Tuesday, August 27, 2013

Changing Complex Systems

Both American healthcare and American higher education are complex systems. Although the public does not know this yet, our healthcare system is undergoing a huge transformative change that is bending the cost curve downwards. In my opinion, the ACA has caused this. I think a similar process of transformative economic change has just been initiated by the President with his new program proposals for Higher Education.

How do I defend those statements? First, let's go back to the early sixties when President Kennedy called on us to put a man on the moon by the end of the decade. And we did. I was down in Montevideo, Uraguay, standing outside an appliance store, watching those fateful first steps Neil Armstrong took on the moon in the summer of 1969. Breathtaking. The crowd looking in the store window cheered. How did we pull that off?

There were lots of specific pieces of the puzzle that were filled in in highly specific ways. But I want to talk about the organizing principle - the declaration of vision that President Kennedy made on May 25, 1961 in his television speech. This declaration created a new possibility for us, a new, living vision that animated us in complex ways, and served as a strange attractor that bounded, funneled, and ultimately directed our creative actions to accomplish that miracle 8 years later.

In her book A Simpler Way, Meg Wheatley explains how the three domains that can influence change in complex systems are: the system's identity, the relationship quality between the system's constituent parts, and the breadth and depth of the information sharing within the system.The declaration of vision by President Kennedy affected the identity of the complex system that was the emerging space exploration movement, led, but never contained by NASA. This proved sufficient to create a highly complex, essentially self-organizing system, aiming broadly at space exploration, and, specifically, at putting a man on the moon by the end of the 60s' decade.

An almost endless number of very specific plans surely emerged to give body and manifestation to what was initially a declaration of spirit. But it was that vision and its animating spirit that inspired, then informed these detailed and specific plans. David Whyte describes this organizing energy brilliantly in his poem What to Remember When Waking:

In that first
hardly noticed
to which you wake,
coming back
to this life
from the other
more secret,
and frighteningly
where everything
there is a small
into the new day
which closes
the moment
you begin
your plans.

What you can plan
is too small
for you to live.

What you can live
will make plans
for the vitality
hidden in your sleep.

Plans - or at least really good plans - follow, and do not precede intention. At the individual level, a clear, powerful, pure intention calls out of us all the tools, implements and plans needed to accomplish what is intended. At the system level, a powerful declaration of vision, one that is shared by other members of the system, becomes a self-organizing identity principle around which complicated, often conflicting system activities will emerge and organize. System members need to be in positive relationship. As much as possible, everyone needs to have and share all relevant information. And it is always important to have incentives aligned with the performance-generating identity principle.

This is happening right now in healthcare. The ACA alerted the healthcare system that fee for service was on its way out and successful medical providers in the future would have to organize and expect to be compensated on a different model, one that emphasized coordinated care - often in new accountable organizations, where incentives would shift to bundled payments, where quality would be measured and rewarded, and where the system would innovate to find ways to compensate reducing system utilization by rewarding savings achieved versus controls. A critical part of this new movement was the move to electronic medical records, kicked off initially with stimulus money. To improve productivity, to truly coordinate care across the many parts of the complex healthcare system, everyone needs the same information, and that's what EMR will help accomplish.

The call to action is less clear and specific than President Kennedy's call to put a man on the moon by the end of the 60s' - in this case the call is for system productivity growth that will, in the future, be rewarded, sometimes in ways we haven't thought of yet. The ACA clarion call was not to force price reductions, commanded from the center; rather it was to encourage a myriad number of ways to reduce utilization and complexity (the number and complexity of procedures and tests). No one at the center knows what the right models are; so the ACA called the provider system into a broad variety of tests, to see what would work to reduce utilization and complexity of system usage - i.e., to find ways to increase system productivity.

It's working. Almost no one recognizes the depth of what is going on. The medical system's organizing principle, its identity is shifting. And there is emerging a whole new wave of information sharing, made possible by the rapidly expanding EMR. Peter Orzag in his Bloomberg column today is just the most recent voice to document the depth and breadth of this change, and how this cost curve bending is clearly not only recession related.

So I think Obama is doing this system changing act again, this time with Higher Education. His University of Buffalo speech told colleges that they had to mend their ways, that they must learn to be more productive, in other words to reduce or slow down the cost growth of getting a college degree. Quality must not be sacrificed. But productivity must be increased. He likened Higher Ed, and its Government incentives to simply add students, to the healthcare system's lack of cost control with fee for service as the payment model.

There is no incentive in the Higher Ed system, as pre-ACA there was no incentive in the medical system to innovate, to increase productivity. That needs to change he said. The Federal Government would develop a ranking, a quality measurement scale that would allow the Government to begin to allocate some of its education resources based on quality measures, not just student enrollment numbers.

Can this be done? How could a political bureaucracy (the Education Department) accomplish this? It's not possible to quantify what makes for a quality college education. Trying to do so will force us to look just at economic measurements - employment, salary - that can say nothing about the character growth and social networking that the best college experiences afford a student.

These are the questions and concerns that will understandably accompany the effort to identify what quality means for a college education. But don't count Arne Duncan out - Starting with this school year 45 states will be launching the Common Core Curriculum, focusing on better, deeper, more rigorous definitions of what our young students need to learn to get ready for college. 45 states are launching Common Core, with 40 of those 45 agreeing to link teacher pay, in part, to student performance against the new, apparently much harder tests. An amazing accomplishment, working with individual states and groups of states, and all manner of education reformers. I, for one, am not in the least counting this as too tough a task for Arne.

And remember, like healthcare, it's not some single point answer; it's an ongoing process of trial and error, to see what works, what makes sense. As I was pondering what might happen, as we really ask the question - how do we measure the quality of a college education - I said to myself, "Maybe we need a test similar to the Baccalaureate test taken in Europe to measure one's broad level of learning." And just this morning, I found this Wall Street Journal article describing the CLA+, or the Collegiate Learning Assessment, that will be given voluntarily by 200 colleges to their graduating seniors to measure their critical reasoning, math and verbal skills.

Face it folks: the quality of college education will begin to be measured. The Federal Government will begin to use the new quality measures to determine how they allocate at least a part of their funds. And colleges know that not just their quality, but their quality cost relationship, will begin to be measured, and it will matter - profoundly over time. And they will begin to adjust their behavior, moving it progressively and continuously towards higher quality at a lower cost, exactly what is happening in healthcare.

Our President plays a very artful and very long game. Take note.

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