Comprehending the health care environment is a key factor in visionary strategic planning and a primary underpinning of execution.
A health care ecosystem is the environment in which an organization resides, functions and competes every day. Ecosystems are self-regulating components within the environment that continually interact with each other, thus forcing changes or behaviors in how health care organizations function.1
In most respects, the health care ecosystem is no different from any other ecosystem, such as what a tree or other living organism encounters in order to survive and prosper. Ecosystems are both biological and nonbiological, controlled by external and internal forces.
The health ecosystem is embedded in societal changes that are occurring rapidly. Leaders who successfully guide organizations through turbulent times thoroughly understand what’s happening around them and can anticipate the future.
The health care ecosystem includes the physical environment, the regulatory state, economic forces, the effects of re-search and innovation, the state of medicine and technology, workforce dynamics, demographics, partnerships and various forms of media — all factors that can affect performance. Generally speaking, ecosystems bridge the natural, social and health care sciences and medical practice. They also include the values and beliefs of patients and families.
Health care’s ecosystem is deeply embedded in societal changes, which are occurring at a rapid pace. Medical staffs must understand and react to the evolving relationships that are occurring among physicians, payers, pharmacists, advanced practice providers, regulators and patients. With all of these factors, physicians must always place the patient first — a difficult task, considering the pressures being imposed on health care.
As a leader, your organization is looking to you to help guide it through all of these competing and interrelating issues. Your ability to do so will determine your career success.
HARDY YET BREAKABLE
As with environmental or biological ecosystems, health care ecosystems are complex, interrelated, adaptive and resilient to change, partly because of the embedded culture and powerful competing interests. On the other hand, all ecosystems are delicate and fragile, particularly when stressed. Health care tends to be nonlinear in function, dynamic in character, and unique among other industry sectors.1
The complexity of the health care ecosystem is due to a variety of contributing factors. These include the increasing complexity and diversity of the science of medicine such as the evolving importance of technology, proteomics, genetics and immunotherapy, as well as the growing impact of nontraditional medicine. Yet these contributing factors are interrelated, creating additional complexity and rendering the decision-making process more difficult, particularly for patients.
All ecosystems have common underlying characteristics or functions.2 They combine physical and biological components with the surrounding environment to form complex relationships. They have supporting components that allow the ecosystem to function, a regulatory framework that allows the ecosystem to function in an orderly way, and a cultural makeup that frames the system. Accordingly, physician leaders must be familiar with the ecosystem in which their organizations exist, to help set and direct strategic goals.
Today’s health care ecosystem is characterized by an unprecedented push for provider accountability and openness. This seems to be driven by three fundamental factors: economics, technology and zeitgeist. (The latter, a German word meaning “the spirit of the time,” is a set of contemporary ideals and beliefs that motivate members of a society.3) These factors appear to be framing the health care ecosystem in significant ways and should be addressed in any long-term strategic plan.
Health care spending and corresponding outcomes have been in the spotlight for some time now, and providers are being asked to demonstrate the value of their services. Advances in information technology as well as an increasing amount of health care transaction data being captured electronically have made data analysis and dissemination much easier. Societal expectations are tilting toward a greater amount of transparency and accountability, and the ability to access and share information almost instantaneously is transforming how patients and providers are interrelating to each other.
All of these are changing the role of the provider from one that dictated care to patients and families to one that educates the patient and family and allows the patient to make an informed choice of care. In some circles, the concept is known as “patient-centered care.”
NEW MARKET FORCES
In most industries, transformation occurs through “disruptive innovation,” a phenomenon creating new markets and new values while displacing established organizations, products and services. Health care hasn’t fully been affected by this force yet,4 but innovators constantly try to make health care more accessible and affordable.
In most industries, there are three specific enablers of disruptive innovation:
- Simplifying the technology.
- Innovating the business model.
- Altering the industry’s value network.
One example of simplifying the technology can be seen in how the software industry went from the complex digital operating system, or DOS, that was poorly understood by consumers to Microsoft’s simpler Windows operating system.
Current regulations and reimbursement systems hinder the development of improved business models, but there are efforts to challenge the status quo, including concierge medicine, alternative medicine and telemedicine.
How do physician leaders prepare themselves to under-stand the complexities of the health care ecosystem? Clearly, they must have an understanding of system thinking — a management discipline that examines the interactions of components within a defined system. Adopting this approach to strategic planning is a game changer, as solutions to problems can be found by knowing how the organization works.
