CHAPTER 1

The Changing Health System

Say what you will about the year 2020. It was undeniably the gateway to a new decade and a glimpse of the road ahead. It is hard not to equate the whole year with the COVID-19 pandemic, and all of the changes that followed in its wake. For many people working within health systems, these changes meant working under conditions they were never trained for, and learning new skills on the fly. In many cases, it involved developing entirely new approaches to the delivery of care, and learning as quickly as possible from the experiences of peers across the country and the world.

As hard as people worked to mitigate the pandemic, they could only do so much within what their contexts allowed—and that context was a health sector already facing significant challenges. We had just begun to understand the severity of healthcare inequalities when COVID-19 began making them much worse. At a time when we needed resilience more than ever, the sector was already facing problems with clinician burnout and wellbeing. And our planet’s climate, our most important determinant of human health, was about to clock its hottest year on record. COVID-19 did not create these challenges; what it did, more than anything, is reveal how deeply intertwined they are, and how critical it will be to address them simultaneously.

How are our health systems likely to continue evolving in the decades to come? The answer depends partly on trends taking place outside these organizations’ direct control, and partly on how well we understand these trends and the opportunities they can create.

In a recent foresight study for the National Center for Healthcare Leadership, our research team identified four macro-level trends that are particularly likely to shape the future of healthcare and have specific implications for leadership within our health systems. All of this work took place before the onset of the COVID-19 pandemic and the civil unrest that reemerged in its wake. It even predated the climate strikes Greta Thunberg led. None of these events were predicted by our modeling, and no one expected them to be. They are the types of emergent events that, in the moment, can seem quite random. Events of this type—sudden, unexpected, dramatic—can lead people to feel very powerless about the future. Attempting to predict a specific event or a specific timeline not only is impossible but also misses the real value of foresight work. The futurist Bob Johansen (2017) makes this point very well in distinguishing certainty, an assumption that we know what is coming, from clarity, a deeper sense of multiple potential future states, some more likely than others.

For example, although no one predicted a novel coronavirus would begin to spread among humans in late 2019, many public health experts had said they believed a pandemic was likely to happen sometime during their lifetimes. (One of the most colorful and compelling examples was Bill Gates’s excellent TED talk from 2015: “The next outbreak? We’re not ready.” Worth a watch if you haven’t seen it.) And although no one could have predicted beforehand that the events surrounding George Floyd, Breonna Taylor, Ahmaud Arbery, and others would galvanize action the way that they did, understanding the underlying forces at work—heightening awareness of racism within the context of growing structural inequality—makes clear their eventual inevitability.

Forces such as the cyclical nature of human social and economic history, the patterns through which new technologies find acceptance and are spread, the influences of demography, and the root causes of attraction and disgust each offer specific clues about the robust trends and the interplays between them, providing greater clarity about these longer-term trends. With practice, these trends can be analyzed to develop a clearer sense of the directions the future is likely to take us, and the inflection points that decide which paths will prevail. For the interested reader, I provide greater detail on sources of data and foresight methods in appendix 2. In the meantime, the four trends we identified for health system leadership in the decade to come are given below. As you look at these health system trends, I invite you to consider whether the events of 2020 truly changed their course, or just accelerated us toward them.

Trend #1: From Expertise to Relationships

If you have ever taken a course on research methods, or conducted some research yourself, you may have run across the idea that good experiments often raise more questions than they answer. As health professions mature, the volume of research relevant to their work also tends to grow very rapidly, quickly outpacing the capacity of practitioners to keep up. Although technologies such as better search tools can assist caregivers in identifying the most important studies related to specific health problems, we only have so much time in a day we can spend in search of better methods. This can result in very long delays—decades, according to some research—before research advances become standard clinical practice (Morris, Wooding, and Grant 2011).

In the realm of accessing and organizing information, computers have some important advantages over humans. For one, they can process text more efficiently and more rapidly. For another, their “memories” (information storage) are much more reliable. They also do not get tired. I could list more advantages, but at some point it starts to get a bit demoralizing. The main point is that the use of computer-assisted tools in healthcare has been growing, helping care providers become more effective in their roles.

Good news so far, right? There’s just one hitch: if care providers can access these decision-support tools, what stops the patients they serve from also accessing them? And if my patients can access these same tools, what do they need me for?

