I've argued that the “discipline of the market place”, as measured by New York-based bond rating agencies, will require the next Government of Ontario (Liberals or Tories) to remove $6 billion from the healthcare sector over three years starting in the Spring Budget of 2012 – one year from now, and five months after the October 6th election.

So what’s the problem? In addition to Ontario’s unprecedented $18.7 billion deficit, we are carrying a debt of $237 billion. The interest charges on our debt are $9.7 billion annually – more than we spend on our colleges, universities and training programs. So we have finally hit a brick wall where we will now be required to find some drastic solutions.

However, if we were to remove $2 billion a year for three years out of the existing silos and stovepipes in our healthcare service delivery system, we would destroy the system. When the Harris government took money out of stovepipes, they caused 6,000 nurses to lose their jobs – which then led to skyrocketing rates of preventable deaths and to a serious deterioration of quality throughout the service delivery system.

Anyone who understands the existing system will know that we can’t take $6 billion out of healthcare spending safely – unless we transform, reconfigure and redesign the whole delivery system. The survival of Medicare depends on our ability to evolve our delivery system to the so-called “second curve” health system design

This means we can’t think the same way anymore. We have to think differently, and do things differently. That does not mean we need a two-tiered system that generates more cash to maintain an inefficient system. It means we need to create a better, more efficient and more patient/client-focused system.

Health reform advocates point to the evidence generated from around the world that indicates that redesigning healthcare system processes from a patient/client/customer perspective leads not just to better quality care, but also to significant efficiencies estimated to reduce health system costs by 30%. Rather than raise more money for inefficient healthcare, we need fundamental system, organizational and process redesign conducted with the full engagement of front-line workers

These types of operational savings can only be achieved by “on-the-ground” CEO’s leading their senior and middle managers to engage front-line service providers in the redesign of their core work processes to reflect patient/client perspectives. But the key to all this is the CEO -- and an aligned and committed management team at each health service provider agency or institution.

However, over the past two years, as we have emerged from the e-health scandals, and a damning Provincial Auditors’ Report, we have created an environment, a culture, and a way of thinking and behaving which is “risk averse” and “rules-based”. We don’t encourage leaders, we blame them, and call the shaming process “accountability”.

Rather than a Culture of Innovation & Care, we have a Rules & Compliance Culture – where we don’t take any chances, and where we slavishly adhere to all the important rules and regulations. Since “innovation” involves taking risks, not many people are actively engaged in innovation. Indeed, with a few exceptions, there are hardly any innovations being tested in today’s healthcare system.

We have somehow re-entered the age of command-and-control management and have made it unsafe for the innovators.

Rather than moving forward with the Excellent Care for All Act’s provisions for performance pay (which provided increased pay for “improved performance”, and wage clawbacks for “poor performance”), the government is instead going forward with only negative sanctions for low scores on patient/staff satisfaction and quality indicators. This is the “pay-at-risk” program. That isn’t what they teach managers in MBA school. They teach that successful transformation must be vision-driven, and that incentives need to be aligned to reward the right things.

So think about this: the Ontario healthcare delivery system is being guided almost exclusively by negative “Fixed Performance Contracts”. In their book, Beyond Budgeting, Hope and Fraser say that “fixed performance contracts being used to drive and evaluate managerial performance can and often do cause managers to behave in dysfunctional ways, particularly if they find they cannot meet these contracts. At best this results in ‘managing the numbers’, at worst, it results in outright misrepresentation and fraud.”

So we are governing our delivery system with negative sanctions and a solid dash of blame and shame. The “lessons learned” from around the world say that this punitive approach will produce dysfunctional behavior, gaming and blame-avoidance dynamics that will ultimately impact negatively on all the major quality and customer indicators – as well as financial performance indicators.

Instead of encouraging and nurturing courageous and innovative leaders who will lead paradigm-shifting transformations of their organizations, the most frequent communications (both formal and informal) from macro system officials seem to be about the terrible things that will happen unless service provider organizations are compliant with all the rules and regulations that have been developed in the wake of Ontario’s various healthcare scandals.

This is the very powerful and all-consuming “blame-avoidance dynamic” that has been put into play in our complex adaptive system of healthcare services. This negative dynamic has become pervasive in the system. “Fear” and “anxiety” are dominant influences on healthcare workplaces. Very few people ever hear positive feedback. Despite the many real improvements that have been made in performance over the past few years, feedback to CEO’s, and to our front-line workers, is almost exclusively negative – except in the more advanced organizations where the CEO is leading a strategic transformation, and where Boards are in true stewardship to their organization.

