5 Things the Most Innovative Health Systems Do Differently

Steve Jobs, founder of Apple and one of the most creative leaders of our time, once told Forbes magazine his philosophy for innovation. "It's not about money," he said. "It's about the people you have, how you're led and how much you get it."

All things being equal, Mr. Jobs' statement is hard to dispute. A significant portion of innovation does indeed boil down to whether an organization's culture is conducive to trial and error. But hospitals and health systems facing reimbursement pressures, value-based care penalties and rising labor costs may treat the ability to innovate as a luxury.

Steven Strongwater, MD, was named chief transformation officer of Danville, Pa.-based Geisinger Health System in August 2012. He recognizes that innovation is not a universal discipline in healthcare, and that some hospitals may be more concerned with keeping their doors open. "There's this Maslow scale of hierarchy," he says. "Depending on how financially strong your organization is, you may not be focused on an innovation vision. We are in some ways a national laboratory. We have a duty to share what we discover here."

Innovation is on every hospital leader's radar to some degree, especially since a number of large, integrated health systems have established departments, centers or leadership roles to formally oversee their innovation efforts. Still, some organizations have thoroughly instilled innovation as a cultural norm. Dr. Strongwater says he doesn't go one day without hearing a new idea from one of his colleagues.

How does this come to be?

There's no how-to instruction guide for the type of innovation success Geisinger has achieved, but there are a few noteworthy things the system does differently that leaders can uphold within their own organizations. Dr. Strongwater attributes Geisinger's innovative cultural to self-reinforcement, a leader who encourages independent thinking, trial and error, and a drive to make work easier.

Jennifer Radin, who leads Deloitte's Healthcare Human Capital practice nationally, works closely with hospital and health system CEOs. She says the ease with which people can innovate is largely determined by an organization's talent development and whether leaders are systems thinkers. Clinicians and staff individually seek to innovate to better serve patients, however, this work is often in spite of the organization's structure, incentives, and decision-making lines of control rather than these organizational elements fully supporting the innovative activity.

It may very well be a combination of all these things and more. Here are five things truly innovative organizations do differently.

1. They know innovation resembles another word: investment. No leader can sit back, cross his or her fingers and hope innovation takes off like wildfire within an organization. This is especially true for hospitals, where most employees are focused on patient safety and quality care. To them, innovation can easily become an afterthought.

Scott Anthony, managing partner of innovation consulting firm Innosight and writer for Harvard Business Review, has said innovation is unnatural. Any business was built to scale yesterday's business model, not discover tomorrow's. Unless leaders make it clear that innovation is an organizational value and discipline, it won't stick, especially during the operational demands of the day to day. Or, as Mr. Anthony put it: "Any executive that doesn't make innovation a strategic priority, ensure there is ample investment in it and approach the problem strategically is committing corporate malfeasance."

Leaders of innovative organizations match any rhetoric about innovation with personal involvement. They want employees to think of solutions to problems they observe, even on the frontlines, and they want to hear about them. Ms. Radin says this type of leadership goes far beyond CEOs being brilliant visionaries. They must voice their expectations, understand the talent levers in their organizations and invest resources into feeding ideas within their hospitals and health systems.
"There's a group of CEOs who are visionary about what needs to happen, but they but don't necessarily realize that you can't just change operations," she says. "To implement strategies, you must do all the right things from culture through individual talent development and training."

More specifically, Ms. Radin says healthcare reform is demanding hospitals and health systems invest in their physicians and help them become business leaders — in the complete sense of the term. "They need to actually be able to deliver business acumen and manage profits and losses, like general managers in any other industry," says Ms. Radin. "They need those skills from masters programs. Many want do to this and are very capable of doing it," she says. Talent development and training demonstrate an organization's commitment to innovation by empowering professionals to bring new solutions to old problems.

2. Their innovation process works like a flywheel. What's another way for organizations to show they're serious about innovation? By tying compensation to it. In its compensation model, Geisinger ties a portion of executive pay to how much leaders innovate. Executives have the opportunity to build an idea, demonstrate it as an innovation pilot, publish their finding and receive a financial reward. [Editor's note: Although there is no hard data on the nationwide popularity of such a pay system, spokespeople at Geisinger said it is a very novel approach and they were not aware of other organizations with similar pay structures.]

Aligning financial incentives to innovation activities certainly sends the message that a health system is serious about it, but Dr. Strongwater says there's more to Geisinger's success than executive bonuses. Instead, problem-solving has taken on a life of its own. It's continual, collaborative and — most interestingly — enjoyed. One person will propose an idea, another person will try to make it better and the process builds upon itself. Dr. Strongwater noticed this immediately, right after he began working at Geisinger about one year ago. Before then, he had served as CEO of a 600-bed teaching hospital.

