasks are superbly done, difficulties will arise if the leadership, management, care teams, and physicians still have the old mindset and culture.

In attending conferences and working with hospital CEOs, I have found that there is more emphasis on the technical tasks that need to be accomplished in order to form an Accountable Care Organization than on the culture such a change will require. I have heard a lot of keynotes filled with power point slides on defining the role and reporting structures for newly formed physician leadership teams; creating system-wide operational councils; and specific legal structures of ACOs so they can accept and distribute global payments. These are all important technical tasks, but they will fail if the culture does not change too.

Two concrete example may help make this point. Sony engineers came up with the equivalent of the iPod long before Apple. However, Sony ran into internal obstacles because of its culture. Sony’s leadership and organization was designed to come up with improvements to the next generation of CD players, but the new iPod technology threatened how Sony’s leaders and engineers thought about their product line. They could not overcome the cultural barriers to marketing such a revolutionary product. Sony’s failure was not one of technical expertise; it was and adaptive failure of cultural mindset.

My travels found me in Savannah, Georgia recently having lunch with Joe Scodari who sits on three Boards of Directors in the health care space. Scodari related a similar story of cultural failure to adapt when Kodak engineers invented the digital camera; the film culture at Kodak did not approve marketing such a transformational product that would cut into Kodachrome film sales. Kodak missed out on digital cameras, and film sales plummeted anyway.

So how do hospital system CEOs avoid the fate of Sony and Kodak as they respond to the sweeping changes in the new federal health care reform law? They must focus on both technical and cultural issues. Jane Kornacki and Jack Silversin who pioneered the physician/hospital compact model and Bob Kegan and Lisa Laskow Lahey who developed the immunity to change model for transformation have much to teach all of us. Physician leadership academies are another essential ingredient in transforming culture among newly employed physicians who are not used to being employees.

Southwest Airlines made money when other airlines floundered; they attribute this success to culture. Hospitals that focus on culture and technical tasks will have a better chance of survival in an environment that is increasingly saying you better get ready to survive on Medicaid rates, not private insurance rates.

Kent Bottles, MD, is past-Vice President and Chief Medical Officer of Iowa Health System (a $2 billion health care organization with 23 hospitals). He was responsible for the day-to-day operations of a large education and research organization in Michigan prior to his work with in Iowa with IHS. Kent posts frequently at his new blog, Kent Bottles Private Views.

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  1. It?s in reality a nice and helpful piece of info. I?m satisfied that you shared this useful information with us. Please stay us informed like this. Thanks for sharing.

  2. A few comments have touched on the issue of vagueness when it comes to culture or others have simply endorsed that culture is important. Culture is certainly a word used often in healthcare. Many if not most healthcare organizations speak to needing a culture of something… a culture of safety, a culture of quality, a culture of service, etc. But very few end up actively building one that is sustainable. Hospitals’ compliance to hand-washing stands as a testimony to our failure for one of our basic commitments, patient safety.
    As someone who has worked with organizations for many years on constructing specific cultures, I think we are setting ourselves up for dissapointment if we expect the majority of healthcare organizations to readily accept Dr. Bottles challenge.
    The first barrier is that we are side-stepping a critical process of strategy development and choice before we even get to culture transformation.
    In the case of Southwest Airlines , Dr. Bottle cites very appropriately, some specific expectations of employees that are part of the culture. But perhaps more importantly, the airline’s first step was to make a deliberate strategic decision that it was not going to compete along the traditional airline model. Short hauls in and out of its hub providing low cost no frills flights was a competitive position that Southwest believed would allow it to compete. It then looked at the operational capabilities needed to deliver on that strategy choice including the routes it would offer and the cost structure it needed. As a low cost provider it was imperative that staff could be flexible and provide manpower where needed. Creating a can do culture became imperative to reduce turn around times so airplane capacity utilization was maximized, among other reasons. From my studies of Southwest, there was a tight linkage between strategy, culture and operations driven by a need to be financial viable in a pretty tough industry.
    Jump to healthcare and we see our industry in general reacting as it usually does to the latest regulation, hiring consultants to explain the implications of ACOs and how they should react. Unfortunately this is not strategy but a reactive posture from an industry that has for too long taken its strategy cues from regulations. It will also most likely not foster the deliberate decisions needed to craft and instill a specific culture as Dr. Bottles points out is so critical.
    It is not all that pessimistic. There are organizations that have done this, tightly aligning strategy, culture and operations and interestingly they did so before PPACA. The Mayo Clinic, Geisinger Health System and Intermountain Healthcare are all three examples. It is not by coincidence that we hear their names often. They are the high performers.
    
