You ain't seen nothin' yet

MGMA Connexion, Jul 2006 by Pope, Christina

MGMA 2006 Annual Conference preview

Change management guru John Kotter focuses on health care

Is your organization the same one it was when managed care and health savings accounts didn't exist? When the only "nonphysician providers" in practices were nurses? When you thought HIPAA might bean African river dweller?

If you think you've seen a lot of changes, you ain't seen nothin' yet.

The leaders of companies such as General Motors and Starhucks are aghast that they now spend more on health care than they do on steel and coffee, respectively. The federal government - along with assorted private payers-has launched physician pay-for-performance plans. Americans are traveling to India, Costa Rica and Thailand to have less costly surgical procedures. And, oh yes, the first of 78 million baby boomers turned 60 this year.

So what are you doing to manage your medical group practice for change?

If your answer is "not much," you are not alone, says John P. Kotter, a worldrenowned expert on leadership at the Harvard Business School. He is the author of numerous acclaimed books, including Leading Change, which sold more than 1 million copies, and Our Iceberg is Melting, coming out in September.

Kotter will he a keynote speaker at the Medical Group Management Association 2006 Annual Conference, Oct. 22-25 in Las Vegas.

"Managing for change seems so simple, so why is it so hard?" lie asks. "The rate of change is now greater than our ability to adapt. VVe haven't learned how to adapt, and we don't yet have a cultural history of managing big change. We aren't tutored in managing change, so we're making mistakes constantly. And that feels really hard."

It's not like health care is the first industry to face enormous change and pressure. In the early 1970s, the Japanese took on American manufacturing companies, starting with appliances and toys because those products were easy to ship, Kotter says. The amount of change in the manufacturing sector from 1980 to 2000 was significantly greater than the 35 preceding years, he says.

"Any analyst could sec the United States was in trouble, but it took most companies by surprise," Kotter says. "The best ones got out of their complacency, and the worst ones went out of business. Manufacturing in the U.S. today is much stronger, but it had to go through big changes."

For three decades, Kotter has studied organizations, the people who have transformed them and the steps they have taken.

"Errors happen in all of the steps toward transformation, but the biggest problem is to start out correctly," he says, emphasizing the importance of creating a sense of urgency, pulling together the guiding team and developing the change strategy. (see his eight steps on page 27.) He compares falsestart transformation efforts to a rubber band: If your organization hasn't established a compelling why, who and how, "your organization will only go so far, and it just might snap right back to where you started."

Kotter says he believes that storytelling is crucial to creating a sense of urgency, the first step in successful change. The penguin characters in Our lechery is Melting convey the impending crisis by crafting a model iceberg, complete with cracks that till with water that freezes - and expands - to show their colony what is about to happen to their home.

Kotter relates another story in his book, The Heart of Change, that illustrates why a company needed to centralize its purchasing. A purchaser collected 424 sample gloves from each of his company's factories and attached the price tag to each. Division presidents were invited to the hoard room to see the pile of gloves, each independently purchased for a different price. The story of why a standardized and bulk-purchasing process was needed immediately spread through the company, hurling it through step 1 of the transformation process.

"A sense of urgency, sometimes developed by creative means, gets people off the couch, out of a bunker and ready to move," Kotter says.

about the author

Christina Pope, MGMA senior writer, cpope@mgma.com