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How Complexity Complicates the Healthcare System

by Michael Rohwer

“Doctors aren’t as smart as they used to be,” a financial advisor recently informed me. I thought he was going to tell me a story of bad investments. Instead, he talked about interactions he’d had with his health care providers. He noted how distracted they’d become. How they seemed to have a hard time making decisions. How they paid more attention to the computer than to him. That he now sees his physicians as lacking control and focus. He likes them, yes, but he’s losing respect for them and for the profession.

In fact, loss of respect is one major reason physicians and other practitioners are leaving the profession, as described in a physician essay published in the Wall Street Journal on August 29, 2014. It is real. It is undermining what we as healthcare professionals seek to accomplish. And I believe it is happening because of a major misdiagnosis in how the healthcare system is managed.

Healthcare is currently managed using traditional industrial methods. Traditional management is based on established science using the machine as a model. This science depends on reducing systems to understandable units and, from that understanding, making reliable predictions. In contrast, the science of Complexity seeks to understand fundamental properties of nature that are by nature systematically unpredictable.

Complex Systems are self-organizing, as though they had a mind of their own. Self-organization leads to hierarchical structures and from these grow emergent properties. These properties are unpredictable even when every system component is understood.

Healthcare is a Complex “Adaptive” System because it contains independent individuals. The behavior of each person is based on physical, psychological, and social rules. Each individual is intelligent, and as they experiment and gain experience, they learn and change their behaviors accordingly. Each responds to and influences those around them. In this way, overall system behavior inherently changes over time. This is the result of Complexity (self-organization, leading to hierarchical structures, and emergent behavior). There is no single point of control and as a result, the output is unpredictable and uncontrollable.

Most of us who work in healthcare have seen the same recurring story. We start with good intentions and redesign based on what we believe is a good idea. Consequences arise, many being unexpected and others differing in timing or magnitude. Every consequence starts a tree of new consequences, most of which consume our energy and often redirect or derail our efforts.

For example, the Resource Based Relative Value Scale (RBRVS) was developed to create standard pricing for professional services. It is a formula developed by experts in medicine, statistics, economics and measurement. It has been widely adopted as the methodology used in fee-for-service payment. As such, it is an example of a top-down, centrally-planned, system-improvement attempt that is still causing problems.

RBRVS has had multiple unintended consequences. It strongly discouraged price competition, making utilization the path to increase income. In many cases, improved efficiency will lower cost of medical procedures, but the central committee that controls reformulation is slow and political. This is a windfall for certain specialties and leads to physician overpopulation in those fields and shortage in others. Members will have a hard time finding certain types of care because the remaining providers may not have the capacity to expand their practice.

(We may be tempted to think that RBRVS was just a bad idea, which it was. However, the more important point is that this is what Complex Systems do. Every idea, no matter how noble or well intentioned, if not deployed in a way adapted to Complexity, will waste resources, raise cost, drain the energy from our people, and still not meet the needs of those we serve.)

As costs rose, Dr. Paul Elwood formed the Jackson Hole Group. Their solution was to replace fee- for-service with prepaid comprehensive care operating as “Managed Competition.” This was a major initiative and Health Maintenance Organizations (HMO) sprung up throughout the country. The concept had precedent in existing organizations such as Kaiser Permanente. However, by the start of 2000, the enthusiasm for the HMO model had cooled significantly for commercial health plans and employers; earlier HMO pioneers had grown up with the concept and had the supporting culture to mitigate the effects of Complexity.

Here’s another example: the January 1992 Medicare Physician Fee Schedule contained Coding Standards that established what needed documentation to justify payment for each level of office visit. In 2010, audits by the HHS Office of the Inspector General demonstrated a 42% error rate, with incorrect payments amounting to $6.7 billion!

Electronic Health Records (EHR), already viewed as necessary infrastructure, would help. EHR had the ability to create self-contained notes that satisfy the standards. Better documentation would result in higher accuracy and savings. However, EHR also has the ability to create notes that justify higher payments independent of services performed. This became a quiet but successful feature for vendors. The increased revenue from higher coding would subsidize the purchase.

As a result, it is likely that we have converted coding errors to administratively justified but fraudulent payments. Audits might seem easier due to the electronic format, but finding services that are documented but not performed is not. Vendors were implicitly redirected to coding issues with the effect of decreasing development of interoperability and usability. The result is that cost continues to rise, technology has poor usability, providers are at more risk, and none of this improves the care delivered to members.

Separately, the HITECH Act was passed to promote adoption of electronic health records. It provided a combination of carrots and sticks in three stages to pressure providers to implement certified EHRs. Like Yogi Berra’s “Déjà vu all over again,” the program experienced delays in rule publication while payments, mostly given to vendors, consumed almost all the funding ($28 billion to date), leaving little for the final stage. The rules for the final stage are pending as of this writing.

As of this time, there are inadequate requirements for interoperability, usability, or to measurable outcomes in quality of care delivered to the member. Leaving interoperability out gives a key edge to current vendors who take advantage of existing market share. Existing systems have not been required to improve usability, leaving interfaces ridden with check boxes while the natural human language is narrative. The result is terrible workflow with an even worse disruption of thought flow. Finally, omitting measurable outcomes as a goal puts bureaucracy and control ahead of what practitioners and members want and need.

This and more have diverted providers from their most important work, which is applying their deep and hard-earned knowledge of human pathophysiology to truly help people. That involves listening to each member in order to understand the unique aspects of their ailment, performing an appropriate physical examination, and from there determining the best next step. It should not surprise anyone that reducing this group to the status of a widget in a machine is associated with demoralization and loss of respect. If we are to succeed long term, we must adopt the ways of nature and Complexity.

The late Donella Meadows of the MIT Sloan School of Management noted that “the least obvious part of a system, its function or purpose, is often the most crucial determinate of the system’s behavior.” This is where we go next: What is the purpose of the healthcare system?