As I look back over my experience both as a practitioner and as a medical leader, I am reminded of the joke that the life of an anesthesiologist is composed of long periods of boredom punctuated by moments of terror. Nothing describes a moment of terror for me more than knowing that the situation demands a decision, and in the moment I do not know what to do! The need to make a decision in the context of uncertainty is an apt description of a frequent situation for almost anyone in healthcare, whether they are directly involved in the care of the patient or whether they are working as a manager to support those who provide the care.
Professional life is always about applying experience and special knowledge to problems. The message of behavioral economics is that we are often encumbered by our biases when we are solving problems. We irrationally apply biases derived from experience with other problems that are not comparable to the issues at hand when we have to make decisions in circumstances of uncertainty.
Not long after I became a CEO I was attending a conference in Orlando offered by the Lean Enterprise Institute. The event had a strange beginning. After recovering my baggage at the airport, I climbed into a taxi and gave the driver the name of my hotel. He smiled and advised me to get out of the cab and to go back into the airport where I should ascend the escalator to the second floor where I would find my hotel. I spent three days in Orlando and never left the airport. At sometime during my stay I was wandering through a bookstore in the airport and discovered Dan Ariely’s wonderful book Predictably Irrational. The book was my introduction to behavioral economics, a subject of which I had only a limited understanding. Many books later I have come to realize that there is no better aid to the art of decision making in the face of uncertainty than at least some introductory understanding of behavioral economics. My most recent adventure in reading in the field has been Richard Thaler’s, Misbehaving: The Making of Behavioral Economics. Thaler’s book and every book that I have ever read in the field of behavioral economics has taught me something about myself and the way I approached the activities that consumed so much of my time and attention during my professional life. The problem for me was that the learning came after most of my professional decisions had been made.
The first lesson to be learned from behavioral economics is built on the knowledge of how our biases cloud our objectivity and lead to avoidable mistakes and suboptimal outcomes. In medical practice these biases that are imbedded in our attempts to solve diagnostic problems and plot successful steps in the management of complex clinical processes can lead to harm. I am sure that these biases are the origin of many medical errors in the care of the individual as well as errors in the management of medical practices, hospitals, and health systems. In his book Thaler reaches beyond how things work at the individual level and begins to look at collective issues. I think that it would be possible to use his insights to better understand the current national lack of social solidarity that leads to failed legislation and persistent social distress, but that is too big a leap from the individual to the whole nation. Let’s just look at the tensions that might be better understood between doctors and patients and doctors and their leadership. I am usually very careful to use language that includes all clinicians and all non practicing healthcare professionals in any discussion. For this piece I am going to limit the discussion to what I know from being a doctor and a medical manager, the CEO of an organization that employs many doctors and other healthcare professionals.
Thaler begins his discussion by talking about self control and the ability to stick with a strategy. A good example of our frequent failures is the common New Year’s resolution to get in shape by sticking with a diet and going to the gym on a regular schedule. If personal “continuous improvement” requires a strategy about what you want to do and another strategy to enable you to stick with the strategy through efficient self control, how much harder is it to get a whole group of doctors to stick to a plan of practice transformation, or at another level consider the difficulty we experience when we try to engage patients in self management?
At the level of the self motivated individual, Thaler adopts the metaphor that Daniel Kahneman offered us in his great book, Thinking Fast and Slow of there being two agents in our minds, one that is an automatic and quick doer, and the other agent that is a reflective planner and very deliberate thinker. When we are working with patients who are often driven by wants and needs in the moment that undermine their desire to be healthy, we are planners and use a combination of information and advocacy to try to get them to be doers who delay gratification in the moment for the long term benefits of following a path that offers very little immediate gratification but over the long haul will make them healthier.
Thaler is not writing about doctors and patients or doctors and managers, but I feel quite comfortable with the idea of extrapolating his theories to both experiences because his ideas provide understanding to the various issues that I remember from my own experience and that trouble many of the medical executives and physicians whom I know who are still “in the game.” Thaler does some extrapolating of his own. He begins with an economics paper from 1976 by Jensen and Meckling from the University of Rochester. They proposed a “principal-agent” model to understand the tensions that exist between management and the professionals in an organization around executing strategy. The bosses or owners are the “principals” or managers, the planners of Thaler’s model with the responsibility for the business (or mission) strategy and the overall success of the enterprise. The “agents” or doers are those to whom authority is delegated to execute the strategy. The classical role of the physician working in a large practice or health system without management responsibilities is to be an agent or “doer” and interact with customers and external business partners through the “rules” (policies and procedures) or mechanisms that have been established by the manager/principals, who are the “planners.”