With telehealth quickly becoming more prevalent, clinicians’ roles may evolve in some unexpected ways. As more patients begin accessing care through video connections, it is not hard to imagine a pathway toward lower-cost care providers. The first wave could involve price shopping in a patient’s local community. That could be followed by price shopping in different communities or worldwide. And once we are conditioned to getting our care through a computer screen, could software-controlled, animated chatbots of some kind be that far off?

These are, by the way, just the sorts of threats that professional associations were set up to grapple with. If you pay dues to such an association, it’s a safe bet that it would like you to continue doing so. The best way for associations to do that is to make sure your professional status isn’t threatened. So they may attempt to block direct consumer access to these tools. Based on prior playbooks, arguments will likely revolve around safety and will contain enough of a grain of truth that they cannot be completely dismissed. On this basis, they may be successful in slowing progress by years, if not decades.

But progress will come all the same. How can I be sure? Two reasons. The first is simple economics. Selling goods and services directly to consumers is usually more lucrative, because doing so cuts out the expensive “middle man” in the form of the healthcare professional. The second is human nature. Throughout most of our history, when we were sick, we did not seek out the expertise of a stranger in a strange clinic; we instead looked to ourselves and our loved ones for care that was delivered in our own homes (Lilly, Laporte, and Coyte 2007). Over-the-counter medications provide a handy example. Many of these medications, such as Claritin and Tylenol, originally required a prescription, meaning you could take them only while under a providing doctor’s supervision. Once they became over-the-counter, however, most people had little concern about self-diagnosing and self-administering, or even having them on hand for family members in need.

Does this mean the roles of professional caregivers are going away? Hardly. If anything, they are likely to expand. To see why, let’s think again about the historical model of caregiving, the one that existed before experts were around. In that model, the fundamental ingredient was not expertise but rather a trusting, caring, and understanding relationship. And when it comes to our health, most people are not going to completely trust what they learn from their loved ones, or the internet. But before you breathe a sigh of relief, it is important to consider what this means. Although the need for the health professions is not going away, it is likely to fundamentally change. While technical expertise may not distinguish care providers the way it once did, relationship expertise will become far more important. Keep this in mind when you read the chapters on self-development and relations.

Trend #2: Expanding Roles in Adaptive Change

While a proper discussion of the history of the U.S. healthcare system is far beyond the scope of this section, a few key points are in order. First, healthcare costs are a barrier to a great many people receiving proper care, and costs are continuing to go up. I’m guessing this may not be news to you. Second, in the United States, this cost trend has been identified as a “massive crisis” since at least 1969 (Millenson 2018). Since that time, much effort has gone into “bending the cost curve”—in other words, slowing and stopping the escalation of costs. And yet, the costs keep rising. Why? One reason has to do with inertia. As I will expand on further in the chapter on health system literacy, growth is the path of least resistance for our current economic systems, and health systems are fundamentally economic systems. Shrinking, or even staying the same size, is much more difficult than continuing to grow. Another reason has to do with a health system’s core “products”: life and health, which, among mortals anyway, are in constant, insatiable demand.

Over time, many health systems have grown very large and sophisticated. The largest ones often have their own training departments and conference spaces. Some have extensive campuses—miniature cities, with retail shops and other extensions of the health system’s “brand.” In the United States, health systems have already become the largest employer, and by 2028 they are projected to represent almost one in every five dollars that get spent (Keehan 2020). Alongside this tremendous growth, health systems are also increasingly struggling with an existential problem: How can they continue to justify their need for escalating costs in the absence of equally escalating outcomes?

The most promising way to address that problem is through expansion of mandate. As communities become more concerned about the health and well-being of their citizens, health systems will find themselves taking increasingly active roles in helping their communities holistically pursue these goals.

