It’s no secret that the American healthcare industry today is under considerable financial pressure. With rising costs for labor and supplies, as well as workforce shortages and the uncertainties of tariffs and changes in federal health policy, the challenges for our industry are significant. In response, we in healthcare have worked to aggressively cut costs, struggling mightily to turn a positive operating margin. However, it is seeming more and more clear that this approach won’t get us where we need to go.
Across our industry, we’re seeing that cost-cutting alone will not solve our profitability problems, let alone our quality and access problems.
What’s the solution? Might we shift our industry’s mindset from one of scarcity to one of abundance. To do this, we should work within each of our institutions to unleash the engine that drives abundance — innovation. It’s an important and needed course-correction. When you cut costs without innovating in how work is performed, cuts can become destructive to the healthcare enterprise, increasing worker burnout, and sometimes even creating unanticipated complications costs. I’m convinced that the way to thrive is through innovation.
There is ample precedent for this. Innovation as part of the Industrial Revolution in the 1800s resulted in huge growth in the American economy and an accompanying dramatic betterment in the standard of living around the world — something which had improved only incrementally over generations. Now is the time to embrace it more fully in healthcare.
That said, innovation does not occur by chance. It only takes root when there is a culture of humility, curiosity and commitment to improve every day, leading people to imitate, innovate and test new ideas. Importantly, innovation also thrives when diverse people are treated with respect, fostering the free flow of ideas from the “bottom up.”
This requires structures to share ideas and a culture where anyone can speak up, regardless of pedigree. This democratization of ideas creates solutions that produce mutual benefit.
At University Hospitals, we’ve embraced and accelerated innovation, with a focus on delivering the highest-value care. To start, we’ve educated nearly all 32,000 of our caregivers that their job is to improve healthcare value — helping them on their journey to truly believing it. What’s more, we’ve made clear that they are innately worthy and capable and belong to a noble effort on behalf of our patients. We need their help to build innovative solutions for improving the care we provide. Caregivers involved with every process and site of care have a role in improving each process. We’ve also asked our care teams to look to other health systems or industries for ideas. When we find ideas that work for us, we build management and shared accountability systems to disseminate them across our system, tracking innovative changes at the hospital, unit and clinician level. There’s public praise for those doing well – with others learning from them – and private support and encouragement for those who are struggling with new demands.
So the question becomes: Is this approach yielding the results that all of us want — patients and caregivers alike? The answer is “yes.” When we implemented the innovative Enhanced Recovery After Surgery protocol across 15 of our hospitals and 16 of our service lines, surgical length of stay fell from 6.1 days to 2.1, with a system O/E of 0.8. At the same time, supply costs per procedure reduced $800, and transactional net promoter score increased from 66% to 81%.
This is a shining example of innovation driving abundance. Yet what is almost more hopeful is the positive energy and excitement these and other efforts have generated among our caregivers. When they are discussing their ideas to improve, you can feel the collective energy. A clinician connecting their work to their organization’s purpose creates a powerful sense of purpose and joy — a potent antidote to burnout, moral injury and their negative financial effects.
Of course, healthcare will continue to have cost challenges, and cost reduction efforts need to persist in our industry. But I believe that by more fully embracing innovation, we will reduce costs and improve quality by improving productivity. Then we can get to a better place where patients and health systems experience the high value care we all want.
Peter J. Pronovost, MD, PhD, is Chief Quality & Clinical Transformation Officer and President, Veale Healthcare Transformation Institute at University Hospitals, Cleveland, Ohio.
