Healthcare Executives and the Mistakes They Make Regarding Decision-Making and Leadership

In April, Linda Henman and Deborah Perkins published a book entitled Healthy Decisions: Critical Thinking Skills for Healthcare Executives, which challenges the status quo, arguing that the success of healthcare organizations hinges not on abstract concepts like "culture" but on the concrete decisions executives make. Drawing from real-world experience with large systems like Mercy and Banner Health, specialty hospitals like Ranken Jordan Pediatric Bridge Hospital, insurance companies like Blue Cross Blue Shield, and nonprofit elder care systems, the authors provide a practical guide to help healthcare executives make the tough decisions they can’t afford to get wrong.

When I spoke with Linda this month, I asked her: "What are the biggest mistakes healthcare executives make regarding decision-making and leadership?" Here is her complete answer:

The single most catastrophic—and astonishingly common—mistake healthcare executives make is undervaluing their workforce. Not on paper, of course. On paper, they wax poetic about people being their greatest asset. In practice, they slash staffing, ignore burnout, and treat frontline engagement as optional.

Let’s look at the wreckage.

Hahnemann University Hospital collapsed under its own weight in 2019. Leaders gutted staffing and fiddled with spreadsheets while credibility—and then patients—walked out the door. This resulted in a full shutdown in a city that needed that hospital.

Ascension Health, one of the largest systems in the country, thought it could cut its way to profitability. That meant layoffs and razor-thin staffing, even in clinical settings. They didn’t get the results they intended. Instead, the decision caused lawsuits, strikes, and a shattered reputation.

Providence faced strikes and the massive exit of nurses because executives didn’t listen. Executives suspected burnout, but they ignored the warnings for too long. Travel nurse overreliance, plummeting morale, and public embarrassment resulted.

Even public systems like NYC Health + Hospitals remain hamstrung by hiring delays and morale freefall. If you can’t staff behavioral health in New York City, you don’t have a workforce problem; you have a leadership problem.

And then there’s MetroHealth, where the headlines address lawsuits, not life-saving care. When the executive team implodes, culture does too.

Some of these organizations have changed leadership and slowly started the recovery process, but others never will. In turbulent times, no one will recover from hiring mistakes, inaccurate strategic focus, or underdeveloped succession planning.

Executives don’t create culture at a board retreat. Culture forms when executives use advanced critical thinking skills to solve problems they’ve never faced before. They must first start by seeing their workforce not as overhead but as a leverage point. Underinvest there, and you’re not saving money—you’re setting a match to your margins.

Start with the best people delivering the best care. Ignore that, and you’ll join the list above—not as a cautionary tale, but as a case study in how to lose an empire by winning a spreadsheet.

What do you think of Linda's perspective? Do you agree with her regarding the mistakes made by these health providers? Have you worked in organizations that have made these mistakes?

The Need for "Safety Culture" in Radiation Oncology

I recently had the opportunity to speak with both Lawrence Marks and Lukasz Mazur, who are the authors of a very important new book titled Engineering Patient Safety in Radiation Oncology: University of North Carolina’s Pursuit for High Reliability and Value Creation. During our conversation, I asked them: "Why did you write this book? What was unique about your experiences?" Here are their complete separate responses:

Lawrence Marks: I studied engineering before medical school. I have always been struck by the differences between engineering and medicine; particularly in the way that the workplace in organized, how work in done, and how each address safety concerns. In the engineering setting, it is often acknowledged that people’s actions, and hence safety, are impacted by things such as leadership, workplace/workflow design, and the organization’s safety culture. This lesson has not been widely learned within medicine. As medicine in general, and radiation oncology in particular, have become more complex, it is becoming increasingly important to consider these “upstream” factors.

For the most part, radiation therapy is very safe. Nevertheless, there are recognized risks. Further, the interactive complexity of modern practice makes it challenging predict where problems will occur. Presently, much of the emphasis on making radiation therapy safer is in the realm of technical solutions: medical physics, computer software, etc. These initiatives are necessary and will certainly help to address the safety issues. This approach alone, however, will not bring us to the level of reliability we strive to achieve.

We can and should do better, and the way to do that is to apply lessons from engineering/industry. We must consider the leadership/administrative component, the workplace and workflow component, as well as the people component, to minimize errors. We must use Lean improvement principles to motivate and enable all colleagues to be actively involved in assessing and improving their own systems -- This will increase safety mindfulness and help to create a “safety culture.” It is only through this multipronged approach that we can become the highly reliable organization that our patients deserve. And this is the focus of this book. We provide an honest and heart-felt summary of our journey in applying this approach in our radiation oncology clinic. We hope that readers will become motivated to apply similar strategies in their own clinics. While we did this work in the context of radiation oncology, the lessons described are applicable in any area of medicine.