"The instant I came here I saw a difference," he says. "Everyone wanted to try new things. In prior roles, you had to convince people to try something. That's a cultural transition and it's self-reinforcing. Some of the things we've done — closing care gaps, improving medication adherence, using bundles for chronic disease care — came out of conversations from people sitting around a table trying to innovate."

3. Leadership knows when to relinquish control. Innovation in healthcare is interesting, given the risk-averse nature of the industry. It's not necessarily the most creative of sectors, but hospital CEOs can still nurture inventiveness. One way is to establish core goals, communicate them regularly, and know when to step aside to let people take to their creative processes. Geisinger President and CEO Glenn Steele, MD, PhD, is known for encouraging executives and professional staff to bring entrepreneurial sensibilities to their work. The result: a culture conducive to brainstorming and independent problem-solving.

"Dr. Steele has set the pace," says Dr. Strongwater. "He's organized [innovation] in a way where everybody knows they have to do it. He is a very clear thinker and has a vision for transforming healthcare which is patient-centered, value-driven and evidence-based. Those core elements set the direction, and he allows people in the organization to work independently and not be micromanaged."

Throughout her work, Ms. Radin has noticed certain CEOs have more success instilling cultures of innovation. Those who do are "systems thinkers," she says. When executing a new care delivery model or clinical pilot, the most innovative CEOs address all components of the hospital. They question how an innovation will affect each and collaborate with stakeholders with diverse perspectives to plan the implementation. "It's about an understanding of multiple disciplines," she says. "It's about recognizing the connection between health outcomes, clinical operational changes and how we get people to work differently."  

4. Innovation isn't seen as a short-term fix. There are two groups of hospital CEOs today, says Ms. Radin. In one group, CEOs are burying their heads in the sand. They are still saying, to an extent, that the demands of healthcare reform and new delivery models will pass. The other group of CEOs knows hospitals must fundamentally change their business model. To them, the healthcare reform law became a platform to have transformational discussions with their board, executive teams and the hospital at large. Transitioning to a new business model takes deep changes to operations, but alert CEOs in the second group aren't shying away from this.

Geisinger digs deep when piloting an idea. The system brings together a diverse group of stakeholders from different facets of the organization, including clinical, operational, financial, payer and patient relations. Design teams then work through clinical evidence, map out existing and future workflows, analyze financial incentives and build a business case for the innovation. The system initially tries new care models with patients for whom its health plan and clinical services intersect — Geisinger refers to those patients as in "the sweet spot." The health system will then scale the innovation to broader populations based on its success.

It's easy to use innovation as a buzzword, but the process itself is anything but business as usual. True transformation starts with a deep understanding of the severity of the problem and a formalized process to execute ideas. "You can't just put in a new decision support system or make cost reductions," says Ms. Radin. "You actually have to change the operating structure, culture and strategic vision so people understand it at every level of the organization. This is not incremental change. This is transformational."

5. Innovation makes work easier. Despite the amount of time and resources it requires, successful organizations like Geisinger do not approach innovation as "work." Rather, invention and creativity are seen as things to simplify work and improve patient outcomes. Instead of expecting professional staff to work harder using the same processes, Geisinger tries to redesign care delivery in a way that promotes quality and patient satisfaction — but also alleviates burdens for everyone involved.

The organization does this on the go, too. It doesn't reserve innovative thinking for annual meetings or summits, but in the day to day, right when issues arise. "People at Geisinger are working just as hard or harder than other people," says Dr. Strongwater. "But we see innovation as a strategy to make work easier."

One specific innovation at the health system illustrates this outlook. In May, Geisinger became one of the first few health systems to give patients access to their electronic medical records — an initiative called OpenNotes. After they visit the hospital or a Geisinger physician, patients can read their medical records and physician notes in full through online access.  

"The early feedback shows patients love it and providers have not been overloaded with constant complaints about their notes [and handwriting]," says Dr. Strongwater. Since gaining access, he says some patients have stepped in to help improve the quality of their medical records record. Patients, intrinsically invested in their own care, will contact the provider to remedy any errors they spot in their medical records, thereby improving patient safety.

Geisinger is known across the country for its innovations with EMRs, medical homes, care bundling and a range of other novel approaches to healthcare delivery. Much of the system's success is linked to a culture that promotes innovation through self-reinforcement and healthy competition, financial incentives, and the outlook that innovation is not work but something to alleviate burdens for patients, families, physicians and staff. As Ms. Radin discussed, healthcare leaders cannot treat innovation passively, but must communicate their expectation that professionals will innovate in the day-to-day. Organizations must also invest in talent development to nurture employees' problem-solving capabilities and be prepared to abandon old operational models and build new ones — not layer new ideas on antiquated operations.

More Articles on Innovation in Healthcare:

How Ideas Become Innovations: Roundtable With Healthcare Innovation Leaders From UCLA, Ohio State
How Easy Fixes Can Doom Innovation in Healthcare
Disruptive Innovation — A Harmful Cliché in Healthcare?

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