The APQC Blog

Health Care Reform? No. Health Care Perform!

I’m sure you’ve heard about health care reform <grin>, but I think we are missing the bigger picture.

The main point supported by the Supreme Court is about universal coverage—whether it is Constitutional to require all Americans to buy health insurance. I’m sure health care reform will continue to be contested politically, as well as legally, but there are much larger forces upsetting the health care industry, and they are driven by the major payors.

The Medicare and Medicaid programs are requiring health care providers to adhere to new provisions: move to electronic medical records; provide secure, confidential portability for patient medical records; etc. So, regardless of whether it is Constitutional to require health coverage, the largest payors in America are requiring significant changes to the industry. Could these provisions be attacked or blocked politically or legally? Sure, but I think the conventional wisdom of a major player is being underscored in this debate: the employers.

For the most part, major U.S. employers are, and have been, focused on improving efficiency for decades (not years… decades). They are using tools to improve processes, automate key business functions, and improve their bottom line by removing defects, waste, and inefficiencies from the delivery of products and services. Most have realized they can’t do this alone. Suppliers are asked to play a key role, and they are expected to focus on the same types of improvements that manufacturers make. A customer doesn’t care if a laptop doesn’t work because a supplier’s transistor was defective; he or she just knows the laptop doesn’t work and expects it to be fixed or replaced—now!

Employers have left the organizations that supply health care services to their employees out of this picture. There is a layer of bureaucracy (a.k.a., the insurer) between them and the direct health care provider, and this complicates the picture. The employer doesn’t know how to address this issue directly with the provider, but, in my opinion, this is going to have to start changing.

I think employers are going to expect health care providers (who are consuming more than 20 percent of every dollar employers earn) to use the same continuous improvement tools that have been effective for their other suppliers. Tools like business process management, Lean, Six Sigma, and other similar, proven improvement methods are used regularly across various industries, and they will work in health care. There are a vital few health care systems that have adopted these tools with great results. Many are starting to examine them, but not enough, though. And they are moving too slowly.

I know, I know. Health care is different. We’re talking about people’s lives, not laptops. But I would bet that an aircraft manufacturer would assert that the supplier that provides them sheet metal or electronic components for airplanes is equally important when it comes to human lives. The manufacturer still expects suppliers to provide high-quality services at a reasonable price while focusing on continuous improvement. Health care is different, but so is every industry. That isn’t the point. The point is that health care needs to embrace these battle-tested tools, apply them to their unique environment, and start pulling their weight in our economy.