Which leads me to the second barrier to the hopeful proposition that healthcare organizations will tap into culture transformation as a tool for performance. A physician once reminded me in talking about expectations and good intentions that most patients dramatically change their behavior not prior to but post heart attack, despite repeated warnings of risks. In other words, we don’t do it unless we have to. In the case of Myspace they unwisely affected the culture through a simple move which impacted operations which undercut their strategy. In the social networking market they are losing, and now and trying to reinvent themselves.
    A bigger question for me as we look at these macro issues affecting healthcare is: Are we prepared to see winners and losers in healthcare? If yes, behavior will indeed change and we will worry less about whether they get the culture thing or not. The winners will most likely have. I guess it all depends if we want to see true transformation.

  3. A few comments have touched on the issue of vagueness when it comes to culture or others have simply endorsed that culture is important. Culture is certainly a word used often in healthcare. Many if not most healthcare organizations speak to needing a culture of something… a culture of safety, a culture of quality, a culture of service, etc. But very few end up actively building one that is sustainable. Hospitals’ compliance to hand-washing stands as a testimony to our failure for one of our basic commitments, patient safety.
    As someone who has worked with organizations for many years on constructing specific cultures, I think we are setting ourselves up for dissapointment if we expect the majority of healthcare organizations to readily accept Dr. Bottles challenge.
    The first barrier is that we are side-stepping a critical process of strategy development and choice before we even get to culture transformation.
    In the case of Southwest Airlines , Dr. Bottle cites very appropriately, some specific expectations of employees that are part of the culture. But perhaps more importantly, the airline’s first step was to make a deliberate strategic decision that it was not going to compete along the traditional airline model. Short hauls in and out of its hub providing low cost no frills flights was a competitive position that Southwest believed would allow it to compete. It then looked at the operational capabilities needed to deliver on that strategy choice including the routes it would offer and the cost structure it needed. As a low cost provider it was imperative that staff could be flexible and provide manpower where needed. Creating a can do culture became imperative to reduce turn around times so airplane capacity utilization was maximized, among other reasons. From my studies of Southwest, there was a tight linkage between strategy, culture and operations driven by a need to be financial viable in a pretty tough industry.
    Jump to healthcare and we see our industry in general reacting as it usually does to the latest regulation, hiring consultants to explain the implications of ACOs and how they should react. Unfortunately this is not strategy but a reactive posture from an industry that has for too long taken its strategy cues from regulations. It will also most likely not foster the deliberate decisions needed to craft and instill a specific culture as Dr. Bottles points out is so critical.
    It is not all that pessimistic. There are organizations that have done this, tightly aligning strategy, culture and operations and interestingly they did so before PPACA. The Mayo Clinic, Geisinger Health System and Intermountain Healthcare are all three examples. It is not by coincidence that we hear their names often. They are the high performers.
    
Which leads me to the second barrier to the hopeful proposition that healthcare organizations will tap into culture transformation as a tool for performance. A physician once reminded me in talking about expectations and good intentions that most patients dramatically change their behavior not prior to but post heart attack, despite repeated warnings of risks. In other words, we don’t do it unless we have to. In the case of Myspace they unwisely affected the culture through a simple move which impacted operations which undercut their strategy. In the social networking market they are losing, and now and trying to reinvent themselves.
    A bigger question for me as we look at these macro issues affecting healthcare is: Are we prepared to see winners and losers in healthcare? If yes, behavior will indeed change and we will worry less about whether they get the culture thing or not. The winners will most likely have. I guess it all depends if we want to see true transformation.

  4. The toughest part of implementing any medical quality improvement program is changing the healthcare organization’s culture. The physician-executive or chief executive officer must be committed to change, not just give lip service to it. The core to TQM or, for that matter, any of the several new popular quality programs, like six-sigma, is the buy-in of senior management to change the culture of the practice organization to support the individual’s pursuit of quality.
    More: http://medicalexecutivepost.com/2010/07/13/in-house-cultural-change-and-the-medical-quality-paradigm-shift/
    Ann Miller RN, MHA
    [Executive-Director]
    http://www.MedicalExecutivePost.com

  5. Kent’s comment makes an important additional point. Those of us trained in medicine are not used to vague concepts like ‘culture’ but believe me it exists. The Sprint/Nextel debacle was another one (I knew one of the C execs in Nextel), and the Beth Israel – Deaconess hospital merger in Boston which almost failed was yet another.
    Culture matters, big time.

