The current use of “managed care” to improve medical performance and reduce costs is inherently flawed. To understand where the flaws lie, it’s useful to ask: What roles should government, management and practitioners play in healthcare and in healthcare decision-making? Today, they often serve in the wrong roles. That’s because they serve within the wrong system structures. Neither traditional centralized management nor free market competition scenarios work for healthcare and yet those settings are perceived as the only two options.
Whether by government or by insurer, efforts to control healthcare costs are typically deployed within a setting of centralized management to dictate how to allocate limited funds. Yet healthcare is a highly complex system, and, as we see in the failure of the USSR and other centralized economies, centralized control doesn’t work for complex systems.
At the same time, free-market competition, which may result in rapid improvements for, say, the electronics industry, is ill-suited for managing healthcare. After all, patients generally can’t shop around for the best hospital.
Are these the only two options?
There is a third: empowering workgroup competition. Groups of care providers who together can be responsible for medical outcomes and other performance metrics compete against other groups in the same hospital and between hospitals. Workgroups must become teams in a peer competition to improve care. This team competition approach combines the best aspects of both the free market and centralized management; it allows the spirit of competition to spur advances and improve performance, while still allowing management to set objectives.
In free-market competition, the goal is financial gain. In workgroup competition, the objective is to be a top performer according to carefully designed metrics that measure both cost and quality. This kind of competition works for sports teams, students competing for grades, and in other competitions where the goal isn’t just to make money.
In order for medical care to improve, the people engaged in providing that care, who know the most about what to do, must be the ones who have control over care decisions, and must be the ones with responsibility for outcomes. However, performance should not be measured at the level of individual doctors and nurses, because outcomes often rely on an entire workgroup’s performance—e.g., how nurses or physicians communicate information across a shift change has a huge impact on outcomes, and communication relies on how people work together.
How does a system empower the people who work together, and who can take on such responsibilities — and not tell them what to do? Through workgroup competition. Fostering workgroup competition means first identifying and solidifying groups that can be responsible for outcomes.
Nurses at a nursing station responsible for the care of patients in a specific part of the hospital could be a workgroup, taking responsibility for improvement in areas like infection rates and patient satisfaction.
In many hospitals, nurses, technicians, and an anesthesiologist are assigned to a surgery based on who happens to be available. In some, however, each surgeon has his or her own team of nurses and techs, and an anesthesiologist with whom he or she works. This team-based approach allows workgroup members to get to know each others’ styles and to work smoothly together. A team approach also allows them to improve their outcomes as a group.
One emergency room, in the Washington Hospital Center of Washington, DC, takes just such a team approach, dividing the emergency room staff into teams who care for a patient from entry to release or admission to the hospital.
Workgroups must be of the right size and function to be able to improve based on the measures evaluated. Some efforts have attempted to produce competition between entire hospital systems, but these units are too large and unwieldy. They focus responsibility on the hospital system management. Since these efforts do not directly measure workgroup performance, they do not enable practitioners to take responsibility for their outcomes or work together to improve their performance. Having provider workgroups rather than management assume the responsibility for healthcare performance in a competitive environment is key.
Once workgroups are created, the metrics of competition must be designed. Healthcare administrators should determine workgroup-performance measures that cover health outcomes, costs, lengths of hospital stays and patient satisfaction. Remember—what is measured is what will be improved: performance metrics must be designed carefully, and should be revisited periodically for updates and improvements.
Finally, workgroups’ performance on each of the measures should be publicized to all the groups on a regular basis—say, monthly. The workgroups would compare their results with those of other workgroups providing similar types of care, like other surgical teams or other nursing stations, and then be responsible for their own improvement.
Care must also be taken to set an appropriate tone for the competition. Just as with sports, rules must be established which will encourage good sportsmanship. Also, as teams improve their performance, swapping team members among them causes better strategies to be shared and improve the performance of all teams.
When workgroups’ scores are in focus, both the scores and the performance they measure improve radically. Members of a workgroup will work together to improve their performance. They will innovate, and they will emulate improvements that they see others adopting.
Some hospital systems publicize their performance measures so that consumers can compare hospitals or systems. This won’t improve performance, however, because patients can’t always change providers, and because hospital systems don’t have much control over their practitioners’ performance.
Arranging hospital operations such that groups consistently work together, and then identifying these workgroups and entering them into a spirited, friendly competition based on well-designed performance metrics will lead to dramatic improvements in results.
Besides improving performance on the measures evaluated, workgroup competition will change the way efforts to control healthcare costs are directed. We will move from a limited focus on cutting healthcare costs to a broader focus on improving the healthcare system at lower cost.
Why centralized management doesn’t work in healthcare:
Why free market competition doesn’t work in healthcare:
Why team competition works:
For Further Reading
1. Y. Bar-Yam, Making things work. (NECSI Knowledge Press, Cambridge, MA, 2005) See page 239.
2. P. Plsek, Redesigning health care with insights from the science of complex adaptive systems, Appendix B of Crossing the quality chasm: A new health system for the 21st century. Institute of Medicine (2001).
3. M. E. Porter, E. O. Teisberg, Redefining health care: Creating value-based competition on results. (Harvard Business School Press, Boston, MA, 2006).
4. M. Berwick, B. James, M. J. Coye, Connections between quality measurement and improvement. Medical Care 41, 30-38 (2003).
5. E. A. McGlynn, Selecting common measures of quality and system performance. Medical Care, 41, 39-47 (2003).
6. M. Werner, D. A. Asch, The unintended consequences of publicly reporting quality information. JAMA, 293,1239-1244 (2008).
7. P. Krugman, Why markets can't cure healthcare. New York Times (7/25/2009).
8. K. J. Arrow, Uncertainty and the welfare economics of medical care. American Economic Review 53, 941-973 (1963).
9. B. Carrol, S. Tomas, Team competition spurs continuous improvement at Motorola. National Productivity Review 14, 1-9 (1963).
10. Delivering safe and optimal care through effective teamwork and communication. Institute for Healthcare Improvement (2008).
11. F. E. Szarka, K. P. Grant, W. T. Flannery, Encouraging organizational learning through team competition. Engineering Management Journal, 16, 21-31 (2004).
12. D. W. Johnson, G. Maruyama, R. Johnson, D. Nelson, L. Skon, Effects of cooperative, competitive, and individualist goal structures on achievement: A meta-analysis. Psychological Bulletin, 89, 47-62 (1981).
13. D. A. Nadler, The effects of feedback on task group behavior: A review of the experimental research. Organizational Behavior and Human Performance 23, 309-338 (1979).
14. D. Schon, C. Argyris, Organizational learning: A theory of action perspective. (Addison-Wesley, Reading, MA, 1978).
15. D. Schon, C. Argyris, Organizational learning II: Theory, method and practice. (Addison-Wesley, Reading, MA, 1996).
16. D. Forsyth, Group dynamics. (Wadsworth, Cengage Learning, Belmont, CA, 2006).
17. D. Levi, Group dynamics for teams. (Sage Publications, Inc., Thousand Oaks, CA, 2007).
18. P. M. Senge, The fifth discipline: The art & practice of the learning organization (Doubleday, New York, NY, 1990).
Writing and Editing Credits
Yaneer Bar-Yam with Shlomiya Bar-Yam, Karla Z. Bertrand, and Nancy Cohen
Page 1: "Calculator Stethoscope" by Vangelis Thomaidis
Page 2: Football Huddles by Jalon Nichols
Page 3: "Business Graph" © iStockphoto / Alex Slobodkin
Page 4: Trophies by Erik Baas
Andreas Gros and Alexander S. Gard-Murray