CHAPTER 1

ORGANIZING FOR SUSTAINABLE HEALTHCARE:

THE EMERGING GLOBAL CHALLENGE

Susan Albers Mohrman, Ph.D.Senior Research Scientist

Center for Effective OrganizationsUniversity of Southern California

3415 S. Figueroa St., #200Los Angeles, CA 90089

1-213-740-9814smorhman@marshall.usc.edu

Abraham B. (Rami) Shani, Ph.D.Orfalea College of Business

California Polytechnic State University, San Luis Obispo, CA, USA, and Politecnico di Milano, Milan, Italy

+1-805-756-1756ashani@calpoly.edu

Arienne McCrackenProgram Manager and Research Associate

Center for Effective OrganizationsUniversity of Southern California

3415 S. Figueroa St., #200Los Angeles, CA 90089

1-213-740-9814amccracken@marshall.usc.edu

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ABSTRACT

Purpose

This chapter frames the topic of organizing for sustainable healthcare in terms of the

environmental trends that have rendered current healthcare approaches unsustainable, the

embeddedness of healthcare in society’s triple bottom line, and the need to build adaptive

capability within the complex healthcare eco-system.

Design/Methodology/Approach

We synthesize documented trends and empirical findings regarding the viability of current

approaches to healthcare, and provide a theoretically framed treatment of the adaptation process

in the complex healthcare system that can lead to the emergence of sustainable approaches.

Findings

There is a misfit between current approaches to delivering healthcare and the requirements and

trends in contemporary society. Fundamental transformation is required that entails a

broadening of purpose, a future orientation, and a rethinking of how healthcare adds value and

how it is embedded in society.

Originality/Value

By reconceptualizing healthcare reform as intricately related to societal sustainability and the

triple bottom line, we open the possibility of transcending a narrow focus on reengineering to

create more efficient organizations and work processes that consume fewer resources and deliver

greater value. We invite healthcare practitioners and scholars to rethink all the connections in

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the healthcare eco-system, and the need to build in self-organizing capabilities and adaptive

capacity. The cases in this book provide knowledge from systems engaged in fundamental

transformation, analyzed through the lenses of theoretical frameworks that help us better

understand essential dynamics involved in creating sustainable healthcare systems.

Keywords:  Sustainability, sustainable healthcare, complex systems, adaptation, triple bottom line, embeddedness, emergence, learning

Paper Category:  Theory Development

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Healthcare as it is organized today is not sustainable. Healthcare systems in the developed world

are encountering increased demand for high quality healthcare even as they face the limits of the

resources that they can command from society. Developing nations are challenged to secure a

flow of resources to make even basic healthcare available to rapidly growing populations who

have increased expectations for services and quality of life. Healthcare managers, professionals,

and academics worldwide are debating how to redesign healthcare’s current organizational

configurations and delivery paradigms to deliver more with less, amidst profound changes in the

populations that need to be served, and changing healthcare priorities. The healthcare challenges

generated by demographic, economic, and ecological trends are a microcosm of the overall

sustainability challenges being faced by mankind, as the requirements of our burgeoning and

highly interconnected global economy approach the “carrying capacity” of the earth on which we

live.

This second volume of the Emerald Press series Organizing for Sustainable Effectiveness

examines the topic of Organizing for Sustainable Healthcare. The chapters systematically

examine healthcare systems that are aggressively grappling to build the foundations for

sustainable, high quality healthcare. From these case-based analyses, we will learn about

substantive organizing changes aimed at operating within resource limitations while addressing

the burgeoning expectations of the population and taking advantage of the explosion of

knowledge in the form of medical advances that hold the potential for unprecedented positive

impact on the health of individuals and societies. We will also learn about the change

capabilities that healthcare systems need in order to implement fundamental change and continue

to evolve through time.

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We believe that closely examining change in the healthcare sector will provide insight

into the overall question of how humanity can put into place sustainable models of organizing.

This sector is competing against other purposes for scarce societal resources, and is facing

unavoidable trade-offs and pressures for financial responsibility and delivering value.

Healthcare’s societal impact manifests in the close connection between the health status of a

population and societal wealth and well-being. In turn, the resources available to promote a

population’s health are a function of the levels of societal wealth. At the individual level,

whether this sector thrives or struggles impacts a large portion of the population in developed

nations who work in healthcare related jobs. The U.S. Bureau of Labor Statistics reports that

workers in the healthcare and social assistance sector made up 11.5% of the workforce (about

16,400,000 jobs) in 2010 (Henderson, 2012). In the EU-27, there are over 21 million health and

social services workers (European Union, 2011). And how well the healthcare sector is

organized and performs impacts almost every member of society, whether through the good or

poor care they and their family members receive or through the absence of care and the financial

toll that illness entails. Healthcare is intricately interwoven in the interlaced societal, economic

and natural dynamics that impact environmental sustainability—both as polluter and as the

antidote to disease that is triggered by toxic and unsafe environments.

In short, the challenges healthcare faces are multidimensional and interconnected. This

reality is captured by Elkington’s (1997) notion of the “triple bottom line,” a framework that

entails commitment to and measurement and improvement of outcomes along the three

intertwined dimensions of economy, society, and environment. Societal institutions at all levels

are involved in and affected by how healthcare functions and is organized: national and local

governments, communities, businesses, families, the developers and manufacturers of healthcare

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related products and services, as well as citizens, patients, and the organizations and individuals

who provide healthcare related services. The healthcare eco-system is expansive, complex, and

diverse.

Our healthcare systems are being threatened by the growth and aging of populations

requiring care and by changes in the substantive demands being placed on the systems. Care for

individuals with chronic illness has surpassed acute care as the major focus of healthcare services

and consumer of healthcare resources (Lambrew, 2007; National Center for Chronic Disease

Prevention and Health Promotion, 2009a; 2009b). Healthcare systems are also being challenged

by the burgeoning costs of new technology, and the increasing expectations of citizens to receive

the most advanced and up-to-date treatment that often carries with it the promise, whether

grounded in research or not, of great benefit as well as a high price tag. All of these demand-

oriented forces are crashing into the resource limits of societies and individuals and causing

fundamental reexamination of the premises, purposes, and organization of healthcare in countries

around the world.

Sustainability has become a fashionable, if controversial, term that covers an umbrella of

concepts, approaches and implications. Early use of the word pertained largely to efforts to

develop sustainable patterns in the consumption of natural resources and to avoid the negative

environmental and social impacts of unrestrained exploitation of the natural environment (see

foundational environmental texts such as Carson, 1962). Sustainability has expanded to include

social responsibility, including concern for communities and social justice (Googins, Mirvis, &

Rochlin, 2007). The very word sustainability implies temporal responsibility: putting in place

practices that can be maintained through time and that protect the needs of future generations.

The triple bottom line perspective recognizes the close interdependency of economic,

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environmental and social outcomes and emphasizes the need to simultaneously address all three

focuses rather than pursuing a course of action that emphasizes one at the expense of the others.

Our working definition is that healthcare is sustainable if:

The eco-system for the sustainable provision of healthcare outcomes operates to

continually increase health, societal, and ecological value, functions with a viable

economic model, and conserves resources for future generations.1

Healthcare is knowledge based, and there is a staggering acceleration of scientific and

socially evolved understandings of health and well-being and their antecedents, correlates,

causes, and dynamics. Humanity knows much more than we have put into practice, and we are

developing knowledge at unprecedented speed. For this reason, the sustainable healthcare eco-

system must incorporate not only effective ways of organizing to address the challenges it is

currently facing, but must also be agile enough to incorporate changes and advances in

knowledge that will lead to sustainable effectiveness through time. This volume pays attention

not only to how a sustainable system is designed but also to how it can build in the necessary

agility and learning capacity to continually change.