In thinking about your ecosystem, it’s important to ask some fundamental questions.5
What is the purpose of your organization in the market-place? Does it exist as a community provider, a tertiary center or an academic medical center? Is it for-profit or not-for-profit? These designations will affect how your organization inter-acts within the overall health care ecosystem. Next, consider your organization’s interdependencies and the tradeoffs your organization must make to function seamlessly within the ecosystem. Also, your organization will need to define its boundaries — the context within which it exists and the areas it can meaningfully influence.
Further, organizations need to consider how to extend their influence across the value chain as they implement subsystems within the organization. For example, implementing a new software system in one area of the organization might be beneficial to another area, so senior leaders shouldn’t al-low organizational silos to impede the expansion of the value chain. They also must recognize a positive action in one area of an institution might have an opposite effect elsewhere.
TODAY AND TOMORROW
So how should physician leaders think about the present and future ecosystem? What is the contextual framework that might guide a leader going forward?6
The first task is to develop an ability to conceptualize the future by asking the right questions. What’s the next product or service my organization should offer? How is health care, as an industry, going to look in the next 10 or 20 years? What technology should my organization invest in over the next five years?
Answering these questions requires a physician leader to acquire a large amount of disconnected information from a variety of sources. Attending industry meetings is a good start, in addition to developing a strong and vibrant network of colleagues and thought leaders and regularly interacting with them.
Physician leaders always should think about disruptive technologies coming to the market that could affect health care or their organization. Twenty years ago, who would have guessed the significant effect that cloud computing or social media have on health care today?
Knowledge management systems allow large organizations to stay abreast of ecosystem changes. They can link specific process steps or domains that enable an organization to systematically manage the knowledge its workforce must acquire, create and use to innovate and compete.7
In 1990, Peter Senge wrote a best-selling book, The Fifth Discipline, in which he described the attributes of a learning organization. It described the realization that the only sustainable source of competitive advantage for an organization is its ability to learn faster than competitors. This is critical in today’s health care environment.
Five developing and enabling attributes began to converge almost 20 years ago that, if mastered, would propel an organization to higher levels of performance.8 They are:
Systems thinking: Seeing the big picture and how work processes are linked.
Personal mastery: Making individual commitment to lifelong learning.
Mental models: Managing preconceived ideas that could hinder new insights and ideas.
Shared visions: Building visions that will survive good times and bad times.
Team learning: Organizations cannot learn and improve if team members cannot learn and improve.
One could argue that these attributes fall under one com-mon strategic initiative: the ability to innovate for the future.
GAINING AN EDGE
What steps should you take to understand your ecosystem better? Some suggestions:
- Be a member of influential organizations that help shape health care, such as the Institute for Healthcare Improvement, and specialty groups, such as the American Association for Physician Leadership®.
- Attend national conferences. Ensure that when you negotiate your employment contract there is adequate time and money set aside for these activities.
- Spend time reading articles and books — and not just about the health care industry. Seek those written by influential CEOs and other leaders.
- Engage your team members. They can be significant sources of information because they also attend national and regional meetings in which knowledge is shared and strategic direction is discussed.
- Keep abreast of technological changes. Spending quality time with your chief information officer will help you understand and appreciate what’s happening.
- Regulations can block innovation. Keep your corporate attorney up to speed on the changing landscape, and maintain relationships with local and regional regulatory bodies that can make or break your plans.
- Ask your research department to conduct environmental assessments. EAs reveal emerging business trends within demographic, regulatory, business, stakeholder, technology and human resource environments.
- Participate often in local business groups to develop a network of community leaders into which you can tap. The information you gain will allow you to assess the community pulse and meet its needs.
Eugene Fibuch, MD, CPE, CHCQM, FACPE, FABQAURP, is professor emeritus at the School of Medicine and co-director of the physician leadership program at the Henry W. Bloch School of Management at the University of Missouri in Kansas City.
Arif Ahmed, BDS, PhD, MSPH, is an associate professor of health administration in the Henry W. Bloch School of Management and co-director of the physician leadership program at the University of Missouri in Kansas City.
- Berkes FJ, Folke C. Navigating social-ecological systems: building resilience for complexity and change. 2003. Cambridge University Press, Cambridge UK.
- Whatley S. Health care Ecosystem: Wild and Messy. July 21, 2014. www.shawnwhatley.com/health care-ecosystem/.
- Herzlinger R, Millenson M. Note on accountability in the U.S. health care system. 2008. HBS Pub 9, pp.308-311.
- Wiltz C. 5 principles of systems thinking for a changing health care ecosystem. 2013. Medical Device Assembly, Nov. 13.
- Fibuch EE and Van Way C. Knowledge Management Systems. 2011. PEJ, Sept/Oct, Vol. 37; pp. 34-39.
- Senge PM. The Fifth Discipline: The Art and Practice of the Learning Organization (1990). Currency and Doubleday Publishers. New York.