Transforming Healthcare: Data Alone Is Not Sufficient (Webinar)

Transforming Healthcare: Date is Necessary But Insufficient.  What else is Necessary?

A conversation between Dale Sanders and John Kenagy, MD

[Dale Sanders]

Thanks Tyler.  Good day, everyone.  It’s my pleasure to welcome you to today’s webinar.  We’re honored to share this time with you.  As the title of the webinar implies, the focus today is less about technology of analytics and more about the culture of analytics adoption.  And that picture on the front page of the presentation is kind of a good example of that.  What we’re really talking about are the people and the culture of analytics adoption, not so much the technology.

Normally, you know, the webinars that we sponsor, we try to be very precise and prescriptive about our opinions on various topics, and agree or disagree with those opinions, we don’t want you left with any uncertainty about our thoughts.

Today’s webinar is a little different because we’re dealing with the topic that is inherently less precise than the technology of analytics, and thus, it’s a little more difficult to precisely express firm opinions about today’s topic.  So our hope today is that we provoke some reflection and some self-awareness that you can apply to your own opinions and your organization’s unique cultural needs on analytics.


It’s my distinct pleasure to introduce and share the time with Dr. John Kenagy.  He’s a dear friend and colleague.  He’s well renowned for his work in this area of cultural adaptation and the transformation of healthcare.  He knows healthcare as a physician, an executive, an academic researcher, an advisor, and a patient, in particular.  In addition to his experience as a vascular surgeon, he’s been chief of surgery, chief of staff and regional vice president at a not-for-profit system.  And of course his most meaningful experience came as a patient and we’ll talk a little bit more about that.

Searching for new answers as a consequence of being a patient, John became a visiting scholar at Harvard Business School, working with Clayton Christensen to translate into healthcare the drivers of success from resilient highly adaptive companies like Toyota, Intel and Ideal.  The result is what he calls adaptive design, and he’s going to talk about that in greater detail in his slide.  His contributions to healthcare have been widely recognized.  He’s a clinical professor of surgery at the University of Washington.  He’s an adjunct professor of pharmacy and therapeutics at the University of Pittsburg.  He’s had a best-selling book called ‘Designed to Adapt:  Leading Change in Challenging Times’, a great book and it was named ‘The Healthcare Management Book of the Year’ by the American College of Healthcare Executives a couple of years ago.  And Forbes has referred to John as the man who could save healthcare.  So again, our pleasure to share this time with him.

Analytic Success

Before we turn things over to John, I’d like to set up a context of the discussion with just a few slides of my own.

So, a friend of mine, good friend, John or Jill Pollman at Community Health in Indianapolis, shared this with me a couple of weeks ago.  And he said the way that they look at analytic success is in three steps and the importance of those steps occurring in sequence can’t be overstated, and that is you have to establish a mindset within the organization, starting at the C level, about becoming data driven and becoming an adaptive organization.  Once that mindset is established, then the leadership has to also establish a firm strategy for developing the skill set of data analytics in the organization.

All of us need to raise our data literacy skills to become data driven in the industry.  And then finally, once you got those in place, then establishing the toolset to support that culture is the last step.  And unfortunately what I see in the industry, even to some degree to some of our clients, is that we deploy toolsets without an appropriate mindset or skill set, and that technology sits underutilized, and the return of investment in that technology is lower than it should be.  So we’ll talk a little more about how to adjust this mindset and skill set and get things going in John’s presentation.

Actionable Data = Pr x Tf x Et

When John and I were preparing for this webinar, we talked about actionable data, and it struck me that it’s a term that we drill on a lot and I’m not so sure I’ve ever fully understood what it meant myself.  So we took a few seconds to define it in our terms, and we decided there were three variables in the creation of actionable data.

First is the data has to be personal, by name, by role and ideally injected in the workflow in which that data is attempting to optimize.  So it’s not good enough to send out reports on analytics that stop at the organizational level or even at the team level.  What you really want to try to do in the design of analytics technically is drive that granularity down to the individual by name, or at least by role, because that’s where behavior changes.  Behavior doesn’t change at the organization level, it changes at the personal level.  The data has to be timely and fresh, high quality, delivered at the right time and at the right place just like good medications.  And then finally, and this is the most important part, the person that is attached to that analytics must know how and what to do in response to the data.  They have to be trained about how to react and that’s where the action comes in.

Feedback and Adaptation from Analytics

As an analytics design guy, I can provide that personal and that timely data technically.  I can do that.  What I can’t do as an analytics design guy is get the organization to teach the employees how to react in response to that data.  So it’s really important that the two-halves of adaptation in healthcare, that is the patients and the clinicians and healthcare providers really need to adapt most in the future of healthcare.  They have to have a means for doing that and the data has to be actionable, so that that slides in the middle, that analytic technology that always grabs and charts the things don’t go wasted.  So John is going to teach some thoughts up for us about what this adaptation looks like and how to create that in your organization.   And I think with that, then we’re ready to turn things over to Dr. John.

Data and Adaptive Capacity

The Key Takeaways

[John Kenagy, MD]

Well thanks, Dale, and it’s a pleasure for me to participate in this webinar and thanks to all of you for joining, and we want to make this an interactive experience.  So please contribute and ask current questions.  I’m going to raise some controversial issues in this webinar.

And so, readiness for transformation, that’s a big subject.  So let’s get started.  So if data is necessary but insufficient, that’s a controversial issue in and of itself.  So here’s an overview of what we’re going to present today as sufficient.

To be ready to use data effectively, it’s essential to increase your organization’s adaptive capacity and that starts with the ‘take action’ strategy.  That starts with leadership and management.  To be meaningful, data has to do something.  So we’re going to present strategic opportunities for leadership to increase the adaptive capacity of your current resources to create new value.

Secondly, to accelerate progress, strategy must link directly to execution.  So we’re going to outline practical methods, processes and tactics that increase adaptive capacity.  And since data drives process, we’ll also identify key numbers you need, including a new predictive metric – the Adaptive Capacity Index.

Finally, to develop mastery, you need more than strategy process and data.  Just like Dale showed, you have to connect with and coordinate your most valuable resource, your people.  We propose that using the Adaptive Capacity Index as a guide, new behaviors will predict key performance indicators, your KPIs like profitability, patient satisfaction, quality, all those numbers.  You can predict those 3 to 6 months in advance.

This webinar will conclude with a review of these key takeaways and an opportunity for one organization out there to systematically adapt and innovate at a rate far exceeding your peers.


So let’s start by talking about adapting.  And as Dale mentioned, that’s me.  That’s me on the left and me on the right there.  Many years ago, on the left, I was graduating from the University of Nebraska Medical School as a brand new MD.  I was ready to start a surgical residency at the University of Washington.  But the multispecialty surgical clinic that I eventually joined was dealing with issues that were not included in any of my academic training.  The managed care revolution was just developing on the west coast in the early 1980’s.  As a young surgeon, I embraced managed care.  It made sense to me.  I adapted and negotiated one of the first capitation agreements now called “bundled payments” for surgery between our clinic and Kaiser Permanente in 1981.  And we prospered.  The contract lasted for more than 25 years.  But almost imperceptibly, the more we talk about per member per month payments, risk tools, medical loss ratios, the easier it is for that word ‘patient’ to become less part of the conversation.  That’s why I really like your second slide, your slide, which included the patient on there, Dale.  I think that that’s something that can get lost in all these.