While it is absolutely possible to have prudent risk management programs in place – and be innovative at the same time – many healthcare sector leaders experience the current macro psycho-socio-political environment as “threatening” and “dangerous” to one’s career. Indeed, the healthcare sector today has been deemed to be “among the most toxic work environments in the country” – from top to bottom, from CEO to floor cleaner.

Everyone says that it is very tough to work in the healthcare sector.

Nevertheless, throughout the chaos, extraordinary people on the front lines of health service delivery, continue to make extraordinary efforts to make our lives better – even in the midst of turmoil.

With several important exceptions, Boards of Governance have not been much help in this increasingly chaotic environment. Some have overreacted and contributed negatively to the internal tension – while most underreacted, not really providing their organizations with stability, or wise counsel. Community governance is very much worth preserving -- but how will governance evolve to “add value” in the emerging system? How will we ensure “community ownership”

The Excellent Care For All Act, while a great piece of legislation, needs sustained leadership efforts if the system is going to actually improve.

Rather than capture the hearts and minds of leaders to achieve major advances in quality and efficiency for patients and taxpayers, the government’s reaction to the various scandals has unintentionally created the environment -- and the incentives -- to get our operational leaders to pay closest attention to ensuring that they will not be harmed.

Think of the hours and hours that will be invested by senior managers in “the game” of blame avoidance, rather than focusing their managerial talents on achieving real improvements for patients/clients/taxpayers. This is what we mean by an “unintended consequence” of a set of actions.

Instead of engaging in blame games, what we need are strategies, structures and processes that will liberate organizational leaders, front-line service providers and physicians to build a better system. But nobody is advocating for that. Healthcare policy has become a political black hole for all three parties at the moment.

Rather than dealing with the complex challenges of health reform, our political leaders seem to be implying that, if elected, they will maintain the status quo. The only “big healthcare reform idea” so far, is to get rid of Local Health Integration Networks -- and replace them with yet another version of District Health Councils, Regional Health Authorities or Local Ministry Offices -- or some other alternative structure that looks like some form of “devolution”.

Here we go again, another structural “quick-fix” that will fail.

Have we not all seen this same movie enough times yet? Historically, we focus on each new structure created by Queen’s Park for “devolution” and “local empowerment” for four or five years, and then, as these structures fail to struggle free of Queen’s Park, the blame shifts to operational CEO’s  and senior managers. We threaten them with pay clawbacks if they don’t succeed in improving their numbers – and then we create the next “structural-quick-fix”. How do we change this repeating pattern of failure and blaming?

Rather than blow-up the LHINs, the next government ought to make them work. “Devolution” failed because Queen’s Park never decentralized power. “Fixing local health authorities” should include new legislation empowering these local planning and funding bodies to allocate resources based on key bottomline results that service providers produce – with rewards for high patient/client satisfaction, quality outcomes/safety, staff/physician satisfaction rates, etc.

The truth is: Queen’s Park never really wanted devolution to work – because both the politicians and the public servants want to micro-manage the system.

Successful “reality therapy” for macro system leaders would produce an understanding that from now on their key function and purpose should be to provide high-level strategic leadership -- where they guide, incent and reward certain behaviors (like quality & patient/staff/physician satisfaction rates, etc) -- rather than come up with yet another “structural-quick-fix”; or engage in further rounds of  threatening dynamics with health service provider organizations and their leaders; or develop more and more compliance rules for the system to follow even more rigorously.

We need calm, confidence, optimism, vision, support, stewardship and mutual accountability from our macro healthcare system leaders at Queen’s Park, and in the LHINs.

Change management scholars say that at this stage of a system transformation, there ought to be at least 30% of health service provider organizations who are “on board” and ready to transform. But I don’t think we are doing that well in Ontario. Many organizations have simply been cast adrift in a sea of negativity. It is a very difficult environment for leaders to lead. Many say it is a “threatening environment”.

Today, I think that perhaps only 15% of our healthcare organizations are in the midst of energized and optimistic capacity-building programs that are designed by their CEO’s to mobilize their organization’s collective intelligence to achieve real bottom-line improvements in performance. In these organizations, the “innovators” are thriving.

While these organizations can hear the negative fear-mongering messages in the official environment of the regulators and funders, they are intentionally marching to a very different drummer. They have Boards and CEOs who want real improvements for their patients/clients/staff. They are obsessed with quality improvement and patient safety issues. Some are moving beyond lean thinking to client/patient experience design.

These organizations have found aligned strategic direction in the Excellent Care For All Act – which for many organizations is a flickering beacon of positive leadership that provides everyone with a greater sense of purpose.