Finally, given the criticality of the healthcare system to the well-being of nations, the

sector exists in a highly politicized environment. The healthcare sector is shaped, enabled and

limited to a large extent by the political forces at work that impact funding and regulation. 1 This definition comes from a community of scholars and practitioners that come together regularly to share learning about and models of sustainable healthcare. This community has been organized by Sue Mohrman (University of Southern California, USA), Rami Shani (California Polytechnic State University, USA & Politecnico di Milano, Italy), Svante Lifvergren (Chalmers University of Technology, Sweden), Andreas Hellström (Chalmers University of Technology, Sweden), Emanuele Lettieri (Politecnico di Milano, Italy), Chris Worley (University of Southern California, USA), Arienne McCracken (University of Southern California, USA), and the much beloved and now deceased Peter Docherty (Chalmers University of Technology, Sweden).

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Indeed, the purposes, priorities, and support for publicly funded healthcare and for the policies

and regulations that shape action of the many diverse elements of the healthcare eco-system

emerge slowly through societal debate. They are formalized and changed through political

processes by which different stakeholders and interests contend for their preferred outcomes.

These political processes go on simultaneously with the technical processes of care delivery and

improvement in the complex healthcare eco-system, often pitting the interests of various sub-

populations of actors against one another. The 2010 passing of the Affordable Care Act (or the

Patient Protection and Affordable Care Act, Public Law 111–148) and its 2012 challenge in the

U.S. Supreme Court, (reviewing issues from three separate court cases: National Federation of

Independent Business v. Sibelius, Secretary of Health & Human Services, et al.; Department of

H & HS, et al. V. Florida, et al.; and Florida, et al. V. Department of H&HS, et al.), is just one

example where many stakeholders with very different ideologies and preferences have utilized

legislative and judicial mechanisms at state and local levels to try to shape the future of

healthcare in the country (Supreme Court of the United States, 2012). This act, if upheld, will

require individuals to buy health insurance, greatly expand the availability of health insurance to

the poor and to those with pre-existing conditions, and move the U.S. toward an outcomes-based

reimbursement system, among other impacts. These are ideas that have been debated in the U.S.

for decades, and where social consensus has not yet been achieved. Any discussion of

sustainable healthcare is incomplete without acknowledgement of its tight connection with the

polity.

In this introductory chapter, we describe and frame healthcare’s sustainability challenges

using a complex adaptive systems perspective (Miller & Page, 2007; Holland, 1995; 1998), and

we draw from the literature to examine how sustainable effectiveness has been approached and

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what has been learned to date. We focus particularly on the issues of purpose and capabilities

development. A capabilities development perspective leads us to focus on organization design

and learning processes that are critical to building sustainable healthcare. First we will more

carefully describe the challenges that are being faced by healthcare systems around the world

that are rendering current ways of organizing unsustainable.

CHALLENGES TO SUSTAINABILITY

Reliable and sustainable healthcare delivery is a high-priority goal for all nations—and is

integral to achieving a vigorous economy and a vibrant and productive society. Yet, despite

having been identified as a key societal issue and looming crisis for decades and the funding and

implementation of many healthcare improvement initiatives, the unsustainable cost trajectory

continues in most countries. Perhaps the most dire situation is in the United States, a country that

has relied on a mixture of private insurance, government benefits for the poor and elderly, and

the delivery of care through a mixture of public and private institutions. Healthcare costs

continue to escalate at a rate of about seven percent per year, more than twice the rate of growth

in the overall economy (Towers Watson, 2010; Bureau of Economic Analysis, 2012).

Projections over the next six to eight years are for similar annual rates of growth, although

growth has recently slowed as a consequence of the 2008 recession (Keehan, Sisko, Truffer,

Poisal, Cuckler, Madison, Lizonitz, & Smith, 2011; Martin, Lassman, Washington, Catlin, &

National Health Expenditure Accounts Team, 2012). The United States pays far more of its

GDP on healthcare than any other nation -- 17.9% of U.S. GDP in 2010, projected to grow to

20% by 2020 (Martin et al., 2012; Fleming, 2011). Total average out-of-pocket spending on

healthcare has risen steadily while family incomes remain largely unchanged (Social Security

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Advisory Board, 2009). Average family healthcare insurance premiums constituted 18% of the

median family income in 2009 and are projected to go to 24% by 2020 (Commonwealth Fund,

2011). Associated social costs are staggering: the U.S. has nearly 50 million people without

health insurance (Christie, 2011).

Even in Europe, where healthcare is largely paid for by taxation of the population at large

and the financial risks are pooled, costs are outstripping economic growth. The World Bank

projects that public expenditure on healthcare in the EU is on its way from the average 8% of

GDP in 2000 to 14% in 2030 and will continue to grow (Economist Intelligence Unit, 2011).

Public expenditures in Japan grew from 6.2% in 2000 to 6.7% of GDP in 2009 (World

DataBank, 2012).

Three trends are cited as fueling the increase in societal healthcare costs: the aging of the

population and related increase in healthcare needs; an increase in chronic disease; and the high

cost of developing new technology combined with the population’s expectation of receiving

state-of-the art care. These all contribute to increasing demand for healthcare.

Another force behind the rise are the costs that result from the increasing misfit between

the way healthcare is organized and the services and value that the healthcare system needs to

deliver in this changing environment. This misfit can lead to poor outcomes that increase the

demand on the healthcare system. We will discuss these challenges next, and at a high level will

examine the opportunities for aligning healthcare systems with the changing realities they are

facing.

The Aging Population

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Societies worldwide are aging as birthrates fall and life expectancy increases (Greenberg et al.,

2011; Humphreys, 2012). Although the world’s population continues to swell, worldwide the

average woman bears half as many children as she would have 30 years ago (Longman, 2004).

For the developed nations, the large post-World War II generation, the “baby boomers,” are

starting to retire and enter their most healthcare-intensive period, while the working population

constitutes a smaller and smaller portion of the population. By 2050, at least 37% of the

populations in Europe and Japan will be in the over-60 age group (European Commission, 2012).

From 2000-2050, the worldwide population of people ages 60 or older will triple to include 2

billion people, and most of that increase will occur in developing countries (World Health

Organization, 2011c).

This population shift forecasts an increased demand for healthcare, and a proportionately

smaller increase in nations’ ability to cover the costs. This will put a larger strain on all

countries, but particularly on those governments that offer such things as pensions and national

healthcare benefits (Andreason, 2011). Funding either for government financed (tax-based) or

employer paid (insurance-based) care depends on having a robust, healthy, working population.

Many governments are being faced with declining revenue growth from a shrinking pool of

working-age citizens, and hence, decreased taxation and insurance funds that could go to

healthcare (Economist Intelligence Unit, 2011). This structural shift is putting pressure on

governments to adopt various policies to scale back benefits, raise the retirement age, or raise

taxes to deal with this shift in the population (Andreason, 2011). Often lost in these macro-

economic analyses is the complementary requirement that healthcare systems have to reduce

costs and/or sharply curtail services.

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Chronic Illness

Disease profiles are shifting, with a staggering increase in prevalence of chronic illnesses, often

lifestyle related, that consume a rapidly increasing percentage of healthcare expenditures

(Lambrew, 2007). Cancer and chronic diseases such as hypertension, diabetes, asthma, and

COPD, are increasing worldwide, affecting both developed and developing nations (World

Health Organization, 2011d). In 2007, a quarter of EU citizens had one or more chronic diseases

(Watson, 2007). By 2020, an estimated 157 million Americans will have at least one chronic

condition, and spending for chronic conditions will account for 80% of all healthcare spending

(Wu & Green, 2000). The annual cost of chronic disease in the U.S., including healthcare

expenses, lost income, and lost productivity, is estimated to be $100 billion (National Institutes

of Health, 1998).

Chronic diseases, especially cardiovascular disease, have found a “new frontier” in

lower-income nations, including China, India and the nations of Africa (Greenberg, Raymond, &

Leeder, 2011). Obesity and overweight, conditions very closely related to cardiovascular

disease, diabetes, kidney disease, and some forms of cancer (Eckel, 2008; Eheman et al., 2012),

are increasing globally. More than half the adult population in the EU and two-thirds of all

Americans are overweight or obese (OECD, 2010;) There are now over 35 million overweight

children in developing countries, notably in urban centers (World Health Organization, 2011a).

