Recently I had the opportunity to participate in an annual event called
Dallas StartupWeek. This event provides a forum for innovators, investors,
entrepreneurs, incubators, founders and anyone interested in starting
a business to network with just about anyone that has something to do
with innovation and startups. The week includes programs focused on everything
from gaming to social causes. Healthcare was one of the areas of focus.
There were several panels consisting of entrepreneurs in the midst of
startups, innovation leaders from several large DFW health systems and
business leaders of organizations that had made it out of the startup-phase.
Interesting stories about various challenges that were encountered, challenges
of breaking through the obstacles of the current incumbents, marketing
to consumers services never marketed before were just a few of the interesting
topics covered. One panel was comprised of a member of each of the current
generations-silent generation (pre 1945), baby boomer (46-64), generation
X (65-76), millennial (77-95) and generation Z (96-present). Current views
on healthcare topics were asked and the different generational views provided.
Needless to say there was a great deal of variety.
This will sound like a blinding glimpse of the obvious-innovators see the
world differently and in some very original ways. They have an enthusiasm
that becomes contagious. Intentionally or unintentionally when they talk,
conventional wisdom and current paradigms seem to be in jeopardy. I found
the stories the leaders took to get to what ultimately became the final
organization fascinating. Starts, pivots, near death, great success followed
quickly by great failure and recovery were constant themes. The critical
importance of leadership teams became evident. When dramatic change was
necessary, called a pivot, teams became critical as not being able to
change would in most cases result in organization mortality.
These sessions were even more impactful because we (Royer- Maddox- Herron)
have recently had our book on leadership, management, and transformation
published. After reflecting on these startup stories, I know our intention
was to be as candid, direct and urgent as necessary, however, in hindsight
we might not have gone far enough. This past week Elizabeth Rosenthal’s book,
An American Sickness, was released. This is another, in what is getting to be a very long list
of books outlining, in ever increasing detail, the multitude of shortcomings
of the current U.S. healthcare model. To add fuel to the fire, Universal
Health Service’s SEC annual proxy filing disclosed their CEO’s
compensation for FY 2016 at $51.3 million. This follows from a few months
ago Anthem disclosing in their proxy filing CEO compensation of $17.1
million. In addition, Congress people home on recess and hosting town
hall meetings are being pummeled with healthcare issues.
Here’s the warning. Many hospital organizations are very short on
leadership talent. In some cases this is by design, because the healthcare
environment didn’t require leaders as much as really strong managers.
Where turnaround situations existed and leadership was necessary, oftentimes
hired guns from the outside were brought in to right the ship and then
departed. Historically, financial success in healthcare has largely been
a function of doing things right. Very seldom was the question asked “are
we doing the right things?” And if it was and the answer conflicted
with the status quo it was soon tabled. The variable managers/leaders
focused on was volume. Prices were pre-negotiated with insurers or predetermined
by the government. And seldom did they ever go down. The questions are
soon to be, “Can you pivot?” and “Can you lead?”
The first obstacle you’re going to face is the proverbial medical
staff vote of no confidence. Why? Because you’re going to want to
stop doing stuff that should have been stopped 10 years ago or start doing
stuff that’s now going to compete with your doctors. The second
obstacle you’re going to face is general associate unhappiness because
people generally don’t like “to be” changed. Third,
the boardroom is going to become contentious because board members are
starting to be asked “what’s going on at the hospital?”at
the beauty salon or country club. Or in some more intense circumstances,
“are you sure you know what you’re doing and why didn’t
you do it sooner?” In modified form, these were the types of questions
the startup innovators had to deal with during their organizations’
Unlike during previous periods of change in healthcare, there haven’t
been significant competitive pressures from outside traditional industry
providers. This time will be different, if for no other reason, technology.
Inherent in every startup story I heard over the course of the week was
a technology component that enabled the new organization. Technology has
a way of overcoming the protective
“moat” that has prevented the more routine competitors from
entering the healthcare castle. The second factor is the massive amount
of investment that’s searching for the “Google” of healthcare.
We have seen the optimism of Wall Street in the Castlight IPO. We’ve
seen the rise and fall of venture capital exuberance with Theranos. So
the two major barriers to competing in healthcare are no longer barriers.
There will be numerous naysayers that healthcare is different. It’s
too complicated. It’s not like going to Walmart. It’s not
like shopping on Amazon. It’s not like booking a flight on an airline.
And all those people are correct. But remember before there was health
insurance there wasn’t any. Before the government decided to accelerate
the building of hospitals through Hill-Burton grants, they were locally
funded. Before there was Medicare, there wasn’t anything. Healthcare
has always been different. But all of what has largely made healthcare
different (complicated) was at one time an innovation. And to think innovation
has run its course in healthcare is just plain stupid.