Well for me, suddenly and unexpectedly, I became a patient.  In 1992, I fell out of a tree and broke my neck.  If you want to know what I was doing up on the tree, you can just email me and I’ll tell you.  So here you have the typical doctor adapting to a broken neck.  Although I was disabled for 6 months, I fortunately made a complete recovery.  I learned a lot during that experience but not from the journals I finally had a chance to read.  I had many wonderful things happened to me but as I watched from my bed, it became obvious that many of those wonderful things happened on the back of an individual going the extra mile to make sure I got what I needed, not what the system was delivering to me.  And it also became clear that the system at times could clearly get in their way.  That experience changed my thinking.  Talk about mindsets.  We’re going to talk a lot about mindsets.  And my mindset changed.  What if the system made it easier for patients to get what they needed?  That’s a great opportunity.  The doctors don’t change systems.  We’re busy taking care of patients.  Managers and executives change systems.  So if I were to make a difference, then I’d have to become a manager.  And I adapted and I did.

The Promise of Managed Care

Supported by my surgical partners and the hospital, I became an executive, eventually a regional vice president for business development in the health system and the vanguard of the managed care revolution.

So this was the promise of managed care in the 1990’s.  This picture, dedicated committed managers and executives gather data from the workplace, analyze, plan, and predict in meetings.  Gone are the advice of wise consultants and industry experts.  We forecasted efficiencies for our surgical teams, great new technology and that smiling staff would enjoy using to improve care and meeting the needs of satisfied patients at continually lower cost.

Well also how are we doing?  We have been managing care for, in my experience, more than 40 years.  What’s our report card?

The Cold, Hard Reality

“A” for technology, “F” for value

The data is clear.  This is a very cold hard reality.  Managed care is not delivered on its promise.  The managed care revolution began back in that corner down there in about 1980.  For me, that’s when we developed prospective payment for surgery.  Since that time, US Healthcare costs have not decreased, they’ve skyrocketed.  What has this investment given us?  Again, the cold, hard reality.  This is the depth, our quality is only mediocre compared to other developed countries.  So much more costly care for mediocre quality, news.  But we get an “A” for technology but an “F” for value.

So who’s fault is it?  Who’s or what’s to blame?  I hear blame passed around all the time now.  It depends on who you ask.  It’s the doctors or the hospitals or the insurance companies or the fee for service system or the regulators or the government.  Now, many people feel our president is to blame, or maybe it’s the patients.  They’re just not healthy enough.  Well I say let’s stop the name-calling.

It’s an Adaptive Capacity opportunity

This is an opportunity.  We don’t lack smart, dedicated, committed people.  Marvelous technology.  Great facilities.  And compared to our peers, in other countries, we certainly don’t lack for money.  I propose this is a wonderful adaptive opportunity.  For the last 40 years, we’ve gathered more and more data to analyze, plan and predict solutions to implement.  Management teams are working harder and harder.  Clinicians are working harder and harder in often not very satisfying circumstances and costs are continuing to increase.  If you have been sick lately, you’ve experienced that the cost of care is an increasing problems for our patients and their families.  Initially, I thought the answer was finding a way, a better way to get more data up faster and implement that more quickly.  But I was wrong.  I’ve adapted.  Our opportunity is to increase the adaptive capacity of our current resources to create new value.  And there’s a clear pass to that result.

Discovering the Solution

So here’s two lists of companies.  List 1 companies and list 2 companies.  So what’s the difference between the list 1 company and the list 2 company?  So ask yourself.  Where is the profitability?  List 1 or 2?  Where is the innovation?  The new products and services?  Where’s the growth?  Where are the bankruptcies?  Where would you want to work?  I think most of us would agree the positives lie on the list 2 side.

So here’s two more differences.  First, the list 1 companies were the leaders in their industry, with all the power, immense resources, really smart people and great technology who fail to develop simple innovations. List 2 companies used fewer resources to create tremendous new value.  Secondly, when the list 1 companies discovered that they were losing competitive advantage, they were unable to make the transition.

This is Harvard Business School Professor Clayton Christensen’s theory of disruptive innovation.  In 1997, I was in the second class of Clayton at Harvard Business School.  He really stretched my brain into a new place when he asked me to join him as a visiting scholar of Harvard Business School.  So I adapted and I took the opportunity.  Clay’s work shows that it’s almost impossible for an established successful list 1 company to compete in the disruptive marketplace.  That’s why he called his theory disruptive innovation.  The almost impossible means it’s possible.  If 95% of established companies fail to organically innovate, 5% succeed.  I adapted my research to discover what the characteristics of success are for the 5% who break the mold and thrive.

What’s the root cause?

So here’s the root cause.  Good organizations become great by being the best at optimizing their products and services, continually improving what they know how to do.  But characteristically, they find it difficult to do what they don’t know how to do to adapt and innovate.  On the other hand, these list 2 companies, they were excellent at optimizing, but what set them apart was their capacity to adapt.  I had the opportunity to work with Toyota and the Toyota Production System experts for two years in the Harvard Business School Initiatives that discovered how and why Toyota is actually not lean.  I was the academic advisor to a consulting firm that worked with Intel in the late 1990’s.  When they developed $60 billion worth of new business, I’m related to their core capabilities and best-selling highly optimized Pentium chips.  I’ve had connections with Apple and found the Southwest Airline story very compatible with the adaptive opportunities we have in healthcare.  So what’s the difference?  These companies were great at optimizing and adapting.  They had adaptive capacity.  List 1 did not.  One of the secrets of their success is that they understood that organizations don’t adapt, just as Dale said in his introduction.  It’s the people inside the organizations that adapt and these companies thrive on increasing the adaptive capacity of their people through some insights.

Next slide…


We don’t think our way to new ways of acting.

Here’s some insights into adapting.  So why don’t we adapt?  Recent research in the neurophysiology of human decision-making provides new insights, into creating readiness for success.  Successful people find it difficult to adapt because most of us can’t think our way to new ways of acting.  Dr. Evian Gordon’s research opened my eyes to how the human brain works.  He inspired me to adapt and learn more about how brain function affects adaptive capacity and organizations, and here’s a brief overview.

So we have got 100 billion neurons.  They develop a marvelous capacity in humans to identify behaviors that have led to our paths to success, and as we succeed, our brains non-consciously record those responses.  That’s a great attribute.  The more successful we are, the more we hardwire the behaviors that led to our success.  We reach a point where we don’t have to think about what to do to succeed.  We just intuitively know what to do.  Well that’s wonderful.  The deeply embedded behaviors become problematic when success factors change.  That’s when we need to adapt and act differently, but neurophysiologically that’s very difficult for most people.  You know the proverb, “Tiger can’t change his stripes.”

Now, I want you to think about this.  You have seen this happen.  When success factors change, think of the times you’ve seen intelligent people start to consistently make unsuccessful choices, no matter what the data shows.  It’s not a failure of thinking, it’s the way our brains are designed to think.  Data requires thinking.  That’s why data is necessary but insufficient because for most of us, our powerful neurophysiologically embedded biases override that thinking.  So if data and technology are not sufficient, what else is necessary?

Next slide…

Adaptive Capacity

Well these and numerous other companies show what’s necessary is adaptive capacity.  Most established successful companies are great at optimizing but they have low adaptive capacity.  They find it almost impossible to do what they don’t know how to do.  The few who excel in times of change are also great at optimizing, but in addition, they have high adaptive capacity.  It’s not either/or, it’s and.  Well you might agree but I’m sure some of you out there are saying, “Well so where’s healthcare?  There’s no healthcare on this list.”  Okay.  So…and what is your organization?

