CHAPTER 1
ORGANIZING FOR SUSTAINABLE HEALTHCARE:
THE EMERGING GLOBAL CHALLENGE
Susan Albers Mohrman, Ph.D.
Senior Research Scientist
Center for Effective Organizations
University of Southern California
3415 S. Figueroa St., #200
Los Angeles, CA 90089
1-213-740-9814
smorhman@marshall.usc.edu
Abraham B. (Rami) Shani, Ph.D.
Orfalea College of Business
California Polytechnic State University, San Luis Obispo, CA, USA,
and Politecnico di Milano, Milan, Italy
+1-805-756-1756
ashani@calpoly.edu
Arienne McCracken
Program Manager and Research Associate
Center for Effective Organizations
University of Southern California
3415 S. Figueroa St., #200
Los Angeles, CA 90089
1-213-740-9814
amccracken@marshall.usc.edu
1
ABSTRACT
Purpose
This chapter frames the topic of organizing for sustainable healthcare in terms of the
environmental trends that have rendered current healthcare approaches unsustainable, the
embeddedness of healthcare in society’s triple bottom line, and the need to build adaptive
capability within the complex healthcare eco-system.
Design/Methodology/Approach
We synthesize documented trends and empirical findings regarding the viability of current
approaches to healthcare, and provide a theoretically framed treatment of the adaptation process
in the complex healthcare system that can lead to the emergence of sustainable approaches.
Findings
There is a misfit between current approaches to delivering healthcare and the requirements and
trends in contemporary society. Fundamental transformation is required that entails a
broadening of purpose, a future orientation, and a rethinking of how healthcare adds value and
how it is embedded in society.
Originality/Value
By reconceptualizing healthcare reform as intricately related to societal sustainability and the
triple bottom line, we open the possibility of transcending a narrow focus on reengineering to
create more efficient organizations and work processes that consume fewer resources and deliver
greater value. We invite healthcare practitioners and scholars to rethink all the connections in
2
the healthcare eco-system, and the need to build in self-organizing capabilities and adaptive
capacity. The cases in this book provide knowledge from systems engaged in fundamental
transformation, analyzed through the lenses of theoretical frameworks that help us better
understand essential dynamics involved in creating sustainable healthcare systems.
Keywords: Sustainability, sustainable healthcare, complex systems, adaptation, triple bottom
line, embeddedness, emergence, learning
Paper Category: Theory Development
3
Healthcare as it is organized today is not sustainable. Healthcare systems in the developed world
are encountering increased demand for high quality healthcare even as they face the limits of the
resources that they can command from society. Developing nations are challenged to secure a
flow of resources to make even basic healthcare available to rapidly growing populations who
have increased expectations for services and quality of life. Healthcare managers, professionals,
and academics worldwide are debating how to redesign healthcare’s current organizational
configurations and delivery paradigms to deliver more with less, amidst profound changes in the
populations that need to be served, and changing healthcare priorities. The healthcare challenges
generated by demographic, economic, and ecological trends are a microcosm of the overall
sustainability challenges being faced by mankind, as the requirements of our burgeoning and
highly interconnected global economy approach the “carrying capacity” of the earth on which we
live.
This second volume of the Emerald Press series Organizing for Sustainable Effectiveness
examines the topic of Organizing for Sustainable Healthcare. The chapters systematically
examine healthcare systems that are aggressively grappling to build the foundations for
sustainable, high quality healthcare. From these case-based analyses, we will learn about
substantive organizing changes aimed at operating within resource limitations while addressing
the burgeoning expectations of the population and taking advantage of the explosion of
knowledge in the form of medical advances that hold the potential for unprecedented positive
impact on the health of individuals and societies. We will also learn about the change
capabilities that healthcare systems need in order to implement fundamental change and continue
to evolve through time.
4
We believe that closely examining change in the healthcare sector will provide insight
into the overall question of how humanity can put into place sustainable models of organizing.
This sector is competing against other purposes for scarce societal resources, and is facing
unavoidable trade-offs and pressures for financial responsibility and delivering value.
Healthcare’s societal impact manifests in the close connection between the health status of a
population and societal wealth and well-being. In turn, the resources available to promote a
population’s health are a function of the levels of societal wealth. At the individual level,
whether this sector thrives or struggles impacts a large portion of the population in developed
nations who work in healthcare related jobs. The U.S. Bureau of Labor Statistics reports that
workers in the healthcare and social assistance sector made up 11.5% of the workforce (about
16,400,000 jobs) in 2010 (Henderson, 2012). In the EU-27, there are over 21 million health and
social services workers (European Union, 2011). And how well the healthcare sector is
organized and performs impacts almost every member of society, whether through the good or
poor care they and their family members receive or through the absence of care and the financial
toll that illness entails. Healthcare is intricately interwoven in the interlaced societal, economic
and natural dynamics that impact environmental sustainability—both as polluter and as the
antidote to disease that is triggered by toxic and unsafe environments.
In short, the challenges healthcare faces are multidimensional and interconnected. This
reality is captured by Elkington’s (1997) notion of the “triple bottom line,” a framework that
entails commitment to and measurement and improvement of outcomes along the three
intertwined dimensions of economy, society, and environment. Societal institutions at all levels
are involved in and affected by how healthcare functions and is organized: national and local
governments, communities, businesses, families, the developers and manufacturers of healthcare
5
related products and services, as well as citizens, patients, and the organizations and individuals
who provide healthcare related services. The healthcare eco-system is expansive, complex, and
diverse.
Our healthcare systems are being threatened by the growth and aging of populations
requiring care and by changes in the substantive demands being placed on the systems. Care for
individuals with chronic illness has surpassed acute care as the major focus of healthcare services
and consumer of healthcare resources (Lambrew, 2007; National Center for Chronic Disease
Prevention and Health Promotion, 2009a; 2009b). Healthcare systems are also being challenged
by the burgeoning costs of new technology, and the increasing expectations of citizens to receive
the most advanced and up-to-date treatment that often carries with it the promise, whether
grounded in research or not, of great benefit as well as a high price tag. All of these demandoriented forces are crashing into the resource limits of societies and individuals and causing
fundamental reexamination of the premises, purposes, and organization of healthcare in countries
around the world.
Sustainability has become a fashionable, if controversial, term that covers an umbrella of
concepts, approaches and implications. Early use of the word pertained largely to efforts to
develop sustainable patterns in the consumption of natural resources and to avoid the negative
environmental and social impacts of unrestrained exploitation of the natural environment (see
foundational environmental texts such as Carson, 1962). Sustainability has expanded to include
social responsibility, including concern for communities and social justice (Googins, Mirvis, &
Rochlin, 2007). The very word sustainability implies temporal responsibility: putting in place
practices that can be maintained through time and that protect the needs of future generations.
The triple bottom line perspective recognizes the close interdependency of economic,
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environmental and social outcomes and emphasizes the need to simultaneously address all three
focuses rather than pursuing a course of action that emphasizes one at the expense of the others.
Our working definition is that healthcare is sustainable if:
The eco-system for the sustainable provision of healthcare outcomes operates to
continually increase health, societal, and ecological value, functions with a viable
economic model, and conserves resources for future generations.1
Healthcare is knowledge based, and there is a staggering acceleration of scientific and
socially evolved understandings of health and well-being and their antecedents, correlates,
causes, and dynamics. Humanity knows much more than we have put into practice, and we are
developing knowledge at unprecedented speed. For this reason, the sustainable healthcare ecosystem must incorporate not only effective ways of organizing to address the challenges it is
currently facing, but must also be agile enough to incorporate changes and advances in
knowledge that will lead to sustainable effectiveness through time. This volume pays attention
not only to how a sustainable system is designed but also to how it can build in the necessary
agility and learning capacity to continually change.
