At the Executive Summit on Healthcare Transformation, presented by Studer Group and Huron February 20-21 in Orlando, senior executives representing the diversity of healthcare delivery converged to discuss the current state of the industry and what can be done to respond to disruption and transform our organizations for the future. As the curriculum lead for this event, it was my honor to partner with colleagues from Huron and Innosight and faculty from organizations who are proactively innovating amidst a rise in consumerism, shifts in payment models and growing financial uncertainty. These organizations include first-movers such as Iora Health, Ann and Robert H. Lurie Children’s Hospital of Chicago, and the University of Kansas Health System. Perhaps most instructive was hearing detailed accounts of businesses that successfully transformed within the highly disrupted sectors of higher education and media.
The focus of the event was how to respond to disruption in the market using a dual transformation approach, in which the core business is enhanced (transformation A) while a separate initiative to create new business models (transformation B) is underway. This positions the organization for success now and in the future.
Innosight’s Future-Back Strategy requires organizations to transform the core business
while simultaneously growing new business models.
“Leading an organization through dual transformation is the hardest problem in business and usually only comes along once or twice in a career,” said presenter Clark Gilbert, president of BYU Pathway Worldwide.
There were three primary themes that emerged from the conference – alignment, commitment and execution.
According to our research at Studer Group, in order for an organization to experience transformative change 75 percent of leaders need to believe that business as usual is no longer acceptable. I don’t think we’re there as an industry. We’ve done surveys on change readiness for 20 years, and we frequently see that leaders are not aligned on the future.
In our Organizational Risk and Readiness Assessments, we ask: If your organization continues to perform exactly as it does today, what do you think your results will be? Typically, executives think the future will be much worse, but the further down you go on the hierarchy, fewer leaders agree.
Studer Group research shows that healthcare leaders are not aligned on what the future of the industry looks like.
It’s natural for people to see things differently from different vantage points throughout the organization. But problems stemming from misalignment at the top will only multiply as they trickle down. Success in a disrupted industry depends, in large part, on alignment of key stakeholders. If senior leadership is unable to get everyone on the same page, effective execution will be impossible and desired results unachievable.
An important first step for organizational leaders is to come together to understand and agree on your top strengths and weaknesses. Innosight’s “Future-Back” strategy provides a roadmap for organizations to determine how to strengthen their core business while simultaneously innovating for the future. As a leadership team, ask yourselves: “What are the unmet needs of our customers today and what will they be tomorrow? Where do we play and how do we win? How will that be different tomorrow? Before you can begin your transformation, the team must align on the answers to these questions to determine the path forward.
Every senior team we work with is clear in stating their commitment to excellence, yet the results show that only a handful are able to sustainably perform at excellent levels. Of course, leaders in healthcare want their organizations to excel. In fact, according to our research, 83 percent of healthcare executives say they are committed to excellence, but only nine percent of hospitals have earned five-star ratings, to pick but one measure of excellence. I believe it’s no longer enough to be committed to excellence. We must also be committed to transformation. As with the myriad of industries that have gone before us, our customers are seeking higher quality at a lower cost. Delivering our current product, even with excellence, won’t be enough.
"Consumers are worried about cost, and they are starting to exercise their buying power in ways they previously haven't,” said presenter Dave Johnson, CEO of 4sight Health. “When given the power, consumers are value-seeking machines.”
12 Lessons from Iora Health on the Road to Transformation B
Presented by Rushika Fernandopulle, MD, MPP, CEO, Iora Health:
- Start with the end in mind.
- Listen to the voices of diverse stakeholders.
- Don’t let regulatory barriers get in the way of innovation.
- Get comfortable with being uncomfortable. Build before you are ready.
- Work to serve the consumer. Period.
- Align everything around the consumer.
- Create a sustainable economic model.
- Transformation A and B should be executed separately. Don’t try to mix old and new.
- Encourage out-of-the-box thinking. Make it safe for employees to “break the rules”.
- Pay attention to the power dynamics. Don’t allow transformation A or B to get more than their fair share.
- Track what matters and only what matters.
- Understand that transformation will soon not be optional.
To continue to be competitive in this shifting landscape, it is vital that organizations not only commit to transforming the inner workings of their organizations, but also pledge to providing a distinctly different, more consumer-focused experience.
“Disruption happens because there is inefficiency in a market,” explained presenter Andrew Waldeck, Senior Partner at Innosight. “The only way we make progress is to make business models that are designed to solve these problems.”
With this shift in the industry, organizations must commit to not only doing what they’ve always done better, but also to doing entirely different things to meet changing consumer demand. So, if the major issues our consumers are facing today are affordability, access and prevention, we must commit to finding solutions to these challenges.
There are three primary leadership competencies required for effective and efficient transformative execution in this new era of healthcare – next-level performance improvement, innovation and engagement. Boiled down, this means we have to drive more effectiveness with more efficiency in our existing approaches so that we reduce unwarranted variation; while at the same time doing entirely new things for which there are no best practices yet established. To be sustainable, both of these approaches require discretionary effort even when no one’s watching.
Studer Group’s Driving Performance Model provides a blueprint for creating lasting change despite significant industry upheaval and is a proven model for executing any sustainable innovation. It begins with a planning phase, followed by an implementation phase, then a phase to hardwire processes, and finally a phase focused on sustaining the change. This model is most effective when it is not a linear, one-and-done progression, but rather a continuous cycle that drives alignment, accountability and reliable execution throughout the organization.
The Driving Performance Model includes four phases (plan, implement, hardwire and sustain) and eight behaviors (diagnose, treat, organize, teach, validate, reward, coach and monitor).
Once your organization has progressed from alignment to commitment and finally to execution, the final hurdle is to sustain the transformation long-term without losing the momentum created along the way. We must continually evaluate our place in the market to optimize the core business and proactively innovate to respond to future disruption.
“The powerful are often the last to understand that their role has diminished,” Johnson said. “They miss the obvious signals. They are actually in great trouble, and they don't know it. The only ones who survive are the agile and resilient.”
At Studer Group, Huron and Innosight, we are committed to helping healthcare executives recognize those signals, find and nurture their own resilience and navigate the rocky terrain of a disrupted industry to fundamentally transform their organizations.
Questions to Consider
Before starting any transformation initiative, ask yourself the following questions:
- Does your full team have an aligned view of the future?
- Is there a sense of urgency to transform?
- Does your leadership development approach support transformation?
- Does your performance management system reward intelligent risk-taking?
- Is the science of engagement being taught and reinforced by senior leaders?
- Is your mission/system designed to support your efforts?
Craig Deao, MHA is an author, national speaker, senior leader at Studer Group and managing director of Huron. Craig is a highly-regarded expert on leadership, engagement, quality and patient safety.