In their article Transforming Academic Health Centers for an Uncertain Future, published in the New England Journal of Medicine, Dzau et al from Duke University School of Medicine argue that AHC’s must rethink how they deliver on their core missions. Given the transformation of health care delivery that is occurring, due in large part to severe funding constraints that taking place, we agree. The advice offered in the article is largely sound: AHCs should focus on care redesign, improve the “yield” of research funding, streamline medical education using state-of-the-art techniques and reduce the impact of decentralized decision-making.
As we said in our 2012 article, “Effective Organizational Model for the Health Care Delivery System of the Future”, taking on enormous challenges at the enterprise level is virtually impossible. While it is true that today’s “ultra-decentralization” of management decisions is a major barrier to organizational improvement, it will also be true that ultra-centralization will not work either. One solution will not fit every problem. As management consultants who work with large, successful AHCs on topics including organizational development, it is painfully obvious to us that new management models for AHCs are critically important.
The current ponderous, decentralized decision-making process slows managerial innovation to a crawl, sub-optimizes every dimension of organizational effectiveness and is extremely cost ineffective. However, the challenges facing AHCs are extremely complex and developing solutions that are more effective are unlikely to originate in the “C-Suite”. Large for profit corporations learned this lesson many years ago and healthcare needs to draw from that experience in order to avoid the wasted time and costs of re-creating the same mistakes. Driving decision-making to a “business unit” level (or Service Line in healthcare language) is the only way to effectively deal with complexity at a speed that keeps pace with market forces. These lessons are well known and documented in the literature of for-profit organizations. They will hold true in healthcare as well. Healthcare leadership, i.e. Boards, CEOs, and physician leadership need to leverage the lessons learned from “corporate” experience. We recognize that the nonprofit mission is different, and that not all lessons from the for-profit world are transferrable, but this is one idea that is essential for AHCs to remake themselves in a timely manner.