I want to underscore that this is an expansion of mandate, not a new one. Throughout the history of modern medicine, many people working in healthcare voluntarily pursued a whole host of community activities beyond the scope of their formal clinical professions, including education, research, and advocacy. What has started to change, and will look different in the future, is the extent to which these activities become organized and formally “blessed” by the organizations we work for. In the United States, we began to see the beginnings of this formalization in 2012. It came as part of the Affordable Care Act (or “Obamacare,” as it is often called). Although the act is mostly known for its focus on getting more people insured, it also contained a number of important new expectations for the health systems. One of these expectations was that they complete a periodic Community Health Needs Assessment (CHNA), a systematic, comprehensive data collection and analysis to identify priority health needs and issues in the communities they serve. Another was that they use the results of the CHNA to formulate a Community Health Improvement Plan (CHIP), spelling out what they plan to do about the health gaps identified by the CHNA. Collecting data about communities wasn’t a new activity for the health systems. Most had already been doing this for years. What changed was the focus. Historically, most data collection related to healthcare needs—for example, how many people were likely to need hip or knee replacements in a given year, and how that number was likely to change over time. The data were primarily to inform plans for growing and marketing healthcare services. What changed with the CHNA and CHIP was a broadening beyond the delivery of healthcare services, and toward improving health.

At Rush University Medical Center, where I work, this early CHNA activity included examining the average life expectancy of people living in different neighborhoods on Chicago’s west side. The results were alarming: in neighborhoods close enough to walk between, average life expectancies differed by as much as 12 years (Rush University Medical Center 2016). Some neighborhoods had life expectancies that rivaled the healthiest countries in the world; others were similar to the least healthy. The findings had an immediate and profound impact on the organization’s leaders, raising fundamental questions about how the health system was approaching its work. In the words of Dr. Larry Goodman, CEO at the time: “With these kinds of data, how do you justify your mission statement without committing to a solution?” (Goodman, personal communication with the author, February 17, 2017). Across the country, many progressive health system leaders were beginning to ask the same question. In searching for an answer, some of these leaders began thinking differently about the economic power their health systems represented.

The anchor institutions concept offered an intriguing starting point. In the context of economic development, an anchor is an organization of substantial size that is deeply rooted in the community where it is located, and whose success is intertwined with the community’s. Arguably, these types of organizations—nonprofits, in particular—have both the opportunity and the responsibility to support the vitality of their home communities. While the anchor institutions idea has been around since at least 2002, its original focus was mainly on the roles universities should play in their home communities (Initiative for a Competitive Inner City 2002). Over time, it was becoming clear that the same logic could be applied to health systems, and with much greater potential impact.

To better understand the anchor institution concept, it is helpful to work through an example with a fictional hospital. First we need a name. How about we call it … wait for it … Fictional Hospital, or FH for short. (Hey, it’s a better name than Fictional Health. Think about it.) Let’s say FH earned $153 million in revenue, which was roughly the average for U.S. hospitals back in 2011 (Becker’s, n.d.). In a typical year, after all expenses, FH might clear about 2 percent of that amount as net revenue, or $3 million. So what should FH do with all that money?

One option FH leadership has, in theory anyway, is to ignore any internal needs of the organization and instead invest the whole amount in community health improvement programs. That $3 million could do a lot of good in the community. However, it is a much smaller amount than the $153 million that the hospital originally took in. Yes, the hospital has to pay its bills, but, wow, if any of that other 98 percent of revenue could somehow be routed toward community health, FH could potentially have a much, much bigger impact.

So let’s take a closer look at FH’s expenses. Using national averages again, a typical hospital of FH’s size would spend about $30–$45 million on “procurement”: products and services needed to keep the place running. Some of this expense may be for high-tech equipment that has to be imported from other places, because maybe no one in the neighborhood has figured out how to slap together a good MRI scanner or robotic surgery machine in their garage. But there may be other expenses that could have stayed local with a little more effort. Laundry services is a good example. Some hospitals send their dirty linens out of town, not because there are no closer options but because options that are farther away are a lot cheaper. If hospital leaders are focused only on efficiency, such decisions make sense. If, however, the leaders are considering community impact in addition to efficiency, their decisions may change. In this case, stable employment is itself an important source of health, so there are important health-related reasons to encourage creation of local jobs.

Do I sound like I may be going off the rails here? It’s one thing to talk about hospitals buying locally, but I just kind of implied that FH ought to consider investing in commercial laundromats. And that’s just one example. There are lots of other causes of health problems that might also make for good investments from a health perspective. How about all the people who don’t have ready access to fresh fruits and vegetables? Should hospitals start opening up grocery stores? What about homelessness? Should hospitals invest in low-income housing? Even if this makes sense philosophically, where on earth would they find the money?

