Making Sense of Complexity: Analyzing Health Maintenance Costs, not just Healthcare

Health maintenance and health maintenance costs are issues that scale from local to international, and from simple to arcane. As in all cases of gridlock, there is no easy solution, but there are undoubtedly only a few initial measures that will inevitably lower the cost of enabling all the other measures that gridlock participants always clamor for. Why don't businesspeople simply identify those enabling issues and move forward? Why DO we have gridlock on health issues? My contention is that the core issues are a failure to think critically, a failure to cooperate and collaborate, and a failure of will and ambition.

It's not that the need isn't obvious. Note that health costs are a big issue for families, businesses, clinicians, and hospitals - [Recent Growth in Health Expenditures], and that both utilization and insurance margins are high [Health Insurance Costs]. The results include frighteningly negative trends for the economy and standard of living [Will health benefit costs eclipse profits?].

Given the need, why didn't adequate entrepreneurial responses arise years ago? When farmers had crises they have always formed granges and cooperatives, and helped one another out, since the dawn of time. When Deming and others were sent to Japan in the '50s to rescue an economy that had high "maintenance costs" for the occupying forces, they took new advances in Industrial Process Control with them. [Ironically, pervasive adoption of those advances had occurred in the US only when CEOs because convinced of the necessity to resist Japanese aggression and atrocities.] One hallmark of Process Control involves coordination among processes, and occurs only when disparate managers come to the realization that "how they do things over their costs me money, and how we do things here may be costing them money". Supply chains become optimized and economies grow when partners coordinate formerly internal business practices and split the cost savings. The corollary is that it IS your business to know and change how others "perfect" internal practices in other departments, other businesses, and even other countries. That, simply put, is why warfare is too important to be left to the generals, and why health is too important to be left to clinicians. No clinician, hospital or insurance company knows as much about process optimization as entrepreneurs and businesspeople, so it's your job as a CEO to demand to see and change the internal business practices of your local health service providers. Not doing so is a failure to serve your workers and stockholders.

In the '50s, US process control engineers taught thousands of Japanese managers to practice total process management, rather than trying to perfect component processes in isolation. [Incidentally, they also advocated statistical methods to guide M&E (measurement and evaluation) and management, but statistics have limited use unless data are shared and results coordinated.] As in the US, only a very few Japanese were able to think critically about the message and actually practice "total process learning" at the Deming lectures, but a few, like those at Toyota, did, with great success.

Regardless of the success of process control at Toyota, and of various dumbed down versions of process control like SixSigma at GE, there remains, 50+ years later, minimal interest in applying rigorous process control pervasively in many industries, including those serving health. Why?

It's rarely because the systemic need or necessity isn't present. When an unsolved communal need is present, it's inevitably because vested interests are allowed to cling to old positions and are not required to see the greater benefit of being indispensable to a changing supply chain or economy. Old interests appropriately cling to existing business practices and require proof of the need to change. If that proof isn't quickly forthcoming from partners, the fault lies with the supply chain, economy or "system" at large, not the local workers, whether generals or clinical workers.

So why has there been so little entrepreneurial response to the need to control health maintenance costs? Given, Americans have been complacent, clinicians have tried to protect their priestly status, and private vendors have profited immensely (whether pharma, device or insurance providers). Nevertheless, the shocking run up in health maintenance costs in recent decades can only be attributed to a disappointing lack of will and ambition among US employers and residents alike. A recent paper attributed much of the blame to a lack of leadership among hospital CEOs [A Deficiency Of Will And Ambition]. That argument, however, just passes the buck, since hospitals will do only as much as their board and local constituents demand. No business in the world has more than a momentary compunction against applying pressure or finding alternatives if suppliers become unresponsive. Why should health service providers be excepted? The fault has to lie squarely with US employers. If you want a better health supplier, treat hospitals, insurers and clinicians of all stripes just like you do your other suppliers. If the local market is rotten, outsource health maintenance services to Minnesota or India as well, or contract to mobile "Health-Geeks-On-Call". The US economy can save trillions by practicing the health equivalent of frequent oil changes and other preventive maintenance instead of simply having another doughnut and waiting for costly repairs.

If that entrepreneurial outlook is not practiced, the result is service disparities, which the health field is full of [for example, see MRSA or Disparities
].

So what can be done? Quit complaining. If you are a CEO, CFO or parent, get off your own widening butt, be as innovative as you are in other areas, and either demand or start your own cooperative employee health maintenance service this month, not next year. Collaborate with other employers and demand responsive suppliers. If someone says you can't do that, and threatens to sue you or your firm, do it anyway and threaten to sue THEM for blocking your freedom to operate your business efficiently.

Case in point? The Veterans Administration Health service, VHA, had extended budget crises in recent years, and responded in grand American fashion. They invented a workable solution that allowed them to lower budgets while increasing both workload and standards of care. A key, ENABLING component of their total process approach was an enterprise infrastructure that allowed data interoperability and total hospital, clinic and medical record interoperability, called VistA. VistA is ~25 years old, and has been adopted by thousands of innovators around the world? Why not at MORE of the 5500+ US hospitals? The answer is simply because complacent employers and residents have put up with unresponsive health suppliers. If any city, county or state in the US adopted VistA at all local hospitals, the result would be a staggering, positive reversal in local economic indicators. Instead of wasting time worrying about making English the official language or outlawing gay marriage, we'd benefit 100x by passing laws requiring VistA at every American hospital and clinic.


Bottom line:

Regions that efficiently manage health maintenance costs drain jobs,
business starts, housing starts, and wealth from regions that don't.

Companies that lower employee health costs see stock valuations rise

Hospitals that lower operating costs make rather than lose money.
["For lots of hospitals, the only reason they lose money is because of the patients who get infections".]

Individuals that manage health maintenance costs see family net worth rise significantly.

Women still shoulder most health responsibility for both men and families. Women that practice efficient family health maintenance see community and family quality of life improve.

Most, but not all, CEOs (and parents) take the easy way out - and procrastinate, by addressing only immediate concerns.
Employers outsource staffing to regions with expendable labor.
Hospitals outsource costs to contributors with expendable capital.
Clinicians & insurers outsource costs to clients with expendable incomes.
Individuals outsource lifestyle risks to expendable futures.

There's nothing wrong with those responses. AS A BEGINNING. However, those whose strategic plans are long term outlast those who only "fight fires". Do we prefer to be like Deming or Skilling? Like Toyota or GM?

None of the sources above are inexhaustible. If you, as a CEO, CFO (or parent), don't have a long term plan to find, build or create RESPONSIVE health maintenance suppliers for your organization, you're not managing risk. Even more importantly, if your organization doesn't recognize the paramount value of effective business practices, including effective employee health maintenance, your board should replace the CEO and CFO. As usual, the buck only stops with American entrepreneurs, who need only to be informed.

....The root of all progress involves exposing hidden business processes.

........We have met the enemy - and they is us. "Pogo"

..........The glory goes to those who find a better way.

If you have COGENT comments, questions or suggestions, please post them here, or send email to rgerickson at gmail dot com.