Next slide…let’s take a look.  Let’s do a mini Adaptive Capacity Index.

Adaptive Capacity Index

Poll Question

So we’re going to take an audience poll based on this list.  Five organizational attributes. All recognized by experts as important.  I want you to pick the one on this list that your current system sees as very important.  What’s the big strategic focus, what’s #1 for senior leadership, what’s driving the corporate agenda?  Remember, pick only one.  Even if it’s not a perfect match, what’s your closest choice?

Alright.  We’ll go ahead and close that poll right now and let’s take a look at the results we have here.  Dr. Kenagy, it looks like we’ve got 17% on developing more people and teams, 32% on consolidating services and hitting performance goals, 11% on doing local experimentation and learning, 32% on cost control and standardizing best practices, and 7% on increasing frontline decision-making and control.

[John Kenagy, MD]

That’s great and thanks, Tyler.  And this really fits a pattern that I see across the country.  I’m interested actually because in this group out there, you actually scored a little bit more adaptively than most organizations.

Adaptive Capacity Index

Behaviors predict performance

Most healthcare organizations are focusing, as I go around the country, on consolidation of services, particularly heating their performance goals, profitability, age gaps, decreasing readmissions, increasing patient satisfaction.  You know the litany hit your numbers.  Or there is a major emphasis on cutting cost and standardization, particularly standardizing around best practices.

But in the highly adaptive companies I worked with, I saw a different Adaptive Capacity Index.  There was a predictable focus on developing people and teams.  I consistently saw a local experimentation and learning.  And very importantly what was lowest in our poll, the development of rapid decision-making close to where value was created was a key attribute, highly adaptive organizations.  Decision-making close to the frontline of the organization.  As you see, the Adaptive Capacity Index has both positive and negative components.  The starred attributes enhance adaptive capacity; and the X’s, although perhaps very important for optimizing, actually decrease adaptive capacity.  If you want to assess your organization’s Adaptive Capacity Index more completely, we have a questionnaire on my website.  Just send us an email and we’ll give you the link.

Adaptive Capacity

Where’s healthcare?

So what’s US Healthcare’s Adaptive Capacity Index?  We just measured it.  Most of us are on the optimizing side, 60% or more of our group today.  And as we saw on our managed care report card a few minutes ago, optimizing the data up to implement down the system is not working.  So increasing adaptive capacity is a great opportunity for us and I think it’s a great opportunity for you.  So here’s how practically you might do it.

Data & Adaptive Capacity

You act your way to a new way of thinking

And it goes back again to how our brains work.  Data is necessary, but as Dale said, it must be linked to action.  You can’t think your way to a new way of acting.  You have to act your way to a new way of thinking.  These are the predictably successful steps.  First, leadership sets direction with a clear consistent meaningful value proposition.  There’s a lot we can talk about it in terms of what’s a meaningful value proposition.  Then, they develop and accelerate this cycle.  The cycle that you see right in the center right there, information data links directly to action that links quickly to verifiable results.  Adaptive organizations make it easy to agilely create new value through this cycle.

Next, highly adaptive organizations close the loop and use those results to improve the information that drives the cycle.  You see, data itself is improvable.  That’s the value of having an adaptive data warehouse.  Finally, the best adaptive organizations make it easy to consistently accelerate and replicate and scale the cycle.  It’s embedded into the work.

Here’s the natural fit to brain physiology.  We have self-regulatory circuits.  You can see on the brain on the right there.  We have self-regulatory circuits in our brains.  Organizations with a high adaptive capacity develop work environments that activate those circuits and enable people to make progress in real time.  The desire to make meaningful progress is a basic human characteristic.  We break out of our deeply embedded intuitive behavior patterns on the left there by making progress and experiencing success working differently.  It’s experiencing success that makes the difference, not more data.  That progress energizes new neural pathways that become new habits and behaviors.  That increases the momentum of progress to further enhance success both individually and organizationally.  Progress and momentum become mastery.

Next slide please…

Progress, Momentum, Mastery

The desire for progress, momentum and mastery is a basic human characteristic.  We admire virtuoso performers, whether they’re great musicians or Olympic champion athletes.  But how did they get that way?  They didn’t think their way to mastery, they acted.  They practiced.  Traditional optimizing organizations try to find and hire virtuosos.  Great adaptive organizations create virtuosos.  For every great musician, there are millions of people who play musical instruments for progress, momentum, and their own level of mastery.  For every Olympic gold medalist, there are hundreds of thousands of people who skater ski and millions more who engage in amateur sports for those same reasons.  The potential of the average human being, particularly in our industry, is unbounded.  Organizations with a high Adaptive Capacity Index enable average people to make progress, momentum and mastery part of their everyday work.  Organizations with a high Adaptive Capacity Index democratize success.  That’s our opportunity.

Next slide…

Adaptive Capacity Leadership

So here’s the first step to democratizing success.  You start on the path to increasing adaptive capacity when leadership strategically takes action.  In every adaptive organization I worked with or studied, successful leadership took one specific action.  They identified places close to customers or patients to be innovation incubators inside the organization to learn and to adapt.  Then they set direction with a clear consistent value proposition and develop rapid decision-making close to where value was created.  So instead of gathering data and moving it up to decision-makers in meetings, adaptive management develops, aligns and coordinates decision-making close to where information and value are being created.  So instead of moving data up, the transformational 5% move decision-making down.  One more key to their success in doing that, these changes are designed to be low risk and high reward rather than massive initial rollouts or major capital investments.  The secret to success is to find one, two or maybe at most four or five places to develop, test, and validate increasing adaptive capacity.  Only then they replicate and scale that success, low risk, high reward, small, simple, safe, and fast, with the help of many organizations to create dozens of these innovation incubators using adaptive design in healthcare.  We call them learning lines.

What data do we measure?

Say you’re driving your car to a place you’ve never been before.  If you use this technology to decide where to go, what data are you collecting and analyzing?  And where is it coming from?  That’s right.  It’s the rearview mirror.  If we decide where to go by looking at where we’ve been, we might optimize an old established path.  But if we’re going to a new place, just looking backwards won’t get us there.  Optimizing based on retrospective data is a persistent malady and establish traditionally managed organizations in every industry.  Depending on retrospective data to innovate is a high risk and low reward.

The opposite of what we want…next slide…

Data in Context & Progress

Timely, role-specific, actionable data with rapid feedback

In complex, dynamic, unpredictable work environments, data must be centered on the present.  It must be forward-looking and it needs to be collected and analyzed in context.  Timely, role-specific, and actionable, exactly what Dale said.  Remember those words.  Those are very important – timely, role-specific, actionable, and with rapid feedback on the actions that you take.  Those are important metrics.

Here’s a healthcare example.  This data is from a busy medical surgical unit that was chosen to be a learning line in the Midwestern Community Hospital.  The first step is to establish what’s happening now, what’s the current state.  You do that through timely, role-specific, direct observations.  Not focus groups, not surveys, not studying the policies and procedures manual.  And that very rapidly gives you an accurate diagnosis.  In this case, observing nurses, we found they spend about a quarter of their time with patients, 37% of their time doing job description administrative work, the rest of their time, that other 40%, is full of opportunity.  So these are activity-based cost data.  This is activity-based cost data.  These nurses were hired to care for patients and do their assigned administrative work.  Ideally, that’s all they would do; therefore, everything else is a workaround or some other impediment to the activities they need to do.  This nursing observation has been repeated thousands of times in hospitals from 20 to 900 beds.  The pattern is predictable and persistent, this pattern.  Coupling this evidence with the true cost of an RN estimated by KPMG to be $98,000 a year and you now have accurate activity-based cost data for all the nurses on the learning line.  So this hospital was paying their nurses about $22,000 a year to take care of patients and $76,000 to do everything else.