Beyond this excellent legislation, what we need from our public servants and politicians is much more encouragement -- including financial rewards -- for our high performing organizations. There are many wonderful performance breakthroughs in our healthcare service delivery system that ought to be celebrated. The “reality therapy” conclusion for macro system leaders is the leveraged action: shift from threatening everyone (while obsessing about rules), to celebrating the 15% of high performers ( and helping to spread successful innovation across the service delivery system).

Change management scholars say that if the regulatory and funding authorities were to behave that way, a critical mass of health service provider organizations– perhaps another 45% of the delivery system – would join the “on-board” innovators group (composed of fifteen percent of all health service providers) because they too want financial rewards, credit and praise. At that stage, we would have about 60% of health service providers “on Board” – a critical mass/tipping point that would make “whole system transformation” possible.

That is the leadership challenge for our macro system leaders: making whole system transformation possible. How? I think that the key is: having prudent risk management processes in place -- while pushing the boundaries of innovation at the local LHIN and organizational levels.

While money talks, the key thing to remember is that the healthcare delivery system is a profoundly human system, and that humans are emotional beings – who respond and react to the emotional and psychic environment that is created. Rather than the regular doses of fear & anxiety – bundled up with more rules, and more need for compliance – macro system leaders need to communicate from vision & purpose if they intend to mobilize the healthcare delivery system to transform.

Our top leaders need to be encouraging and energizing our operational CEO’s and our community boards -- not paralyzing them with fear.

The recent “orgy of blame” on CEO’s and on our “ineffective” local Boards of Governance, has seriously destabilized the healthcare delivery system. Many of our leaders are not leading. They are treading water and surviving. How can we get our leaders to starting leading again?

If we want to create a better healthcare system, we need our managerial and governance leaders to be motivated and ambitious on behalf of the patients/clients/staff/ and the “owners” of their organizations. We need them to be innovative, courageous and inspirational, rather than risk-averse and cautious. But to do that, they need to exist in a safe, positive learning environment -- instead of a negative, blaming, threatening and punitive environment.

Learning organizations and learning communities often learn from their “best mistakes” of the past.

We need our governance and managerial leaders to understand that the answers to their most complex & perplexing issues are within their organizations – in the hearts and minds of the people who work there. We need our leaders to tap into the collective intelligence of their organizations to discover how best to improve upon the organization’s performance.

To be successful, our leaders need support: from their Board, from their senior managers; from the LHIN; and in hospital settings, they need support from physician leaders if they are to succeed. “Support” is what humans need as they learn and adapt, and as they evolve and transform. That needs to be the key function and role of the MOHLTC and the LHINs: to support the transformation process at the organizational level and at the local network level.

The key question each of us need to determine is: How can we “add value”?

Health service delivery system leaders who complain that the senior officials at the MOHLTC “don’t have a health sector background”, ought to lighten up: we don’t need our public servants to be surgeons, they need to be “good listeners” and good “strategic thinkers” -- who are in service to the health system, as it transforms. At the LHIN level, having a good grasp of the health sector is essential for collaborating with health service provider organizations, and for allocating resources to achieve their network’s strategy.

While we need a high-level vision for where government intends to take the provincial healthcare system over the next 5 to 10-years, at the local level, we need local visions and strategies for meeting the healthcare needs of each community. Yes, there needs to be some consistency and standards, but we must recognize that each network is truly unique. That’s why each local community needs to be free to set their own course – rather than being run by centralized control from Toronto, with the traditional “one-size-fits-all” bureaucratic solutions.

So, how should the next Government of Ontario, and each of the health system stakeholders respond to the circumstances that I have described?

I am suggesting that if $6 billion was to be removed from the health sector over three years, it would require a “whole system transformation & reconfiguration”. What would that look like? How can it be made to happen in ways that would result in real improvements  to our healthcare service delivery system?

For the past twenty-years, our clinician-centric craft model of medicine and our rigid bureaucratic service delivery systems with their industrial organizational practices have been faced with unrelenting incremental change. Today, public, governmental and service provider pressure is increasingly pushing for transformational, fundamental and deep change in our healthcare system. But how? How will we change the system?

Following HOOPP’s Healthcare Symposium in November, pension fund CEO John Crocker suggested that government needs to establish a truly arms-length Commission of knowledgeable and experienced experts to propose evidence-based solutions to our current health system challenges. Food-for-thought.

While we wait for healthcare bureaucrats, policy wonks and politicians to grapple with these issues between now and next November, what does the health sector think ought to be done? If you were a Commissioner, what would you suggest to the next government? What do you think we need to do to get ready for the new paradigm shifting ways in which to evolve our healthcare service delivery system to the next level? What should Ontario’s ‘second curve’ health system design look like? In what ways would the emerging system be better for patients/clients, taxpayers, staff, physicians and for leaders across the system?

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