In past blogs we have talked about the benefits of incorporating the values of transparency, adaptability and innovation into organizational design. In today’s blog we bring these themes to the health care industry.
A Big Problem Is Getting Bigger
Anyone who follows the health care industry, or who has had a recent health care experience, or who has an older family member dealing with health related issues, knows we have some serious issues to confront in the health care industry….around the world.
In a 2008 study on American health care costs, McKinsey Global Institute reported that the US spent $2.1 trillion (16% of GDP) on health care, $650 billion above the expected amount even adjusting for the relative wealth of the US economy.
In a 2015 global study Deloitte reported health spending globally rising to $7.2 trillion or almost 11% of global GDP and growing at 5% per year from 2015 through 2018 to $9.3 trillion.
The World Bank, which has been studying health care costs for decades, has monitored the inexorable upward climb on health care costs and, for years, charted these trends. It is no accident perhaps that the map is red.
These numbers are mind-numbing. And, as the National Institutes of Health have noted, there is no end in sight. In a very real sense, like hypertension, the “silent killer” , the cost and complexity of the health care challenge is the ticking time bomb of our age. You can watch a short video describing the changing face of the US health care industry here.
For the optimist, increased spending on health care is probably a good thing – at some level it implies (at least compared to spending on bombs and guns) – a higher degree of compassion towards our fellow human beings, and a measurement of an improving quality of life.
For the zero-sum realist, however, the increasing share of a stagnant economic pie allocated to health care costs, primarily for an aging population, and primarily in OECD and BRIC countries, while much of the rest of the world continues to suffer poor health outcomes, sets off alarm bells.
Cost increases are being driven by demand side factors such as aging populations world-wide, sedentary workforces, poor diets, the rising prevalence of chronic diseases, poorer physical and mental health, and supply side factors such as economic growth in emerging markets, and improvements in health care delivery infrastructure, systems and tools.
For every victory (think declining smoking rates) there seem to be new challenges (sitting as the new smoking). Leaving all else aside, ageing alone, and the demands of ageing patients on the health care system, present a compelling challenge:
The world is facing a situation without precedent: We soon will have more older people than children and more people at extreme old age than ever before. As both the proportion of older people and the length of life increase throughout the world, key questions arise. Will population aging be accompanied by a longer period of good health, a sustained sense of well-being, and extended periods of social engagement and productivity, or will it be associated with more illness, disability, and dependency? How will aging affect health care and social costs? Are these futures inevitable, or can we act to establish a physical and social infrastructure that might foster better health and wellbeing in older age? How will population aging play out differently for low-income countries that will age faster than their counterparts have, but before they become industrialized and wealthy?
As the World Health Organization in its study of ageing notes In almost every country, the proportion of people aged over 60 years is growing faster than any other age group, as a result of both longer life expectancy and declining fertility rates.
Economic Transparency: Demand, Supply and Price
Given the overwhelming influence of demand and supply drivers on the global health care industry – now the largest industry in the world, dwarfing all others – it is no accident that the language of analysis and criticism is first and foremost expressed in economic terms.
One theme getting traction these days – particularly in the US where cost issues have been most pronounced — is the need for increased transparency in the “medical economy” – and specifically the pricing of inputs and delivered services, as well as the comparative assessment of quality and effectiveness of treatment outcomes. The following infographic from Castlight casts some light on the issues:
The theory here being that improved visibility around the pricing of medical inputs and services, measured against the quality of outcomes, will drive enhanced levels of competition, innovation and – ultimately – price reduction and service improvement to benefit consumers. You can almost hear the references to Adam Smith’s invisible hand.
Organizational Design, Transparency & Transformation In Health Care
There seems to be little doubt that improved transparency, accountability, and consistency in measurement around the pricing and quality of medical deliverables will lead to improved outcomes, as well as more effective management of costs.
If letting the invisible hand work, guided by enhanced pricing transparency, is an important driver of innovation and improved health care outcomes, what are some of the other tools and ideas we can use?
The medical industry is also profoundly and fundamentally about people – care givers and care consumers.
The solutions to the challenges the industry faces will likely be driven as much by the visible hands of the hundreds of thousands of people active in the health care industry worldwide, as by the invisible hand of the marketplace. As a result, another element we see as being important to the conversation at Organimi are the notions of organizational design, transparency and transformation.