Lukasz Mazur: Most quality and safety improvement programs in healthcare delivery industry are currently structured to: transform leaders into effective change agents, design efficient and ‘waste-free’ workplaces, and develop people into creative problem solvers. This is perhaps one of the key reasons why continuous quality improvement (CQI) programs based on Lean or Six-Sigma philosophies become so popular and are now being implemented throughout the healthcare delivery landscape. Despite many positive reports in the academic literature, books, and press, however, it is still difficult to determine whether the transformation of colleagues to innovative problem solvers has indeed occurred in the healthcare organizations utilizing CQI programs. One of the reasons for this shortcoming is lack of valid and detailed implementation – the basis for transformation to safety mindfulness. 

This book’s purpose is to fill this shortcoming and provide ample examples of our hard work at transforming our leaders, enhancing our workplaces, and supporting people in their journey towards safety mindfulness. We have an important message to send—that the patient safety and quality concerns within radiation therapy (RT) field are not merely a technical issue, but rather a more global cultural issue grounded in attitude and behaviors. We emphasize a need for leaders to create and nurture a culture that promotes a transformation from quick fixing, conforming, and expediting behaviors to enhancing and initiating behaviors. Leaders must acknowledge that they are responsible for modeling and developing these desired improvement behaviors in colleagues by developing infrastructures that promote these values and, as needed, use their authority to enforce these values as well. 

The broad application of the principles described in our book to healthcare can make healthcare delivery more efficient and safer. At the end, this can benefit all of us – providers, patients, and families. 

What are your thoughts on the application of lessons learned from Lean initiatives in engineering and industry to radiation oncology clinics?

Lean is the Medicine that Healthcare Systems Require

Last month, an important book titled The Lean Prescription: Powerful Medicine for Our Ailing Healthcare System, authored by Patricia Gabow and Philip Goodman, was published, and it details how Denver Health became the first healthcare organization to be awarded the Shingo Bronze Medallion Prize for Operational Excellence. 

I had the chance to speak with Patricia about her book, and one of the main questions I asked was: "Why should healthcare organizations choose Lean as a methodology to transform and improve their culture and results?" Here is her complete response: 

Let me go back one step from this question and first answer an even more basic question, “Why must healthcare organizations transform at all?” Pondering this question is what led me to Lean. There is a national-level answer and an organizational-level answer to this question. I contend that the USA doesn’t have the best healthcare system in the world. Fortunately, both the state and federal governments are taking a wide array of steps to begin to address the issues of coverage, cost, quality and care co-ordination. But the fruits of the policy changes will only occur if individual healthcare systems are transformed. 

My 40 years in healthcare, first as a practicing physician and then as an administrator, convinced me we needed transformation at an organization level. Standing in any clinic or any hospital unit tells you we are basically doing things like we did when I was an intern more than 40 years ago -- we have new drugs and new technologies, but most of our processes are the same. We need transformation in all our healthcare institutions and that will require clear (and new) methods to achieve it. We must identify, prescribe, and administer some powerful medicine to the system. 

I think Lean is that medicine. The power of Lean lies in the fact that it is both a philosophy and a tool set. The Lean philosophy teaches us that transformation is built on the two pillars of Respect for People and Continuous Improvement. These should always have been the pillars of healthcare. Even if healthcare had to wait for an automobile manufacturer to teach us this, we can embrace it. 

In my decades in healthcare, I, as others in healthcare have tried many approaches to reducing cost and increasing quality. Lean was the most powerful approach I had ever seen. There are few, if any other, approaches that hit the target on quality, cost and employee empowerment. 

For example, other approaches that reduce costs at best can hope to keep quality the same and keep employees neutral about both the process and outcomes of the cost reductions. Because Lean focuses on getting rid of waste that shouldn’t have been there at all, its focus can’t be argued about -- who wants to defend waste? Because Lean is built on respect for people, the Lean tools that let us see and eliminate waste can be used by every employee. You don’t need a PhD to use an elegantly simple tool like a spaghetti diagram. Every employee becomes an engaged problem solver. We gain an army of problem solvers -- it is no longer just up to executives to make our systems better. 

While these are the intellectual reasons why Lean is the methodology for healthcare organizational transformation, the real “proof is in the pudding.” At Denver Health we realized over $192 million of hard financial benefit, achieved outstanding quality such as having the lowest observed to expected mortality of all academic health system members of the University Healthsystem Consortium and having 83% of our employees say they understood how Lean helped us maintain our mission. Lean is the method that hits the bull’s eye on cost reduction, quality of care, and employee engagement. How could you not use such an approach? 

What do you think of Patricia's thoughts on the power of Lean to transform health systems? I'd particularity like to see comments from those in the healthcare sector who are currently part of a Lean initiative.