Finally, given the criticality of the healthcare system to the well-being of nations, the
sector exists in a highly politicized environment. The healthcare sector is shaped, enabled and
1
This definition comes from a community of scholars and practitioners that come together regularly to
share learning about and models of sustainable healthcare. This community has been organized by Sue
Mohrman (University of Southern California, USA), Rami Shani (California Polytechnic State
University, USA & Politecnico di Milano, Italy), Svante Lifvergren (Chalmers University of
Technology, Sweden), Andreas Hellström (Chalmers University of Technology, Sweden), Emanuele
Lettieri (Politecnico di Milano, Italy), Chris Worley (University of Southern California, USA), Arienne
McCracken (University of Southern California, USA), and the much beloved and now deceased Peter
Docherty (Chalmers University of Technology, Sweden).
7
limited to a large extent by the political forces at work that impact funding and regulation.
Indeed, the purposes, priorities, and support for publicly funded healthcare and for the policies
and regulations that shape action of the many diverse elements of the healthcare eco-system
emerge slowly through societal debate. They are formalized and changed through political
processes by which different stakeholders and interests contend for their preferred outcomes.
These political processes go on simultaneously with the technical processes of care delivery and
improvement in the complex healthcare eco-system, often pitting the interests of various subpopulations of actors against one another. The 2010 passing of the Affordable Care Act (or the
Patient Protection and Affordable Care Act, Public Law 111–148) and its 2012 challenge in the
U.S. Supreme Court, (reviewing issues from three separate court cases: National Federation of
Independent Business v. Sibelius, Secretary of Health & Human Services, et al.; Department of
H & HS, et al. V. Florida, et al.; and Florida, et al. V. Department of H&HS, et al.), is just one
example where many stakeholders with very different ideologies and preferences have utilized
legislative and judicial mechanisms at state and local levels to try to shape the future of
healthcare in the country (Supreme Court of the United States, 2012). This act, if upheld, will
require individuals to buy health insurance, greatly expand the availability of health insurance to
the poor and to those with pre-existing conditions, and move the U.S. toward an outcomes-based
reimbursement system, among other impacts. These are ideas that have been debated in the U.S.
for decades, and where social consensus has not yet been achieved. Any discussion of
sustainable healthcare is incomplete without acknowledgement of its tight connection with the
polity.
In this introductory chapter, we describe and frame healthcare’s sustainability challenges
using a complex adaptive systems perspective (Miller & Page, 2007; Holland, 1995; 1998), and
8
we draw from the literature to examine how sustainable effectiveness has been approached and
what has been learned to date. We focus particularly on the issues of purpose and capabilities
development. A capabilities development perspective leads us to focus on organization design
and learning processes that are critical to building sustainable healthcare. First we will more
carefully describe the challenges that are being faced by healthcare systems around the world
that are rendering current ways of organizing unsustainable.
CHALLENGES TO SUSTAINABILITY
Reliable and sustainable healthcare delivery is a high-priority goal for all nations—and is
integral to achieving a vigorous economy and a vibrant and productive society. Yet, despite
having been identified as a key societal issue and looming crisis for decades and the funding and
implementation of many healthcare improvement initiatives, the unsustainable cost trajectory
continues in most countries. Perhaps the most dire situation is in the United States, a country that
has relied on a mixture of private insurance, government benefits for the poor and elderly, and
the delivery of care through a mixture of public and private institutions. Healthcare costs
continue to escalate at a rate of about seven percent per year, more than twice the rate of growth
in the overall economy (Towers Watson, 2010; Bureau of Economic Analysis, 2012).
Projections over the next six to eight years are for similar annual rates of growth, although
growth has recently slowed as a consequence of the 2008 recession (Keehan, Sisko, Truffer,
Poisal, Cuckler, Madison, Lizonitz, & Smith, 2011; Martin, Lassman, Washington, Catlin, &
National Health Expenditure Accounts Team, 2012). The United States pays far more of its
GDP on healthcare than any other nation -- 17.9% of U.S. GDP in 2010, projected to grow to
20% by 2020 (Martin et al., 2012; Fleming, 2011). Total average out-of-pocket spending on
9
healthcare has risen steadily while family incomes remain largely unchanged (Social Security
Advisory Board, 2009). Average family healthcare insurance premiums constituted 18% of the
median family income in 2009 and are projected to go to 24% by 2020 (Commonwealth Fund,
2011). Associated social costs are staggering: the U.S. has nearly 50 million people without
health insurance (Christie, 2011).
Even in Europe, where healthcare is largely paid for by taxation of the population at large
and the financial risks are pooled, costs are outstripping economic growth. The World Bank
projects that public expenditure on healthcare in the EU is on its way from the average 8% of
GDP in 2000 to 14% in 2030 and will continue to grow (Economist Intelligence Unit, 2011).
Public expenditures in Japan grew from 6.2% in 2000 to 6.7% of GDP in 2009 (World
DataBank, 2012).
Three trends are cited as fueling the increase in societal healthcare costs: the aging of the
population and related increase in healthcare needs; an increase in chronic disease; and the high
cost of developing new technology combined with the population’s expectation of receiving
state-of-the art care. These all contribute to increasing demand for healthcare.
Another force behind the rise are the costs that result from the increasing misfit between
the way healthcare is organized and the services and value that the healthcare system needs to
deliver in this changing environment. This misfit can lead to poor outcomes that increase the
demand on the healthcare system. We will discuss these challenges next, and at a high level will
examine the opportunities for aligning healthcare systems with the changing realities they are
facing.
The Aging Population
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Societies worldwide are aging as birthrates fall and life expectancy increases (Greenberg et al.,
2011; Humphreys, 2012). Although the world’s population continues to swell, worldwide the
average woman bears half as many children as she would have 30 years ago (Longman, 2004).
For the developed nations, the large post-World War II generation, the “baby boomers,” are
starting to retire and enter their most healthcare-intensive period, while the working population
constitutes a smaller and smaller portion of the population. By 2050, at least 37% of the
populations in Europe and Japan will be in the over-60 age group (European Commission, 2012).
From 2000-2050, the worldwide population of people ages 60 or older will triple to include 2
billion people, and most of that increase will occur in developing countries (World Health
Organization, 2011c).
This population shift forecasts an increased demand for healthcare, and a proportionately
smaller increase in nations’ ability to cover the costs. This will put a larger strain on all
countries, but particularly on those governments that offer such things as pensions and national
healthcare benefits (Andreason, 2011). Funding either for government financed (tax-based) or
employer paid (insurance-based) care depends on having a robust, healthy, working population.
Many governments are being faced with declining revenue growth from a shrinking pool of
working-age citizens, and hence, decreased taxation and insurance funds that could go to
healthcare (Economist Intelligence Unit, 2011). This structural shift is putting pressure on
governments to adopt various policies to scale back benefits, raise the retirement age, or raise
taxes to deal with this shift in the population (Andreason, 2011). Often lost in these macroeconomic analyses is the complementary requirement that healthcare systems have to reduce
costs and/or sharply curtail services.
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Chronic Illness
Disease profiles are shifting, with a staggering increase in prevalence of chronic illnesses, often
lifestyle related, that consume a rapidly increasing percentage of healthcare expenditures
(Lambrew, 2007). Cancer and chronic diseases such as hypertension, diabetes, asthma, and
COPD, are increasing worldwide, affecting both developed and developing nations (World
Health Organization, 2011d). In 2007, a quarter of EU citizens had one or more chronic diseases
(Watson, 2007). By 2020, an estimated 157 million Americans will have at least one chronic
condition, and spending for chronic conditions will account for 80% of all healthcare spending
(Wu & Green, 2000). The annual cost of chronic disease in the U.S., including healthcare
expenses, lost income, and lost productivity, is estimated to be $100 billion (National Institutes
of Health, 1998).
Chronic diseases, especially cardiovascular disease, have found a “new frontier” in
lower-income nations, including China, India and the nations of Africa (Greenberg, Raymond, &
Leeder, 2011). Obesity and overweight, conditions very closely related to cardiovascular
disease, diabetes, kidney disease, and some forms of cancer (Eckel, 2008; Eheman et al., 2012),
are increasing globally. More than half the adult population in the EU and two-thirds of all
Americans are overweight or obese (OECD, 2010;) There are now over 35 million overweight
children in developing countries, notably in urban centers (World Health Organization, 2011a).