Cancer, a term that encompasses more than 100 diseases, remains a critical concern

across the globe. These diseases have many possible causes, including the inheritance of high-

risk mutations in specific genes (e.g., BRCA1 and BRCA2 mutations for breast cancer) (Offit,

2006). Some known human carcinogens are tobacco, alcoholic beverages, excess body weight

and other lifestyle factors; UV rays from the sun and radon (natural environmental factors); and

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aluminum production, coke production, and iron and steel founding (workplace exposure)

(American Cancer Society, 2012). In 2008, there were over 12 million cancer cases and almost 8

million cancer deaths worldwide. The developing world accounted for 56% of the cases and

64% of the deaths (Jemal et al., 2011), although the mortality rates in some countries have been

declining and overall incidence rates of cancers have been stabilized (Eheman et al., 2012). As

populations worldwide are aging, incidence rates are expected to increase in the future, however.

Aggregate 5-year costs of cancer care for the U.S. elderly Medicare population were estimated to

be $21.1 billion in a 2008 study (Yabroff et al., 2008).

Technology

Healthcare is also experiencing pressure from the increasing costs of technological and

pharmacological innovation, as new devices, equipment, techniques, and drugs become more and

more costly to develop. The cost to bring a new drug to market in 2006 was over $1.3 billion – a

tenfold increase from the cost in 1975 (Economist Intelligence Unit, 2011). Much of this

increase is attributed to the investment in and cost of biomedical research (DiMasi & Grabowski,

2007) and innovations in material sciences, genetics, biotechnology, bioinformatics, advanced

imaging technology, and e-health. Pharmaceuticals have been the fastest growing component of

healthcare costs in the U.S. (NHE Fact Sheet, 2009).

Technology has brought great advances in ability to treat disease and improve chances

for survival, but these advances have been costly. In the U.S. alone, spending on pharmaceutical

research and development was estimated to be $37 billion in 2010. American biotechnology R &

D spending was $30 billion in 2009, and medical technology R & D spending accounted for $9

billion in 2009 (Research!America, 2010). Annual costs of the biologic medicines used to treat

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the chronic disease psoriasis ranged from $18,000 to over $27,000 (Beyer & Wolverton, 2010),

and other biologic drugs and new chemotherapies are similarly priced. Purchasing one  Da

Vinci surgical robot can cost a hospital approximately $2 million, not including maintenance

costs (Varney, 2012). The average hospital charge in Texas for a coronary bypass surgery with

insertion of a cardiac catheter was almost $136,000 in 2010, not including physician fees (Texas

PricePoint, 2010). And the list goes on and on. Genetic testing enables patients to know whether

they have the risk factors associated with many diseases, and raises the possibility of taking

medical measures to prevent disease that a person may never contract.

These advances often bring or promise improved chances of preventing or surviving

disease and slowing progression, of making surgery less invasive and therefore less dangerous,

enabling the replacement and repair of defective organs, joints or limbs, and enhancing the

quality of life and extending it. Although great progress has been made in treating illness, the

breakthroughs required to cure chronic and many other life-threatening conditions have been

slow to come. Such progress would allow us to radically change the cost structure of healthcare.

While the mapping of the human genome seemingly ushered in a new age of gene therapy and

genetic intervention, the reality is disappointing: no non-experimental gene therapy drugs or

procedures are currently available to U.S. patients (Lindee & Mueller, 2011). Genetic

interventions have yet to fulfill their promise.

Information about new technologies is readily available to people through news media,

on the internet, and also from advertising by the companies who develop them. In the U.S. in

particular, but increasingly in other countries, the population is exposed to a barrage of

advertisements about drugs, devices, and procedures that are touted to help detect problems,

prevent the onset of illness and/or to be effective in addressing existing conditions. Public

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awareness has increased, expectations have been established about receiving state-of-the-art care,

and patients often arrive at the doctor’s office requesting specific treatments. Undeterred by very

public exposure that many claims about the benefits of new technologies are not well grounded,2

patients may equate the quality of care they are receiving or the caliber of the hospital where

they may be treated with the presence of approaches they hear about on the airwaves and read

about on the internet. This places pressure on healthcare costs, and raises the politically

explosive questions of who should pay, and of what is society’s healthcare obligation to its

population and what is individual responsibility.

Organizational Misfit with the Changing Healthcare Needs

Increased demand may be triggering the current sense of urgency about healthcare sustainability,

but the inadequacy of our current models of healthcare delivery has also become a major focus as

nations consider the question of how to respond to these changes and to provide more value for

the healthcare dollars that are spent. We know that sustainable healthcare delivery cannot be

achieved by continuing to accelerate resource consumption. Witness the U.S. which, while

paying almost twice as much per capita as the next closest nation for healthcare, is rated in

comparative studies toward the bottom on many measures of quality and patient satisfaction,

including safety, access, efficiency and longevity (Davis, 2010). The U.S. healthcare system is

apparently not organized to effectively use resources “to continually increase health, societal,

and ecological value, to operate with a viable economic model, nor to conserve resources for

future generations” (our working definition of sustainable healthcare as described earlier in this

chapter).

2 See, for example, such issues as the lack of efficacy of gender-specific and many other new knee replacement devices or the safety problems with the drug Vioxx (Skelly, 2007; Tong, Tong, & Tong, 2009; Weisz, Mohrman, & McCracken, 2012).

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This U.S. anomaly can be explained by many factors. Much of the R&D and innovation

that has led to new technological capabilities has occurred in the United States, and the cost of

such development has disproportionately been passed on to that healthcare market. Other

nations’ government-run systems have implemented price caps and have received the same drugs

and devices less expensively, while also making the decision not to introduce expensive drugs

and technology into their formularies and guidelines that cannot be shown to deliver increased

value. (Darzi et al., 2011; Anis, 2011) U.S. healthcare is largely delivered by physicians in

private practice, often by for-profit hospitals and affiliated healthcare service organizations, and

almost half of its healthcare is administered by for-profit insurance companies. None of these

actors have had any incentive to change their practices to restrain healthcare costs; in fact, they

thrive when they receive more resources. Approximately 31% of healthcare costs cover the

administrative costs and the profits of insurance companies (Woolhandler, Campbell, &

Himmelstein, 1999), and this number increases as much as 6.6% per year (Blanchfield et al.,

2010). Despite the fact that almost 50% of U.S. healthcare costs are paid for by the government

in the form of the Medicare program for seniors and the Medicaid Program for the poor (Kaiser

Family Foundation, 2009), approximately 16% of Americans have no insurance, and

consequently a large number of Americans receive their “primary” care in emergency rooms at

great expense.

Arguably, these parameters of the U.S. healthcare eco-system add significantly to the

high costs. But another factor is also at work in most developed nations: the healthcare system as

currently designed is not effective at dealing with the kinds of substantive health issues that are

being faced in today’s society, and in fact is very inefficient at doing so (Christensen, Grossman,

& Hwang, 2009; Berwick, Nolan, & Whittington, 2008). A specific and very costly example is

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that the traditional hospital-based and private-practice-based delivery system is not suited to

deliver coordinated life-cycle care for chronic disease treatment and prevention, nor coordinated

care for an aging population with multiple, interacting disease states. The U.S. system may have

been deluged by lifestyle-related chronic conditions earlier than many other countries, but this

problem is now global.

Current healthcare systems developed over time as hospitals and other healthcare

organizations evolved to address the changing needs of physicians and their patients and were

largely shaped around the acute illness model of care and the need to have places to house

patients with persistent infection (Wagner et al., 2001). Our success in finding effective

treatment for infection has resulted in less need for hospitalization for individuals with

infections, but has also increased lifespans and the related increase in incidence of chronic care.

Failing to effectively prevent and manage chronic disease results in people getting sicker, having

more acute episodes, and requiring more complex and expensive care (Pencheon, 1998).

