Megan McArdle‘s informative Daily Beast piece about the Cleveland Clinic, widely recognized as a model health care provider in the United States, questions whether the cultural forces central to its success can be more broadly emulated in other medical settings. Because fundamentally transforming how any institution’s workers interact with each other is an inherently complex and uncertain endeavor, her skepticism is legitimate and no doubt widely shared. The Affordable Care Act includes a variety of provisions that are intended to induce health care providers to function more like Cleveland Clinics, but it very much remains an open question whether they will have that desired effect.
Still, history demonstrates that it is entirely possible for productivity-enhancing organizational practices to spread from isolated cases to entire industries. Back in the 1980s, the late W. Edwards Deming’s ideas about management, derived from his decades of experience working closely with Japanese manufacturers after World War II, turned him into an octogenarian sensation when a wide array of Fortune 500 companies sought his insights and strived to implement them. Not coincidentally, his beliefs were entirely consistent with the Cleveland Clinic’s preoccupation with ongoing improvement and deep internal collaboration.
Central to inducing change during Deming’s era was demonstrating that better outcomes arise from adherence to managerial practices that radically differ from prevailing systems. Once U.S. executives belatedly came to recognize that Japanese manufacturers were producing much higher quality products that were rapidly eating away at their market share, they became far more open to learning how the Japanese firms organized themselves. Deming, a statistician who had helped the Japanese to develop and refine systems like so-called “quality circles,” derided the rigid top-down managerial hierarchies that had dominated in the United States since the assembly-line era—hierarchies that by and large characterize large medical institutions to this day.
Building on Deming’s Total Quality Management approaches, a parallel, closely related movement based on systems theory and self-management also took hold in the 1980s and 1990s. Labeled “high-performance work systems,” it emphasized team-based work processes for maximizing learning and improvement across an organization. Adopted in a broad swath of industries like telecommunications, autos, steel, apparel manufacturing and paper production, those innovations produced sizable productivity gains and other benefits relative to traditional work organizational systems, based on abundant empirical research. As it turned out, unfortunately, much of that progress for U.S. manufacturing was ultimately subverted by the flow of global capital to low-wage countries.
For the U.S. health care system, which faces relatively little pressure from international competition, the question is whether the Affordable Care Act’s incentives and other forces can catalyze changes in the organizational practices of medical institutions comparable to what occurred in U.S. manufacturing beginning in the early 1980s. In a Tweet, McArdle suggested that private companies can induce change by firing recalcitrant employees to an extent that isn’t practicable in health care or the public sector. But Deming’s entire orientation was aimed toward building the trust of the workforce rather than alienating employees through threats. Indeed, the manufacturing firms that most energetically adopted high-performance workplace practices were unionized. Companies that lay off large numbers of workers rarely evolve toward the kind of culture described in McArdle’s piece about the Cleveland Clinic.
Make no mistake: it will be many years, at best, before the lion’s share of major U.S. health care institutions adopt and become acculturated to organizational practices that continually promote improved outcomes for patients and cost-effectiveness. But the difficulty of achieving that transformation does not mean that it is impossible. The most important step toward getting to that point has already been taken: gaining widespread acceptance that organizational practices are intimately connected to results.