Cancer, a term that encompasses more than 100 diseases, remains a critical concern
across the globe. These diseases have many possible causes, including the inheritance of highrisk mutations in specific genes (e.g., BRCA1 and BRCA2 mutations for breast cancer) (Offit,
2006). Some known human carcinogens are tobacco, alcoholic beverages, excess body weight
and other lifestyle factors; UV rays from the sun and radon (natural environmental factors); and
12
aluminum production, coke production, and iron and steel founding (workplace exposure)
(American Cancer Society, 2012). In 2008, there were over 12 million cancer cases and almost 8
million cancer deaths worldwide. The developing world accounted for 56% of the cases and
64% of the deaths (Jemal et al., 2011), although the mortality rates in some countries have been
declining and overall incidence rates of cancers have been stabilized (Eheman et al., 2012). As
populations worldwide are aging, incidence rates are expected to increase in the future, however.
Aggregate 5-year costs of cancer care for the U.S. elderly Medicare population were estimated to
be $21.1 billion in a 2008 study (Yabroff et al., 2008).
Technology
Healthcare is also experiencing pressure from the increasing costs of technological and
pharmacological innovation, as new devices, equipment, techniques, and drugs become more and
more costly to develop. The cost to bring a new drug to market in 2006 was over $1.3 billion – a
tenfold increase from the cost in 1975 (Economist Intelligence Unit, 2011). Much of this
increase is attributed to the investment in and cost of biomedical research (DiMasi & Grabowski,
2007) and innovations in material sciences, genetics, biotechnology, bioinformatics, advanced
imaging technology, and e-health. Pharmaceuticals have been the fastest growing component of
healthcare costs in the U.S. (NHE Fact Sheet, 2009).
Technology has brought great advances in ability to treat disease and improve chances
for survival, but these advances have been costly. In the U.S. alone, spending on pharmaceutical
research and development was estimated to be $37 billion in 2010. American biotechnology R &
D spending was $30 billion in 2009, and medical technology R & D spending accounted for $9
billion in 2009 (Research!America, 2010).
Annual costs of the biologic medicines used to treat
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the chronic disease psoriasis ranged from $18,000 to over $27,000 (Beyer & Wolverton, 2010),
and other biologic drugs and new chemotherapies are similarly priced.
Purchasing one Da
Vinci surgical robot can cost a hospital approximately $2 million, not including maintenance
costs (Varney, 2012). The average hospital charge in Texas for a coronary bypass surgery with
insertion of a cardiac catheter was almost $136,000 in 2010, not including physician fees (Texas
PricePoint, 2010). And the list goes on and on. Genetic testing enables patients to know whether
they have the risk factors associated with many diseases, and raises the possibility of taking
medical measures to prevent disease that a person may never contract.
These advances often bring or promise improved chances of preventing or surviving
disease and slowing progression, of making surgery less invasive and therefore less dangerous,
enabling the replacement and repair of defective organs, joints or limbs, and enhancing the
quality of life and extending it. Although great progress has been made in treating illness, the
breakthroughs required to cure chronic and many other life-threatening conditions have been
slow to come. Such progress would allow us to radically change the cost structure of healthcare.
While the mapping of the human genome seemingly ushered in a new age of gene therapy and
genetic intervention, the reality is disappointing: no non-experimental gene therapy drugs or
procedures are currently available to U.S. patients (Lindee & Mueller, 2011). Genetic
interventions have yet to fulfill their promise.
Information about new technologies is readily available to people through news media,
on the internet, and also from advertising by the companies who develop them. In the U.S. in
particular, but increasingly in other countries, the population is exposed to a barrage of
advertisements about drugs, devices, and procedures that are touted to help detect problems,
prevent the onset of illness and/or to be effective in addressing existing conditions. Public
14
awareness has increased, expectations have been established about receiving state-of-the-art care,
and patients often arrive at the doctor’s office requesting specific treatments. Undeterred by very
public exposure that many claims about the benefits of new technologies are not well grounded,2
patients may equate the quality of care they are receiving or the caliber of the hospital where
they may be treated with the presence of approaches they hear about on the airwaves and read
about on the internet. This places pressure on healthcare costs, and raises the politically
explosive questions of who should pay, and of what is society’s healthcare obligation to its
population and what is individual responsibility.
Organizational Misfit with the Changing Healthcare Needs
Increased demand may be triggering the current sense of urgency about healthcare sustainability,
but the inadequacy of our current models of healthcare delivery has also become a major focus as
nations consider the question of how to respond to these changes and to provide more value for
the healthcare dollars that are spent. We know that sustainable healthcare delivery cannot be
achieved by continuing to accelerate resource consumption. Witness the U.S. which, while
paying almost twice as much per capita as the next closest nation for healthcare, is rated in
comparative studies toward the bottom on many measures of quality and patient satisfaction,
including safety, access, efficiency and longevity (Davis, 2010). The U.S. healthcare system is
apparently not organized to effectively use resources “to continually increase health, societal,
and ecological value, to operate with a viable economic model, nor to conserve resources for
2
See, for example, such issues as the lack of efficacy of gender-specific and many other new
knee replacement devices or the safety problems with the drug Vioxx (Skelly, 2007; Tong, Tong,
& Tong, 2009; Weisz, Mohrman, & McCracken, 2012).
15
future generations” (our working definition of sustainable healthcare as described earlier in this
chapter).
This U.S. anomaly can be explained by many factors. Much of the R&D and innovation
that has led to new technological capabilities has occurred in the United States, and the cost of
such development has disproportionately been passed on to that healthcare market. Other
nations’ government-run systems have implemented price caps and have received the same drugs
and devices less expensively, while also making the decision not to introduce expensive drugs
and technology into their formularies and guidelines that cannot be shown to deliver increased
value. (Darzi et al., 2011; Anis, 2011) U.S. healthcare is largely delivered by physicians in
private practice, often by for-profit hospitals and affiliated healthcare service organizations, and
almost half of its healthcare is administered by for-profit insurance companies. None of these
actors have had any incentive to change their practices to restrain healthcare costs; in fact, they
thrive when they receive more resources. Approximately 31% of healthcare costs cover the
administrative costs and the profits of insurance companies (Woolhandler, Campbell, &
Himmelstein, 1999), and this number increases as much as 6.6% per year (Blanchfield et al.,
2010). Despite the fact that almost 50% of U.S. healthcare costs are paid for by the government
in the form of the Medicare program for seniors and the Medicaid Program for the poor (Kaiser
Family Foundation, 2009), approximately 16% of Americans have no insurance, and
consequently a large number of Americans receive their “primary” care in emergency rooms at
great expense.
Arguably, these parameters of the U.S. healthcare eco-system add significantly to the
high costs. But another factor is also at work in most developed nations: the healthcare system as
currently designed is not effective at dealing with the kinds of substantive health issues that are
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being faced in today’s society, and in fact is very inefficient at doing so (Christensen, Grossman,
& Hwang, 2009; Berwick, Nolan, & Whittington, 2008). A specific and very costly example is
that the traditional hospital-based and private-practice-based delivery system is not suited to
deliver coordinated life-cycle care for chronic disease treatment and prevention, nor coordinated
care for an aging population with multiple, interacting disease states. The U.S. system may have
been deluged by lifestyle-related chronic conditions earlier than many other countries, but this
problem is now global.
Current healthcare systems developed over time as hospitals and other healthcare
organizations evolved to address the changing needs of physicians and their patients and were
largely shaped around the acute illness model of care and the need to have places to house
patients with persistent infection (Wagner et al., 2001). Our success in finding effective
treatment for infection has resulted in less need for hospitalization for individuals with
infections, but has also increased lifespans and the related increase in incidence of chronic care.
Failing to effectively prevent and manage chronic disease results in people getting sicker, having
more acute episodes, and requiring more complex and expensive care (Pencheon, 1998).