Moving “upstream” in chronic disease life cycles has a significant potential return on investment,

yet both in the U.S. and the EU people are receiving only half of the preventive care that they

should be getting (Rand Health Research Highlights, 2006). Prevention and wellness are

receiving no more than 5% of the money spent annually on healthcare (Economist Intelligence

Unit, 2011; Kelley, Moy, Kosiak, McNeill, Zhan, Stryer, & Clancy, 2004). This is because we

have a system designed to provide episodic care—not to keep people well and manage the life

cycle of health.

The treatment of chronic illness demands early detection, preventive measures including

lifestyle intervention, continual monitoring and control, and coordinated treatment. Yet we

retain a highly fragmented system that is organized around specialized medical disciplines rather

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than around the coordinated treatment, where each specialty reacts to particular patient

symptoms and conditions rather than coordinating and being proactive in addressing prevention,

disease control, and patient wellbeing. Patients in a sense start over at each encounter and wind

their way through many specialties, services, offices and locations in order to get treated for

particular episodes of care. Patient information often is not readily available and does not flow

with the patient, and patients often have to coordinate their own care.

Fragmentation also negatively impacts the treatment of patients with acute illness, serious

injury, and complex and perhaps poorly understood diseases that require the coordinated services

and knowledge of many medical professionals for efficient diagnosis, treatment, and

recuperative care (Bohmer, 2009; Christensen et al., 2009). Yet these patients frequently are

treated sequentially and in an uncoordinated fashion by many departments, each of whom deals

with a small piece of the puzzle (or the human system), and none of whom take responsibility for

outcomes.

Fragmentation is reinforced when providers are reimbursed for procedures, activities,

and episodes of care rather than for health outcomes. The stream of resources to healthcare

providers depends on demand for their services, and each provider acts in a way that ensures an

ongoing stream of resources; perpetuating fragmentation in the care of patients. Poor healthcare

leads to greater demand—and much greater costs to society in terms of resources consumed and

health status and quality of life of the population. Even error gets reinforced, as preventable

iatrogenic disease such as hospital acquired infections and adverse drug interactions result in

more demand for health services and more reimbursement for care (Darzi, 2011). In the U.S.,

hospital-acquired sepsis and pneumonia, for example, created 2.3 million additional days of

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patient hospitalization and over $8 billion of in-hospital costs in 2006 (Eber, Laxminarayan,

Perencevich, & Malani, 2010).

The challenge is to reverse this cycle of escalating costs by aligning the healthcare system

with the delivery of high quality care and outcomes, and moving its focus upstream to

prevention, early treatment, and control of chronic disease, thereby greatly increasing value to

patients and society (Porter, 2009; 2010; Kaplan & Porter, 2011). Kaplan and Porter note that

better healthcare outcomes are linked with lower total care cycle costs. They strongly believe

that the healthcare field has great potential to simultaneously improve outcomes and drive down

costs -- by systematically measuring outcomes and using an accurate cost measurement system

(Kaplan & Porter, 2011).

Inertia protects the status quo. Communities, providers, and local governments have had

a stake in this fragmentation and redundancy that leads to sub-optimal outcomes and inefficient

resource utilization. In the name of professional autonomy, physicians have been a major force

in ensuring that healthcare remains what is called by Swensen et al. (2010) a “cottage

industry”—where individualized care plans and idiosyncratic treatment approaches work against

the integration, standardization, and improvement required to increase value. Each element has

worked to carry out its own tasks, and to ensure its own resource stream—often without regard

to overall system effectiveness. Insurance companies and government agencies have played a

role in regulating this loosely coupled system, although rarely intervening to ensure consistency

of practice or that the pieces work together or are organized effectively. The system continues to

treat chronic illness as if it were a series of discrete episodes, and multiple disease state patients

as though they house distinct conditions. Each community, each health system, and each

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specialist seeks to have complete services for acute care, even if they don’t have the volume to

justify the costs of such services or to ensure excellence.

There is evidence that this may be changing. In the face of bleak forecasts, changing

regulatory requirements, and changing government policies that affect reimbursement, coverage

and service offerings, many public and private healthcare organizations are aggressively

pursuing reform and renewal. Healthcare systems are responding to pressure to deliver increased

value through a number of initiatives. These include:

Systematically improving clinical and administrative processes leading to better defined,

evidence based, repeatable care pathways that address the life cycle of disease and/or the

coordination of the steps of an acute treatment episode such as a surgery (Gooch et al.,

2009; Weisz et al., 2012).

Measuring outcomes, and transparently reporting results to facilitate learning and

stimulate improvement (Swensen et al., 2010).

Systematically measuring and reporting costs such as with time-driven, activity-based

cost systems (Kaplan & Anderson, 2003; Kaplan & Porter, 2011).

Developing management systems including goal-setting, measurement, and feedback

systems for accountability and learning (Institute for Healthcare Improvement, 2003)

Enhancing IT capabilities to provide integrated patient records so that providers have

access to more complete information about the patient and the information moves with

the patient between providers.

Enhancing technological capabilities to provide integrated patient care away from the

main healthcare site in few localities with closer proximities to patient homes.

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Building decision making support into electronic medical record systems and other IT

applications that provide assistance to providers about best practice and to avoid error

(Strauss et al., 2000; Sperl-Hillen et al., 2010).

Organizing for greater ease and reliability of integration of the team of specialists

involved in diagnosing and treating patients with complex and uncertain presenting

conditions. (UCLA Health System, 2009; Cosgrove, 2011).

Redesigning primary care to create measurable integrated practice units that provide a

medical “home” (American Academy of Family Physicians et al., 2007) for patients that

is responsible for coordination of care and ensuring access to needed specialist and

community services. (Berwick, Nolan & Whittington, 2008).

Educating patients and their families and providing patients with information to take

responsibility for their health and to more effectively use health services. (Eriksson et al.,

2010; Lorig et al., 1999).

Redesigning the work systems of medical providers such that medical staff burnout is

reduced and human and social sustainability can be achieved (Docherty, Kira, & Shani,

2009).

Building better connections between the various agencies, organizations departments and

facilities that are involved in care (Lifvergren, Docherty, & Shani, 2011), and

rationalizing this configuration in order to avoid costly redundancy and diffusion of

expertise (National Cancer Forum, 2006; Begg et al., 1998; Roohan et al., 1998; Finks et

al., 2011).

Taking a population approach to the delivery of care in order to increase overall health

status and reduce demand on the system (Berwick, Nolan & Whittington, 2009).

21

Although the healthcare environment is changing fundamentally in ways that render

current approaches unsustainable, the greatest challenge to the sustainability of healthcare is to

find new organizational approaches that deliver the value that society needs and is able and

willing and able to pay for. Almost all aspects of the system have to change. A path dependency

viewpoint (Nelson & Winter, 1982; David,1985; 2005) would suggest that the amount of inertia

built into the current institutional structure of healthcare systems and self-interest and roles

within them mediates against success in transforming from within existing players.

Christensen et al. (2009) predict that only disruptive innovation can transform the healthcare

industry to be affordable and accessible—and to that we would add, to deliver the services and

outcomes needed in today’s world. They argue that when there are changing requirements and

opportunities to deliver enhanced value, new organizations with new business models often

appear to do so. Established organizations find it hard to change because their business models

link them tightly to old ways of doing things and to customers and other stakeholders wanting

traditional approaches. Christensen et al. posit that disruptive and transformative innovation has

three elements: 1) it builds on sophisticated technologies to change the processes of doing work;

2) it entails a new business model to offer simplified and affordable solutions to customers; and

3) it involves the emergence of a network of organizations that operate in mutually reinforcing

and compatible ways and that together transform the industry. New industry standards and

societal regulations emerge that enable this new way of functioning (2009, p. xx).

In the chapters in this book we will learn about a number of organizations that are working to

implement new approaches to deliver the value that is required to be sustainable. One reality

that cuts across them all is that the changes they are implementing are disruptive in very

22

fundamental ways to the status quo. We will see all the elements of new business models

(Johnson, 2009) emerging: a new value proposition and the resources, processes, and profit

formula required to deliver on the value proposition (also described in Christensen et al., 2009).

