A Letter to Healthcare Leaders on ‘Transforming’ the System

In any industry, there’s a boundary of performance for which the operational state-of-the-art is attained. This is a place of maximum convergence and hyper-commoditization. It’s a place where expertise of the past has lost its balance, unable and ill-equipped to surf the steady-breaking set of big and heavy waves crushing conventional understanding. It’s a place where the relentless pressure to produce “profit” is distorting the market strategy, putting it ahead of outcomes as the central idea. This is also a place where leading with a battle cry of “transformation” has the inspirational and persuasive energy of an emoji.

This boundary is called the “productivity frontier,” which economist and professor Michael Porter, MBA, PhD, defined as the “sum of all existing best practices at any given time.” We’ve reached this point with U.S. healthcare.

As a general rule, you can’t “fix” an embedded economic system. And we’re not going to crack the mad riddle of healthcare by mounting long attacks on each other, or by chasing or buying operational “efficiency” in the hope it conjures shareholder value. That delivers what we have now: structural stalemate, static drift, innovation stagnation, systemic performance declines, a celebration of short-term wins, and a stunningly bad return on investment from a nearly $5 trillion annual expenditure.

Another problem with the healthcare system is a “festering weakness in business’s upper reaches,” as Peter O’Toole writes in The Guardian. Today’s leaders either don’t have the skills to meet the accelerating world around them, can’t affect change within their own organizations, or are too afraid to make a mistake and fail. But as we close out 2024, career collapse has become the operative ethic. Five CEOs of major companies have “abruptly quit” in the past month, four in the past quarter, and another four in the past year.

Big-business strategies and agendas have become aggressively anti-common sense — and this, of course, includes healthcare. We are confusing the PowerPoint for power. Cost-cutting is devouring industries and lives. Groupthink is eating new think for breakfast.

For the most part, we’re either asking the wrong questions, or our questions are based on the wrong framework. The big idea machine is broken.

Stuck With a Fragmentary Worldview

There is a “division of labor,” which is seen as the path to productivity, an economic concept introduced by Adam Smith in the first sentence of The Wealth of Nations in 1776. But as a frame to guide modern competitive strategy — the stuff of vision, ideas, and discussion guides — mathematical gymnastics around a single market is not only intellectually fraught, it’s a general form of analytical thinking in terms of pieces and parts, a fragmentary worldview, that’s become the root cause of the multi-dimensional dysfunction that’s been sustaining a “massive crisis” in healthcare for decades.

Healthcare is a “nested market” — its main feature is the density of structural linkages and interactions that cut across domains. This refers to everything from clinicians to pharmaceuticals to insurers to government. By not understanding how to create with complexity, there’s no vision or understanding of how to develop policy that enables “market interoperability” — an innovation agenda to cohere the “commercial determinants of health” in a way that produces better economic systems.

Said another way:

In healthcare, it’s not just one market that drives innovation and determines “value,” but an infinite flow of them. If you accept that premise as your jumping-off point, then what follows is this simple idea: real strategic advantage goes to the side with the skills to harness a carnival of markets and manage them as a single economic unit, as a system of markets, cohering and collaborating on shared space for growth.

A New Direction for Healthcare

Markets fare better when they link capacity-building.

To date, attempts at healthcare system reform have targeted each individual component in isolation: health plans versus provider shortages versus drug makers versus PBMs versus the government. But they’re all deeply intertwined markets.

In a guest opinion piece for the New York Times titled, “UnitedHealth Group CEO: The Health Care System Is Flawed. Let’s Fix It,” Andrew Witty wrote, “We know the health system does not work as well as it should, and we understand people’s frustrations with it. No one would design a system like the one we have. And no one did. It’s a patchwork built over decades. Our mission is to help make it work better. We are willing to partner with anyone, as we always have — health care providers, employers, patients, pharmaceutical companies, governments, and others — to find ways to deliver high-quality care and lower costs.”

This is what we — proponents of reform — have been saying for decades.

The capacity to “see, say, sell, and sustain” is a rich vein to mine for originality. No magic wands, hyperspace missions, moonshots to save humanity from itself, generative AI capabilities from technology vendors promoting access to galaxies far, far away. Just a different brand of imagination, the kind with the power to punch through and persuade.

The things to align are the fragments to health: the social determinants of health and the commercial determinants of health, inter-operating as a single, balanced, and living ecosystem. The “production of affordable health” is the organizing idea around which to drive large-scale system change.

The era of linear solutions is over. Ditto for the quick fix of the thing that’s not fixable.

Avoiding ambiguity and shying away from complexity is understandable. Pretending it doesn’t exist is foolish at best and fantasy at worst. It’s time to break the standard model of thought and inaction.

A big strategic rotation starts with a brick through the window of convention and cliché.

The thing needed across the board is a different brand of strategic communications, able to articulate and propagate a new direction, new concepts, and storytelling to help people navigate the kinetics of collapse in a way that leads to market innovation. “Lowering cost” isn’t the problem to chase and fix; the problem to chase and solve is “producing health” as an organizing idea to lead the next cycle of innovation in healthcare.

Let the modern realignment begin.

John G. Singer is executive director of Blue Spoon, the global leader in positioning strategy at a system level.

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