Quick thought – is health care getting too big?

by Hans on 2010/02/17

A post on Roger Martin’s blog at Harvard Business Review titled “The Inauthentic Communities of the Modern Executive” has me wondering if health care has gotten “too big”. In the post, Martin describes senior management has become separated from its customers due to the sheer size and growth of the corporation. No longer having that personal connection, senior management is distanced from the individuals and communities it serves. Martin writes:

Executives could have a relatively intimate relationship with their customers, who were mainly located in their company’s home region or at least country. Employee bases were smaller and concentrated close to home, which tended to make executives a prominent force in their home cities. And their shareholders stayed on the register for a much longer period than they do today.

This structure had a number of beneficial effects for executives. It was easier to get to know customers, figure out how to serve them, and continuously improve a product or service. It was easier to get to know employees because there were fewer of them and they lived nearby. And since the home city was more important to the company and the executive typically had a network of friends outside the company in that city, the executive was less likely to have a schism between his corporate role and personal role relative to the city. That is to say, doing things to benefit the city made sense both corporately and personally. On top of that, shareholders were more likely to encourage or at least tolerate long-term planning rather than very short term results because they planned to be around for the long-term.

While not perfect, this structure enabled the executive to live a reasonably authentic life; the way he wanted to live personally was largely aligned with her corporate responsibilities. He wanted to make the customers — whom he was likely to know personally — happy. He wanted to support his employees’ well-being — employees who he and his family probably knew. He wanted to be a respected figure in the city, a city that was important to his company and his family. And he wanted to make his shareholders happy because he knew that they had placed a long-term bet behind his company. If he worked on all those aspects of his community, he could be successful and happy. And by serving customers and employees well, the corporation was likely to keep on prospering.

We’ve started to see this trend in health care over the past while. Arguments for “economies of scale” and efficiencies have resulted in large, multi-site hospital corporations emerging as the norm. These larger organizations then start the cycle of competing for people, resources, and mind-share resulting in a predictable “arms race” to become the most prestigious health care institution either through research or best care.

We have also seen the move toward regionalized models of care which are an attempt to move away from the centralized “command and control” model to something that can better respond to local needs. In Ontario, the Localized Health Integration Networks (LHINs) are supposed to serve in this capacity to “determine the health service priorities of our regions” but I wonder if we are simply adding another layer of administration to the system and making the system bigger without knowing it.

Martin concludes his post, describing the effect of professional managers:

In the intervening years, as corporations have ballooned in size, the community has become far more impersonal and distant. Customers and employees have become more dispersed and distant and the home city has become less central — even expendable, as Boeing’s abandonment of Seattle demonstrated. And perhaps most important, a company’s owners have become a group of distant professionals who trade their holdings at the click of a button. Many large shareholdings, in fact, aren’t even managed by people.

It was just as this process was taking place that the idea that shareholder value was a corporation’s principal objective function took hold, largely, I think, through the agency of business schools, whose dramatic rise coincided with the decline of the traditional business community. With the new creed came an army of professional proselytizers who have come to be the principal agents in the executive’s new community: Wall Street stock analysts who cooed with approval when shareholder value was put first and delivered spankings when it wasn’t; Wall Street investment bankers touting “value accretive merger and acquisition ideas”; strategy consultants providing approaches to slash costs and “enhance shareholder value”; and the financial press looking for a story.

I wonder if the influx of management professionals focusing on quality of services, efficiency, and value have in some way replicated what Martin talks about. Is this a good thing? I am not advocating that we abandon efficiency, effectiveness, quality, and patient safety. What I am wondering is if we are making our health care organizations too large and complicated such that the managers are so far removed that “patient care” is just a catch-phrase used flippantly, much like how many companies talk about “customer satisfaction”?

I will admit that I do not have any solutions or suggestions to this potential issue. There are benefits to be realized as an organization like a hospital increases in size – increased specialization and diversity of services is one glaring example. But, every time I walk outside of the mammoth buildings of the large hospital corporations, I can’t help but notice that the administrative corridors and buildings seem to be getting larger and larger with more opulent furnishings.

The question I wonder is – is there a better way? Is health care getting too big? If “yes”, what do we do about it?

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