The Logjam of the U.S. Healthcare Sector

Results from two seminars and workshops
of CEOs, Board Members and Medical Directors
under the auspices of
The Governance Institute

by
Tor Dahl

With the assistance of
Ruth Knapp and Marisa Hinnenkamp

March 25, 2002

What is a Logjam?

Over the last 25 years, we have identified the obstacles that lie between the ambitious goals of an organization and the status quo. We call that a "logjam". Logjams contain "logs" and we have found only 23 logs, and no logjam has had less than 4 logs, or more than 12 logs in total. Most logjams contain five to seven logs. And no two logjams have ever been alike.

In each logjam, there is always a key log. This log must be addressed and removed first, because it serves as the catcher of new and old logs that are always forming, no matter how successful an organization is. When this log is removed, the others can be removed in logical order.

The health sector is the only major sector of the U.S. economy that has negative productivity. That means that more people must be hired, more equipment must be purchased every year just to deliver the same amount of services. Eventually that will need to stop, or there will have to be severe rationing of health care in the U.S. Such rationing can be avoided only if the negative productivity is reversed. To do so, we must know what is in the way for that to happen. In our language, we must identify the logjam – and remove it.

How Do We Remove a Logjam?

Just like a disease can only be cured if we know its cause and treatment, a logjam can only be removed if we know its root cause and how to correct it. The root cause of every log in any logjam is a bad idea. When this idea is found, and replaced with a good idea, the log can be taken out of the logjam. When that happens, productivity increases dramatically, as does the bottom line and, much to the surprise of skeptics, physicians and staff satisfaction and patient satisfaction increase as well. The reason is simple: Most of the negative stress and dissatisfaction is rooted in non-productive behavior. When we remove that behavior, we remove the stress and dissatisfaction that go with it.

Another surprising finding is that quality always improves dramatically when a logjam is removed. The reason for this is that a quality failure is always the result of a performance glitch, and improved performance corrects quality as well. In fact, the most frustrating part of organizational quality programs is that many times an organization ends up doing something that they should not be doing – perfectly! There is a simple reason for this as well: Quality is all about taking out variation in products and processes. When there is no variation left, a process or product is considered perfect, and people resist changing it. But approximately 20% of all that is now being done in a hospital or clinic should not be done at all!

The Logjam

We recently asked 153 healthcare leaders to assess the logs in their 94 different hospitals and clinics across the United States. Our survey data reveal the following:

LOGS

Naples, FL

January 2002

102 Participants

Scottsdale, AZ

March 2002

51 Participants

Combined Data

153 Participants

Communication & Information Sharing 37 31 68
Attitudes and Motivation 34 10 44
Customer Service & Satisfaction 30 9 39
External Forces 18 16 34
Information Systems Management 26 7 33
Leadership Skills & Practices 24 8 32
Direction, Goals & Strategy 27 3 30
Teamwork & Cooperation 16 9 25
Organizational Structure & Bureaucracy 17 6 23

 Interpreting the Logjams

Even though the data in this note came from two separate groups, with no communication between them, the groups have seven of the nine logs in common, and they both identified the same key log: Leadership Skills and Practices.

The participants noted that leadership faced competing interests and goals which led to a lack of overall common goals, which in turn made alignment difficult or impossible. When alignment was lacking, so was trust and cooperation. The root cause of this log, the groups concluded, was selfishness, that is, self-interest turned personal and antagonistic toward the whole.

The other logs in the logjam tell the rest of the story:

(a) Leadership must be forcefully exercised so that people unite behind Direction, Goals and Strategy.

(b) The Organizational Structure must be made to accommodate the alignment to Direction, Goals and Strategy.

(c) Implementation and alignment happen through Communication and Information Sharing, Teamwork and Cooperation, and Attitudes and Motivation.

(d) Information Systems Management measures results against milestones and benchmarks, and provides corrective feedback and rewards.

(e) All this is directed towards better customer service and satisfaction, and making the best of the external forces that must be accommodated.

The 94 different institutions that gave their responses to this mini-survey have all different logjams. But the remarkable convergence around 9 of a possible 23 logs (40% of the logs contained 70% of the information) from an extraordinarily varied sample of organizations hint at deep common concerns and underlying factors shaping the health sector today.

Conclusion

Peter F. Drucker states it clearly: "All businesses have access to pretty much the same resources. Except for the rare monopoly situation, the only thing that differentiates one business from another in any given field is the quality of management on all levels. The first measurement of this crucial factor is productivity. That is the degree to which resources are utilized and their yield. The continuous improvement of productivity is one of management’s most important jobs. It is also one of the most difficult, for productivity is a balance between a diversity of factors, few of which are easily definable or clearly measurable."

The health sector has showed negative productivity for more than a decade now. And 151 of its leaders have pointed to leadership as its key challenge. For those who say "there are no silver bullets," perhaps it’s time to look at productivity in all seriousness.