Moving “upstream” in chronic disease life cycles has a significant potential return on investment,
yet both in the U.S. and the EU people are receiving only half of the preventive care that they
should be getting (Rand Health Research Highlights, 2006). Prevention and wellness are
receiving no more than 5% of the money spent annually on healthcare (Economist Intelligence
Unit, 2011; Kelley, Moy, Kosiak, McNeill, Zhan, Stryer, & Clancy, 2004).
This is because we
have a system designed to provide episodic care—not to keep people well and manage the life
cycle of health.
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The treatment of chronic illness demands early detection, preventive measures including
lifestyle intervention, continual monitoring and control, and coordinated treatment. Yet we
retain a highly fragmented system that is organized around specialized medical disciplines rather
than around the coordinated treatment, where each specialty reacts to particular patient
symptoms and conditions rather than coordinating and being proactive in addressing prevention,
disease control, and patient wellbeing. Patients in a sense start over at each encounter and wind
their way through many specialties, services, offices and locations in order to get treated for
particular episodes of care. Patient information often is not readily available and does not flow
with the patient, and patients often have to coordinate their own care.
Fragmentation also negatively impacts the treatment of patients with acute illness, serious
injury, and complex and perhaps poorly understood diseases that require the coordinated services
and knowledge of many medical professionals for efficient diagnosis, treatment, and
recuperative care (Bohmer, 2009; Christensen et al., 2009). Yet these patients frequently are
treated sequentially and in an uncoordinated fashion by many departments, each of whom deals
with a small piece of the puzzle (or the human system), and none of whom take responsibility for
outcomes.
Fragmentation is reinforced when providers are reimbursed for procedures, activities,
and episodes of care rather than for health outcomes. The stream of resources to healthcare
providers depends on demand for their services, and each provider acts in a way that ensures an
ongoing stream of resources; perpetuating fragmentation in the care of patients. Poor healthcare
leads to greater demand—and much greater costs to society in terms of resources consumed and
health status and quality of life of the population. Even error gets reinforced, as preventable
iatrogenic disease such as hospital acquired infections and adverse drug interactions result in
18
more demand for health services and more reimbursement for care (Darzi, 2011). In the U.S.,
hospital-acquired sepsis and pneumonia, for example, created 2.3 million additional days of
patient hospitalization and over $8 billion of in-hospital costs in 2006 (Eber, Laxminarayan,
Perencevich, & Malani, 2010).
The challenge is to reverse this cycle of escalating costs by aligning the healthcare system
with the delivery of high quality care and outcomes, and moving its focus upstream to
prevention, early treatment, and control of chronic disease, thereby greatly increasing value to
patients and society (Porter, 2009; 2010; Kaplan & Porter, 2011). Kaplan and Porter note that
better healthcare outcomes are linked with lower total care cycle costs. They strongly believe
that the healthcare field has great potential to simultaneously improve outcomes and drive down
costs -- by systematically measuring outcomes and using an accurate cost measurement system
(Kaplan & Porter, 2011).
Inertia protects the status quo. Communities, providers, and local governments have had
a stake in this fragmentation and redundancy that leads to sub-optimal outcomes and inefficient
resource utilization. In the name of professional autonomy, physicians have been a major force
in ensuring that healthcare remains what is called by Swensen et al. (2010) a “cottage
industry”—where individualized care plans and idiosyncratic treatment approaches work against
the integration, standardization, and improvement required to increase value. Each element has
worked to carry out its own tasks, and to ensure its own resource stream—often without regard
to overall system effectiveness. Insurance companies and government agencies have played a
role in regulating this loosely coupled system, although rarely intervening to ensure consistency
of practice or that the pieces work together or are organized effectively. The system continues to
treat chronic illness as if it were a series of discrete episodes, and multiple disease state patients
19
as though they house distinct conditions. Each community, each health system, and each
specialist seeks to have complete services for acute care, even if they don’t have the volume to
justify the costs of such services or to ensure excellence.
There is evidence that this may be changing. In the face of bleak forecasts, changing
regulatory requirements, and changing government policies that affect reimbursement, coverage
and service offerings, many public and private healthcare organizations are aggressively
pursuing reform and renewal. Healthcare systems are responding to pressure to deliver increased
value through a number of initiatives. These include:

Systematically improving clinical and administrative processes leading to better defined,
evidence based, repeatable care pathways that address the life cycle of disease and/or the
coordination of the steps of an acute treatment episode such as a surgery (Gooch et al.,
2009; Weisz et al., 2012).

Measuring outcomes, and transparently reporting results to facilitate learning and
stimulate improvement (Swensen et al., 2010).

Systematically measuring and reporting costs such as with time-driven, activity-based
cost systems (Kaplan & Anderson, 2003; Kaplan & Porter, 2011).

Developing management systems including goal-setting, measurement, and feedback
systems for accountability and learning (Institute for Healthcare Improvement, 2003)

Enhancing IT capabilities to provide integrated patient records so that providers have
access to more complete information about the patient and the information moves with
the patient between providers.

Enhancing technological capabilities to provide integrated patient care away from the
main healthcare site in few localities with closer proximities to patient homes.
20

Building decision making support into electronic medical record systems and other IT
applications that provide assistance to providers about best practice and to avoid error
(Strauss et al., 2000; Sperl-Hillen et al., 2010).

Organizing for greater ease and reliability of integration of the team of specialists
involved in diagnosing and treating patients with complex and uncertain presenting
conditions. (UCLA Health System, 2009; Cosgrove, 2011).

Redesigning primary care to create measurable integrated practice units that provide a
medical “home” (American Academy of Family Physicians et al., 2007) for patients that
is responsible for coordination of care and ensuring access to needed specialist and
community services. (Berwick, Nolan & Whittington, 2008).

Educating patients and their families and providing patients with information to take
responsibility for their health and to more effectively use health services. (Eriksson et al.,
2010; Lorig et al., 1999).

Redesigning the work systems of medical providers such that medical staff burnout is
reduced and human and social sustainability can be achieved (Docherty, Kira, & Shani,
2009).

Building better connections between the various agencies, organizations departments and
facilities that are involved in care (Lifvergren, Docherty, & Shani, 2011), and
rationalizing this configuration in order to avoid costly redundancy and diffusion of
expertise (National Cancer Forum, 2006; Begg et al., 1998; Roohan et al., 1998; Finks et
al., 2011).

Taking a population approach to the delivery of care in order to increase overall health
status and reduce demand on the system (Berwick, Nolan & Whittington, 2009).
21
Although the healthcare environment is changing fundamentally in ways that render
current approaches unsustainable, the greatest challenge to the sustainability of healthcare is to
find new organizational approaches that deliver the value that society needs and is able and
willing and able to pay for. Almost all aspects of the system have to change. A path dependency
viewpoint (Nelson & Winter, 1982; David,1985; 2005) would suggest that the amount of inertia
built into the current institutional structure of healthcare systems and self-interest and roles
within them mediates against success in transforming from within existing players.
Christensen et al. (2009) predict that only disruptive innovation can transform the healthcare
industry to be affordable and accessible—and to that we would add, to deliver the services and
outcomes needed in today’s world. They argue that when there are changing requirements and
opportunities to deliver enhanced value, new organizations with new business models often
appear to do so. Established organizations find it hard to change because their business models
link them tightly to old ways of doing things and to customers and other stakeholders wanting
traditional approaches. Christensen et al. posit that disruptive and transformative innovation has
three elements: 1) it builds on sophisticated technologies to change the processes of doing work;
2) it entails a new business model to offer simplified and affordable solutions to customers; and
3) it involves the emergence of a network of organizations that operate in mutually reinforcing
and compatible ways and that together transform the industry. New industry standards and
societal regulations emerge that enable this new way of functioning (2009, p. xx).
In the chapters in this book we will learn about a number of organizations that are working to
implement new approaches to deliver the value that is required to be sustainable. One reality
that cuts across them all is that the changes they are implementing are disruptive in very
22
fundamental ways to the status quo. We will see all the elements of new business models
(Johnson, 2009) emerging: a new value proposition and the resources, processes, and profit
formula required to deliver on the value proposition (also described in Christensen et al., 2009).