Although it is too early to know whether the changes these systems are making will truly lead to

a more sustainable industry, we can learn from their experiences about how they are intentionally

changing with the purpose of delivering greater value to the societies in which they function. In

the next section we will examine the question of sustainability.

HEALTHCARE AND THE TRIPLE BOTTOM LINE

It is tempting to define the challenge of building sustainable healthcare as increasing the value

that is delivered by improving health outcomes while maintaining or reducing costs, and to

simply look for ways to organize the healthcare eco-system and its elements to be more efficient

(thereby conserving resources), and more effective at delivering high quality and better health

outcomes. We could treat it as “just another industry” whose time has come to learn to operate

within its means and to realize that scarcity will be the future normal state. But a closer look

reveals the special role that healthcare plays in the broader quest of humanity to develop

sustainable economic, societal and ecological ways of functioning.

How the healthcare system operates is intricately connected to society’s triple bottom line

because its product is the health of those who constitute society. Ideally, healthcare preserves

and regenerates societal capabilities by increasing the health status and quality of life of

populations, contributing to a healthy workforce, and extending the length of time that people

can thrive and be contributing members of society. A poorly functioning healthcare system has

23

opposite impacts; in fact, the negative impacts of a poor healthcare system are amplified because

of the resulting even greater demand for its (poor) services.

Conversely, the health of the healthcare system is affected by economic, social and

ecological dynamics in the environment. The capacity of our healthcare systems is affected by

forces that weaken the economy, degrade the natural environment which we depend on for our

health and economic well-being, and disrupt communities. Availability of healthy food is

associated with both race and income--and health -- lower-income neighborhoods and

communities of color, especially, are less able to access healthy food (Baker et al., 2006).

Communities with large numbers of underserved or unserved immigrant populations often are

the source of diseases, such as TB, that could readily be treated and controlled. A study in

Canada showed the connection between TB and poverty, yet this socio-economic issue is

generally not addressed in TB health programs (Reitmanova & Gustafson, 2011).

Rather than using resources “to continually increase health, societal, and ecological

value, to operate with a viable economic model, and to conserve resources for future

generations,” the organization of today’s healthcare often squanders resources and has negative

societal, economic and ecological impacts (Christensen et al., 2009; Kira & Lifvergen, 2012).

This is despite the unflagging efforts of healthcare professionals, who have deep clinical

knowledge, care about the welfare of the patients they see, and in fact individually and

collectively accomplish remarkable feats to treat, cure, and preserve life for individual patients.

Yet traditional ways of organizing healthcare work against the sector achieving its promise in all

three domains of the triple bottom line.

In the U.S. the cost of avoidable hospital readmissions is over $17 billion annually

(Berenson, 2009). Adverse drug interactions, hospital-acquired infections, and surgical mishaps

24

account for 98,000 U.S. hospital deaths every year (Kohn et al., 1999). Over prescription of

antibiotics has encouraged the rise of MRSA, a bacterium resistant to commonly used

antibiotics, which is now found not only in hospitals and care settings, but also among drug users

and people in prison, and increasingly the public at large (Gagnon, 2007). Huge street profits

can be made from powerful prescription narcotics such as OxyContin. More than 12 million

Americans use prescription drugs for nonmedical reasons, and there were nearly 15,000 U.S.

deaths from painkillers in 2008 (Centers for Disease Control and Prevention, 2011). In another

paradox, the field of healthcare creates a substantial amount of waste and toxicity. Hospitals in

the U.S. alone generate about 6 million tons of waste annually (Waste, 2012), 20% of which is

hazardous and may be infectious, toxic or radioactive (WHO, 2011b).

Economic and Social Outcomes

The forces propelling healthcare expenditures in an unsustainable direction are at work

regardless of how healthcare is financed. Government resources are being strained, pointing to a

probable redistribution of financial responsibility for healthcare that may have significant

negative social impact on individuals who can least afford to pay. In recent years, many

Americans have signed up for high-deductible health insurance policies to keep their premium

payments lower (Helfand, 2010). This kind of policy discourages regular preventive care, as the

policy will most likely only be used for severe or acute injury or illness (Employer Health

Benefits, 2011). The social costs of chronic disease are significant. Six million adults in the UK

(Economist Intelligence Unit, 2011) and 66 million in the U.S. are caregivers for relatives, many

of whom have chronic illnesses (National Alliance for Caregiving, 2009) . Illness or medical

bills contribute to over 62% of all bankruptcies in the U.S. (Himmelstein, 2009). Rapid growth

25

in the costs of insurance and/or care affect consumption patterns and the robustness of local

economies. Healthcare that does not deal with the population’s needs leads to greater illness and

greater demand, even further diminishing society’s ability to pay.

Businesses are also deeply impacted by rising healthcare costs and by the deteriorating

health status of their workforces. Famously, General Motors now spends more on health

premiums (about $1,500 per car) than on steel (Appleby & Carty, 2005). Businesses know that

productivity is impacted by the poor health status of their employees. Some companies, like

Cisco Systems, have put a healthcare clinic in their workplace. Cisco’s LifeConnections Health

Care Center boasts primary care, laboratory, radiology, vision care, chiropractic, and disease

management services. The company believes that this move has increased productivity and

saved them money (Vesely, 2011).

Demonstrating the tight two-way relationship between healthcare and societal financial

well-being and global interconnectedness, the 2008 economic crisis was felt worldwide and has

greatly increased financial pressures on healthcare systems. Triggered by a bubble in the real

estate sector, the impact was amplified by the creation and globally widespread sale of

derivatives so complex that even the executives of the financial firms claimed not to have

understood them (Faiola, Nakashima, & Drew, 2008) . The wealth and employment of millions

of people and the health of many small and large businesses were dramatically affected.

Government deficits skyrocketed, and the public and private funds available to pay for healthcare

declined. Growth in overall U.S. healthcare spending for 2009 was the lowest in 50 years

(Martin, Lassman, Whittle, & Catlin, 2011) which might be considered an indication that the

sector is getting its costs under control. But the story is more complex, due to the intricate web

of forces at work. The budgetary impact of healthcare costs for individuals, corporations, and

26

federal and state budgets were strongly felt due to increased unemployment (up in 2009 to 9.3%,

from 5.8% in 2008) (Bureau of Labor Statistics, 2012), a slowdown in consumption, and

decreased tax bases. Many businesses decreased their spending on healthcare by pushing more

costs to their employees (Lazarus, 2010). Many individuals have deferred spending, leading

perhaps to pent up demand that will be felt in the upcoming years.

The U.S. is not alone. Globally, public spending on healthcare has become even more

vulnerable since the 2008 downturn in many countries since the 2008 recession, as governments

have crafted austerity measures to reduce deficits (Frayer, 2012; Vasarri & Davis, 2011; BBC

News Europe, 2012). In return for accepting bailouts, Latvia (from the International Monetary

Fund ) and Greece (from the IMF and its Eurozone partners) were each required to undertake

austerity measures that reduced hospital budgets by 40% (Kramer, 2010; Kentikelenis,

Karanikolos, Papanicolas, Basu, McKee, & Stuckler, 2011). Ireland has cut 750 million Euros

from its health services in 2012 (O’ Cionnaith & Ring, 2012) while Spanish officials are

considering charging wealthy citizens for healthcare services to reduce its debt (Davies, 2012).

Healthcare workers’ perceptions of their work are changing as well. Surveys carried out

in Europe, Australia, and the United States show that healthcare staff have been experiencing an

increase in work intensity throughout the 2000s, due mainly to technological change, reduced

budgets and redesigning or reorganization of work (Docherty, Kira, & Shani, 2009). The

increase in perceived work intensity is matched by increase in turnover decisions, sickness, sick

leave and, early retirements (Ackroyd & Bolton, 1999; Marklund et al, 2007). The regional,

national and global context of healthcare work seems to have an impact on human and social

sustainability of professionals in the field.

27

Healthcare systems are inextricably embedded in contexts so complex that only by

building adaptation capabilities can they flex to fit trends and disturbances in the eco-system.