As it turns out, most hospitals in the United States actually have sizable stockpiles of cash. They need to, in fact, in order to be eligible for loans with favorable interest rates—something most hospitals must access regularly. One of the benchmarks creditors use for good financial health is having “200 days’ cash on hand,” meaning enough accessible funds to be able to cover the costs of running an organization for 200 days straight without any other income. If it costs $150 million per year to run a hospital, 200 days’ cash on hand works out to a nest egg of about $82 million, another much bigger number than the $3 million we were talking about originally. Realistically, it would never make sense for hospital leaders to blow this whole nest egg on a bunch of potentially risky investments in laundromats, grocery stores, and apartment buildings. Chances are, they already have the money invested in much safer places. But it could make sense to move at least a few million into investments that can pay health as well as financial dividends—something some health systems have already begun to do.

This brings us to the last, and most sizable, resource FH can use to impact the communities it serves: its payroll. The single biggest expense most hospitals have is personnel, which accounts for 55 percent of total expenditures (Daly 2019). For an organization the size of FH, this could amount to $82 million per year. Like many other hospitals, FH may also be the largest employer in its community. From a health perspective, many healthcare jobs offer important advantages over jobs in other sectors. For one, they are often more stable, and job security is known to be important to health. Many jobs within healthcare also pay higher-than-average wages. Even for healthcare jobs that may not pay as well, FH could help employees find their way to higher-paying jobs by supporting education and career-pathing programs. These types of programs require additional expenditures outside of the direct payroll costs, but they also produce gains in the form of decreased recruiting and new hire costs, as well as grateful employees.

To the extent that gains from career-focused learning programs outweigh their costs, they are more accurately described as investments rather than expenses. Returns on investment increase when the up-front costs can be decreased, and increase further still if the costs are covered by someone else entirely. Support for these types of programs from outside may become all the more common in the future, for reasons related to our next trend.

Trend #3: Communities Becoming “Service Lines”

Clinicians and the health systems supporting them tend to be very serious about care quality and work continually on improving it. However, when it comes to people’s health, there is only so much a health system can do through the care it provides. In reality, only about 10–20 percent of people’s health relates to the quality of healthcare they receive (Hood et al. 2016). The rest relates mainly to a set of factors collectively known as the social determinants of health (SDOH).

At their essence, SDOH refer to differences in living conditions that impact health outcomes. They include factors such as the level and quality of education a person receives, the quality of food and water they have access to, the amount and security of income they collect, the safety of their work and living places, and the extent to which they perceive they have equal rights (World Health Organization 2020). The work that health systems have engaged in around SDOH, at least so far in their history, has been supported mainly through either voluntary activities or funds generated from their core business: clinical care. But as prior trends illustrated, we are beginning to wake up to just how complex some of our social challenges are, and how much coordinated effort they will require to solve.

What do successful coordination efforts look like? Answers to this question are crucial to the work of organizations like the Federal Reserve Bank of San Francisco and the Low Income Investment Fund, whose roles involve investing in efforts to solve community challenges. These two organizations conducted an extensive review culminating in the 2012 book Investing in What Works for America’s Communities. In summarizing across their findings, they drew three key conclusions (Erikson, Galloway, and Cytron 2012). First, new approaches need to be entrepreneurial as well as fundamentally cross sectional, drawing in and engaging many more collaborators than have historically been involved in community development. Second, the approaches need to be evidence based—that is, highly data driven, allowing for ongoing course adjustments based on what the data reveal along the way. Third, they require a focus on both people and places. The report also identified the need for a new player in community development: an organization that could integrate participants and resources across the full spectrum of communities, including organizations focused on education, housing, community empowerment, and health. They called this new entity the “quarterback organization.”

Although their summary did not suggest where these new quarterback organizations would come from, in many ways the role seems natural—indeed, almost inevitable—for our health systems to take. For one, the sheer scale and complexity of health systems mean their leaders need to be effective coalition builders across many competing interests. The services that health systems provide tend to be very data driven and data responsive, involving ongoing adjustments to activity based on data related to volume, quality, patient experiences, and other sources. Also, although historically the health systems’ focus has tilted very strongly toward people and not places, their growing responsibility for the overall health of populations is pushing them toward developing place expertise as well. Finally, as noted previously, health systems are under increasing pressure to justify both their current size and their continued growth. Taking a leadership role in addressing seemingly intractable community problems is about as compelling a justification as I think anyone could come up with.