Although it is too early to know whether the changes these systems are making will truly lead to
a more sustainable industry, we can learn from their experiences about how they are intentionally
changing with the purpose of delivering greater value to the societies in which they function. In
the next section we will examine the question of sustainability.
HEALTHCARE AND THE TRIPLE BOTTOM LINE
It is tempting to define the challenge of building sustainable healthcare as increasing the value
that is delivered by improving health outcomes while maintaining or reducing costs, and to
simply look for ways to organize the healthcare eco-system and its elements to be more efficient
(thereby conserving resources), and more effective at delivering high quality and better health
outcomes. We could treat it as “just another industry” whose time has come to learn to operate
within its means and to realize that scarcity will be the future normal state. But a closer look
reveals the special role that healthcare plays in the broader quest of humanity to develop
sustainable economic, societal and ecological ways of functioning.
How the healthcare system operates is intricately connected to society’s triple bottom line
because its product is the health of those who constitute society. Ideally, healthcare preserves
and regenerates societal capabilities by increasing the health status and quality of life of
populations, contributing to a healthy workforce, and extending the length of time that people
can thrive and be contributing members of society. A poorly functioning healthcare system has
23
opposite impacts; in fact, the negative impacts of a poor healthcare system are amplified because
of the resulting even greater demand for its (poor) services.
Conversely, the health of the healthcare system is affected by economic, social and
ecological dynamics in the environment. The capacity of our healthcare systems is affected by
forces that weaken the economy, degrade the natural environment which we depend on for our
health and economic well-being, and disrupt communities. Availability of healthy food is
associated with both race and income--and health -- lower-income neighborhoods and
communities of color, especially, are less able to access healthy food (Baker et al., 2006).
Communities with large numbers of underserved or unserved immigrant populations often are
the source of diseases, such as TB, that could readily be treated and controlled. A study in
Canada showed the connection between TB and poverty, yet this socio-economic issue is
generally not addressed in TB health programs (Reitmanova & Gustafson, 2011).
Rather than using resources “to continually increase health, societal, and ecological
value, to operate with a viable economic model, and to conserve resources for future
generations,” the organization of today’s healthcare often squanders resources and has negative
societal, economic and ecological impacts (Christensen et al., 2009; Kira & Lifvergen, 2012).
This is despite the unflagging efforts of healthcare professionals, who have deep clinical
knowledge, care about the welfare of the patients they see, and in fact individually and
collectively accomplish remarkable feats to treat, cure, and preserve life for individual patients.
Yet traditional ways of organizing healthcare work against the sector achieving its promise in all
three domains of the triple bottom line.
In the U.S. the cost of avoidable hospital readmissions is over $17 billion annually
(Berenson, 2009). Adverse drug interactions, hospital-acquired infections, and surgical mishaps
24
account for 98,000 U.S. hospital deaths every year (Kohn et al., 1999). Over prescription of
antibiotics has encouraged the rise of MRSA, a bacterium resistant to commonly used
antibiotics, which is now found not only in hospitals and care settings, but also among drug users
and people in prison, and increasingly the public at large (Gagnon, 2007).
Huge street profits
can be made from powerful prescription narcotics such as OxyContin. More than 12 million
Americans use prescription drugs for nonmedical reasons, and there were nearly 15,000 U.S.
deaths from painkillers in 2008 (Centers for Disease Control and Prevention, 2011). In another
paradox, the field of healthcare creates a substantial amount of waste and toxicity. Hospitals in
the U.S. alone generate about 6 million tons of waste annually (Waste, 2012), 20% of which is
hazardous and may be infectious, toxic or radioactive (WHO, 2011b).
Economic and Social Outcomes
The forces propelling healthcare expenditures in an unsustainable direction are at work
regardless of how healthcare is financed. Government resources are being strained, pointing to a
probable redistribution of financial responsibility for healthcare that may have significant
negative social impact on individuals who can least afford to pay. In recent years, many
Americans have signed up for high-deductible health insurance policies to keep their premium
payments lower (Helfand, 2010). This kind of policy discourages regular preventive care, as the
policy will most likely only be used for severe or acute injury or illness (Employer Health
Benefits, 2011). The social costs of chronic disease are significant. Six million adults in the UK
(Economist Intelligence Unit, 2011) and 66 million in the U.S. are caregivers for relatives, many
of whom have chronic illnesses (National Alliance for Caregiving, 2009) . Illness or medical
bills contribute to over 62% of all bankruptcies in the U.S. (Himmelstein, 2009). Rapid growth
25
in the costs of insurance and/or care affect consumption patterns and the robustness of local
economies. Healthcare that does not deal with the population’s needs leads to greater illness and
greater demand, even further diminishing society’s ability to pay.
Businesses are also deeply impacted by rising healthcare costs and by the deteriorating
health status of their workforces. Famously, General Motors now spends more on health
premiums (about $1,500 per car) than on steel (Appleby & Carty, 2005). Businesses know that
productivity is impacted by the poor health status of their employees. Some companies, like
Cisco Systems, have put a healthcare clinic in their workplace. Cisco’s LifeConnections Health
Care Center boasts primary care, laboratory, radiology, vision care, chiropractic, and disease
management services. The company believes that this move has increased productivity and
saved them money (Vesely, 2011).
Demonstrating the tight two-way relationship between healthcare and societal financial
well-being and global interconnectedness, the 2008 economic crisis was felt worldwide and has
greatly increased financial pressures on healthcare systems. Triggered by a bubble in the real
estate sector, the impact was amplified by the creation and globally widespread sale of
derivatives so complex that even the executives of the financial firms claimed not to have
understood them (Faiola, Nakashima, & Drew, 2008) . The wealth and employment of millions
of people and the health of many small and large businesses were dramatically affected.
Government deficits skyrocketed, and the public and private funds available to pay for healthcare
declined. Growth in overall U.S. healthcare spending for 2009 was the lowest in 50 years
(Martin, Lassman, Whittle, & Catlin, 2011) which might be considered an indication that the
sector is getting its costs under control. But the story is more complex, due to the intricate web
of forces at work. The budgetary impact of healthcare costs for individuals, corporations, and
26
federal and state budgets were strongly felt due to increased unemployment (up in 2009 to 9.3%,
from 5.8% in 2008) (Bureau of Labor Statistics, 2012), a slowdown in consumption, and
decreased tax bases. Many businesses decreased their spending on healthcare by pushing more
costs to their employees (Lazarus, 2010). Many individuals have deferred spending, leading
perhaps to pent up demand that will be felt in the upcoming years.
The U.S. is not alone. Globally, public spending on healthcare has become even more
vulnerable since the 2008 downturn in many countries since the 2008 recession, as governments
have crafted austerity measures to reduce deficits (Frayer, 2012; Vasarri & Davis, 2011; BBC
News Europe, 2012). In return for accepting bailouts, Latvia (from the International Monetary
Fund ) and Greece (from the IMF and its Eurozone partners) were each required to undertake
austerity measures that reduced hospital budgets by 40% (Kramer, 2010; Kentikelenis,
Karanikolos, Papanicolas, Basu, McKee, & Stuckler, 2011). Ireland has cut 750 million Euros
from its health services in 2012 (O’ Cionnaith & Ring, 2012) while Spanish officials are
considering charging wealthy citizens for healthcare services to reduce its debt (Davies, 2012).
Healthcare workers’ perceptions of their work are changing as well. Surveys carried out
in Europe, Australia, and the United States show that healthcare staff have been experiencing an
increase in work intensity throughout the 2000s, due mainly to technological change, reduced
budgets and redesigning or reorganization of work (Docherty, Kira, & Shani, 2009). The
increase in perceived work intensity is matched by increase in turnover decisions, sickness, sick
leave and, early retirements (Ackroyd & Bolton, 1999; Marklund et al, 2007). The regional,
national and global context of healthcare work seems to have an impact on human and social
sustainability of professionals in the field.
27
Healthcare systems are inextricably embedded in contexts so complex that only by
building adaptation capabilities can they flex to fit trends and disturbances in the eco-system.