Thaler focuses on the interdependence between the principals (thinking slow) and the agents (thinking fast). The principals, or managers, if you wish, establish expectations. The rules and policies that they create push the agents toward what they consider to be the “right” actions. Agents who follow the rules and deliver the expected outcomes earn rewards. To further their strategic objectives the principals often try exhortation and the introduction of guilt meant to further motivate the agents toward the achievement of corporate goals. The agents are the experts in the work of the business and it is hard to prevent them from pursuing their own agendas or to get them to learn or follow a new agenda.
If you are thinking about the internal conflicts between compensation programs that reward physicians for volume work while managers are seeking to establish new programs that will promote value based organizational performance, then you are getting the picture. I was once amused by how Craig Samitt, who is now CMO of Anthem, described the compensation programs of most medical groups as “funky” because the physicians were still compensated for volume performance while the organization was signing more and more contracts that were moving them toward value based reimbursement.
The management process that Thaler describes is one that doctors love to call “top down” management. John Toussaint has described it as both management by objective and “Sloan Management” in honor for Alfred Sloan the long time CEO of General Motors. Toussaint points out that practitioners of Lean management are “managing by process” and that rather than setting objectives and cascading responsibility for achieving those objectives from the lofty position at the top of the organization they gain insight from the practitioners at the point of service. They support them as they seek to solve the problems that are creating waste and adding no value for those who come to the practice for service. Strategy development and deployment occurs as the outcome of an active process that goes up and down the organizational structure between the principals or planers and the doers or agents. The new role of the principals is to coach, teach and mentor and not to command or drive compliance from the agents with blame, guilt or exhortation.
I became fascinated with the possibilities that Lean offered as a “better way.” It became obvious to me that the transition was not easy and does not succeed if there is any lack of engagement by the “principals” or the “agents.”The “agents” do not trust “principals” that espouse Lean and then continue to practice as directors in a system of management by objective. Many of the most successful introductions of Lean also include a process of “renegotiating” the relationship or contract between the doctors and other agents of the practice and the principals or managers. Such processes create trust and are foundational to the stable “relational contracts” that enable Lean transformation.
I like the idea of “distributed leadership.” To me it implies a blurring of the line between agents and principals that is consistent with Lean. It is also consistent with the concept of subsidiarity. Local decision making and problem solving are foundational Lean principles. When practicing physicians accept the responsibility of becoming a participant in management by process then the Lean leader’s new role becomes being a coach, teacher, and mentor and is critical to the success of the new order.
So why do so many practices try Lean but fail in their transformational efforts? In my opinion Lean failures occur when the managers fail to recognize that the transformation begins with them. They must “think slow” and realize that much of what they have been doing has been driven by biases that do not deliver the answers they need. I know that many progressive physicians and medical managers believe in the Triple Aim and in the benefits of Lean management. My advice to them in this moment of uncertainty is to stay the course. Focus on organizational development that creates awareness and understanding of Lean philosophy and practice.
Transformation is largely a process of unlearning the old relationship between principals and agents and learning how to distribute leadership and the focus of real change to the agents at the point of care. It is a process with a learning curve. To come full circle it becomes a process that requires a strategy to stay with the strategy. It is not easy to give up what you know but is no longer working, and embrace what you do not know and stay with it until it works. The successful Lean organizations have engaged mentors or guides for their leadership teams. Patty Gabow gives a great description of the folly of a “do-it-yourself Lean transformation” in her wonderful book The Lean Prescription: Powerful Medicine for Our Ailing Healthcare System.
So, my advice to anyone who does not know what to do in this moment of confusion created by the repeal and replace process in Congress is to focus on your organization’s transformation. Whatever bill is passed by Congress, the ability of your organization to survive and the well being of the patients who depend on your services will be best served by your intensified focus on pursuing the Triple Aim through a process of transformation and continuous improvement. That strategy will serve you well no matter what happens next in Congress.