Thomas Lee, MD explains how ideas from Michael Porter and other business thinkers could fix healthcare.
Thomas Lee:Today we're going to be talking about how some of the most powerful ideas from all business sectors are being used in health care today. I'm an optimist. I do think that the arc of history is toward a better health care system, but there's a reason that it's an arc, because there are a lot of barriers in the way.
There is not going to be any single magic bullet which is going to make everything OK. We need an array of ideas. We need big ideas for the marketplace, and frankly, we need big ideas for the front lines where doctors, like me, are actually taking care of patients and making decisions about what's going to happen with them.
Now I'm going to rely upon five really powerful thinkers who are my big influences as I go through my professional life these days. And, we're going to start by talking about some of the things that I and many others have learned from Michael Porter, who is the professor at Harvard Business School who developed a lot of the modern concepts of strategy used in many business sectors.
As he put it, strategy boils down to two basic questions. And you have to have clarity on these questions, and you have to really be focused on those questions. And those questions are, what are you doing for whom? Like who's your customer and how are you creating value for that customer?
And then the second question is, how are you going to be different? Because if you're doing the same thing as everyone else the same way, then inevitably you're going to end up in a price war, and you won't have a margin. And whether you're for-profit or not-for-profit, you won't be able to invest in the future, you know, stay on the cutting edge. You know, in healthcare the what for whom it has to be improving value for patients. There's no other what for whom that is an overarching goal that all the stakeholders in healthcare shares.
Until relatively recently, you haven't really needed strategy in this sense in healthcare to thrive. What you needed was really good operational effectiveness and an excellent brand. Now, when we say operational effectiveness, what we're talking about is doing what you do well, and doing it better and better and better. Michael and I feel that 90% of management is operational effectiveness.
But in the old days, where working really hard, operational effectiveness, and having a respected brand enabled you to thrive. I think today that is table stakes. You have to do that to simply survive, and if you want to flourish, if you want to thrive, then you have to be ready to make choices. You can't do everything.
You have to pick where you're going to compete and where you're not going to compete. But that dynamic is what got me to start paying a lot of attention to the work of Leemore Dafny – economist, anti-trust expert, also at Harvard Business School, expert on competition, the overall marketplace and how it should work.
We need competition at every level of health care. We need competition where consumers are picking their health insurance products. We need competition where patients are picking where they'll dock with the health care system, who will be their primary care physician, where they will go for their secondary care. And then we need those providers and patients to be working together and facing competition as they pick where they go for their tertiary and their quaternary care.
Now, we know nothing is perfect. Regulation, as a path forward to try to improve quality and efficiency, it can create a floor. But it can't produce improvement. It can't generate the constant thinking, what can we do to get better than we are now? It produces energy, say, what can we do to make sure that we're OK? But we need something more than that in health care.
You need people to want to try to get better, and to do that they have to make tough choices. And to make those choices, they have to feel the pressures of competition. They have to want to win, and they have to be afraid of losing. And that dynamic, I think, can reliably produce our best work in trying to create a better health care system. That’s where we get to the work of Burt, Christakis, and Duckworth.
Ronald Burt, sociologist at the University of Chicago, expert on social capital. We all know what financial capital is, the financial resources that enable organizations to do things they couldn't otherwise do. We know what human capital is, hiring good people so that you can do those things. Social capital are the relationships, the interactions among those personnel so that the organization can do things it might otherwise not be able to do. So what Ronald Burt describes are two basic approaches to creating social capital for your organization.
Brokerage is where you actually try to increase variation within your organization. You open yourself up to new ideas from the outside. People watching this today, you are people who are probably idea brokers. You nurture creativity and innovation from within your organization. So that is essential to learning, to actually imagining how you might get better, opening yourself up to the possibility that other people might have something to teach you.
Closure, though, is an essential part as well for realizing the benefits of idea brokering. Closure is where you nail it down. You look at the things and the different ideas and you say, this one is better. This is the best. We are all going to do this. We’re going to standardize around the practice, in fact. These are organizational imperatives. These are measurable. These are improvable. These things are all about how people interact.
This is about how your team should work, how the people in your organization work together. So themes like cooperation, reliability, respect, team work itself, great teams. One of the most powerful set of ideas running through health care today is a work from Stanley McChrystal and his colleagues, a team of teams. But then, to have great interactions, to have great teams you need to have shared values.
So let's turn to the individual level. What's going on for individuals who are members of these teams, members of these organizations? Nicholas Christakis, now at Yale, social network science. He kind of exploded onto the national consciousness with his 2008 New England Journal of Medicine paper on obesity. And even if you don't know the paper, you know the finding, which is that if a friend of a friend of yours gains weight, you are more likely to gain weight even if you don't know the friend of a friend.
And if the friend of a friend of a friend gains weight, you're more likely to gain weight. And that's because -- obesity isn't an infectious disease, but it behaves like an infectious disease because norms are developing around us without us knowing it all the time. If everyone around you is having dessert, you have dessert. If everyone around you is having super size french fries, your threshold for having super size french fries changes. And that’s what’s drives the spread of values from person to person to person.
He and his colleagues have shown with obesity, smoking, and happiness, and charitable giving, stimulus crowds. In my leadership roles at Partners and the Brigham, I would give out physican-of-the-year Awards. And we would take a fantastic doctor, like my primary care doctor, and we put them up on stage and we give them an award. And the message would basically be, why can't you be more like Chuck? But that’s not actually the most powerful message.
The most powerful message is there is a norm developing here. You put three or four excellent physicians up there, and you give the message there's a norm. And you should aspire to practice like that. And if you're not, you should be a little bit nervous. So thinking about norms, we need empathy to be a core value. Like, you're embarrassed if you're not showing empathy. We need coordination, we need communication, we need safety, we need the valuing of excellence itself.
And that value is what led me to be very interested in the work of Angela Duckworth, the psychologist at Penn, expert on grit. She’s been studying people who pursue excellence at a very high level over a sustained period of time, not days, not weeks, but for years and decades. What drives them? Passion, perseverance, those being the two big characteristics. She describes the psychological assets that lead to them.
Interest in what you're doing, a sense of purpose, the feeling that it’s valued by others. Practice, deliberate, practice where you’re trying to get better. You're not content with the status quo. The hope, the hope that things could get better if you work. It’s not optimism the things will get better, it's the hope that things will get better if you keep on working. And then running throughout all this is a passion for excellence, a passion for trying to be better than you currently are.
The passion to try to be the best, or at the very least to be the best that you can be reliably. Angela’s work is what we need in order to do what Leemore wants, to compete. Is what we need to do what Michael Porter wants us to do, which is to have a strategy where we make choices, choices that might make us better? If we're going to have effective strategies and execute on them, we really need what Ronald Burt talks about and teaches about how to develop real teamwork for working together as a competitive differentiator.
To guide our social capital efforts, we have to be informed by what is the strategy. What are we trying to do for whom? And then for our social capital to really turn into something real, we need great social network science. We need to spread norms, create the right norms, and make sure that they spread reliably. And all of these factors create a feedback loop, with the desire for improvement and then our ability to get there.
It could and should be a virtuous cycle. And if you can work at all of these levels and align yourselves around using them to try to improve the value of care for patients, we may have a health care system that that's better, and we’ll have competitive differentiation in a lot of organizations.