The speed with which the 2008 jolt to the global economy wreaked havoc on public services in
general, and on both public and privately supported healthcare systems, should serve as a
warning. These systems must be redesigned, with full consideration about how the sector can
optimally contribute to and minimally detract from the prosperity of the broader society.
The burden of decreased spending on healthcare has fallen disproportionately on lower income
individuals. In countries where concerns for social equity have been built into national
approaches to healthcare, threats to the resource stream pose a fundamental challenge to this core
value. How healthcare systems evolve in this era of scarcity will be a critical determinant of the
nature of and values of the societies in which we live.
Healthcare and the Environment
The interaction of healthcare with the third pillar of sustainability, the natural environment, can
be expected to play an increasing role in the debates about societal sustainability in general and
sustainable healthcare in particular. Healthcare sustainability is being challenged as the “carrying
capacity” of the earth is being approached and its natural eco-systems continue to be threatened
(Stead & Stead, 2009).
On the demand side, a deteriorating natural environment is believed to contribute to
increased prevalence of chronic disease such as asthma, autoimmune diseases, cancer, and birth
defects (Ritz, 2002; Crouse, 2010; Farhat, 2011). Less often considered is the negative impact
that healthcare has on the environment. Ironically, although the healthcare industry has the goal
of “doing no harm,” its waste and pollution pose a real threat to our environment, as well as to
28
patients and healthcare workers themselves. Adverse impacts include greenhouse gases, waste,
toxic chemicals, water use, air pollutants, and land use patterns (Turley et al., 2011).
Carbon
dioxide emissions from the UK National Health Service in 2004 exceeded 18 megatons, or over
2.5% of all UK CO2 emissions (SDC, 2008). Improperly incinerated medical waste can release
dioxins, furans, and other toxic pollutants into the air, chemicals that are believed to have
adverse health implications that include the impairment of the immune system (WHO, 2011a).
Pharmaceuticals are detectable in surface water, drinking water, sewage, and soil (Dussault et al.,
2007; Kolpin et al., 2002; Ternes, 1998.).
Hospitals are especially polluting, and in fact are often not very healthy places to work or
be treated. In addition to waste, older hospitals in particular are often made of building materials,
including paint, particle board, and carpeting that release high amounts of volatile organic
compounds such as formaldehyde (Landro, 2006). These can all add up to indoor pollution
impacting patients and caregivers. Hospitals are dangerous places to work (Weisz, Haas,
Pelikan, & Schmied, 2011). Healthcare workers who handle drugs, including those that are
respiratory sensitizers, carcinogenic, mutagens, or are toxic for fertility or reproduction, are at
occupational risk (Halsen & Kramer, 2010).
Global Challenges
The challenges facing healthcare globally are varied, a fact which is becoming increasingly
apparent as developing nations become integrated into the global economy. Entire areas of the
world have large populations who have little or no access to modern healthcare. In South Africa
alone, the number of people living with HIV was estimated at 5.38 million (over 10% of the
population) in 2011 (Statistics South Africa, 2011). Populations continue to suffer from
29
healthcare inequities that depend greatly on economic status, as those in the lowest-income
nations are still served the least by healthcare. Life expectancy ranges from a high of 79 years in
high-income nations to a low of 49 years in the sub-Saharan Africa (World Health Organization,
2008). Of all deaths in the African region, 46% are of children under 15; this figure is 1% in
high-income nations. Only 20% of all deaths in the African regions are of people 60 or older; in
developed countries this figure is 84% (World Health Organization, 2008).
Even the most basic requirements of a healthy life, namely safe drinking water and
sanitation, are still not available to many in the world’s lowest-income countries. Over one
billion people currently have no access to any kind of sanitation facilities (including toilets),
most notably in South East Asia and Africa (World Health Organization, 2011d). Access to
medicine also varies worldwide, with those in low- and middle-income countries often lacking
access to even essential medicines (World Health Organization, 2011d). Annual per capita
expenditures on healthcare range from greater than $6000 (USD) in the US to less than $10 in
the poorest countries (Benatar, Gill, & Bakker, 2011).
Although it would be easy for developing nations to say “that’s not our problem,” there
are strong humanitarian as well as economic reasons for paying attention to this larger set of
issues. There is still concern that in today’s globally mobile world, local outbreaks of infectious
disease can rapidly become pandemics (e.g., SARS; Anonymous, 2003). Developed economies
are heavily dependent on these emerging nations as markets and partners in the global economy,
and on their becoming developing strong economies with healthy populations. The social justice
issues are hard to ignore. Companies from developed nations establish operations in emerging
markets, take advantage of low wages, and in many cases fail to invest in the health of the
30
communities in which they operate or the health of their local workforce (Jamali, 2010:
Donaldson, 2001).
Ethical issues (which are profound and deserve close societal scrutiny and debate) aside,
the world is a highly connected and highly complex system, and healthcare occupies a critical
place in the network. Financial, societal and ecological dimensions profoundly impact
healthcare, and the healthcare system is a major factor in the ability of humanity to deal with its
financial, social and environmental issues. The next section will provide a complex systems
framework to help get our conceptual “arms” around this reality
.
HEALTHCARE AS A COMPLEX SYSTEM: THE EMERGENCE OF SUSTAINABLE
PRACTICE
The important problems facing healthcare cannot be solved within the confines of single
organizations or entities. Viewing today’s complex healthcare eco-systems as complex adaptive
systems provides conceptual leverage on its seemingly intractable challenges. Complex adaptive
systems are composed of many interacting elements, or agents, each with its own strategy for
adapting to its environment and pursuing its goals (Axelrod & Cohen, 1997). These agents are of
multiple types and at multiple levels of aggregation In healthcare, agents include patients,
providers, clinics, hospital systems, healthcare systems, insurance companies, governments and
regulatory agencies, employers, and many more. They act independently and interdependently—
collaboratively and competitively—to secure the resources they need to pursue their purposes.
Their actions have intended and unintended impacts on the markets, societies, communities, and
natural environments in which they operate and on which they depend for their own survival.
31
Emergent Properties of Complex System
The properties of the larger system emerge as a result of the actions and interactions of
the various agents who comprise the system. Emergent properties include healthcare outcomes
for individuals being treated, the pattern of outcomes that the system delivers including quality,
patient satisfaction, and affordability, population health indicators such as prevention, levels of
value that are achieved in terms of resource consumed and outcomes delivered, capacity to selfcorrect and continually improve, employee well-being, and various types of social or
environmental health or degradation.
These emergent properties are not simple aggregations of the impact of individual agents.
Prevention, for example, results from the activities of physicians and other providers, medical
educators, patient awareness and proactivity, community resources, communication and
detection systems, and reimbursement policies from the funders (Weisz, Mohrman &
McCracken, 2012). Improving hospital safety happens in teams in which people feel the
psychological safety to confront error and together learn how to build in reliable performance
(Edmondson, 1999). Chapter 7 of this book, describes how a cross functional team in the West
Skaraborg Hospital System in Sweden that learned through iterations of experimentation and
reflection how to build a microsystem (from Batalden et al., 2002; Batalden et al., 2003; Mohr
& Donaldsson, 2000; definition on page X of this volume) capable of stabilizing older patients
with multiple diseases, so that they could be more effectively treated in the complex health
system. There is a clear relationship between the quality of teamwork in healthcare settings and
the quality of care, outcomes, and innovation (Borill et al., 2001; West et al., 2002; Sommers et
al., 2000; Hughes et al., 1992).
32
The impacts of the actions of the agents within the complex system are not linear. Early
discharge of patients from the hospital without sufficient planning for follow up care may allow
the hospital to stay within insurers’ guidelines, but may lead to unnecessary readmissions that
greatly increase utilization and cost. When physician groups and others establish out-patient
surgery centers to provide efficient, specialized care with well-defined work processes, local
hospitals may lose revenue and have to spread fixed costs across a smaller base, making care
more costly. Chapter 5 in this volume describes such systemic interdependencies in the
Montefiore system in the Bronx, New York, as it set up a portion of its patient care in a prepaid
managed care format that led to the necessity to grapple with the complex systemic patterns of
interaction and resource flow for the whole system. Emergent properties reflect complex,
dynamic interactions resulting in outcomes that cannot be fully planned or anticipated.