The speed with which the 2008 jolt to the global economy wreaked havoc on public services in

general, and on both public and privately supported healthcare systems, should serve as a

warning. These systems must be redesigned, with full consideration about how the sector can

optimally contribute to and minimally detract from the prosperity of the broader society.

The burden of decreased spending on healthcare has fallen disproportionately on lower income

individuals. In countries where concerns for social equity have been built into national

approaches to healthcare, threats to the resource stream pose a fundamental challenge to this core

value. How healthcare systems evolve in this era of scarcity will be a critical determinant of the

nature of and values of the societies in which we live.

Healthcare and the Environment

The interaction of healthcare with the third pillar of sustainability, the natural environment, can

be expected to play an increasing role in the debates about societal sustainability in general and

sustainable healthcare in particular. Healthcare sustainability is being challenged as the “carrying

capacity” of the earth is being approached and its natural eco-systems continue to be threatened

(Stead & Stead, 2009).

On the demand side, a deteriorating natural environment is believed to contribute to

increased prevalence of chronic disease such as asthma, autoimmune diseases, cancer, and birth

defects (Ritz, 2002; Crouse, 2010; Farhat, 2011). Less often considered is the negative impact

that healthcare has on the environment. Ironically, although the healthcare industry has the goal

of “doing no harm,” its waste and pollution pose a real threat to our environment, as well as to

28

patients and healthcare workers themselves. Adverse impacts include greenhouse gases, waste,

toxic chemicals, water use, air pollutants, and land use patterns (Turley et al., 2011). Carbon

dioxide emissions from the UK National Health Service in 2004 exceeded 18 megatons, or over

2.5% of all UK CO2 emissions (SDC, 2008). Improperly incinerated medical waste can release

dioxins, furans, and other toxic pollutants into the air, chemicals that are believed to have

adverse health implications that include the impairment of the immune system (WHO, 2011a).

Pharmaceuticals are detectable in surface water, drinking water, sewage, and soil (Dussault et al.,

2007; Kolpin et al., 2002; Ternes, 1998.).

Hospitals are especially polluting, and in fact are often not very healthy places to work or

be treated. In addition to waste, older hospitals in particular are often made of building materials,

including paint, particle board, and carpeting that release high amounts of volatile organic

compounds such as formaldehyde (Landro, 2006). These can all add up to indoor pollution

impacting patients and caregivers. Hospitals are dangerous places to work (Weisz, Haas,

Pelikan, & Schmied, 2011). Healthcare workers who handle drugs, including those that are

respiratory sensitizers, carcinogenic, mutagens, or are toxic for fertility or reproduction, are at

occupational risk (Halsen & Kramer, 2010).

Global Challenges

The challenges facing healthcare globally are varied, a fact which is becoming increasingly

apparent as developing nations become integrated into the global economy. Entire areas of the

world have large populations who have little or no access to modern healthcare. In South Africa

alone, the number of people living with HIV was estimated at 5.38 million (over 10% of the

population) in 2011 (Statistics South Africa, 2011). Populations continue to suffer from

29

healthcare inequities that depend greatly on economic status, as those in the lowest-income

nations are still served the least by healthcare. Life expectancy ranges from a high of 79 years in

high-income nations to a low of 49 years in the sub-Saharan Africa (World Health Organization,

2008). Of all deaths in the African region, 46% are of children under 15; this figure is 1% in

high-income nations. Only 20% of all deaths in the African regions are of people 60 or older; in

developed countries this figure is 84% (World Health Organization, 2008).

Even the most basic requirements of a healthy life, namely safe drinking water and

sanitation, are still not available to many in the world’s lowest-income countries. Over one

billion people currently have no access to any kind of sanitation facilities (including toilets),

most notably in South East Asia and Africa (World Health Organization, 2011d). Access to

medicine also varies worldwide, with those in low- and middle-income countries often lacking

access to even essential medicines (World Health Organization, 2011d). Annual per capita

expenditures on healthcare range from greater than $6000 (USD) in the US to less than $10 in

the poorest countries (Benatar, Gill, & Bakker, 2011).

Although it would be easy for developing nations to say “that’s not our problem,” there

are strong humanitarian as well as economic reasons for paying attention to this larger set of

issues. There is still concern that in today’s globally mobile world, local outbreaks of infectious

disease can rapidly become pandemics (e.g., SARS; Anonymous, 2003). Developed economies

are heavily dependent on these emerging nations as markets and partners in the global economy,

and on their becoming developing strong economies with healthy populations. The social justice

issues are hard to ignore. Companies from developed nations establish operations in emerging

markets, take advantage of low wages, and in many cases fail to invest in the health of the

30

communities in which they operate or the health of their local workforce (Jamali, 2010:

Donaldson, 2001).

Ethical issues (which are profound and deserve close societal scrutiny and debate) aside,

the world is a highly connected and highly complex system, and healthcare occupies a critical

place in the network. Financial, societal and ecological dimensions profoundly impact

healthcare, and the healthcare system is a major factor in the ability of humanity to deal with its

financial, social and environmental issues. The next section will provide a complex systems

framework to help get our conceptual “arms” around this reality

.

HEALTHCARE AS A COMPLEX SYSTEM: THE EMERGENCE OF SUSTAINABLE PRACTICE

The important problems facing healthcare cannot be solved within the confines of single

organizations or entities. Viewing today’s complex healthcare eco-systems as complex adaptive

systems provides conceptual leverage on its seemingly intractable challenges. Complex adaptive

systems are composed of many interacting elements, or agents, each with its own strategy for

adapting to its environment and pursuing its goals (Axelrod & Cohen, 1997). These agents are of

multiple types and at multiple levels of aggregation In healthcare, agents include patients,

providers, clinics, hospital systems, healthcare systems, insurance companies, governments and

regulatory agencies, employers, and many more. They act independently and interdependently—

collaboratively and competitively—to secure the resources they need to pursue their purposes.

Their actions have intended and unintended impacts on the markets, societies, communities, and

natural environments in which they operate and on which they depend for their own survival.

31

Emergent Properties of Complex System

The properties of the larger system emerge as a result of the actions and interactions of

the various agents who comprise the system. Emergent properties include healthcare outcomes

for individuals being treated, the pattern of outcomes that the system delivers including quality,

patient satisfaction, and affordability, population health indicators such as prevention, levels of

value that are achieved in terms of resource consumed and outcomes delivered, capacity to self-

correct and continually improve, employee well-being, and various types of social or

environmental health or degradation.

These emergent properties are not simple aggregations of the impact of individual agents.

Prevention, for example, results from the activities of physicians and other providers, medical

educators, patient awareness and proactivity, community resources, communication and

detection systems, and reimbursement policies from the funders (Weisz, Mohrman &

McCracken, 2012). Improving hospital safety happens in teams in which people feel the

psychological safety to confront error and together learn how to build in reliable performance

(Edmondson, 1999). Chapter 7 of this book, describes how a cross functional team in the West

Skaraborg Hospital System in Sweden that learned through iterations of experimentation and

reflection how to build a microsystem (from Batalden et al., 2002; Batalden et al., 2003; Mohr

& Donaldsson, 2000; definition on page X of this volume) capable of stabilizing older patients

with multiple diseases, so that they could be more effectively treated in the complex health

system. There is a clear relationship between the quality of teamwork in healthcare settings and

the quality of care, outcomes, and innovation (Borill et al., 2001; West et al., 2002; Sommers et

al., 2000; Hughes et al., 1992).

32

The impacts of the actions of the agents within the complex system are not linear. Early

discharge of patients from the hospital without sufficient planning for follow up care may allow

the hospital to stay within insurers’ guidelines, but may lead to unnecessary readmissions that

greatly increase utilization and cost. When physician groups and others establish out-patient

surgery centers to provide efficient, specialized care with well-defined work processes, local

hospitals may lose revenue and have to spread fixed costs across a smaller base, making care

more costly. Chapter 5 in this volume describes such systemic interdependencies in the

Montefiore system in the Bronx, New York, as it set up a portion of its patient care in a prepaid

managed care format that led to the necessity to grapple with the complex systemic patterns of

interaction and resource flow for the whole system. Emergent properties reflect complex,

dynamic interactions resulting in outcomes that cannot be fully planned or anticipated.

