Industry Voices—Built to flail: Why the culture of healthcare needs to be addressed, stat

Existing companies like Amazon, CVS and Google are introducing new business models that challenge the role of traditional providers. They are a disruptive force to which healthcare systems are struggling to respond. (Amazon)

The chief innovation officer of a highly regarded integrated delivery network recently lamented: “Getting people to change is the hard part.”

This is a common refrain in administrative suites and medical executive committee meetings as healthcare systems struggle to respond to a marketplace where new competitors and delivery models are emerging at breakneck speed.

There’s ample evidence that healthcare is on the cusp of significant change. Consumer expectations regarding affordability, reliability and accessibility are changing as out-of-pocket costs grow, the population ages and demand for more convenient, just-in-time access increases. Value-based and capitated payment arrangements account for a growing percentage of healthcare revenues.

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Seizing on the rampant inefficiencies in the healthcare industry, well-funded entrants are challenging incumbents with targeted population health management, telehealth and care management solutions. Existing companies like Amazon, CVS and Google are also introducing new business models that challenge the role of traditional providers.

Savvy healthcare executives are taking steps to create a differentiated brand and product offering that appeals to consumers. Massive investments have been made into integrated care delivery models and outpatient facilities, data analytics, telehealth platforms and other technologies. “Innovation” could well be healthcare’s word of the year.

Behind the scenes, many organizations are struggling to develop and sustain organizational behaviors that deliver on their brand promise. Our fourth annual State of Population Health Survey reinforces those concerns. Asked about challenges to implementing population health, respondents cited “difficulties in changing the organization’s culture” as second only to the “threat of financial losses” —a jump from fifth to second place in one year.

Examples of healthcare’s cultural challenges abound. Organizational silos and stakeholder self-interest reinforce the status quo. Administrators and medical leadership struggle to have “hard conversations” with providers who are cost/quality outliers. Strategies that emphasize improved patient access are trumped by the organizational pushback against expanding patient scheduling hours.  

Unlike healthcare systems, nontraditional providers such as Google, Amazon and Apple have a laser-like focus on the consumer. If healthcare incumbents want to remain competitive, they’ll need to develop a value-focused culture that puts the customer at the center.

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Resetting cultural beliefs and behaviors requires top-down commitment and a systematic approach to assessing and reshaping organizational culture. Organizations that have successfully navigated this transition have focused on four central elements.

  1. Establish a strategic vision. Leaders need to engage critical stakeholders in defining a vision for the future that considers changing market dynamics, the competitive landscape and unmet market needs. This exercise defines purpose, ambitions and behavioral expectations, while also serving as a “true north” to guide cultural change. As we wrote in our latest book, a galvanizing vision is essential as organizations rebalance resource allocations and shift more emphasis to outpatient care and other services that fill specific market needs. 

  2. Develop an enabling organizational structure. Titles and reporting structures send clear messages to the organization about strategic priorities and cultural shifts. If a provider is committed to improving the experience of its patients, a chief customer experience officer reporting directly to the CEO demonstrates that the organization is serious about putting the customer at the center of strategic and operational decisions.
  3. Recalibrate performance measurement systems. As organizations define the new behaviors and competencies required for future success, they need to develop new performance measures and hold people accountable. Organizational goals and performance targets should cascade downward to ensure day-to-day work and decision-making align with the vision. As an example, organizations intent on improving patient access to primary care physicians need to be sure that access-related metrics are built into clinic-level performance standards as well as the performance targets of physicians and extenders.
  4. Create a tight feedback loop. Organizations seeking to change their culture must reinforce desired behaviors and recognize performance. Rewards can be intrinsic or extrinsic, ranging from compensation and incentives to public recognition and celebration of successes. Making organizational advancement contingent on the demonstration of core values makes a powerful statement. As new delivery models transcend organizational boundaries, it’s also critical to provide feedback and reinforce culture with strategic partners ranging from independent physician practices to post-acute providers and community resources.

Taking on a cultural transformation during times of regulatory uncertainty, media scrutiny and financial challenges is a daunting task.

For executives and boards intent on positioning their organizations to remain vital institutions and meet the needs of the communities they serve, it’s also a task that can’t be ignored.

Michael N. Abrams is managing partner and Gordon Phillips is a consultant at Numerof & Associates.