In adaptive design, that’s data you can act on.  Link that data to action and anything that changes activity-based cost into more patient care is creating new value from current resources.

Next slide…

Data + Momentum

The key to progress is increasing the momentum of that cycle, information – adapt – new value – information.  We do that counter-intuitively by eliminating projects, rapid cycle work, PDSA initiatives, improvement, advance, and implementations.  Instead, we embed this adaptive improvement cycle into everyone’s everyday work.  So this unit created 135% more nursing time for patients by formally repeating this cycle 244 times and doing hundreds of other small improvements in a little over one year.

Next slide…

Data & Increasing Adaptive Capacity

Deliver Results, KPI’s and Insight

Data plus increasing adaptive capacity is a powerful combination.  Changing the unit’s activity-based cost profile led to those bar graphs on the right, which is the greatest increase in patient satisfaction to the 17-hospital system.  And 3 to 6 months later, all the key performance indicators, they’re logging what’s actually happening.  They all followed because the behaviors of staff and management, they’re on the left-hand corner.  The behaviors of staff and management had changed in verifiable, improvable, scalable ways.  So on this unit, improvement was not a project and quality was not a department.  They’re everyone’s job every day.  You can measure those behaviors with an Adaptive Capacity Index and predict your future.  So that’s insight in the opportunity for new predictive analytics.

An Adaptive Design Predictive Analytic Opportunity

So this is the adaptive design analytic opportunity.  On the right-hand side of this slide, there’s undeniable evidence you can democratize innovation and drive your KPIs with progress, momentum and mastery.  But it’s also clear that management on the left currently does not have the information needed to be able to leverage this capacity.  Retrospective data coupled with deeply embedded data up implement down mindset.  They all mention changing mindsets and this is all about changing mindsets.  Those mindsets and methods weigh management down and it inevitably slows and stalls adaptive change.

Management quite simply does not have the information they need to improve in the complex, dynamic, unpredictable world of healthcare.  It’s not a personal.  It’s not a performance.  It’s not a professional problem.  It’s a system problem.  We have a mid-20th century management system that moves data up to decision-makers and implement solutions and it does not deliver the information management needs to lead 21st century healthcare.  We propose closing the gap between the two and creating new insight for management, insight into your future KPIs.

Here’s how…

Data & Adaptive Capacity

Mastery and Predictive Analytics

First, take low risk high reward action.  Democratize adaptation and innovation in one place in your organization.  No problem should go higher in the organization or use any more resources they needed to ensure a rapid, verifiable, sustainable, systemic improvement.  Prove you can make progress, momentum and mastery.  That’s the first step.

Secondly, use an Adaptive Capacity Index to start projecting future KPIs 3 to 6 months in advance.  This new behavioral data can provide actionable guidance, supporting and reinforcing the practice of adaptive design and coordinate improvement across large organizations.  That’s progress, momentum and mastery for management, facilitating improvement, not doing the improvement.

Finally, third, create meaningful use for predictive analytics in your organization.  That’s that little connecting point from the frontline back to the management team.  Timely, role-specific, actionable financial data, activity-based cost data.  Data on behaviors that predictably and persistently create new value can flow from a data warehouse to management in real time.  When integrated with your existing IT systems, analytics and KPIs, this information will enable you to systematically adapt and innovate at a rate far exceeding your peer group.  That’s progress, momentum, and mastery and a chance to thrive in 21st century healthcare.

Data & Adaptive Design

So here we are.  These are our takeaways.  We’re interested in your thoughts.  Now, this is counter-intuitive.  This is not a traditional message.  We believe management can safely take action and create readiness.  We can continue to optimize and we can strategically increase adaptive capacity.  It’s a low risk, high reward choice.  It’s not either/or, it’s ‘and’.

Secondly, we can use data to think and act our way to new ways of thinking.  Linking data to action, to new value results, and then feeding that information back as a closed loop and doing Adaptive Late-Binding ™ Data Warehouse is a powerful force to accelerate improvement.

Third, being able to identify, develop, and scale the behaviors that increase your Adaptive Capacity Index will rapidly create new value and give you predictive guidance on your KPIs 3 to 6 months in the future.

Adaptive design is a self-sustaining system to design, do, and improve complex work within and across disciplines.  The data, methods, skills, and tools were all documented in my book, designed to adapt, leading healthcare in challenging times.  Guidance for doing adaptive design is also now available on the web.

In appreciation of your participation today, we’ll offer a 15% discount on the book to registrants of this webinar.  Just contact us and we’ll send you ordering information.

An Adaptive Data Opportunity

Low risk, high reward

Finally, readiness requires taking action.  Who wants to be in the thriving 5% as healthcare undergoes in historic transformation?  Here’s an opportunity for one organization interested in being ready to linked down at the action to new value results in real time.  An Adaptive Data Warehouse is essential for success.  We propose to connect with our current or potential future Health Catalyst clients interested in exploring what’s possible with Adaptive Design and Late-Binding ™ Data Analytics.  It’s a low risk, high reward opportunity to act your way to a new way of thinking and leadership in US Healthcare.  For information, contact us at

Data & Adaptive Capacity


Thank You


Dr. John Kenagy:     Well Dale, I have one more slide to close.  But before that comes up, let’s pause for questions and comments and thoughts.

Dale Sanders:          Great.  Thanks, John.  There’s a couple of questions.  Let’s see what folks have asked.  And we encourage others to submit those as well.

So from Ryan Eslinger, we have, “How do you solve for the timely data issue when healthcare is largely retrospective, particularly from the standpoint of healthcare’s life blood, encountering healthcare claims data?”  What’s your thoughts on that, John?  And then I’ll offer my thoughts too.

Dr. John Kenagy:     Yeah.  You bet.  That’s a perfect question.  And it’s a change in mindset.  And actually this is a behavioral change for management.  We are deeply embedded in looking at all that retrospective data.  Well, that’s’ fine.  But the opportunity to look at where we are now and look forward is the key, and you develop that skill set, that’s an adaptation.  For management to be able to learn to do that, you have to create it and do it.  You have to actually take action.  So the way that you make the transformation, the way you make the move is to actually do it but do it in a low risk way, do it in a low risk, high reward way.  Identify a spot or several places in your organizations to do that, link with your management team, and discover the opportunity.

Dale Sanders:          I’ll offer a thought on that too, Ryan.  I’ll use the contrast to highlight kind of where we are versus where we need to be in healthcare.  We collect on average about 100 Megabytes of data per patient per year, and I know that based upon my calculation as a CIO in management of storage for our electronic medical records on our encounter data.  In contrast, the Boeing 787 will collect 500 Gigabytes of data in a 6-hour flight.  So we’re collecting about 100 Megabytes per patient per year, Boeing is collecting about 500 Gigabytes of data on a flight in 6 hours.  And so, what we have to do in healthcare is we’ve got to figure out a way to increase the sampling rate of data that we collect about our healthcare.  It can’t occur once or twice or three times a year during a clinical encounter.  We have to start thinking about how we monitor people’s health 24/7 and how we become proactive in the use of that data.  That’s my thought on that.

