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Centralized health care on the block

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CALGARY -- Albertans received some good news last week concerning their health-care system. Five senior executives of Alberta Health Services, including the chief operating officer, were fired. It's a good start.

While the firings were the big news and the focus of the media, the accompanying report by Official Administrator Janet Davidson has far more important implications. Her report represents a 180-degree change in the disastrous command and control management model and improvement strategy that created the organizational train wreck that is the Alberta health-care system.

In The Decline of Health Services in Alberta, published three years ago, I identified the four strategic pillars of Alberta's health system that have contributed to rising costs, a bulging bureaucracy and declining service levels, including long wait times for patient access. These four pillars are:

Centralization as a means of increasing co-ordination and control; pursuing economies of scale to reduce costs; increasing utilization as a means of improving efficiency; and using performance measures and targets to improve performance and accountability.

That these four strategies are destructive to system performance isn't news. Private-sector managers, and many in the public sector, have known this for the better part of 40 years. To add insult to injury, the peer-reviewed journal, Leadership in Health Services, published a version of The Decline of Health Services in Alberta, highlighting these four strategies and citing Alberta as a case study of global worst practice in health-care system leadership.

The good news is Davidson's report proposes to reverse course on the first two strategies -- centralization and economies of scale. If her report is to be taken at face value, centralization is dead. Good thing, too. Centralization only creates costly, bureaucratic, multi-levelled organizational monstrosities.

The word decentralization isn't used, of course. But Davidson says; "organizational layers should be considered within the context of enabling decisions related to patient care to be made as close to the point of care as possible."

The only interpretation possible is the government's 20-year commitment to hopelessly outdated management dogma is over.

Dead, too, is the patently stupid infinite economies-of-scale logic that has created bureaucratic fiefdoms in corporate functions such as human resources. Despite the huge cost savings attributed to these functional fiefdoms, they have, in fact, driven costs to front-line managers upwards of 20-fold.

According to Davidson's report, these will be demolished with: "staff from corporate function areas (i.e. finance, HR, engagement, IT)... assigned to work in service-delivery areas."

That's the good news. The bad news is her report may not result in any productive change at all. It's strictly focused on organizational structure. This is necessary but not sufficient. Reorganizing the boxes on the organization chart is like rearranging the deck chairs on the Titanic. It presents a different perspective to those on board, but doesn't change the outcome. The trick to improving system performance is not just changing the organizational structure but changing the work structure -- the way in which work is organized and performed.

If that doesn't happen, Davidson's report will wind up on that huge trash heap of Alberta health-care history comprised of reports and reviews that made no difference.

It doesn't help that some elements of the report appear to have been developed with little investigation or thought beyond lip service to prevailing conventional wisdom (an oxymoron in the case of Alberta health care). For example:

"Alberta Health Services and Alberta Health need to work together to develop a set of robust performance measures and targets that will be used to guide service and quality improvement."

No jurisdiction has more performance measures and targets than Alberta. We have performance dashboards, performance report cards, real-time performance-reporting systems and what else, with a huge performance measurement bureaucracy to deliver it all. This effort has amounted to little more than an expensive junk-science exercise in lying with statistics. We need less, not more of this.

How can we tell if this report is being taken seriously? Easy: the 90-day rule of organizational transformation. We should see additional executive firings and real changes in organizational structure within the next 90 days. If we don't, this report is going nowhere.


Robert Gerst is a partner in charge of operational excellence and research & statistical methods at Converge Consulting Group Inc. He is author of The Performance Improvement Toolkit: The Guide to Knowledge-Based Improvement.


Republished from the Winnipeg Free Press print edition September 20, 2013 A15

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