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.