Just this week, BCG released an entirely unrelated analysis, Man and Machine In Industry 4.0, detailing how the transformation of manufacturing will impact industrial powerhouse Germany’s labour force over the next decade.
In the same vein, the answer to the question “how will we cope” will most likely be found in the patterns we have followed in the past, there and elsewhere:
- new entrants will innovate, bringing new and lower cost technologies, business processes, and medical care solutions to market that disprupt and displace older and more costly methods (think solar versus coal)
- new and increasingly virtual (lower cost) networks of individuals will emerge to compete (think Uber for medicine) with established providers operating higher cost facilities
- organizations confronted by excessive medical costs will demand and force change on existing players and providers, or will by-pass them entirely to embrace new players with proven track records
- entrenched interests – be they medical professionals, hospital employee unions, or regulators – will become increasingly subject to co-ordinated and concerted pressure to deliver more for less
- regulatory approaches, laws, rules and policies will be shifted to embrace alternative market, staffing and qualification models, emphasizing values of speed, competition and innovation
- individual consumers will take more ownership over their own health care experience, assessments and outcomes through improved awareness of their own health situations, access to more sophistocated self-diagnsotic tools, and by embracing wellness and other preventative solutions
- ageing patients, their claims on the health care systems and budgets. and their desires for control over their own end of life treatment and life ending decisions will raise moral and ethical issues echoing those of the recent past in the pro-life / abortion debates.
The Organimi Check Up
It is an exciting time for health care…at least for those who aren’t cynics.
And just how do org charts relate to all of this?
It is ironic that in doing research for this blog we looked for the NIH organization chart online and found a 404 report.
We’re not trying to single out the NIH. It did have other pages for directories and organizational structures.
There are also much better organizational charts in the health care space that can be found elsewhere. You can find the Alberta Health Services org chart here for example It is an excellent organizational chart, created and posted in pdf format, providing more information, but also likely requiring significant ongoing (and costly) maintenance and support.
There are countless online examples of org charts for health care institutions, research organizations and hospitals, as well as the government and not for profit bureacracies and agencies interfacing with them. There are no shortage of people in the health care industry. And there is no shortage of static organizational charts with boxes and roles filed by individuals who may not easily be connected to or aware of even the work of their colleagues in other parts of their own organizations.
What do org charts in the health care industry currently typically look like; how do they “present”…as the usual pdfs with empty boxes…the “hollow shells” of organizational structure that so many health care institutions publish internally to staff and externally on the Internet to the world around them. The face to the world, in short, of a massive, capital intensive, faceless, and largely centrally planned health industry establishment operating world-wide. At a 10% administrative overhead marker, this group is capturing close to $1 trillion in economic value annually. They have the organizational heft to prove it.
The health care challenge is a global challenge, engaging stakeholders world wide who need to be able to connect, communicate and collaborate more effectively to come up with more innovative solutions to a pressing problem that is not going to go away. These are the people who need to embrace change; and change will most likely come from within the industry; and change will be driven by those who embrance any and every new technology innovation available that assists them in connecting, communicating and collaborating more effectively together.
Organimi is a light-weight solution specifically designed for that purpose – to help organizations – traditional or virtual – that wish to bring people together, connect them, and help them facilitate innovative solutions to intractable problems. Create and share your org charts, in real time, on-line, with everyone on your team. Create new teams – locally and around the world – of like minded people pursuing change with passion. A great way to kick start and accelerate innovation around the edges of your health care establishment.
As recent research shows, providing tools that help people connect socially in the workplace not only deliver improved personal outcomes but also enhance engagement, productivity and innovation in the workplace. Organimi is a simple tool to use to start this process…by, simply, letting people better get to know and understand the people they work with everyday, and by helping them construct new networks of people who can bring new insights to old problems.
If you are a hospital administrator, a research center director, or a not for profit organization of employers trying to bring some structure to your efforts around innovation in your corner of the health care industry to solve some of these challenges, perhaps Organimi may be a useful tool for your team to use. It is free for up to 75 members and may be worth a clinical trial or two.
As always, thanks for reading.
The Organimi Team