Dr. John Kenagy:     Dan, I think that you hit it and there’s a huge opportunity, a gigantic opportunity.  There’s a huge amount of data that’s sitting out there.  The ability to get at the data in the context of the work as it’s happening and to make sure that the data is distributed in a timely, role-specific, actionable way is essential.

Dale Sanders:          Yeah.

Dr. John Kenagy:     And you develop that capability.  You don’t just implement it.  And you don’t hire a consultant to input it.  You develop it.  That’s the capability we’re interested in developing.

Dale Sanders:          Let’s ask another or address…we got a handful of good questions here, John.  “How do you foster adaptive behavior in a market that still reinforces behavior within a fee for service payment model?”  That’s from Michael Londell.

Dr. John Kenagy:     Well I think, again, and that gets to doctors and here I am as a doctor.  So how do you get those doctors to change behavior?  Think back to those brain slides, and I do lot of work now along helping people understand how they can leverage normal, natural neurophysiology to do this work?  How do you change doctor’s behavior and performance?  Well, you find some doctors to work with and you allow them to participate in one of these learning lines.  As a matter of fact, you encourage them.  You engage them.

So here’s rules of thumb, really quick: don’t take a fortified hill.  You know in your organization who not to include among the doctors.  You know that.  And if you don’t know, just ask, people will tell you.  But you will have doctors who are ready to look if it can be safe for them, that can be safe for them, and then have them become part of the learning line.  What you’ll discover is they’re part of the problem and become part of the solution, and you’ll make their life better.  The fastest way to get a doctor to change is for him to see another doctor who’s got a toy that he doesn’t have.  Create some toys for doctors to be successful and then build on them.

Dale Sanders:          Yup.  Great.  Thank you, John.  Let’s see.  Here’s another.  “How do you change the organizational mindset on a proactive basis?  What is the driver for change?”  That’s Robert Beltran.

Dr. John Kenagy:     Well, one thing, and Bob is doing great work and asking great questions in about health disparities.  Terrific work.  One thing we didn’t talk about, and it could be a subject for another webinar, we haven’t talked about the details of doing this.  This is a high level view.  A clear consistent value proposition, first of all, you have to have a place to work, a small specific place to work, and then this clear consistent value proposition that gives people a purpose.  It is never your EBIDA numbers.  I mean it’s just not that.  But you can design, and the book actually discusses what are the kind of value propositions that really engage people.  Then the value proposition creates the purpose and then the Adaptive Design Methodology gives people the opportunity to make progress toward that purpose in real time.

Dale Sanders:          Awesome.  Thanks John.  I might also mention too that I’m a little tainted.  I believe that healthcare provider organizations should be more proactive on their own moving towards value-based purchasing.  How often have you heard of a hospital or an IDN CEO going to a third-party insurance company and saying, “Look, we know we’ve got to get out of the fee for service model.  So let’s starts building a per case and a per capita contracting model right now.  We as a healthcare provider organizations are willing to take that first step.”  Right now, I feel like we’re waiting for the federal government to drive that through CMS reimbursements and to some degree we’re waiting on the insurance companies to drive that but I think healthcare providers could be more proactive with that.

Dr. John Kenagy:     I’ll be a little stronger.  I think we have to be.  Waiting for the government, waiting for the insurance companies is the worst idea we can do.  The farther you get away from the point of care, the less you know about value, and it’s not that those are, you know, the government has good people, insurance companies are good people but they can’t know what’s going on.  And you’re exactly right, Dale.  Being proactive of in making the transition from volume to value.  There are huge opportunities.  You just saw the example of that unit there.  They made a transition from volume to value, dramatically increased the value that they were doing.  So it’s yes, we have to take the reign.  For 40 years, we have let other folks do this for us and it hasn’t worked.  We’ve got to get close to patients and start from there and work that.

Dale Sanders:          Yup.  Another question is from William Barnes, “How can you increase the health of patients and the population covered to decrease the demand for healthcare?  It seems that these techniques for changing behavior could be relevant for patients and the population as well.”  Yes, definitely.


Dr. John Kenagy:     You’re exactly right.  And population, traditional population management is again kind of a traditional managed care approach.  We started doing that way back in the 1990’s.  The way that you change the health of a population is to change the health of individuals.  That’s the key.  So find places in your environment that are high leveraged to change the overall health of the population.  They’re not hard to identify, you’ll find them.  Create learning lines there.  And the important thing about the learning line is it can easily extend outside of the organization.  The rules, the very clear rules for how you create these connections, they can easily span outside organizations.  So they get into the community.  We need to cross the continuum of care.  We can’t do it ourselves.  We need to do it in the framework of patients.  Then increase the velocity of change.  That’s the way you change the population – increase the velocity of that adaptive cycle

Dale Sanders:          Yeah, I really think the future of healthcare has to increase our engagement with health coaches.  Not necessarily physicians and nurses, but I do think there are a large number of people who would love to change their behavior and their health but they don’t have the background or the skills to do that.  And with just a little encouragement from a health coach and some guidance and tracking from a health coach, I think patients would welcome that and I think it would do a lot of good for the industry.

Dr. John Kenagy:     I’ll give you a quick example, Dale.  Myra Muramoto at the University of Arizona has created a helper’s program in which they engage lay people to intervene in smoking cessation.  It’s a marvelous program.  It’s a perfect example of what you’re talking about.  There’s an abundance of opportunities.

Dale Sanders:          Yeah.  Yup.  Okay.  A question from Beverly Yanis, “Excellent information.  Can you say anything about how these are working in small rural facilities and clinics who have limited resources data warehousing capacity and lacks skills and data analytics that turn data into action?”

Dr. John Kenagy:     It’s a great question and I’d be happy to connect you with a place that’s doing one of these.  I moved away from traditional consulting and to online guidance for doing Adaptive Design and one of our beta sites was a very small isolated community access hospital.  I would be happy to put you in contact with them.  The CEO of that hospital, it’s Harvard Beach Community Hospital in Harvard Beach, Michigan, Ed Gamache says he feels it’s the answer to quality for small facilities because this is such a low cost option and it increases the adaptive capacity of these people.  So I would be happy to talk about that.  I think it’s a great – I think that the small community hospitals are likely to be able to do this much faster than big large established organizations.

Dale Sanders:          I agree.  Totally agree, John, as we’ve seen.  We just need to figure out a way to reach out and get these tools and this expertise.  Doing that with the distance and these webinars is one of those.  So Beverly, feel free to give John and I an email and we’ll do our best to connect you.

By the way, we’re running out of time, guys, but I’m committed to staying on the line to answer all the questions that have been submitted.  So I’m willing to stay over.  I would love to do that.  John, I won’t commit you to that.

Dr. John Kenagy:     Absolutely.  Absolutely.  Absolutely, Dale.  I would be happy to stay on.

Dale Sanders:          Okay.  Great.  Great.  So we’ll go over our allotted time.  I bet Tyler is going to want to interrupt and make a plug for next week’s webinar here that’s showing up on your screen.

One more question or another question here from Tracy Wilkes, “Answer on how to move from retrospective to prospective.  Stop getting data retrospectively, utilize ITs and CVA data standards with metadata, tagging that enable them to stretch the data to flow to applicable applications, then real time analytics can be performed.”

