Innovation

How matters

How matters more than most leaders thought.

Corporate America is changing. Business leaders are realizing that they need to think beyond the bottom line.

Some investors are pushing back but what they might not realize yet is companies can do even better when they consider the social and environmental impact in their policies and business practices.

Haven

Haven Healthcare is the new healthcare company formed by Chase, Amazon and Berkshire Hathaway that is led by Atul Gwande MD. Dr. Gwande has been sharing his experiences, thoughts and insights about the cost and quality of healthcare in his books and articles for more than a decade. 

Since formation, the company has been working to understand the needs of their patient population so that they can “create new solutions and work to change systems, technologies, contracts, policy, and whatever else is in the way of better health care.”

The “whatever else” in this case likely refers to the way American Corporations have focused solely on the bottom line. It should come as no surprise to any of us that Jamie Dimon, CEO of Chase is one of the leaders championing this change. 

He is likely getting some good data and management insights to support his position. Hopefully we’ll learn more about that when the Forbes article is published next month. Until then, you might want to check out this book.

Dying for a Paycheck

We’re likely going to hear about some of the work published by Stanford Professor, Jeffrey Pfeffer. In Dying for a Paycheck, he talks about the management practices that “literally sicken and sometimes kill employees” which as you might imagine also negatively impacts productivity and the bottom line. 

Professor Pfeffer hypothesizes that prescription drug data is a better indicator of health and wellbeing than solicited input from employees because it is unbiased. Researchers in Denmark are reportedly using prescription drug data to draw correlations between prescription drug use and the effects of entrepreneurship, organizational change, compensation and more.

My guess is that Haven is using their medical data to investigate the policies and business practices of the operating companies and drawing similar types of insights. It could be game changing for Americans and the healthcare industry.

Times change, we need to change as well. 
~ Nelson Mendela

Changing how

A lot of this might seem like common sense, but without data it is harder to convince people change is necessary.

I was a very early pioneer in the online learning space. Our solution helped clients enhance their operations while providing a path for a brighter future for their employees. How you ask?

Our training solution provided the much needed training to those responsible for the revenue cycle and financial management. Most had never received formal training on the systems or best practices which from a financial perspective is a recipe for disaster.

Staffing decisions are emotional but became so much easier with data about the time spent on course work, modules completed and assessment results. 

We enrolled everyone in their required training modules and gave them time on the job to complete the course work. Some just didn’t complete all of their modules and not surprisingly, they underperformed in those areas of their job. It was a clear indication that they had no interest in the work.

Rather than terminating their employment, it was our opportunity to start a conversation about the right career path for them. There are really only three career options: 

1/ Develop functional depth

2/ Transition to a cross functional role

3/ Retrain for something entirely new

Even though the organization had less than 100 people, we were able to offer all of these options within the organization and financially, we had some of the best years. 

Investments in fundamentals and people pay off in companies of all sizes.

Training investments help people perform better on the job and prepare for a brighter future. Many of the people who successful completed our courses have already transitioned into new jobs. They didn’t have to experience the stress of having their job eliminated.

Industry leaders need to making these types of investments to be profitable and accountable to all constituents going forward. If you’re coming from a strong viking and victim culture such as in law, finance and tech it might be harder for you to make the mental shift but it’s necessary now. 

Regulation vs. Ethics

Can the healthcare industry self regulate?

I had a discussion recently with a CEO to fortune 1000 companies about the need for proper regulation. At the start of the conversation, he asked what I meant by regulation. So to ensure that we’re all on the same page for this discussion, let’s start with the definition of regulation.

Definition: A regulation is a rule or directive made and maintained by an authority.

Regulations are tricky to get right because they need to be protective but not restrictive – and somehow, they need to be efficiently and effectively enforced to work well. It takes a lot of work to strike the right balance. That may be why some politicians and business leaders would like to do away with all regulation and let the markets self regulate. 