Within complex healthcare systems are communities--sets of co-evolving populations of
agents that are tied together by common orientations, dependence on common resources, and
interdependence of flows of activities and outcomes. Several medical practices that provide
cancer care in conjunction with a network of hospitals in a metropolitan area might constitute
such a community. Communities may be geographically or professionally defined, or defined by
a set of interrelated activities defined with reference to a population of patients. The various
populations of agents who form a community require resources in order to prosper, and seek
them out by inhabiting niches or parts of the eco-system where they believe they can gain access
to them (Hannan & Freeman, 1977). Chapter 4 in this volume describes the key role that
technology played in linking healthcare agents into such a community that provide rehabilitation
care in the Lombardy Region of Northern Italy.
33
Communities can spawn new forms by changing the way they interact with each other.
Organizations may set up relationships with other entities who bring synergies and scale or
access that give them an advantage with respect to achieving an ongoing flow of the resources
they need for success. For example, healthcare systems may set up exclusive relationships with
specialized (and presumably efficient) kidney dialysis firms to provide dialysis services for their
population of patients. Hospitals may organize a network of rehabilitation centers that develop
standard processes for moving patients between settings. A network of hospitals interested in
ecological sustainability may join together in a consortium to explore new approaches to deal
with toxic waste and to work with vendors to provide environmentally sustainable supplier for
their Operating Rooms. In the process, the various participants will develop new capabilities, as
they contribute to changing patterns of activities, network relationships, and outcomes in the
overall eco-system.
Co-Evolution
Organizations have been described as learning and changing through co-evolutionary
relationships with their environment —through relationships that are interdependent, mutually
causal, and iterative (Stead & Stead, 2009), such that change in the macro environment emerges
in mutual interaction with change in its component inhabitants. There is an ongoing need for
adaptation. The strategies of actors in social systems are based on purposes, interpretation, and
anticipation of possible futures (Leyesdorff, 2001). Actors in a complex social system are able
to devise strategies for adaptation (Knight, 2002), to borrow ideas from others in the complex
system (Campbell, 1960), to repurpose, and to learn.
34
Drawing on institutional theory, Hoffman (1999) talks about organizational fields, in
which organizations evolve in concert with the demands and institutional forces in their
environments. Healthcare is such a field. Its participants operate in environments increasingly
characterized by advanced electronic communication capabilities that allow complex knowledge
work to be done virtually. Customers have developed expectations for convenient, rapid, and
high quality service. Corporations and government are keenly aware of the tight connection and
complex relationships between economic viability, sustainable healthcare, and healthy
communities—and of the complex interacting issues of environmental sustainability.
Companies, individuals, and the government are beginning to use different criteria to distribute
resources, and patients are applying new preferences when they purchase healthcare or choose
providers. As a consequence, healthcare organizations can be expected to make changes in their
purposes and in how they operate to ensure a continued resource stream. Innovators provide
approaches congruent with these environmental focuses, and in so doing shape the perceptions of
what constitutes good healthcare and provide valuable learning for other organizations in the
eco-system.
Although top-down and hierarchical direction are insufficient to change a complex
system, such systems can be highly responsive to seemingly small inputs that create amplifying
effects (Axelrod & Cohen, 1997), and to discontinuous innovations that provide models or open
up possibilities for action by many elements of the larger system. Requiring transparency around
measures of key indicators of quality and value might be one such intervention that has ripple
effects throughout the healthcare eco-system as organizations and individuals have no only to
introduce and adapt to measures and reports, but also to improve in order to satisfy the many
stakeholders that are now serving in watchdog roles. Reimbursing for outcomes rather than
35
based on the costs structures of systems that use top down budgeting through departments and
fragmented sub-units forces organizations to examine their organizational purposes,
accountabilities, and designs to focus organizational members on the processes and interactions
that lead to health outcomes.
Self Organization and Learning
It has been argued that complex systems are inevitably self-organizing (Fukuyama,
1999), and that they cannot be fully externally or hierarchically controlled. Governments and
hierarchies rely on the various agents in their domains to find solutions to the problems of
complexity. Order arises from local interactions of actors even if those actors are not aware of
how their actions contribute to the larger order (Holland, 1995; 1998). This reality can be seen
in the current healthcare reform efforts in the U.S. The U.S. government is using regulation and
legislation to intervene in the system by changing the criteria of success of the system to focus
on outcomes rather than treatments, and by holding healthcare systems accountable for the health
of the population. Yet the government is ill-suited to design a new system and its new
approaches. That has to be done by the players in the local healthcare eco-system. The three
U.S, systems described in this book are doing exactly that: the Alegent Healthcare System in
Nebraska (Chapter 2); Montefiore in the Bronx, New York (Chapter 5); and the Southern
California Region of Kaiser Permanente (Chapter 3). New interaction patterns have emerged
within and across the various elements of the eco-system as these systems have tried out new
behaviors and ways of working and connecting. They learn from their experimentation, and
incorporate the knowledge they gain into the way they operate.
36
The literature points to four conditions for self-organizing systems (Monge & Contractor,
2003, pp. 95-97). First, self-organization happens when a system is not in equilibrium and the
agents in the system seek to adapt to change, a condition that currently characterizes today’s
healthcare systems. The other three conditions relate to knowledge and learning capability.
1)
Are the components of the system self-generative –i.e., can they self-create and
renew? In this volume we will come to appreciate that the transition to
sustainable healthcare entails change at all levels of the system.
2)
Does knowledge flow between components, and result in greater capability and
the creation of new knowledge? Enhancing the flow of knowledge from the
larger environment as well as across the elements of the system are inherent in
the changes descried in this book.
3)
Is there a “requisite variety” of knowledge (Ashby, 1956) to address the
problems of interest? These systems assembled expertise from many parts of
their own system as well as external experts and other stakeholders in an effort
to develop novel approaches that could address the complex, multi-faceted
aspects of their journeys.
Sustainable healthcare will only be achieved if we can accelerate the self-organization of
the thousands of systems and millions of participants in the healthcare eco-system. Many
healthcare systems and organizations, governments, NGO’s, professional associations,
communities, and other entities are engaged in learning about how best to operate and interrelate
to contribute to a sustainable future. True change will depend not only on single initiatives and
change in the piece parts that constitute the eco-system. Changes in how they operate alone and
in relationship to one another are required to generate that new patterns of interaction that will
37
underpin a sustainable system. In Chapter 4, which deals with the use of technology to radically
change the capabilities of the rehabilitation sector of healthcare in Italy, rehabilitation hospitals,
researchers, community agencies, university and corporate co-developers of new technologies,
and family members all have become involved and have had to learn to operate differently in
relationship to each other.
Innovation, the adoption of new strategies, business and operating models, and changes
in the relationships between the participants and stakeholders in the complex healthcare ecosystem will profoundly impact the context for healthcare, in ways that will shape the ongoing
direction of the elements of the system. Out of this cycle of local learning and contextual change,
new patterns of healthcare will emerge. But change is not enough: whether the emergent system
will be sustainable will depend on whether sustainable effectiveness is an explicit purpose of the
innovators and whether the capacity to adapt is an explicit focus.
Becoming a sustainable system entails a reconceptualization purpose—and embedding
that new purpose in the system’s mission, vision and design (Mohrman & Shani, 2011). Because
of the temporal nature of sustainability, sustainable healthcare systems will depend
fundamentally on learning mechanisms built into the system to enable continual improvement
and adaptation through time. Learning mechanisms are structures and processes that are devoted
to the facilitation of understanding and action (Lipshitz, Popper, & Oz, 1996; Popper &
Lipshitz,1998). There is a need not only to design the new organization, but also to make design
choices about the nature and tapestry of the learning mechanisms to facilitate the transition and
to enable the system to continue to learn and change through time (Shani & Docherty, 2008).
