In all of the loud and necessary debates over how to reform health care in the United States before it bankrupts the country, there is one element that has been continually overlooked: the management systems employed by hospitals. Leaders at good hospitals around the country are working hard on cutting waste and added cost and improving the quality of care and patient satisfaction. Teams are striving to improve health care at their institutions in numerous ways, including reducing the number of patients readmitted to hospitals within 30 days of discharge, emergency-room waits, the time between a heart attack and a balloon angioplasty, to name a few. And yet, many of those ardent reformers are furiously running in place because they do not have the management system to support their goals. Worse yet, old-fashioned management-by-objective systems often work to actually undermine all of the good works by those frontline improvement teams.

This 20th century system essentially has leadership establishing objectives for managers to achieve. If managers achieve the objectives, they are rewarded. Unmet objectives result in loss of stature, demotion, or firing. The system encourages certain behaviors, such as top-down bureaucracies and seeking whom to blame for problems or unmet goals instead of how to fix or achieve them. Information sharing is often seen as more threatening than helpful.

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The recent Veteran’s Administration scandal is a good illustration. Managers at the VA were rewarded for reducing or maintaining the time it took for patients to get an appointment in Phoenix and at other facilities around the country. Without help or guidance to improve their internal processes and with an ever-increasing number of patients requiring assistance, managers in Phoenix manipulated the schedules and falsified records to look as though they were meeting objectives. Patient needs were unmet, but remember: The objective was to reduce the wait-time metric, not to meet patient needs.

Since leaving my role as CEO of Thedacare, a large cradle-to-grave health system in Wisconsin, in 2008, I have studied over 160 health care organizations in 16 countries. I have seen enough similarities in successful organizations to suggest a framework for the new management approach in health care. Success begins with defining clear purpose (not dozens of strategic initiatives), defining the few metrics that are critical to improving patient care, and establishing the core principles that drive new systems. For example the principle of “respect for people” means leadership respects caregivers enough to develop a system in which caregivers have control to change processes without management involvement.

This is a management-by-process system like the Toyota Production System. It is not about landing a few key objectives. Management by process requires that leaders know exactly how care is delivered to patients and then lead frontline caregivers in improving those processes daily. Most processes are governed by standardized work, including daily management activities. In my new book Management on the Mend, I have highlighted the work of the Palo Alto Medical Foundation, Seattle Children’s, Salem Health, and others in North America that are successfully rethinking all management practices.

The health care organizations that have switched to management by process train every leader — from shift supervisors to senior executives — to lead their teams in problem solving with the scientific method. In this case, however, managers and executives are not expected to fix problems; they are trained to facilitate problem solving by those that best know that work.

At each level of management, leaders help to create their own standard work. Middle managers, for instance, make the rounds of their direct reports every morning, asking specific — often scripted — questions about the day’s challenges. One example is a “status sheet” discussion. The status sheet contains questions that managers and executives ask when they go to a place of work (the intensive-care unit, the emergency room, etc.) The aim of the questions is to understand the status of the work. On the Medical-Surgical floor, the status-sheet discussion between a manager and a nurse lead might include a conversation about which patients are at risk for falls today, or whether there is adequate staffing to handle patients’ requirements (patient acuity). Then the manager meets with a frontline team to coordinate problem solving and improvement activities before meeting with her own superior to discuss the day’s observations, update improvement activities, etc.

Each executive and manager maintains a list of skills and knowledge required to be effective at their level. For instance, that same middle manager needs to be able to teach scientific problem solving using the plan-do-study-act method. She also needs to be able to effectively train others on the unit’s standard work. And finally, she needs to know how to remove any barriers to improvement for her team. The manager is not in control of everything that happens; she is a facilitator leading change.

The system is designed to push decision making to the smallest team at the front line of the work. The daily conversations up and down the leadership chain push vital information about frontline conditions up to executives while moving strategic decisions throughout the organization. This helps ensure not only that strategy is well informed, but also that everyone is working on the right problems.

At San Francisco General Hospital (SFG), one of the largest public safety-net health care organizations in California, information is shared daily between layers of management so everyone understands what is important. The chief operating officer (COO) meets with direct reports during the week on the floor. A discussion ensues to determine what problems have been identified in the last day or two and what is happening to address those problems. If there has been a rash of medication reconciliation errors, for example, the COO will ask questions in a way to coach her subordinate to understand the problem more deeply.

In contrast a management-by-objectives COO would tell the subordinate what to do and blame her for the poor performance. This process of “catchball” between the executives and managers and managers and frontline teams ensures leadership knows where barriers and flow stoppages are and that front line managers and team know what the COO believes is important. There is no question where decisions are to be made. The frontline teams have clear decision-making authority, but they can exercise it with the knowledge of what upper echelons of management are trying to accomplish overall. There have been 23 new improvement ideas implemented in the 3M surgical clinic at SFG this year. The result has been a 76% decrease in total amount of time for patient-care episodes, including check-in, rooming, physician visits, and waiting. Total experience time started at 206 minutes and has dropped to 49 minutes.

For most health care leaders, this requires a great deal of personal change. We need to trade our dozens of pet projects and strategic initiatives for a few key metrics. The Children’s Hospital of Eastern Ontario (CHEO) has five key metrics, one of which is the number of days children wait for appointments, tests, etc. CHEO’s goal is to reduce this by 50,000 days in the next two years.

Health care leaders need to repeatedly ask simple questions such as “What is actually going to deliver better patient value?” Many of us are accustomed to telling people what to do, to offering lectures instead of asking questions. Worse, we are used to assigning blame instead of encouraging inquiry and helping others to solve their own problems.

Executives must lead with humility, not power. Executives and all the other managers in the organization must become students of the work, relinquishing their need to (seem to) have all the answers. Most importantly they must mentor, coach, and teach. The new leadership role is to help others look for better ways to deliver care — by removing defects, reducing waiting, and allowing everyone to work at the top of their scope-of-license.

Management is a significant part of today’s cost and quality crisis in health care. But as the positive results at organizations that have adopted a management-by-process system are proving, it can and must be a big part of the solution.