  6. As a health economist, I’m inclined to view the success or failure of accountable care organizations as being based on how the financial risks and rewards are distributed.
    Partnerships between physicians and hospitals are usually dominated by the big H, e.g., the hospital installs the lead administrator, negotiates the contract, and decides which physicians get to take part in it. This typically leads to an imbalance tilted towards specialty care and NOT primary care.
    Only if the hospital gains more by keeping patients out of the hospital will the arrangement have any possibility of working.
    The best performing ACO’s will treat hospitals and other institutional providers as vendors supplying the physician group with inpatient and outpatient facility services, and not as equal partners.

  7. Today’s New York Times has a front page article on the decline of MySpace. (http://ow.ly/3CnX5) I think it is interesting and relevant to the above blog post that the Times attributes many of the problems of MySpace to what I would call culture. The MySpace culture and the News Corporation culture were not compatible. They note that AOL ran into many similar problems when it merged with Time Warner. News Corporation moved the MySpace offices from loft space in Santa Monica to a Beverly Hills office building. “Another early sign of the culture clash was the News Corporation’s decision…to move MySpace’s offices from Santa Monica, where employees worked in a loft space and had access to countless restaurants and coffee shops, to a building in Beverly Hills that was originally intended to be a medical facility. There were many fewer restaurants nearby, and employees began leaving work early to eat, and not returning until the next day.”

  8. There is nothing more significant than having an identity. This is like a your usual task done without interruptions. I must say that changing the culture has to outcomes. The good one and the downfall. People like in the airlines tend to have better service but they sacrifice the time that has to spent with family or friends. This may be harsh but change is the only constant thing on earth.

  9. Culture is really important in navigating a rapid change in our environment.Hospital and doctors must really pay attention to technical and cultural. As for me cultural has a big influence in Healthcare system. I think its not right to fail a technical task just because culture does not change. They must work together in able to improve our health care system.

  10. You can not change this culture simply by Health Insurance reforms. As always our legislatures only address a fraction of the entire culture. I;m not sure of the meaning of a Global payments mean. However,fee for service has been a carnavel of hidden expenses.
    I doubt that the culture will ever change unless these contracts between insurer and Provider includes the Consumer. Today, the consumer has become the target of profitability and exploitation without any leverage on their behalf. These entities artificially inflate costs of services of which insurers massively discount their costs,requiring unnessary and in some cases excessive testing; all at the direction of insurance and at the expense of the Patients.
    I find insurance reform promising simply because it stops most of the eggregious abuses. If nothing else.
    The truth is Health Care is a run away train that is draining all our countries financial resources to keep up with the wants of their Investors. The facts are, these wants so out pace the needs of the organizations that they have dismantled patient safety Protocals to feed the greed.

  11. I appreciate this well written and sensitive article. However, the real culture shock will not be in setting up ACOs, but in unwinding them once Obamacare is repealed. Most in the health-care sector are over-investing in Obamacare, and not hedging their bets.

  12. Time for real doctors to step up and take control of health care again. It is unprofessional to allow unlicensed lay people to tell doctors what to do; it is the corporate practice of medicine.
    Time to kill the legal beast that drives insane healthcare spending.
    Time to have the worried well fund their own care.
    Time to lock the treasury and keep out the citizens who have emptied it for decades.
    Culture that.

  13. As far as I can tell, the primary purpose of an ACO is to drive down utilization, especially of hospital based services. Hopefully, patients will also receive higher quality, more coordinated care as a by-product of squeezing out redundant and unnecessary treatment. It’s quite understandable that a hospital CEO may not be enthusiastic about embracing a new business model that is likely to shrink his institution’s business. In the beginning, a few institutions might be able to pull this off if they can win additional business by cutting costs for payers while improving care for patients. Over time, however, the end result will be a smaller market for hospital based services. Less business means fewer hospitals and fewer licensed beds. Shrinking markets aren’t fun for CEO’s.

  14. I am a believer in the term “culture” (for instance, I do believe that there is a dysfunctional inner city culture perpetuating poverty and other problems). But here, IMHO, the term “culture” is used so vaguely that I don’t know what Dr. Bottles wants to suggest. That a surgeon should pick up litter in the office or get the door for a handicapped patient (nothing bad about either)? Or to have the culture of a spotless, marble tiled lobby with a grand piano and valet parking, and successfully focussing on services that are moneymakers? Or am I missing something here?

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