The Denver Health & Hospital Authority -- The Results Are In

Over on the Hospitals and Health Networks site, I read this great article about the Denver Health organization's incredible benefits resulting from its six-year Lean journey. Patricia A. Gabow, CEO of the Denver Health and Hospital Authority, believes the $135 million financial benefit since 2006 is a result of the adoption of Lean management techniques. In addition, in 2011, the hospital evidently saw "$46 million in financial benefits from Lean projects."

Other than the amazing benefits discussed in the article, I found this detail quite interesting: "There are 16 value streams and an organized method for picking improvement projects. Some are short term, others extend over multiple years, such as revenue cycle, the OR and community health. Each value stream has an executive sponsor and a steering committee that meets monthly. Gabow reviews metrics for all of the value streams and rapid-improvement events every month."

What do readers working in the healthcare industry think of this format for value stream maps? Are your maps used in the same fashion?

After winning the coveted Shingo Prize for Operational Excellence (the first healthcare organization to achieve this feat) , Denver Health now offers its own Lean Academy. Check out the video presented at the Shingo Award ceremony:

Lean "Mentor" Hospitals

Although I always like reading about the successes gained from a lean initiative, I don't mind hearing about them as well! Listen to this news report from Dave Padilla from KCBS in California.

The proliferation of lean initiatives in healthcare during the past five years has been dramatic because of rising costs and the legacy of redundant and wasteful processes. It appears the Contra Costa Regional Medical Center in Martinez, CA revolutionized its operations and the quality of patient care after it adopted its version of a lean management design. The important strides -- most notably, the significant reduction of ventilator-associated pneumonia instances -- has resulted in the facility being named a "mentor hospital" by the Institute for Healthcare Improvement (IHI). Much praise should be given to CEO Anna Roth and her entire staff for the determined effort and measurable results.

Where do you see the potential power of lean making crucial improvements in hospitals and medical facilities? What are the biggest hurdles to not only the successful implementation of the tools but the development of the proper culture?

Toyota's New Line of Products... Hospitals?

The adoption of lean initiatives within the healthcare industry has gained some notoriety in the mainstream press, and I'm sure most lean advocates can't rejoice enough. Many would agree that the ultimate victims of the built-in process variation and waste within the systems of the healthcare industry, from hospitals to suppliers, are the consumers. And, unlike nice-to-have products such as cars and computers, most customers don't have such luxuries as time and choice when "shopping" for healthcare services and products.

A article recently appeared here about the improvements the University of Michigan Health System have achieved after adopting a Toyota-styled approach to administrative and operating process. I think the most important statement about the future of this lean initiative can be summed up in this one quote from Jack Weiner, CEO of St. Joseph Mercy: “We do not view lean as a program. They are cultural transformations because you change how you do the work.” I think it's refreshing that, other than talking about the improvements gained early in the adoption, one of the pivotal leaders is already acknowledging that lean is as much about thinking as it is doing.

What do you think will be the biggest challenges to the adoption of lean in the healthcare industry? Do you think the initial resistance could come from physicians and practitioners who could argue that a lean transformation will ultimately stall because patients will never be "products" and believe that the drive for ultimate efficiency will overlook the nuances and hinder the customized needs of the patients?

Hospitals Must Learn to Focus on Results

While growing numbers of hospitals are learning how to apply lean concepts to their operations, they have a lot to learn about how to measure performance.

I come to that conclusion after reading an article from Hospitals and Health Networks Digital Magazine, which said that hospitals are hiring more doctors.

The authors of the article believe, and I agree, that this is a good trend. It is driven by several factors, including the fact that many young physicians entering the profession are wary of the hassles involved in running a private practice today and prefer the stability of a hospital job.

However, the article notes that contracts between hospitals and doctors typically include productivity targets and incentives that represent a greater portion of the physician’s compensation than in the past.

Data available from previous employment efforts are enabling hospitals and physicians to design "smarter" contracts. Examples of smarter incentives include both group and individual incentives, better calibrated productivity measurement (whether productivity is measured in patient volume, RVUs, gross charges, collections, etc.) and other measures designed to tightly align the hospital employer's goals with the physician's, such as quality outcomes. Hospitals that directly employ physicians have tighter control over productivity and tracking.

I am concerned that the emphasis will be more on quantity – the aforementioned patient volume, gross charges, etc. – than on quality outcomes.

We publish several books by Mark Graham Brown, who is an expert on metrics and incentives. Several years ago, Mark taught me the basic rule of incentives: They should be based on results, not activity.

Quality outcomes (meaning patients with improved health) are results. Patient volume is activity. If you pay your doctors to see more patients, they will see more patients. But what matters is whether they are improving the health of their patients.

I hope hospitals come to understand that and revise their metrics and incentives accordingly.