This leadership role will only become more complex, and more important, as we begin adapting to changes in our most fundamental determinant of human health: the earth’s climate. In the years ahead, scientists anticipate we will continue trending toward more extreme weather, greater challenges to food and water supplies, and much greater numbers of climate refugees, all of which are ongoing threats to community health and wellbeing (Watts et al. 2021). Healthcare professionals will be increasingly called on to help advocate for greater attention to carbon emissions; and, to become credible leaders, they will first need to make sure their own houses are in order. Healthcare lags many other industries in its attention to carbon emissions and is substantially more energy intensive than most other commercial activities (Salas et al. 2020). Over time, almost every aspect of how health systems currently operate may need to be reviewed in light of its carbon emissions impact. Through this lens, the sheer magnitude of health systems’ economic power may indeed have the potential to shift the broader economy in the directions needed.

Taken together, these trends could lead health systems to look and act very different than they do today, from the services they provide, to how they think about patients, to the boundaries of the organization itself. Our final trend speaks to this evolution of the organization at an even more fundamental level.

Trend #4: People as the Common Denominator

What is a “health system”? I have used the term many times already without bothering to define it. If I asked people working in healthcare this question, the answer might be something like “a group of hospitals and clinics that are all part of the same corporate structure.” I think that is a reasonable definition. Now I will ask a harder question: Who, exactly, makes up that health system? The first pass at an answer generally focuses on employees: people who are paid by the corporate entity for the services they render. If pressed, we may need to broaden the definition to include volunteers: people who are formally recognized as supporting the organization in some specific way, regardless of whether they are paid to do so.

Now, let’s flip the question on its head and ask, Who does a health system serve? Patients (or consumers or customers)—in other words, the people who pay the health system in exchange for some form of care—may immediately come to mind. Here, too, the need for a broader definition quickly becomes apparent: if a health system provides care for someone who has no means to pay for it, we would of course still argue that the health system is serving them. So perhaps receiving care is enough to be considered a patient or customer.

If you agree with all the above, then you agree that a person can be considered part of the health system as long as they are working to support its mission, and you also agree that a person is served by the health system as long as said health system is trying to improve their health. This essentially means that any patient of the health system who takes a role in managing their own health is also part of the health system. It additionally means that anyone whose work for the health system benefits their own health is also someone the health system is serving. In the end, the system and the served are more like two different perspectives rather than two truly distinct phenomena.

If there is little real distinction between employees and patients, why do we think about them so differently? The answer relates back to the healthcare professions and the unique expertise they bring to their caregiver roles. If I am sick and you have something that can help me get well, then we have the basis for a transaction, although not necessarily an equal one. Structurally, the caregiver has the upper hand. Think about it this way: If I as a patient walk away from the transaction, the provider could lose a little bit of income. I, on the other hand, could lose my health—or even my life.

As we discussed in trend #1, the power differential between patients and providers has been diminishing, and while I may never be the best person to cater to all my own health needs, my choices for who I seek care from have been expanding. Trends #2 and #3 are also very relevant here. As health systems find themselves more involved in community health, the role of the workplace becomes all the more salient. If the average person spends a third of their life at work, it stands to reason that what happens there—what they eat, how active they are, their sense of accomplishment, and the quality of their relationships—will account for a third or more of their health outcomes. In other words, the work itself must become a critically important piece of any health system’s efforts to improve well-being.

Patient, employee, community member: the distinctions are more about the perspective we are using to organize our thinking than actual, concrete distinctions in the world around us. If they clarify expectations for us in specific interchanges, they can be helpful. But if they create enduring power imbalances, they may cause more harm than good.

The same principle is true about hierarchies within organizations. As the patterns of change in the external environment continue to become more complex, top-down leadership structures have more trouble adapting to them successfully. The organizations that thrive will have more egalitarian structures, where people have the skills as well as the flexibility to enter and exit leadership roles more fluidly based on current and emergent needs. In other words, leadership will be viewed less as a job of the few, and more as a role we all need to take when circumstances require it.