Curing health care

Our health care issues won’t be solved by yesterdays thinking

February 15, 2012
CALGARY, AB, Feb. 15, 2012/ Troy Media/ – With all the talk of healthcare recently, people can be forgiven for thinking something is being done to address issues plaguing the system.

There is some good news. The Federal governments’ new laissez-faire approach to funding, and the efforts by PEI Premier Robert Ghiz and Saskatchewan Premier Brad Wall to search for innovations in health care delivery, are both positive steps. Neither, however, will have much impact on things that matter; costs, system capacity or access.

The reason is simple enough. These and other initiatives underway in Canada, including pay-for-performance, patient-focused funding, activity-based funding, and facility and service rationalization, are all products of the same thinking that gave us the problems we are now trying to solve. Our health care issues won’t be solved by yesterdays thinking.

Little to show for current way of doing things

Unfortunately, few things are more ‘yesterday’ than current health care thinking and it has a name – command-and-control. Management guru Edwards Deming called it a “prison”. More recently, former Vice-Chairman of General Motors Bob Lutz called it, “bean counting management”, a “creeping malignancy that transformed the once all powerful, world dominating American economy from one that produced and exported to one that trades and imports. . . “
What command-and-control did to GM and the American economy, it’s doing to the Canadian healthcare system. So much activity and so little to show for it.

The Canadian Institute for Health Information reports that after a decade and millions of dollars of effort, there is ‘some evidence’ that progress is being made in reducing wait times. To translate, that means there’s plenty of evidence that no progress is being made at all. The professional management-by-numbers approach, like its paint-by-numbers counterpart, is a poor excuse for the real thing.

Take for example the bigger-is-better belief that dominates our thinking. Productivity not what it should be? Scale-up the facility, increase the production run or lot size. Input costs too high? Buy in bulk. Consolidate Human Resources into one massive centralized department. Do the same for Purchasing and Asset Management. Have a choice between several small IT systems, and one enterprise-wide behemoth? Choose the latter. Confronted with 200 independent health organizations? Merge them into a single Super-Board behemoth. Why? In theory, because of economies of scale.

In the real world, however, this is always an operational disaster. While centralizing improves coordination and control, it’s the least effective, most costly, means of doing so, producing large bureaucracies with run-away costs. Sound familiar?

Likewise, consolidating functions and bulk purchasing lowers costs sensitive to economies of scale, but it increases costs sensitive to diseconomies of scale or economies of flow. Bulk purchasing allowed Alberta Health Services to pay about half the regular unit price for H1N1 vaccine, but the additional costs in handling these large quantities, including dumping half the inventory, more than made up for it.
This same command-and-control thinking pursues increased asset utilization as a means of increasing efficiency. Its successful pursuit in Alberta has produced only inefficiency and long wait times. Why? Because increasing utilization also produces exponential declines in throughput (capacity), exacerbating both costs and wait times.

Our system is awash in that other product of management-by-numbers, performance targets and measures. These contribute to declines in performance because the targets are set independently of actual performance capability – like expecting a Cessna to fly Mach 1. No surprise then, that Alberta continually fails to meet its targets. Each new round of failure is met with both a promise that next time will be different and the ritual flailing of those responsible. This is ‘the beatings will continue until moral improves’ approach to performance improvement.
We are witnessing the organizational train wreck that comes with professional management-by-numbers thinking. But is the command-and-control model really to blame? Perhaps, as one senior Canadian healthcare executive put it to me: “We just made a lot of very bad decisions.” He is right, but this avoids the real issue; WHY did we make so many bad decisions?

Dump command-and-control

The answer is, because we bought into the bean counting view of management. We believed you could run a hospital from the 42nd floor of head office. We needed health guys, real managers running things. We got numbers guys, professional managers reading reports and writing strategies.

We can only turn things around when we dump command-and-control and put our trust back into the people we hired to do the job. That someone responsible for running a hospital can’t make a $1,000 decision without months of effort pushing 50 pages of documentation up through unknown levels of approval, is an absurdity. Alberta’s new five-year plan includes adding; “12 new treatment spaces to the emergency department at the Stollery Children’s Hospital.” It’s as if the Board of Toyota was directly involved in the planning to build 20 more Corollas than expected next year. The amount of waste and cost in this degree of micro-managing is almost incalculable.
So is its impact on innovation. Change requires moving beyond paint-by-numbers to the real thing.


Robert Gerst is a Partner of Converge Consulting Group Inc. and author of the report The Decline of Health Services in Alberta: The triumph of professional over real management, upon which this essay is based. The report, available at, was the leading news download of the Canadian Health Network in 2011 and will be presented at The International Deming Research Seminar at Fordham University in NYC this February.

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