38
The authors of each of the chapters of this book have described the learning approaches
that have enabled the system they are focusing on to make progress in implementing new
approaches, to learn from them, and to improve them. Because a property of a sustainable
healthcare system is that it adapts as the environment changes, a description of the changes that
are being implemented in these cases necessarily includes a description of the change and
learning approaches and capabilities that they are building into the way they operate.
It is a primary purpose of this book to generate and share knowledge about new ways to
deliver the value that society needs from its healthcare systems: These cases share experience
with innovations, new business models, new relationships with patients, new approaches to
improving the health of the population, new ways of integrating care across the various
components of the eco-system, new organizational forms, new use of information and
communication technology, the incorporation of technology as a foundation for sustainable
healthcare, new forms of governance, incentives, and regulatory elements that will constitute
sustainable healthcare.
Only through rapid experimentation and learning can transitions to sustainable healthcare
be achieved in time to address the urgent demands being faced. Those who pioneer approaches to
adapt to the new world of resource shortages and changing demands are inventing and learning
on behalf of the rest of us. We need to learn from their efforts and broadly disseminate
knowledge to enable self-organization and to accelerate the transition to a sustainable future
(Mohrman & Worley, 2010).
Organization of the Volume
39
This volume focuses on rich case examples of healthcare organizations and systems that have set
out to become more sustainable by adopting new approaches that better fit the rapidly shifting
context for healthcare. From these empirical examples we can learn about the substantive
changes they are making and what they are learning. We can also learn how they are trying to
embed the capacity for adaptive change into the way the organization functions. The intent of the
book is also to yield generalizable theory-based knowledge and extract principles that can
contribute to the design of sustainable healthcare organizations and accelerate the transformation
process that is required. Each chapter is anchored in, explores the relevancy of, and perhaps
even extends a solid theoretical perspective that illuminates our understanding of the case and
explores the power of that theory in guiding responses and solutions to the challenges we face.
In Chapter 2, Christopher Worley explores the seven-year journey to achieve a
sustainable model at Alegent Health, a large multi-hospital, faith-based healthcare system in
Nebraska that was formed through the merger of several previously independent hospitals.
Starting with a highly participative formulation of a mission and values statement that called for
becoming a world-class leader in delivering compassionate healthcare, Alegent quickly built a
capability, called the decision accelerator, to involve large multi-stakeholder and cross-functional
groups in rapid decision making and planning. New service line strategies, an award-winning
system-wide quality program, and an environmental strategy were among the innovative
approaches that were generated through the decision accelerator process. These were aimed at
improving clinical outcomes and financial performance, and reducing environmental impact.
Worley argues that the heart of the transformation is the redesign of the system for agility, and
that the decision accelerator capability and other organizational design features that promote
agility will underpin its capacity to continually adapt to a changing environment and be
40
sustainable through time. He argues that this way of conceptualizing the challenge of creating
sustainable healthcare is more apt than to define it through a series of initiatives.
In Chapter 3, Susan Albers Mohrman and Michael Kanter, M.D., describe fundamental
change in the Southern California Region of the Kaiser Permanente healthcare system, a region
that provides integrated healthcare to more than 3 million members. Beginning in 2004, the
Southern California Permanente Medical Group began the transformation of the healthcare
delivery model to focus on prevention and value. The authors apply the complex adaptive
systems framework to define the challenge of dealing with the complexity, uncertainty, and
variation inherent in a healthcare system. The chapter focuses primarily on the redesign of the
work systems and the pathways and processes through which patients move through this vast
complex care network to connect efficiently with needed knowledge, information, resources, and
providers to optimize their health. Inherent in the transformation is the development of the
capability to continually infuse the system with current medical knowledge and flexibly
reconfigure the pathways with evidence-based practices to address the needs of a highly diverse
population of members.
Chapter 4 deals with the key role of technology in driving healthcare innovation and
sustainable practice, focusing on the Villa Beretta Rehabilitation Hospital in the Lombardy
Region of northern Italy. Emanuele Lettieri, Rami Shani, Annachiara Longoni, Raffaella
Cagliano, Christina Masella, and Franco Molteni, M.D. apply socio-technical systems theory to
illuminate the need for and processes to synchronize the social and technical systems. They see
the alignment process as a catalyst to ongoing learning and increases capacity to address
economic, social and environmental outcomes. Because the introduction of technological
change disrupts professionals’ practices, participative processes for design and learning are an
41
essential part of the synchronization process and of deriving benefit from new technology. The
chapter looks very closely at the ways in which technology, when combined with the needed
changes in the social system, can be used to promote triple bottom line outcomes.
In Chapter 5, Peter Lazes, Liana Katz, Maria Figueroa, and Arun Karpur, MBBS,
examine the 16-year journey of the Montefiore Medical Center in the Bronx, New York, as it has
struggled to change and adapt in order to create a sustainable model for the delivery of care in an
underserved and highly impoverished metropolitan area. The authors describe a combination of
disruptive and adaptive change. The formation of the Care Management Corporation that has
assumed the risk for the complete care of a portion of the population served by the system
entailed the establishment of a new business model and new relationships with insurers,
providers and the traditional departments of the Montefiore Medical Center. This disruptive
change occurred simultaneously with extensive adaptive changes in the systems and processes to
increase the integration of care and achieve affordability and quality outcomes. A critical
message of the case is that fundamental change requires the alignment of the interests of many
stakeholders, who have to be brought into the change process. The authors particularly focus on
the importance of bringing front-line workers into the process, to design the new work systems
that have the levels of quality, service, and cost efficiency required for sustainable effectiveness.
In Chapter 6, Svante Lifvergren, M.D., Ulla Andin, M.D., Tony Huzzard, and Andreas
Hellström examine the development of clinical microsystems, as part of a broader
developmental journey of the healthcare system in the West County of Skaraborg, Sweden. This
journey started in 2001 and has involved the building of a coalitional management approach to
promote integration across three independent elements of care: the four hospitals that deliver
acute and planned care, the primary care system, and municipal nursing and rehabilitation care.
42
This paper deals with the region’s more recent focus on building work systems to integrate
healthcare across the three streams of care. The authors use the concept of clinical microsystems
to understand how a mobile team set up to provide care for the elderly with multiple diseases
connected to its larger three-entity healthcare context to provide complete integrated care. It also
closely examines the action learning approaches taken by this pilot team that has developed
approaches that can now be disseminated more broadly through the region.
In Chapter 7, Eilish McAuliffe, Tony O’Brien and David Coghlan examine how the Irish
Health System overcame years of political inertia to finally implement a plan to rationalize
cancer services. The plan involved the consolidation of cancer services into regional centers that
would be tasked with developing world-class cancer care services and with connecting
effectively to the many localities that would now send their cancer patients to these new centers
for care. The case focuses primarily on the phases and success factors of large-scale, disruptive
change in a highly politicized context. In Ireland, local politics trumped national-level decisions
and plans for a number of years, preventing the country from implementing sustainable
approaches to cancer treatment.
In the final chapter, Rami Shani and Sue Mohrman draw learning from the collection of
cases, particularly with respect to the challenges of capability development for sustainable
healthcare. We also chart an agenda for future research about Organizing for Sustainable
Healthcare, and offer a challenge to academics and practitioners alike to collaborate in the
acceleration of progress in this area.
One intent of this Emerald Series on Organizing for Sustainability is to ensure that
academic work captures and provides value to the real work of creating a sustainable world. The
43
volumes in the series do this by combining the perspectives of practice and theoretical
perspectives that provide insight into the challenges that organizations are facing. Sustainable
healthcare will emerge from changes in practice, as members of organizations and society come
together to craft new approaches. The work that appears in this volume confirms that there is no
shortage of ideas, activities, and energy around the import topic of sustainable healthcare, and
that some progress is being made. Change occurs system-by-system and situation-by-situation,
as early adopters use their ingenuity and resources to find ways to make a difference. It is also
clear that even the early adopters have a long way to go, and that we all have to learn together.
44
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