AdvaMed


The AdvaMed Association for medical technology is taking on a self regulation initiative for 2020. They are developing a new code of ethics that is values based to better engage everyone in and involved with the organization in compliance. To do so, they have been reportedly working with all of their stakeholders including teaching hospitals, hospitals, clinicians, device and diagnostic companies to develop the new code.

At this point, they have identified six [6] key values for the new code of ethics:

1/ Innovation
2/ Education
3/ Integrity
4/ Respect
5/ Responsibility
6/ Transparency

It’s not clear yet how they plan to operationalize the values. What we know is that member companies will need to have policies and programs in place signed by the CEO demonstrating compliance in order to be awarded the AdvaMed seal of approval.

There is a carrot for member company participation. The seal will help business partners and customers identify organizations who are in compliance. That may also give companies selling solutions an edge in competitive bid opportunities.

There is no stick for non-compliance. AdvaMed will not initiate investigations or bring any action for non-compliance. 

The question that remains unanswered is whether ethics can protect consumers from corporate wrong doing and greed better than regulations?

However, the industry should welcome the attempt to self regulate even if it’s an added regulatory measure. With all the advances in medicine that are raising new ethical questions and concerns for the healthcare industry, ethics need to be ingrained in the culture for companies to earn the trust of partners, customers and patients around the world.

Relativity applies to physics not ethics.
~ Albert Einstein

Startup Comp

What is the value of your time and risk tolerance?

A member of the Female Founders Network shared her story of working for a successful startup that recently became a public company. She was an early employee but was never offered shares or options and questioned whether or not it was fair.

With the amount of pay inequity in the market, it would be easy to chalk it up to another example of gender inequality. Without knowing the numbers, I have to generously assume it has more to do with risk and reward.

Startups are high risk. It’s easy to look back at a successful startup and wish you were paid in equity. But how would you feel forgoing cash and benefits for a stock vesting plan if the company failed after 4 years? My guess is that the experience gained would not feel like adequate reward for most. That’s the risk – reward relationship of startup.

My advice to the Female Founder Network and you is to know the value of your time and your risk tolerance. Everyone deserves to be fully compensated for the value of their time. The method of compensation needs to reflects your risk tolerance. Methods include:

1/ cash + benefits
2/ stock + options
3/ blended

Time is one of your most precious resources that can only be valued by you. The method of compensation should be negotiated.

From a leadership perspective, we need to think about the person not just the position when offering stock and options. Doing so will help address pay inequity.

Startup Comp

What is the value of your time and risk tolerance?

A member of the Female Founders Network shared her story of working for a successful startup that recently became a public company. She was an early employee but was never offered shares or options and questioned whether or not it was fair.

With the amount of pay inequity in the market, it would be easy to chalk it up to another example of gender inequality. Without knowing the numbers, I have to generously assume it has more to do with risk and reward.

Startups are high risk. It’s easy to look back at a successful startup and wish you were paid in equity. But how would you feel forgoing cash and benefits for a stock vesting plan if the company failed after 4 years? My guess is that the experience gained would not feel like adequate reward for most. That’s the risk – reward relationship of startup.

My advice to the Female Founder Network and you is to know the value of your time and your risk tolerance. Everyone deserves to be fully compensated for the value of their time. The method should reflect your risk tolerance.

Compensation Methods:

1/ cash + benefits 

2/ stock + options 

3/ blended 

Time is one of your most precious resources that can only be valued by you. The method should be negotiated.

Operating in the Grey

Morally wrong but not illegal. That’s the fine line that many companies walk.

There is a really good documentary called the Drug Short that uses the story of Valeant to explain the problem with drug pricing in the US.

Valeant operated more like a hedge fund than a pharmaceutical company. The model was pretty simple:

1/ Buy companies that have a drug with a monopoly.

2/ Strip out the R+D so that the typical 18% spent on R+D goes to the bottom line.

3/ Raise prices on existing drugs.

The problem is that many of the drugs were life sustaining drugs for people in middle America who couldn’t afford to pay for them. 

So the company took extraordinary measures to bilk insurance companies into paying for the prescriptions. To keep patients quiet about the issue, they provided just enough financial support to them through their advocacy efforts.

