To those outside of healthcare, the term "Transformers" likely evokes images of the action-packed movie adventures where the development of transformation technology is crucial to survival.However, this comparison is not entirely unfamiliar to today's hospital C-suite.
Many healthcare executives feel similarly under siege by forces beyond their control. Regulatory and market pressures have forced many healthcare organizations to the brink, creating a need to pursue continuous innovation and reorientation to cope with the dynamic, unstable environment. There is a sense that traditional techniques for analyzing industry dynamics and managing organizations have become obsolete.
Like in the action movies, the successful are Transformers.
In sharp contrast to conventional approaches, true transformation is a holistic long-term change program that goes beyond the level of first-order change (incremental alteration of an existing process) to the second and third orders of change, during which processes and structures are fundamentally reconfigured to drive and support new organizational behaviors that stand the test of time.
According to studies appearing in several industry publications, the result is deep, meaningful change in the culture and cognitive frameworks that drive key components of an organization and its success, such as activities, critical skills, decision mechanisms, organizational learning and power structure.
Research has shown repeatedly that organizations that can successfully change their strategic orientation and culture will deliver substantially better performance over time in both fiscal and non-fiscal measures. Such organizations build cultures that emphasize employee development, empowerment and participative decision making and possess an operating infrastructure that offers the discipline and rigor to deliver and sustain changes over time.
The true barriers to progress are those who continue to believe that short-term, non-strategic, transactional improvement efforts actually yield desired results. The academic literature in strategic management and marketing validates the concept of better performance yielding improved profitability, among other measures, for organizations that undergo a successful strategic and operating orientation change across a core set of dimensions underpinned by cultural transformation.
Consider the case of a regional integrated healthcare system in the South that invested in the implementation of management systems, strategy activation and culture change. Not only did they survive Hurricane Katrina due to a transformation process they had started before the tragedy, they achieved revenue growth rate of more than 10 percent per year, a 35 percent market share, which doubled in three years.
There are many challenges for would-be Transformers, including heavy resistance to change and competing agendas and incentives. Time and time again, organizations face the reality of sacrificing meaningful change in pursuit of immediate results. The mindset of proving cost reduction as a gateway to funding longer-term transformation programs creates unsustainable changes, as these organizations fail to address the issues underlying poor performance, such as organizational silos; fragmentation and conflict; a culture that blocks execution as well as a lack of understanding of true cost drivers.
Cost reduction is not a rite of passage. It is woven into an effective operating model for delivering patient-centered, timely, efficient and equitable care, and should not shortcut the true transformation efforts required to restore and keep our healthcare organizations vibrant in these dynamic times.
Rob Nelson, MBA, is the global strategy, leadership & transformation leader for GE Healthcare Performance Solutions.