Where Can “Healthcare Leadership” Go From Here?
Expert knowledge of the past has lost its balance, unable and ill-equipped to surf the steady-breaking set of big and heavy waves crushing conventional understanding.
Surfing to Success
In any industry there's a boundary of performance for which the operational state of the art is attained. This is a place of maximum convergence. It’s a place of hyper-commoditization, where expertise of the past has lost its balance, unable and ill-equipped to surf the steady-breaking set of big and heavy waves crushing conventional understanding. This is also a place where leading with a battle cry of “transformation” has all the inspirational and persuasive energy of an emoji.
This boundary is called the 'productivity frontier', which Michael Porter defined as the “sum of all existing best practices at any given time” -- we've reached this point with healthcare in the United States.
As a general rule, you can’t “fix” an embedded economic system, whether that economic system orbits around CVS Health, Intel, Moderna, Nike, Starbucks, UnitedHealthcare or the U.S. Congress. And we’re not going to crack the mad riddle of healthcare by mounting long attacks on each other, or by chasing/buying operational “efficiency” in the hope it conjures shareholder value. That delivers what we have now: structural stalemate, static drift, innovation stagnation, systemic performance declines, a celebration of short-term wins, a stunningly bad ROI from a $5 trillion investment.
The durability of firms like McKinsey points to festering weakness in business’s upper reaches, writes Peter O'Toole in Why does McKinsey still get hired? for The Guardian on Friday. “McKinsey shields weak leaders from accountability. After a preventable shop floor accident or before big layoffs – known as “efficiency consulting” – a McKinsey report can shield a company from an angry plaintiff or its soon-to-be former workers. Its presence offers the plausible deniability that layoffs were just a business decision, one recommended by a respected, external party.”
Today’s leaders either don’t have the skills to meet the accelerating world around them, can’t effect change within their own organizations, or are too afraid to make a mistake and fail, says O’Toole. As we close out 2024, career collapse has become the operative ethic, confirming his insight and the legacy risk leaders face when they confuse operations for strategy. A short list of the“abruptly quitting” and ousted:
In the past month: German Chancellor Olaf Scholz; Stellantis CEO Carlos Tavares; Intel Corporation CEO Pat Gelsinger; VillageMD CEO Tim Barry; Kohl's CEO Tom Kingsbury; Northvolt CEO Peter Carlsson; France’s Prime Minister Michel Barnier; South Korea's ruling party leader Han Dong-hoon; Dave & Buster’s CEO Chris Morris.
In the past quarter: Volkswagen CEO Pablo Di Si, Nike CEO John Donahue; CVS Health CEO Karen Lynch; Aetna CEO Brian Kane; Starbucks CEO Laxman Narasimhan; President Joe Biden; Democratic presidential candidate Kamala Harris; the entire board of directors for 23andMe.
In the past year: Nestlé CEO Mark Schneider; Boeing CEO Dave Calhoun; Campari Group CEO Matteo Fantacchiotti; Hertz CEO Stephen Scherr; Wipro CEO Thierry Delaporte.
Cost-cutting is devouring industries, leaders’ legacies and lives. Groupthink is eating new think for breakfast. Our strategies and agendas have become aggressively anti-common sense.
Leaders are risking more to avoid losses than to achieve gains.
Mark Bertolini Is Misreading the Room
Discovering the economic truth of a market entails converting an open system into a closed one, and then making recommendations born from that false sense of separation.
This is the “division of labor” as path to productivity, introduced by Adam Smith in the first sentence of the Wealth of Nations in 1776. But as a frame to guide modern competitive strategy – the stuff of vision, ideas and discussion guides swarming at the highest altitudes -- mathematical gymnastics around a single market is not only intellectually fraught, it’s a general form of analytical thinking in terms of pieces and parts, a fragmentary worldview, that’s root cause of the multi-dimensional dysfunctionality that’s been sustaining a “massive crisis” in healthcare for decades.
Markets fare better when they link capacity-building.
Which is what Mark Bertolini, CEO of Oscar Health, seems to miss, or misread, when he argues that small and middle-market companies have “no leverage” at negotiating with large insurance providers.
In an appearance last week on CNBC, Bertolini pitched a provocative message, stating, "I would eliminate employer-sponsored insurance" as part of a solution to the current discontent surrounding health insurance. "The ability of your employer to negotiate against the large insurance company...is very stinted now. It's stunted." This lack of leverage, he says, is hampering many organizations from securing the best possible deals for their employees. "The companies have no leverage now."
Keep selling yourself that story.
Employer-sponsored health insurance is the largest source of health coverage for non-elderly U.S. residents. Overall, about 165 million people had employment-sponsored health insurance in 2023. Health benefits are a perk that attracts and retains employees (more than 20 percent of Americans say they would change jobs to get coverage for Ozempic and Wegovy).
Here’s a roadmap to invent the leverage Bertolini believes is not there:
Position ‘producing cardiometabolic health’ as a new economy business concept.
