Confusing Activity with Results

Drucker Institute Executive Director Rick Wartzman

“If ever an entire sector of the U.S. economy was guilty of committing one of Peter Drucker‘s greatest sins of mismanagement—confusing activity with results—it’s healthcare,” Drucker Institute Executive Director Rick Wartzman writes in his latest column for Bloomberg Businessweek.

The piece goes on to explore WellPoint’s recent push to revamp the way it reimburses about 1,500 hospitals across the nation, so that annual payment increases are pegged to the insurance giant’s definition of quality care rather than to the volume of services delivered.

[EXPAND More]Drucker pointed out that public-service institutions, including many hospitals, tend to have a particularly tough time in this area. Because of their inherent complexity, such enterprises “are prone to the deadly disease of bureaucracy; that is, toward mistaking rules, regulations, and the smooth functioning of the machinery for accomplishment,” Drucker wrote in Toward the Next Economics.

To combat this, Drucker advised, the organization must set explicit goals. “To say our objective is … ‘healthcare’ is operationally a meaningless statement,” Drucker asserted. Instead, this grand sense of purpose must be “converted into specific … work assignments” that, in turn, can be analyzed and appraised.

At many hospitals, Wartzman writes, this would “amount to a procedure that no one could object to: a much-needed transplant surgery, with results replacing activity and quality replacing quantity.”[/EXPAND]