The Organizational Transformation of American Medicine

I shall discuss the struggle now going on for control of health care.  This struggle is mainly between the management of corporations and physicians. It is a struggle for power. To be effective in the marketplace, corporations have to harness physicians to corporate goals, thus creating internal discipline and compliance; to be independent professionals, physicians have to be free to choose what they want for their patients.  The government, economists, and leaders of large organizations favor the corporate strategy because it is a way of making physician behave economically.

Richard Reece, MD, And Who Shall Care for the Sick? Media Medicus, Minneapolis, 1988

September 19, 2012 -  Who shall care for the sick?  The answer is becoming clear. It will be large organizations.  American health care has become a $3 trillion industry.  It is simply too large to be left or to be trusted to physicians, hospitals,  patients, health care consumers, even to government, and regrettably,  to a lesser extent, physician organizations,.

Peter F. Drucker (1909-2005) nailed it in 1968 when he wrote;

Every single social task of major impact . . . is increasingly entrusted to institutions which are organized for perpetuity and which are managed by professionals, whether they are called ‘managers,’ ‘administrators,’ or ‘executives.

But who will  run these large organizations?  Who will be responsible for their results?   How will they arrive at their decisions?

Increasingly, it will be mix of  leaders from the corporate world,  various sectors of the health industry, and the world of government.   Curiously, although Medicare and Medicaid have combined budgets of over $1 trillion and will soon pay for 50% of all health care costs, government is not big or trusted enough to have a decisive influence. Government organizations are too bureaucratic, too inefficient, and too lashed to the political mast. 

Instead,  control will be exercised through a powerful coalition  of  influential consultants, accountants,  and health care leaders meeting together to decide how to grow and survive.   Government cuts in reimbursement,   growing power of  information technologies, public demands for fruits of medical technology,  and the need to rationalize the role of physicians will preoccupy this coalition.

Who will bring the major players in this coalition together?    It may be  major accounting and consulting organizations,  like BDO and ABC (Advisory Board Company). 

If you are a TV watcher,  you may have noticed ads with the headline “Those who know know BDO. " 

BDO is a  global network  of accountants and consultants providing  advisory services in 137 countries, with more than 49,000 people working out of 1,100+ offices worldwide.

The mission statement for BDO reads: "Funded on timeless values, motivated by entrepreneurial thinkers, achieved by individual accountability and professionalism, and distinguished by quality and independent service, our distinguished culture is the reason people who know, choose, BDO."

The Advisory Board Company is a global research, consulting, and technology firm partnering with 125,000 leaders in 3,200 organizations across health care and higher education.

The Research Council of Washington founded the company in 1979;. Although its original mission was to answer “any question for any company for any industry,” in 1983 the company began to specialize in research for the financial services industry and changed its name to The Advisory Board Company (ABC).  In  1986 The Advisory Board Company launched its strategic research division dedicated to the health care industry, including its first membership program, the Health Care Advisory Board (HCAB). The firm expanded to include its first clinically based program, the Cardiology Roundtable in 1994, providing best practices in managing cardiovascular care for the nations’ cardiac programs. The Advisory Board Company maintains its focus on the health care sector, working with more than 1,500 healthcare organizations.

By 2002 the firm consisted of 2,100 memberships and 500 employees. The Advisory Board Academies leadership development division launched, addressing leadership gap in health care solutions, by analyzing and managing these problems.

• Physician Integration, Alignment, and Employment
• Clinical Integration and Clinical Transformation
• Physician Practice M &A
• EMR and Practice Management IT Selection and Implementation
• Physician Manpower Planning and Medical Staff Development
• Interim Physician Practice Management
• Supply Chain
• ICD-10
• Emergency Department
• Quality Improvement
• Surgery

I am not recommending BDO or the Advisory Board Company to physicians.  I am trying to point out that the health care industry has irrevocably changed because its size and cost, and a coalition of organizations and special interests,  guided by large consulting firms,  will decide the future direction of health care.

Tweet:   Large organizations, guided by large consulting firms, rather than physicians alone, will decide who cares for the sick.