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Live from the CHIME Fall CIO Forum

October 26, 2011
by Mark Hagland
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Former HHS secretary Michael Leavitt describes the demands of a new era in global healthcare to attendees

Addressing some 600-plus CIOs and other healthcare IT leaders on Oct. 26, former Health and Human Services secretary Michael O Leavitt told his audience, gathered together in San Antonio, Tex. for the CHIME Fall CIO Forum 2011, that the healthcare industry faces an unprecedented era of change, based on the need to bend the healthcare cost curve, innovate new forms of delivery and contracting, and document and prove value. The Fall CIO Forum is sponsored annually by the Ann Arbor, Mich.-based College of Healthcare Information Management Executives.

Putting the current moment in healthcare into a global economic context, Leavitt told CHIME Fall Forum attendees that, while all previous initiatives to reform and advance the healthcare system have been strongly motivated by compassion, the changes that will take place globally in healthcare going forward will be driven more intensely by “global economic dispassion—in other words, the recognition on the part of policy and political leaders in all countries that healthcare has become too expensive and that its cost curve is unsustainable, and that it has not proven its value to purchasers.

Leavitt, now the chairman of Leavitt Partners, a healthcare and food safety consulting firm, went on to discuss the emerging reality that networks of all kinds—not just technological ones, but strategic ones, are now becoming core to all kinds of innovation and change, across all fields of endeavor. He noted, for example, the early harbinger of that trend in the 1990s, when, following the creation of the Star Alliance in 1992 by United Airlines and several partner airlines, within five years, every major airline in the world had joined one of three global airline alliances in order to compete.

In healthcare, Leavitt noted, three core types of organizations—hospitals, physician groups, and health insurers—are currently trying to strategize forward to determine which other types of entities to partner with; in other words, will hospitals and physicians partner to the exclusion of insurers? Or will physicians and insurers work together and attempt to commoditize hospital services? And so on. But, he added, the economic and strategic issues facing each of the three core types of healthcare organizations make the outcome of the such early strategizing difficult to predict. Still, he said, there is no question that partnering and networking for innovation—clinical, operational, financial, informatics, and strategic—will be essential to success going forward, at a time when healthcare reform and basic market economics are changing the landscape on the ground, as healthcare costs continue to explode.

“In the past,” Leavitt told his audience, “innovation in healthcare was all about a new molecule, a new device, or a new protocol. In the future, we will create new forms of innovation, to deliver value in healthcare, something we haven’t been able to define until now.” And, he said, all successful innovation going forward will be collaborative, and will be information technology-facilitated.

Leavitt was the second keynote speaker of the morning; he followed Clayton Christensen, the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School, and best-selling author of The Innovator’s Dilemma, The Innovator’s Prescription, and several other books that helped popularize the concept of disruptive innovation. Christensen articulated the phases of a cycle that he told his audience naturally takes place in every area of innovation, one in which early centralization of efforts and control ultimately gives way to a sustained phase of decentralization.

It is during the phase of decentralization that value evolves forward, Christensen emphasized. For example, he said, the early phase of information technology development that was focused on mainframe computers and then mini-computers naturally gave way in the 1980s and since then to a period, including during the present time, when all sorts of small, innovative players have been able to disrupt current practices and understandings. Unfortunately, Christensen noted, the healthcare industry faces some unique barriers to health system innovation, based on factors unique to it.

For example, he noted, nurse practitioners could readily be trained to provide effective colonoscopies at a lower cost of care from those currently provided by gastroenterologists; but the rigidity of the reimbursement system, which is kept in place through the power of physicians, will not allow for that otherwise-natural disruptive change to take place. It will require policy-level changes, he said, before some of the potentially disruptive innovation that needs to happen to transform healthcare can occur.

The Leavitt and Christensen keynote addresses took place during the first full day of formal educational sessions at this year’s Fall CIO Forum. But numerous CHIME members had already been in San Antonio for days, having participated in the well-known CHIME “boot camp” sessions that began on Saturday, Oct. 22, and which twice a year provide less-experienced CIOs and CMIOs with coaching and mentoring from experienced CIOs, in a small-group setting. Meanwhile, the Fall Forum’s educational sessions run through midday Friday, Oct. 28.

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