Align Oscar Health (Amazon) + Whole Foods (Amazon) + Eli Lilly + DexCom + Gallaghar into a new economic system (“ecosystem”) organized specifically to serve the roughly three million employees-as-customers within it. Have the ecosystem rotate around Amazon itself, almost like a satellite in orbit. Have Amazon procurement put out a Creative Brief to the collapsing marketing services industry (Omnicom + IPG, WPP or Publicis) to invent a new advertising network for a “basket” of products and services for the above.
As part of a health benefit innovation, eliminate all forms of “prior authorization” and “utilization management” — let the healthcare professionals practice the art of medicine without friction. Put out an RFP to Epic and Oracle for a specialized EMR in cardiometabolic health.
Invest and progressively integrate a flow of growth and value drivers (“value” in healthcare is a flow, not an end state) to keep the ecosystem alive and flourishing. (To understand the idea of ‘progressive integration’ more, see: Ro teams up with Eli Lilly to offer single-dose vials of weight loss drug Zepbound on LillyDirect)
Package and promote the ecosystem as a new B2B brand, a foundational model (similar to Amazon Nova) for the next healthcare, one that positions ‘market maximization’ ahead of profit maximization on the roadmap.
To solve the ‘cold network problem’, feed the foundational model with data supplied by the three million employees-as-customers of the system they helped create; give them a cut of future revenue from products developed by their data. Make the data accessible and interoperable with a new HIE.
After a couple of years to prove itself out, convert the brand into a public benefit corporation. Then list it not on NASDAQ but on the Long-Term Stock Exchange (LTSE), which promotes itself as “the business ecosystem helping visionary companies at all stages drive long-term profit with purpose.”
After the ecosystem takes root and establishes itself as a standard, replace GDP with the ‘production of cardiometabolic health’ as a measure of national wellbeing and performance of the Untied States.
Healthcare is a ‘nested market’ — its main feature is the density of structural linkages and interactions that cut across domains. By not understanding how to create with complexity, the collective We lack the vision and understanding of how to develop policy that enables 'market interoperability' – an innovation agenda to align value, to cohere the ‘commercial determinants of health’ in a way that better economic systems are born.
Adjusting Our Mindset
“We have collectively perhaps underestimated the magnitude of this emerging axis and the strategic impact it’s having on us all,” warned Andrew Shearer, Australia’s chief of national intelligence, in remarks at the Halifax International Security Forum in Canada last month. “We fell into the trap of looking at each component in isolation, and not seeing the linkages between them and the deep connectivity between one theater and another…We haven’t adjusted our mindset.”
Shearer was referring to Russia, China, Iran and North Korea interoperating as a new system, but the same logic applies to any setting. Strategic fit to a world that’s spinning counter-clockwise is going to need a new kind of sense-making to describe and rational magic to enact, a different framework to deal with the gravity-altering agenda — the “holy shit moments” — now in front of every brand, business, industry and government in the world.
“We know the health system does not work as well as it should, and we understand people’s frustrations with it,” wrote Andrew Witty in a guest opinion piece for the New York Times on Friday (UnitedHealth Group C.E.O.: The Health Care System Is Flawed. Let’s Fix It). “No one would design a system like the one we have. And no one did. It’s a patchwork built over decades. Our mission is to help make it work better. We are willing to partner with anyone, as we always have — health care providers, employers, patients, pharmaceutical companies, governments and others — to find ways to deliver high-quality care and lower costs.”
Which we’ve been saying for decades.
"Words, like cavalry horses answering the bugle, group themselves automatically into the familiar dreary pattern. This invasion of one's mind by ready-made phrases can only be prevented if one is constantly on guard against them, and every such phrase anaesthetizes a portion of one's brain."
George Orwell, "Politics and the English Language," 1946
Healthcare is at war with cliché, not just clichés of the pen, but clichés of the mind. The era of linear solutioning is over. Ditto for the quick fix of the thing that’s not fixable.
“Cost” isn’t the problem. The problem is the production of affordable health. And the leverage to make that Big Strategic Rotation happen is in the hands of the employers, not the vendors.
The weight is out there, just waiting to be picked up and given better direction.
The thing needed across the board is a different brand of strategic communications able to articulate and propagate a new narrative, a story told with new concepts to help people navigate the kinetics of collapse in a way that defines progress in terms of economic innovation, not technological. Because simply hanging loose at the crap tables and hoping for the best is the low-probability path to strategic (and professional) success.
In related breaking news last week, Johnson & Johnson is suing Cigna, accusing them of working with a drug-benefit middleman to drain J&J financial-assistance funds earmarked for patients taking some of its pricier drugs.
Let the Modern Realignment begin.
/ jgs
John G. Singer is Executive Director of Blue Spoon, the global leader in positioning strategy at a system level. To engage with a mind stretch: john@bluespoonconsulting.com