Hillary Clinton started tweeting and talking about the issue during her campaign. Investors and board members could have looked into it and taken action, but they didn’t. They were reportedly paid large sums to look the other way. 

The returns on biotech companies now are largely due to price increases. The companies can’t afford to lower their prices and profits.  So nothing has changed.

Good Data

Only 30% of the analytic results in healthcare organizations are accurate. 

It was one of the facts that we learned on the Health Catalyst webinar this morning and based on my own experience seems about right.

Part of the issue is the old adage “Garbage In/Garbage Out” and the other part is lack of consistency in defining and pulling the data elements.

The new Health Catalyst population stratification module standardizing the datasets makes it easy enough for business people and maybe even some clinical people to pull their own data. It’s a huge plus especially for healthcare organizations conducting research.

Garbage in/Garbage out needs to be addressed with better user interface design, refined data capture requirements and compliance with medical record documentation. There is just no way around it.

Everyone needs quality data to make sounds decisions whether clinical or business. When the data is bad, we end up wasting resources solving problems that don’t exist and overlooking the real issues.

Focus on Why

Do you know why your company exists?

If you answer is something like to provide high quality medical services or to provide a specific type of solution to the healthcare industry, you’re telling me about your company’s what – not the why. 

The why is the reason the company was founded and continues to exists. The why embodies the company’s beliefs about those that it serves and reflects the values that guide how the company operates. 

One Medical

I reviewed an investor report on One Medical recently that had this really wordy description of why the company exists. It made me wonder whether the company is loosing touch with their why [a common problem as companies grow] or if the why was just lost in translation.

However, most people are familiar with the company so it seemed like a good example to explain the differences between why – what – how and the value of focusing on why.

Early success:

1/ Why: The founder, Tom Lee MD believed waiting 29 days [the average wait time in the US] to see a primary care physician was unacceptable. So the company’s core belief is timely service is most important to their customers and members.

2/ What: One Medical found customers willing to pay a premium for on demand access to care. Employers and those without an established relationship with a primary care physician were willing to pay the premium. 

3/ How: The company solved the wait problem by incorporating nurse practitioners and technology into their service so that most if not all of their members are seen within 24-48 hours of scheduling an appointment. They also increased the length of the appointment to minimize the risk of wait times on the date of service.

Growth + Profitability:

The why has defined the company and is the reason existing customers and members value the company. As the company enters new markets and partnerships, the management needs to consider:

1/ Do other populations value timely access to care as much and are they willing to pay a premium for it? 

2/ Are they able to modify the how without sacrificing the why to achieve long term growth and profitability?

It will be interesting to see how the next chapter turns out.

Hiring for Fit

Have you ever wondered why 80% of Americans are in jobs that they don’t enjoy?

The easiest answer is that they have the skill and need the money to support their family, pay off their school debt, buy their dream home or maybe it’s just about survival.

Whatever the case may be, the way companies hire may be compounding the problem. Why? Companies often recruit based on past job title, education, school etc. They don’t understand why people did those jobs, why they chose their school or their major.

Chances are people made those decisions early in life when they didn’t really know what they wanted to be, how they wanted to apply their skill or where they wanted to live. Their decisions were likely influenced by their parents or a teacher or life circumstance.

If they’re trained in something that they don’t enjoy and they’re continuously recruited for that skillset, they’re probably not going to be happy doing the job. They’ll do it but they’ll also keep their options open.

Understanding WHY they made certain decisions and WHY they are interested in a certain company and job, might be better ways of understanding fit.

Unless deep functional knowledge is needed to do the job well, skills and knowledge can be developed – motivation and satisfaction can’t.

Living your Values

If you’re thinking which values are you referring to – personal or company values? I’m actually referring to both because there should alignment in your personal and professional life.

If you need to google your company values or call human resources, chances are your company’s values have not been operationalized. Only 10% of companies have a short list of memorable values that they’ve associated with behaviors to reinforce their values.

Salesforce has done a good job of honing the values list to four [4] values and associating behaviors with each value. It’s how they are able to walk their talk in everything they do despite being a very large company.

