The Little Big Things - 163 Ways to Pursue Excellence, by Tom Peters

Ah, self-help books. Some (well, most, really) are bad. A long time ago I read Covey’s Seven Habits…and found it…well, I don’t really remember. I’ll re-read it I suppose. I also picked up a copy of Getting Things Done, by David Allen and found that to be a mere echo of what I was already doing (lists!). Back in my days at Haarmann & Reimer, a German-based flavor and fragrance company now merged with Dragoco, another f&f company based also out of Holzminden, Germany, and renamed Symrise, one of the big bosses gave me a copy of Tom Peters’ The Pursuit of Wow! It was great. This book is not too dissimilar. Peters leans on the “soft” side of organizational things. Heavy emphasis on “thank you” notes and managing by walking around and being a people-person. He gives examples of practical ways to be better at these things. The structure of the book, while probably off-putting to a lot of people, I found to be a welcome distraction and probably contributed to my ability to read the whole thing. He changes font size, bolds text, has anecdotal stuff in boxes, one word sentences taking up entire lines, and so forth. Like I said, it won’t be for everyone. I read this in the bathroom – Peters won’t mind, he suggests that you do it. Cheers.

The Innovator's Prescription, by Clayton Christensen

Healthcare in the U.S. accounts for approximately 18% of GDP, a rate significantly higher than that seen in other western countries. Outcomes in the U.S. seem to be, at best, equal if not worse than most of these countries. However, studies of outcomes are complicated by confounding factors and difficult to interpret. Nevertheless, the burden of healthcare costs in America is high and increasing. Christensen’s book offers a solution for both the increasing costs and the inconsistent quality of our care. He is an economist who has studied industries including computers, telecommunications and steel, among others. His co-authors are both physicians. From a business-model perspective, he divides healthcare delivery into three entities. The first is care delivery centered around well-defined diseases and paths to treatment and cure. Diseases like ear infections or pneumonia or appendicitis. In these cases, path to treatment and, presumptively, cure is well-established. In such cases, providers should be compensated based on outcome. Providers that wish to treat patients for these disorders (hospitals, urgent care centers, clinics, etc.) would be well-served to concentrate on their “processes” to improve their bottom-line. From a business/operations management perspective, well-defined processes that yield consistent and measurable outcomes have their value in the “process” itself – the better (faster, cheaper) the process, the more profitable the organization will be. The second entity is activity surrounding the diagnostic workup of patients. In these cases, before the patient has a diagnosis, the value rests in the resources of the organization doing the “problem solving” – resources like the capabilities (knowledge, etc.) of physicians, diagnostic machinery, etc. The value here is not the process for finding a diagnosis, but, rather, in the practitioners and other resources within the organization. Christensen calls these entities “solution shops” and suggests that the best way to compensate them for their work is on a fee for service (not unlike that which currently exists).  The third entity/business model is centered around patients with chronic illness for which the patient has been diagnosed and is receiving care but there is no cure and regular maintenance and follow-up is required (diabetes, rheumatologic disorders, congestive heart failure, asthma, e.g.). For these patients, a network of support that involves other patients, non-physician support staff and care providers is optimal for maximizing their health and outcomes. In this case, a membership-fee type compensation structure is best.

Christensen’s work is centered around a concept of “disruption.” His basic argument is that “disruptive” technologies emerge that allow competitors to enter (or create) markets where industry leaders previously didn’t compete (for low profitability reasons, usually). As these new competitors build expertise, they move upmarket and slowly erode the industry leaders’ market, eventually supplanting them. Examples abound and he talks a little about the steel, electronics, computer and education industries in this book; he’s written other books entirely on this subject. To me, the most interesting part of his discussion on “disruption” is the organization dynamic that prevents most market leaders from re-organizing in order to compete with the new competitors/technologies. He also identifies the components necessary to enable disruption – a new technology (or application thereof), a cost-effective (usually low-cost) business model and infrastructure necessary to supply the new business entity (new technologies and business models cannot “plug and play” into the old business model – or else risk failure). Whenever possible (and it is often), the author cites examples from healthcare.

After Christensen argues that medicine is really three different types of businesses/operations and outlines his vision of “disruption,” he postulates that each will try to disrupt the other (or new entities will emerge that will do the disrupting). For example, as organizations that work in the first (process-oriented) model take patients from the traditional physician office, those “traditional” physicians will begin to develop ways to take business from the “solution shops” – examples abound (ultrasound equipment in cardiologists offices, point of care lab testing devices in family doctors’ offices, etc.) – in those cases, the primary care physician becomes a “solution shop” and is paid on a fee for service basis instead.

Healthcare is complicated by a non-market driven (my opinion) compensation system (the Centers for Medicare and Medicaid Services, CMS, sets the pricing for services and the insurance companies fall in line). Most everything is paid for on a “fee for service” basis, much of which is independent of outcomes. The more “stuff” that a doctor does, the more he/she gets paid (as long as that “stuff” is on the fee schedule). This means more interventions (not fewer) and only those interventions that can get compensated. Who are we to blame? Not the physicians – they are acting as anyone else would in a similar situation - they are incentivized to do those things which provide the most compensation.

One model for a new payment system is a single payment for each patient for all future care. Providers of care for that patient will have to work within a fixed payment stream. The more efficiently they provide service, the more money they will make. Where are the incentives now? To provide less care (naturally, outcomes will also be monitored in order to prevent abuse). Which organizations will profit most? Those that are integrated and can organize their internal operations to move patients through in an efficient, cost-effective, high-quality manner. This means that surgeons, internal medicine doctors, radiologists, pathologists, nurses, etc.) will all be part of the same organization. Accountable Care Organizations may be able to get this done.

Christensen also tackles the medical education system, pharmaceuticals (a very interesting section, indeed) and medical devices. The book is well-written, accessible and persuasive. In addition to discussing the myriad problems in our health system, it offers a path for a solution. If you are interested in the state of affairs of the U.S. healthcare system in the early 21^st century and wish to learn a little about Christensen’s vision of “disruption,” then this book is for you.