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Hedgehogs, healthcare and Haven: When business leaders miss the mark

We care a lot about the topic of leadership in healthcare, as we all should. Let’s look at the news from Haven, the new healthcare organization formed as a joint effort by Amazon, Berkshire Hathaway and JPMorgan Chase. The founders’ intention is to transform the industry. A couple of months before Atul Gawande was appointed its CEO — with great fanfare, as he is a very well-known name in healthcare— Joe wrote about Haven. He wrote passionately because he wanted the Haven founders to get the model and leadership right.

Unfortunately, when Gawande was hired as CEO, we (Joe and Ryan) suspected it would not work out. As it turns out, it hasn’t. Haven announced last week that Gawande was stepping down to focus on Covid-19 efforts and will move into the role of executive chairman.

Gawande is an extraordinary and accomplished surgeon, writer and professor. And he’s Exhibit A in why healthcare organizations need to re-think their leadership structures entirely. Here’s a snippet from the article, written before he was hired:

Physicians aren’t trained to manage people or complex organizations and should only rarely be business leaders. I read a story in an urban newspaper this year about how the then-CEO of a major medical center took a hardline approach after nurses staged a one-day walkout by locking the nurses out of their jobs for four days. The physician-CEO’s tactic damaged the system’s relationship and trust with nurses. The parent company then promoted him to chief physician executive of the larger health network where he’ll oversee a strategy aimed at improving the patient experience.

The new healthcare initiatives need to avoid making promotions like this! The former CEO’s medical background doesn’t list experience identifying and solving workforce problems and complex organizational issues. As a longtime life sciences business leader, I can’t foresee how this skilled physician will improve care delivery for the nearly billion-dollar enterprise.

We’re not suggesting that there doesn’t exist the rare physician who can offer exceptionally powerful business leadership. For instance, an MD-MBA would have the training and experience for the role. Or take an MD who has years and years of experience moving up the ranks on the business side of healthcare. Or take a physician-innovatorit’s well known that leading a new, innovative company from scratch requires different skills than being a Level-5-type leader who performs well at larger companies. (Level 5 leader is a concept coined by author and leadership consultant Jim Collins.)

We would argue that with its massive founding organizations—some of the largest in the world—Haven is more a “large, complex organization” that requires big business leadership than a small, new venture that can pass muster with an innovator mindset. Like it or not, healthcare organizations and the issues surrounding the healthcare challenge are complex. It’s a trillion-dollar challenge. This means big-idea, high-growth organizations need seasoned, skilled leaders—people who understand organizational management, behavior and problem solving. Managing people, leading people, negotiating complicated agreements, setting prices in an opaque industry, pattern recognition vis-a-vis achieving results, innovating within old-line industries, establishing intrapreneurial divisions and communicating with manifold stakeholders require skill sets that differ significantly from the skills Gawande possesses, considering his background.

Gawande has deep intelligence, great insights, strong character, terrific work ethic, passion, appreciation for the ins-and-outs of healthcare, and a healthy dose of charisma. Yet, how could the enormously successful founding companies behind Haven not know that hiring decisions for healthcare CEOs need to be based on the CEO’s track record innovating, growing and leading great organizations through crisis and growth, not on the CEO’s raw smarts, terrific insights, sense of urgency or pedigree?

The reality is that Haven has work to do before it can hire and sustain a great CEO. This is because Haven has seemingly not yet established the right priorities upon and through which a leader can be identified and selected to maximize the chance of success. The Haven founders’ driving priorities for their organization are stated to be accessibility, simplicity, affordability, and technology. Whoa, Nellie! That’s too many priorities. Some might say those priorities miss the mark. Regardless, here’s what we say: Haven’s driving priority should be improving the patient experience.

If the founding organizations made improving patient experience the driving priority, then we believe good things, organizationally, would follow. With the patient experience as a driving priority (the “hedgehog,” to use another Jim Collins term), system design would be improved, costs would be streamlined, hiring would be simplified, organizational quality improved, negotiating contracts would have an organizing principle, and,  importantly, key patient satisfaction scores would be higher.

The list goes on, but this article will not. Suffice it to say, the new Haven CEO needs to be obsessed with patient experience and organized around that. Please Messrs. Bezos, Buffett and Dimon, make that happen.

Editor’s Note: Joe Mandato holds common shares in JPMorgan Chase, which is mentioned in this article.

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