Dr. John Kenagy:     Well I think looking back to that slide 22,  you’ve got to get close to patients and you have to start taking action, connecting information to actionable result.  That creates the data and information you need.  So this is a discovery-based approach.  This is a discovery-based design.  This is design management.  This is just not the same, actually not that slide but the slide I’m thinking of was number…I think it’s 22.  But yeah, we need to move away from the rearview mirror without any question.  How do we do that?  You do it.  That’s the hard part  – we always want to sit in a meeting and then try to figure it out ahead of time.  Highly adaptive organizations just simply go out and do it, low risk, high reward.  And the guidelines for doing this and the rules are clear.  They’re not rocket science.

Dr. Dale Sanders:    Yeah.  And let me comment too.  Sometimes I think we get hung up on the possibility and the notion that we have prospective data,  that in some way the data that we’re collecting now is useless.  But the reality is there is no data in the future.  There is only data that we collect now and then it becomes historical.  The only thing we have for data to represent the future are models predicting the future based upon our existing data, that is by definition historical at the moment we capture it.

Dr. John Kenagy:     I think you’re right.

Dale Sanders:          So the ability to be prospective in our data analytics and behavior, it will be driven by the models that we develop and the particular algorithms that we develop.

Dr. John Kenagy:     Exactly.  So the Adaptive Capacity Index is an algorithm, it’s a proprietary algorithm that allows you – by looking at these behaviors, you can predict where we’re going to be.  And I can be happy to continue this conversation with others, and we’ve got data that shows it, if people are interested.

Dale Sanders:          Yeah.  So you made a statement, John, and I want to – this is not a question – I only just want to bring it up, that when we were preparing for this webinar, John said, by neurological definition, executive leadership meetings are generally the least creative meetings in an organization because, by definition of society, the folks in those leadership meetings are successful.  And as John mentioned, physiologically, when we achieve success as an individual or as a team, we tend to relax our ability to be innovative and adaptive.  And so, to me, as an executive, that means I either have to stay constantly paranoid and hold on to a sense of an adequacy so that I maintain that edge for adaptation; or I need to realize the shortcoming and push creativity and the responsibility for creativity out of the executive leadership team and into the frontlines, and it’s probably a little bit of both.

Dr. John Kenagy:     Yeah, I think it is both, and a chance to experience it.  But leadership and management are absolutely essential in this work.  I mean you can democratize innovation but replicating and scaling that is the key and that’s the role of management, but that’s the way management engages in the creative process.  It won’t be as part of the senior leadership team meeting agenda.

Dale Sanders:          Yeah.

Dr. John Kenagy:     That just is not going to happen.  Nobody has to feel bad about that.  Nobody is wrong.  Everybody is committed.  It’s just a very low, it’s a great optimizing spot, it’s a great place to optimize.  It’s not the place (59:40).

Dale Sanders:          Yeah.  Okay.  Next question here.  This is from Wendy Willington.  By the way folks, I’m answering these as they came in first in, first out.  “It seems that to encourage the democratization you speak of and the on-the-spot adaptation, that we as senior leaders need to have the data at our fingertips but also do a lot of managing by walking around.  This is roll up your sleeves stuff through to courage? No?”

Dr. John Kenagy:     Yeah, I think so.  And I think we can be much more specific about what managing by walking around is.  And in turn, if you’ve got data to guide your walking around, it makes it so much easier.  It’s so much easier.  So I think that this is, again, so how do you do this?  You actually create environments in your organization for people to learn how to make these changes to adapt to their own behaviors.  That’s again an essential part of Adaptive Design.  It’s something I’m very interested in.  You can create readiness in your management team to change.  I have a specific program for that.  I would be happy to talk about it.  People just need the opportunity to engage and think out of our own boxes.

Dale Sanders:          Yup.  And I’m a big big fan of executives getting out of the mahogany row and getting out to the frontlines.  I mean that’s a core characteristic of Toyota, for example.  In Southwest they practice that all the time

Dr. John Kenagy:     Yeah, but they have.  And I know from Toyota because I know a lot about Toyota.  People just don’t go walk around.  That just never happens.  They have really specific activities and they’re specified and that’s something we can do in healthcare without any question.

Dale Sanders:          Next question.  “Understanding how physicians and administrators think, with desire to keep decision-making a top level from the top down, how do you begin to articulate and argue that need to move decision-making towards the patient encounter where value is created?”  Again, that’s from Theresa Wilkins.

Dr. John Kenagy:     Yeah.  Thanks Theresa and this is an important point, and actually it’s one of the things that’s hardest for us to do in a traditional management organization.  Everybody wants to have the data and sit in the meeting room and then plan how we’re going to do this.  It’s actually creating the space and the place to do it.  That’s the idea of the learning line.  And the rules about how you create it and how you make it safe and what you do there and everything, that’s very clearly documented.  There’s no question about it.  But it’s the discovery base.  This is what I – when I had a consulting firm, this is what I used to tell the consultants, we’d be doing this rapid learning in their frontline, and we say, always have on the back of your mind a solution, just in case they get stuck, but don’t use it.  And what we discovered is that the solutions that come out of just the basic frontline people are so much more elegant than anything we, consultants, with years of experience, would come up with.  That’s what managers need to be able to go out and discover so that they find it safe for this to happen and that they learn.  And once they start the progress, momentum and mastery path, those three things are very important.  Once they start that path, they don’t want to quite but you’ve got to get on with that.

Dale Sanders:          Great.  Next question is from Laura Lim, “Our facility has long-term 20 plus year C suite and frontline directors.  So lots of seniority.  What is the best way to start the process for Adaptive Capacity with this kind of momentum?”

Dr. John Kenagy:     Well…so one thing I’m interested in and I’d be happy to talk specifically about this is this idea of a readiness program and I’d be happy to send you some information on this.  What I’ve done is put together a series of seven experiences for a management team.  First of all, you can’t make the decision as part of the senior leadership team agenda that doesn’t work but you can take leaders outside of that.  I mean just very quickly what we do is we have the organization pick a group, you can have up to 70 people if you want to.  They need to be leaders from the top of the organization all the way to the frontline, not everybody but everybody knows who should be there, and we do a series of seven experiences, where people actually put their hands on the – you get to be Intel when they created $60 billion worth of new business that everybody in the senior leadership team, including Andy Grove said, we’d never gone into any of these businesses.  So giving people experiences and in an hour and a half and they’re done, and the series is a way to start building the capacity within your management team to be able to move out of the office.

Dale Sanders:          Yup.  Thanks.  Okay.  Another question from Mark Nuggets, “What about political mindset and interest that hamper Adaptive Capacity?  What are some ideas to disrupt the status quo?  For example, HIPAA makes it very hard to share medical data coupled with public fear of a data repository to medical details affecting the insurance premiums, etc.”

Dr. John Kenagy:     Yeah boy and that’s we’re paying a penalty for not taking care of this ourselves but everybody is paying the penalty.  The politics and the regulatory commissions are not going to go away until it becomes safe for them to go away.  The way I look at it is everybody has to play on that playing field.  Nobody can dodge that.  So that’s just part of the work.  And highly adaptive ways, experimenting with highly adaptive ways to deliver the kind of information you want under the regulations, we’re not going to cheat on the regulations.  By tapping into the knowledge and creativity of people close to where that information exchange happens, you come up with amazing ideas.  So everybody has got to play on the playing field.  The organizations with a high degree of adaptive capacity will just play a lot more effectively.  And the other thing, I would hold government out to they say they’re looking for innovative places to, you know, models.  Maybe your organization can be a place that you can say, hey, we’re going to discover how we make patients safe, we make information safe outside the HIPAA context, and see what happens.