Within complex healthcare systems are communities--sets of co-evolving populations of

agents that are tied together by common orientations, dependence on common resources, and

interdependence of flows of activities and outcomes. Several medical practices that provide

cancer care in conjunction with a network of hospitals in a metropolitan area might constitute

such a community. Communities may be geographically or professionally defined, or defined by

a set of interrelated activities defined with reference to a population of patients. The various

populations of agents who form a community require resources in order to prosper, and seek

them out by inhabiting niches or parts of the eco-system where they believe they can gain access

to them (Hannan & Freeman, 1977). Chapter 4 in this volume describes the key role that

technology played in linking healthcare agents into such a community that provide rehabilitation

care in the Lombardy Region of Northern Italy.

33

Communities can spawn new forms by changing the way they interact with each other.

Organizations may set up relationships with other entities who bring synergies and scale or

access that give them an advantage with respect to achieving an ongoing flow of the resources

they need for success. For example, healthcare systems may set up exclusive relationships with

specialized (and presumably efficient) kidney dialysis firms to provide dialysis services for their

population of patients. Hospitals may organize a network of rehabilitation centers that develop

standard processes for moving patients between settings. A network of hospitals interested in

ecological sustainability may join together in a consortium to explore new approaches to deal

with toxic waste and to work with vendors to provide environmentally sustainable supplier for

their Operating Rooms. In the process, the various participants will develop new capabilities, as

they contribute to changing patterns of activities, network relationships, and outcomes in the

overall eco-system.

Co-Evolution

Organizations have been described as learning and changing through co-evolutionary

relationships with their environment —through relationships that are interdependent, mutually

causal, and iterative (Stead & Stead, 2009), such that change in the macro environment emerges

in mutual interaction with change in its component inhabitants. There is an ongoing need for

adaptation. The strategies of actors in social systems are based on purposes, interpretation, and

anticipation of possible futures (Leyesdorff, 2001). Actors in a complex social system are able

to devise strategies for adaptation (Knight, 2002), to borrow ideas from others in the complex

system (Campbell, 1960), to repurpose, and to learn.

34

Drawing on institutional theory, Hoffman (1999) talks about organizational fields, in

which organizations evolve in concert with the demands and institutional forces in their

environments. Healthcare is such a field. Its participants operate in environments increasingly

characterized by advanced electronic communication capabilities that allow complex knowledge

work to be done virtually. Customers have developed expectations for convenient, rapid, and

high quality service. Corporations and government are keenly aware of the tight connection and

complex relationships between economic viability, sustainable healthcare, and healthy

communities—and of the complex interacting issues of environmental sustainability.

Companies, individuals, and the government are beginning to use different criteria to distribute

resources, and patients are applying new preferences when they purchase healthcare or choose

providers. As a consequence, healthcare organizations can be expected to make changes in their

purposes and in how they operate to ensure a continued resource stream. Innovators provide

approaches congruent with these environmental focuses, and in so doing shape the perceptions of

what constitutes good healthcare and provide valuable learning for other organizations in the

eco-system.

Although top-down and hierarchical direction are insufficient to change a complex

system, such systems can be highly responsive to seemingly small inputs that create amplifying

effects (Axelrod & Cohen, 1997), and to discontinuous innovations that provide models or open

up possibilities for action by many elements of the larger system. Requiring transparency around

measures of key indicators of quality and value might be one such intervention that has ripple

effects throughout the healthcare eco-system as organizations and individuals have no only to

introduce and adapt to measures and reports, but also to improve in order to satisfy the many

stakeholders that are now serving in watchdog roles. Reimbursing for outcomes rather than

35

based on the costs structures of systems that use top down budgeting through departments and

fragmented sub-units forces organizations to examine their organizational purposes,

accountabilities, and designs to focus organizational members on the processes and interactions

that lead to health outcomes.

Self Organization and Learning

It has been argued that complex systems are inevitably self-organizing (Fukuyama,

1999), and that they cannot be fully externally or hierarchically controlled. Governments and

hierarchies rely on the various agents in their domains to find solutions to the problems of

complexity. Order arises from local interactions of actors even if those actors are not aware of

how their actions contribute to the larger order (Holland, 1995; 1998). This reality can be seen

in the current healthcare reform efforts in the U.S. The U.S. government is using regulation and

legislation to intervene in the system by changing the criteria of success of the system to focus

on outcomes rather than treatments, and by holding healthcare systems accountable for the health

of the population. Yet the government is ill-suited to design a new system and its new

approaches. That has to be done by the players in the local healthcare eco-system. The three

U.S, systems described in this book are doing exactly that: the Alegent Healthcare System in

Nebraska (Chapter 2); Montefiore in the Bronx, New York (Chapter 5); and the Southern

California Region of Kaiser Permanente (Chapter 3). New interaction patterns have emerged

within and across the various elements of the eco-system as these systems have tried out new

behaviors and ways of working and connecting. They learn from their experimentation, and

incorporate the knowledge they gain into the way they operate.

36

The literature points to four conditions for self-organizing systems (Monge & Contractor,

2003, pp. 95-97). First, self-organization happens when a system is not in equilibrium and the

agents in the system seek to adapt to change, a condition that currently characterizes today’s

healthcare systems. The other three conditions relate to knowledge and learning capability.

1) Are the components of the system self-generative –i.e., can they self-create and

renew? In this volume we will come to appreciate that the transition to

sustainable healthcare entails change at all levels of the system.

2) Does knowledge flow between components, and result in greater capability and

the creation of new knowledge? Enhancing the flow of knowledge from the

larger environment as well as across the elements of the system are inherent in

the changes descried in this book.

3) Is there a “requisite variety” of knowledge (Ashby, 1956) to address the

problems of interest? These systems assembled expertise from many parts of

their own system as well as external experts and other stakeholders in an effort

to develop novel approaches that could address the complex, multi-faceted

aspects of their journeys.

Sustainable healthcare will only be achieved if we can accelerate the self-organization of

the thousands of systems and millions of participants in the healthcare eco-system. Many

healthcare systems and organizations, governments, NGO’s, professional associations,

communities, and other entities are engaged in learning about how best to operate and interrelate

to contribute to a sustainable future. True change will depend not only on single initiatives and

change in the piece parts that constitute the eco-system. Changes in how they operate alone and

in relationship to one another are required to generate that new patterns of interaction that will

37

underpin a sustainable system. In Chapter 4, which deals with the use of technology to radically

change the capabilities of the rehabilitation sector of healthcare in Italy, rehabilitation hospitals,

researchers, community agencies, university and corporate co-developers of new technologies,

and family members all have become involved and have had to learn to operate differently in

relationship to each other.

Innovation, the adoption of new strategies, business and operating models, and changes

in the relationships between the participants and stakeholders in the complex healthcare eco-

system will profoundly impact the context for healthcare, in ways that will shape the ongoing

direction of the elements of the system. Out of this cycle of local learning and contextual change,

new patterns of healthcare will emerge. But change is not enough: whether the emergent system

will be sustainable will depend on whether sustainable effectiveness is an explicit purpose of the

innovators and whether the capacity to adapt is an explicit focus.

Becoming a sustainable system entails a reconceptualization purpose—and embedding

that new purpose in the system’s mission, vision and design (Mohrman & Shani, 2011). Because

of the temporal nature of sustainability, sustainable healthcare systems will depend

fundamentally on learning mechanisms built into the system to enable continual improvement

and adaptation through time. Learning mechanisms are structures and processes that are devoted

to the facilitation of understanding and action (Lipshitz, Popper, & Oz, 1996; Popper &

Lipshitz,1998). There is a need not only to design the new organization, but also to make design

choices about the nature and tapestry of the learning mechanisms to facilitate the transition and

to enable the system to continue to learn and change through time (Shani & Docherty, 2008).