Whittling down the values list from 100+ takes some time and careful thought. Most companies have a list of 10-15 values but within that shortlist there are usually 2-4 that encompass the company’s core beliefs. 

Operationalizing values is a process of linking values to behaviors so that people understand what’s an acceptable behavior as well as what’s not an acceptable behavior. Providing three [3] examples of each type of behavior is usually enough.

Once the values are operationalized, the company culture will develop to support and enforce those values.

If you’re questioning whether or not it’s worth your time, think about how much easier it will be for everyone in your organization to:

1/ Hire the right people 

2/ Manage customer relationships 

3/ Work collaboratively with people throughout the organization

4/ Make good decisions for the company

Defining and operationalizing your values is not something you want to put off until you’re the size of Salesforce. There are a lot of steps in the journey to realize that level of success. That’s why I think of it as one of those “the sooner the better” activities.

“Daring leaders who live into their values are never silent about hard things.” ~ Brené Brown

Our Values

I’ve been working on refining the values for Rush360 too.

Innovation is the heart of what we do. There are 4 steps in our process [Learn, Engage, Design and Transform].

So I started with the steps and thought about the values we need to have in order to do those things well and support the people on our team.

These are the four values that resonated the most with what we do and why:

1/ Courage: It takes a lot of courage to step into a new environment and to get up to speed quickly especially when people see you as a change agent.

2/ Open: It takes an open mindset to be constantly working with new people, new process, new system and in new environments.

3/ Creativity: We get the benefit of having a fresh perspective on the problem but it takes a lot of creative energy to work with all the stakeholders and to design a solution that works for them now and in the future.

4/ Innovation: It takes someone who loves to innovate because the stakes are high and the risk of failure is real. Failure on any scale is disappointing and tough on the ego.

That leads me to balance. I think everything in life – from our bodies to our businesses – needs balance. In Dare to Lead, Brene talks about daring leaders having a strong back and a soft front. It seemed like a good framework to test the balance of our values… it takes a strong back [courage and love for innovation] and a soft front [open and creative mindset].

Frontline of Addiction

Everyone is feeling the pain of the homeless issue and the drain of addiction related issues.

A colleague emailed me today with his latest story of arriving to work early and stepping in human feces on his way into the office. Emergency workers were also on the scene dealing with some other health hazards and attending to what he referred to as the walking dead. Needless to say, the drama affected his mental state all day.

The healthcare systems are also being taxed. I was on a call a few weeks ago listening to the gains realized by a Canadian hospital system after redesigning key processes. When I asked if they were able to reallocate those resources to reduce their waitlists, they replied no because they are experiencing an increase in ER visits.

Addiction is a specific mental illness. We need to get the experts on the frontlines of this issue and remove the access barriers or we’re not going to stem the tide.

Hospitals aren’t set up for rehab. So what if we restructured rehab facilities for emergency overdose services and observation? They have the expertise and resources to really help people suffering with addiction.

It might not be the right solution but it’s a starting point. We need to challenge our approach to the problem because what we’re doing now is clearly not working.

IDNs are the Now

A colleague has been asking me about the biggest challenge for integrated delivery systems now.

He was specifically asking about Kaiser and in the interest of full disclosure, they are not one of my clients.

Kaiser is a staff model HMO which gives the company a unique competitive advantage. Other integrated delivery networks are trying to replicate the model but without the structural efficiencies most won’t achieve the same economics.

The economics are a big part of the challenge for all integrated delivery networks including Kaiser. Healthcare in the US is simply too expensive.

I found my notebook from a design thinking course that I took at Stanford. One of the cases discussed was the high infant mortality rate in India. Most hospitals in India have incubators but they’re rarely used. Why? Most babies at least then where born in the community not hospitals. The incubators didn’t meet the need.

To some degree, integrated delivery networks seem like the incubators in India. They are state of the art but they’re not meeting the needs of the community. The US needs something more accessible and affordable.

That’s why I think IDNs are the now but not necessarily the future of healthcare.