Dale Sanders:          Yeah, we definitely need to modify the way we’re interpreting HIPAA in healthcare.  We’re over-applying it frankly and anybody that knows me knows that I’m all about protecting patient safety or patient confidentiality but there are lots and lots of patients who are more than willing to benefit from the free exchange of information without a lot of fear over their data, but we over-mitigate that risk of the patient’s reaction, but we need to make it easier for patients to opt in to more efficient ways to communicate email, texts, and other social media than what we’ve done so far.

Dr. John Kenagy:     Yeah.

Dale Sanders           Next question.  “What is the role for engaging vendors for physician preference items in the value proposition

Dr. John Kenagy:     Yeah, I think that’s another really interesting place.  Right now, the vendors drive the show, and that is problematic.  So, first of all, just identifying that you have the problem is really important.  How do you solve that?  You create some relationships with a small number of vendors to explore a different way to do that.  And again, the same rules apply in creating learning environments around this work.  That allows you to discover your way forward. I think can find that we have huge opportunities.  What I tell vendors is, hey, the laboratory is in our place, it’s next to patients.  You want to work with us, come on in and take a look and see what’s going on, but I’m not necessarily interested in your solution.  Give us some ideas about how we can work on this together.  So I think creating those learning environments is a great opportunity, and we in healthcare should benefit.  We have the laboratory.  We shouldn’t have to have our solutions handed to us.  We should be part of creating them.  Find some organizations who want to create the new healthcare.  Partner with them.  It’s a new business opportunity.

Dale Sanders:          And I also would suggest that our investments from a federal level have not exactly stimulated innovation in the industry.  They stimulated the uptake of existing products and I wish we would have followed the role model from the Defense Advanced Research Projects Agency, the DARPA, which is the think tank arm of the DOD.  We could have set aside a billion of that $25 billion in high-tech funding and really seeded incredibly innovative ideas from that.  We’ve done some little minor things with that money but I’m talking about offering $100 million up for revolutionary new products to support clinical care at the point of care, patient engagement in their own care.  So I’m a little worried that the investment in products is not going to drive that kind of innovation, but hopefully I’ll be wrong about that.

Okay.  Michael Wondo has a question here, or a statement maybe.  “I submit the value as defined by providers is not shared by insurers.”

Dr. John Kenagy:     Yeah, we haven’t talked about insurance.  That’s another industry that is part of the game and I think the opportunity to connect meaningfully in new adaptive relationships with the insurance industry is a terrific opportunity right now.  They do not have it figured out, I guarantee you.  And they need to get close to the point of care and they might be important resources for us.  So, I also think that there are some new software capabilities, particularly agile development, and agile software development that could be really valuable in redefining our relationships.  So I think that that’s another place.  If we want to sit back and have it handed to us, we’ll get what we keep getting.  So, who’s going to step out and create those relationships?  And I think that the idea of an Adaptive Data Warehouse is just to be a really key connector around that point.  It’s not claims there we’re talking about here.  That is not the answer.

Dale Sanders:          I think one of the key answers to this, Michael, too for me is watching what happened with integrated delivery networks where I think they’re in the best position and that model is in the best position to evolve to the future of care because those organizations have been balancing the delivery of care and the economics of care and the risk of care under the same CPO for a number of years.  So I think if I have my druthers, every healthcare provider organization in the US would have some form of health plan that they offered along with their provider services because I think that changes the mindset and it forces you to think about that quality cost, the ratio, which is the healthcare value equation.

Next question from Matthew Keith – oh, Matthew asks to repeat the email address for the book discounts.  We will provide the slide with our contact information in those, Matthew.  So you’ll see that.

“Which book covers the topic of developing the learning lines?” That’s from Michelle Mock.

Dr. John Kenagy:     The ‘Design to Adapt’ book has a lot of – it goes in depth into the concept of learning lines and how you set them up.  And again, we can provide.  Michelle, we’d be happy to – we can also provide support around that.  The other thing that – we do have an online learning system called Experience Adaptive Design, and the idea is that supplies – so the book is kind of the guide book, the textbook, and then the online learning system gives you what, you know, the people in your organization, what they need to be able to do this in real time because you can access that at any time.  And I’d be happy to talk about that.

Dale Sanders:          Question from Gi Arco, “What is the impact of the traditional silos of power on the organization Adaptive Capacity and what changes are needed to manage it to improve organizational synergies

Dr. John Kenagy:     Well that’s a great question, Gi.  Well, and that’s one of the things we actually measure when we do an Adaptive Capacity Index, but there’s a lot of things that we do when we – so it’s actually a self-diagnostic, self-improving algorithm.  But one of the things you look at is what are the information flows and are there silos and how effectively can you cross them.  Silos are very clear decrease.  They very clearly decrease your Adaptive Capacity Index.  So now a senior leader can get the information to say, hey man, these silos are hurting our Adaptive Capacity.  We need to think about how we’re going to change that.  That’s the adaptive decision-making that senior leadership can start to take.  Okay.  Wait a minute here, how do we get the – the SNF unit and our hospital, we got two silos there, how do we create a learning line between them?  So that’s the idea of having the — what management gets is they start to see what’s increasing their Adaptive Capacity and decreasing it.

Dale Sanders:          Great.  Okay.  Go ahead, John.

Dr. John Kenagy:     Well I’m just going to say that we can talk a little bit more about the specifics of how that might happen through other slides.  Or we might have to look at the difference between retrospective data and forward-looking data, if that’s of interest to the group.

Dale Sanders:          Another question from Gi Arco, “How can a planner approach the future to be developed when the future continues to be divergent?”  I think we have to make our own for the future, right?  We can’t let it be divergent anymore.

Dr. John Kenagy:     You said it, Dale.  That is absolutely, we make the future.  We make the future and we are closest to the patient.  Where the value is added, you go to – if you look at Adaptive Organization, they go to where the value is added.  The value is added at the interface between a human and a patient in your institution, in your organization.  How do you maximize the value of that?  I call that the value point.

Now, the challenge for us is that’s a very tiny place in a big complex organization but the multiple on that is hundreds of thousands of times in every organization.  You can maximize that value.  That’s our opportunity.  That’s how you start to make your future.  Doing it in a prospective adaptive way rigorously, you discover things you never would have been able to predict and you make your future by actually engaging in the present and designing your future, if I’m making sense with that comment.

Dale Sanders:          Another question from Gi Arco, “Do IDNs have greater challenges with the Adaptive Model compared to the community-based entity?”  And I’ve touched on this a bit.  How should the IDNs accommodate the Adaptive Model by department, facility or other?”

Dr. John Kenagy:     Well, so that’s – we’ve worked with some of the greatest IDNs.  This is actually challenging work because many IDNs tend to be very traditionally managed and the move is to move information up to decision-makers.  We’re really interested and that’s one of the reasons we think the Adaptive Capacity Index is going to be helpful for IDNs.  I honestly believe right now that independent organizations have the opportunity to move much faster.  IDNs can definitely do this and we’ve done it with them and we’re interested in exploring it, but it’s a low adaptive a capacity index if you’ve got a lot of silos to cross.