38

The authors of each of the chapters of this book have described the learning approaches

that have enabled the system they are focusing on to make progress in implementing new

approaches, to learn from them, and to improve them. Because a property of a sustainable

healthcare system is that it adapts as the environment changes, a description of the changes that

are being implemented in these cases necessarily includes a description of the change and

learning approaches and capabilities that they are building into the way they operate.

It is a primary purpose of this book to generate and share knowledge about new ways to

deliver the value that society needs from its healthcare systems: These cases share experience

with innovations, new business models, new relationships with patients, new approaches to

improving the health of the population, new ways of integrating care across the various

components of the eco-system, new organizational forms, new use of information and

communication technology, the incorporation of technology as a foundation for sustainable

healthcare, new forms of governance, incentives, and regulatory elements that will constitute

sustainable healthcare.

Only through rapid experimentation and learning can transitions to sustainable healthcare

be achieved in time to address the urgent demands being faced. Those who pioneer approaches to

adapt to the new world of resource shortages and changing demands are inventing and learning

on behalf of the rest of us. We need to learn from their efforts and broadly disseminate

knowledge to enable self-organization and to accelerate the transition to a sustainable future

(Mohrman & Worley, 2010).

Organization of the Volume

39

This volume focuses on rich case examples of healthcare organizations and systems that have set

out to become more sustainable by adopting new approaches that better fit the rapidly shifting

context for healthcare. From these empirical examples we can learn about the substantive

changes they are making and what they are learning. We can also learn how they are trying to

embed the capacity for adaptive change into the way the organization functions. The intent of the

book is also to yield generalizable theory-based knowledge and extract principles that can

contribute to the design of sustainable healthcare organizations and accelerate the transformation

process that is required. Each chapter is anchored in, explores the relevancy of, and perhaps

even extends a solid theoretical perspective that illuminates our understanding of the case and

explores the power of that theory in guiding responses and solutions to the challenges we face.

In Chapter 2, Christopher Worley explores the seven-year journey to achieve a

sustainable model at Alegent Health, a large multi-hospital, faith-based healthcare system in

Nebraska that was formed through the merger of several previously independent hospitals.

Starting with a highly participative formulation of a mission and values statement that called for

becoming a world-class leader in delivering compassionate healthcare, Alegent quickly built a

capability, called the decision accelerator, to involve large multi-stakeholder and cross-functional

groups in rapid decision making and planning. New service line strategies, an award-winning

system-wide quality program, and an environmental strategy were among the innovative

approaches that were generated through the decision accelerator process. These were aimed at

improving clinical outcomes and financial performance, and reducing environmental impact.

Worley argues that the heart of the transformation is the redesign of the system for agility, and

that the decision accelerator capability and other organizational design features that promote

agility will underpin its capacity to continually adapt to a changing environment and be

40

sustainable through time. He argues that this way of conceptualizing the challenge of creating

sustainable healthcare is more apt than to define it through a series of initiatives.

In Chapter 3, Susan Albers Mohrman and Michael Kanter, M.D., describe fundamental

change in the Southern California Region of the Kaiser Permanente healthcare system, a region

that provides integrated healthcare to more than 3 million members. Beginning in 2004, the

Southern California Permanente Medical Group began the transformation of the healthcare

delivery model to focus on prevention and value. The authors apply the complex adaptive

systems framework to define the challenge of dealing with the complexity, uncertainty, and

variation inherent in a healthcare system. The chapter focuses primarily on the redesign of the

work systems and the pathways and processes through which patients move through this vast

complex care network to connect efficiently with needed knowledge, information, resources, and

providers to optimize their health. Inherent in the transformation is the development of the

capability to continually infuse the system with current medical knowledge and flexibly

reconfigure the pathways with evidence-based practices to address the needs of a highly diverse

population of members.

Chapter 4 deals with the key role of technology in driving healthcare innovation and

sustainable practice, focusing on the Villa Beretta Rehabilitation Hospital in the Lombardy

Region of northern Italy. Emanuele Lettieri, Rami Shani, Annachiara Longoni, Raffaella

Cagliano, Christina Masella, and Franco Molteni, M.D. apply socio-technical systems theory to

illuminate the need for and processes to synchronize the social and technical systems. They see

the alignment process as a catalyst to ongoing learning and increases capacity to address

economic, social and environmental outcomes. Because the introduction of technological

change disrupts professionals’ practices, participative processes for design and learning are an

41

essential part of the synchronization process and of deriving benefit from new technology. The

chapter looks very closely at the ways in which technology, when combined with the needed

changes in the social system, can be used to promote triple bottom line outcomes.

In Chapter 5, Peter Lazes, Liana Katz, Maria Figueroa, and Arun Karpur, MBBS,

examine the 16-year journey of the Montefiore Medical Center in the Bronx, New York, as it has

struggled to change and adapt in order to create a sustainable model for the delivery of care in an

underserved and highly impoverished metropolitan area. The authors describe a combination of

disruptive and adaptive change. The formation of the Care Management Corporation that has

assumed the risk for the complete care of a portion of the population served by the system

entailed the establishment of a new business model and new relationships with insurers,

providers and the traditional departments of the Montefiore Medical Center. This disruptive

change occurred simultaneously with extensive adaptive changes in the systems and processes to

increase the integration of care and achieve affordability and quality outcomes. A critical

message of the case is that fundamental change requires the alignment of the interests of many

stakeholders, who have to be brought into the change process. The authors particularly focus on

the importance of bringing front-line workers into the process, to design the new work systems

that have the levels of quality, service, and cost efficiency required for sustainable effectiveness.

In Chapter 6, Svante Lifvergren, M.D., Ulla Andin, M.D., Tony Huzzard, and Andreas

Hellström examine the development of clinical microsystems, as part of a broader

developmental journey of the healthcare system in the West County of Skaraborg, Sweden. This

journey started in 2001 and has involved the building of a coalitional management approach to

promote integration across three independent elements of care: the four hospitals that deliver

acute and planned care, the primary care system, and municipal nursing and rehabilitation care.

42

This paper deals with the region’s more recent focus on building work systems to integrate

healthcare across the three streams of care. The authors use the concept of clinical microsystems

to understand how a mobile team set up to provide care for the elderly with multiple diseases

connected to its larger three-entity healthcare context to provide complete integrated care. It also

closely examines the action learning approaches taken by this pilot team that has developed

approaches that can now be disseminated more broadly through the region.

In Chapter 7, Eilish McAuliffe, Tony O’Brien and David Coghlan examine how the Irish

Health System overcame years of political inertia to finally implement a plan to rationalize

cancer services. The plan involved the consolidation of cancer services into regional centers that

would be tasked with developing world-class cancer care services and with connecting

effectively to the many localities that would now send their cancer patients to these new centers

for care. The case focuses primarily on the phases and success factors of large-scale, disruptive

change in a highly politicized context. In Ireland, local politics trumped national-level decisions

and plans for a number of years, preventing the country from implementing sustainable

approaches to cancer treatment.

In the final chapter, Rami Shani and Sue Mohrman draw learning from the collection of

cases, particularly with respect to the challenges of capability development for sustainable

healthcare. We also chart an agenda for future research about Organizing for Sustainable

Healthcare, and offer a challenge to academics and practitioners alike to collaborate in the

acceleration of progress in this area.

One intent of this Emerald Series on Organizing for Sustainability is to ensure that

academic work captures and provides value to the real work of creating a sustainable world. The

43

volumes in the series do this by combining the perspectives of practice and theoretical

perspectives that provide insight into the challenges that organizations are facing. Sustainable

healthcare will emerge from changes in practice, as members of organizations and society come

together to craft new approaches. The work that appears in this volume confirms that there is no

shortage of ideas, activities, and energy around the import topic of sustainable healthcare, and

that some progress is being made. Change occurs system-by-system and situation-by-situation,

as early adopters use their ingenuity and resources to find ways to make a difference. It is also

clear that even the early adopters have a long way to go, and that we all have to learn together.

44

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