The other challenge that IDNs have is they have been successful for a long period of time and that’s a tough place to be from a neurophysiologic point of view.  So the options are in both places but I don’t think necessarily bigger is better.  I mean the future will hold it out.  It’s possible for any organization to do this.  It’s a matter of accelerating their Adaptive Capacity, whether it’s big or small.

Dale Sanders:          Yeah.  And someone asks what’s an IDN.  That’s an Integrated Delivery Network, which basically means you’ve got providers and an insurance plan under the same CEO.  You’ve got hospitals, physician clinics, and an insurance plan all under the same CEO.  So that single CEO is balancing both risks, as well as the delivery of care.

Dr. John Kenagy:     And in general, you’re employing the physicians and it’s that large model approach.

Dale Sanders:          Yeah.  Jeffrey Hopsfield asks, “In healthcare especially, innovation is looked upon as the enemy of standardization and hence, compliance.  How do you go about obtaining the correct balance and minimize risk along the way?”  This is a great tie-in back to Toyota and how they achieved standardization but yeah, creativity.  Right, John?

Dr. John Kenagy:     Yeah, exactly.  And I would say look at page 46 and 47 in my book in which I talked about the specifics of standardization at Toyota.  So Toyota standardizes a lot of work but the reason that they standardize is to change it.  They’re very wise in knowing that if we keep doing something differently everytime we do it, we can never really figure out a good way to do it.  But the only reason they standardize is to be able to find when their current standardization method fails.  So one of my teachers said, process, process, oh, we’re terrible at process at Toyota.  We don’t care about process.  We just want to get them working the same way, so we can find out when that’s going to fail.  And then what we want to do is we want to be really good at identifying when our current systems fail, and we want to improve that as simply and as easily and as rapidly as possible.

So that’s the reason that they embed the improvement process in the work.  And it is different in Lean and Lean has great process improvement.  It’s probably the best form of process improvement.  But Adaptive Design and TPS are not process re-engineering project-based methodologies.  They are systems, systems for designing, doing, and improving work in complex environments and they work both within and across disciplines.  Page 46 and 47 of my book, that answers the question specifically.

Dale Sanders:          Alright.  We’re almost out of questions and that’s great because we’re probably running out of time too.  I think we still have 116 folks on.  That’s great.  This is from Robert Beltran again, “Do you consider the implementation strategy of Obama Care an example of Adaptive Design?”

Dr. John Kenagy:     No.  I don’t want to get into the politics of things.  This is my personal belief, the government has no choice but to control the cost of healthcare.   We’ve blown the bank.  We’re responsible for that.  We’re the people who are doing this business.  But the cost of care is prohibitive.  The government has to control it because we have it.  The challenge is that the government doesn’t know how to do that.  And so, what do they do?  They turn to the experts in the current system.  But the problem is the experts in the current system designed the current system.  What do we get neurophysiologically?  We get more data up to decision-makers in meetings.

And so, I think again this is good-hearted efforts to do the right thing.  I definitely believe that.  But the opportunity, I think our opportunity is to create the local environments that show that you can significantly decrease the cost of care, get rid of healthcare disparities, eliminate the disparities, make a difference without having to shuffle a lot of information up and down the system.

So I think Obama Care is what we get because we haven’t solved our problems.

Dale Sanders:          Yeah, I wish personally that the federal government would have acted more like the largest consumer and customer of healthcare in the world than the organization that tried to fix healthcare.  I wish that the federal government would have just stepped back and said, look, we’re not going to pay fee for service healthcare anymore.  By, pick a year, 2020, we want 90% of our dollars being spent federally going towards per case and per capita contracts with quality incentives.  You, the healthcare industry, figured it out, you figure out how to get there.  But as the world’s largest customer of healthcare, we’re not going to pay for fee for service anymore.

But unfortunately, like you said, the federal government took a lot of responsibility in defining how that transition should occur and I think as a consequence we get that top down approach to solving problems that’s just not going to work.

Dr. John Kenagy:     The other thing I have to say is the political system, the nature of politics, those of you who have been in the game, that’s the wrong place to sort out something as complex, dynamic, and unpredictable as healthcare.  Not bad people at all but the political process by it very – I mean we can see right now does not necessarily create rational results.

Dale Sanders:          Okay.  Almost the last question from John Sormino, “How about the Accountable Care Organization concepts?  What is your opinion on these concepts?”

Dr. John Kenagy:     So I guess you could say I started on Accountable Care Organization because what we did back in the 1980’s was what kind of began to lead to this model.  What we didn’t do is all the stuff that’s on top of Accountable Care Organizations.  So Accountable Care Organization is the top down approach to how do we force prospective payments and increasing value.  I think, again, it’s part of the environment and it’s up to – also example, Mayo and Kaiser don’t want to have anything to do with Accountable Care Organizations and yet they are the kind of organizations that were supposedly the model for ACOs.  So I say…

Dale Sanders:          Yeah, Intermountain as well.

Dr. John Kenagy:     And Intermountain is a perfect example.  So I say if you want to do it, everybody is playing that game.  It just becomes part of the current condition but don’t drive your quality issues based on the regulatory compliance.  Just meet the regulations.  Just comply but make the care better.  So I think it’s the kind of a choice in which the senior leadership team needs to think about instead of implementing the regulation, we’re going to make the care great and then we’ll just deal with the regulations.

Dale Sanders:          That’s a great way to summarize it, John.  Worry less about the federal definition and participation.  Worry more about the concepts.  The concepts are rock solid.  But yeah, change the organization towards the ACO concepts and then I think by nature, you’ll meet the federal requirements as well.

I think one of the key things missing in Accountable Care Organization is the notion of patient accountability.  Somehow in this model we will look that about 40% of healthcare costs are lifestyle related.  Now, granted there are some folks who have no control over their lifestyle and we don’t want to penalize them, and we want to give them the care they deserve, but there’s a lot of us that could be participating more proactively in our accountability, both economically as well as quality of care.  So missing in Accountable Care Organizations I think is the patient accountable care organization.

Dr. John Kenagy:     Yeah and I’ll just add to that.  Think back to those brain slides.  And so I’m a vascular surgeon and I took care of smokers all the time.  My ability to say “here’s the data, keep smoking and you’re going to die” doesn’t work.  But the people I could create relationships with or get them into relationships in which they can take responsibility for their own health, that’s the sort of thing that works and that’s our opportunity in healthcare.

Dale Sanders:          Yeah.  Well I think that’s a good place for us to stop.  We’ve run out of questions.  We thank everyone for staying over.  John, you’re great.  Thank you.  It’s an honor to share the time with you.

Dr. John Kenagy:     Oh I really appreciate this opportunity.  Health Catalyst is very very generous to open up their space and time for this and it’s been a real pleasure for me to participate and thanks again to Chris and Tyler and your very professional team, Dale.

Dale Sanders:          Thank you, John.  Very much.

Tyler, back to you.  I think we’re done.  Right friend?  (88:23).

Tyler Morgan:          Yes.  Thank you very much Dr. Kenagy and Dale.  Thanks to all who have joined us.  After this meeting closes, you’ll have the opportunity to take a short 7-question survey.  Please take a few minutes and fill out the survey so we can continue to bring you relevant content.  Shortly after this webinar, you will be receiving an email with links to the recording of this webinar and the presentation slides.  On behalf of Dr. John Kenagy and Dale Sanders, as well as the folks at Health Catalyst, thank you for joining us today.  This webinar is now concluded.