“Simple Rules” and Organizational Culture in Healthcare

In the past three decades, healthcare organizations have undertaken a variety of programs to increase the quality of care and business performance. Many have made significant improvements. But often they have barely kept pace with the demands of the healthcare marketplace for innovation and adaptation. Reimbursement and the pool of professional and clinical staff are decreasing while nearly everything else is increasing: capital and operating expenses, information and consumer expectations, aging and diversity, advances in science and technology, and oversight and regulation.

In response, healthcare organizations sometimes seem to launch one major initiative after another. Many of these initiatives produce some benefit. More often than not, however, the results fall short of the leader’s hopes and the organization’s needs. The process of adaptation and change is impaired or inhibited by cultural and operational factors that lie deep within the organization’s history and traditions. Because organizational change in healthcare depends for its success upon changing the behavior of clinicians and staff throughout the organization, they must be engaged in the process for any initiative to be effective.

Borrowing an idea from chaos theory and complexity science, we have found that engaging healthcare professionals in the process of change requires understanding and addressing what we call “simple rules”—the unstated assumptions that pre-program organizational design and human behavior within that design.

Organizational simple rules
The concept of “simple rules” in chaos and complexity science is itself simply stated: the performance of complex adaptive systems is determined by a small set of simple but deeply embedded rules. A wonderful example of this is “Boids,” a computer simulation developed by Craig Reynolds in 1986. The program uses just three simple rules to simulate the flocking behavior of birds:

• “Steer to avoid crowding local flockmates.” 
• “Steer towards the average heading of local flockmates.” 
• “Steer to move toward the average position of local flockmates.”¹

These three rules alone guide a virtual “flock” of birds in the complex behavior required to fly in concert and adapt appropriately to physical barriers in their airspace.

Paul Plsek and colleagues have shown that organizations, like natural systems, obey simple rules.² Organizational simple rules are fundamental specifications of what is required, what is prohibited, and what is allowed. The rules shape every aspect of organizational design and behavior—structure and leadership, systems and processes, management of resources and information. Yet they are so fundamental that those in the organization may be as unaware of them as we are of the air we breathe.

As an example of organizational simple rules that operate in healthcare, here are two rules we have often encountered that work in tandem:

• “The ultimate measure of success is quality.”
• “Individual physicians are the arbiters of quality.”

Where these are the rules, every aspect of organizational design supports the individual physician's autonomy in providing what he or she considers quality care. This worked fairly well when the evaluation of quality was largely impressionistic and anecdotal, and was primarily a judgment about individual doctors. In today’s environment, where quality is increasingly measured and documented, and systems, as well as individuals, are expected to produce consistent results or suffer the consequences, a strategy based on these particular rules would—and does—lead to failure.

When change is difficult in an organization, it is often the simple rules that are getting in the way. The concept of “simple rules” can help provide a deep, systemic explanation for organizational performance, and can be a tool for enlisting the medical staff, administration, nurses, and others throughout the system in necessary change.
Simple rules and organizational performance

Simple rules guide the management of people and the critical elements of organizational design. The interaction of human resource management and organizational design determines the behavior of every person in the organization. And it is this behavior that produces organizational performance—good, bad, or indifferent.

What gets in the way of fundamental change is not that leaders keep doing the same thing over and over again, expecting to achieve new results. Rather, they keep trying new things, but are constrained within the boundaries created by their organization’s simple rules. True innovation and breakthrough change require breaking the old rules and declaring new ones that make it possible to design the organization and set behavioral expectations that will lead to different results, and doing it in such a way that the people throughout the organization understand and embrace the new rules.

Consider the following story from outside of healthcare. We know a husband and wife team who run a small company publishing a literary magazine for young people. They complained that their staff (all in their early twenties), were uncommitted, unambitious, disrespectful, and prone to turn over quickly. On further questioning, we learned that the couple is mission-oriented and had set out to create a company that felt “like a family.” They hired young people, provided them with lunch every day, offered them personal advice and support, and generally did everything possible to make life easy for them. They were operating under three simple rules:

• “Treat each other like family.”
• “Employees are dependents (and therefore can’t be independent).” 
• “Results are achieved by those who care enough.”

With simple rules like these, the result was predictable: The couple got the “family” they wanted, with all the dysfunction and resentment endemic to families—and inimical to high performance. All their efforts to “fix” the organization had been constrained by these same rules: they tried to get better performance by being even better “parents” rather than asking the fundamental question of whether a family model was appropriate to a business.

An organization’s simple rules are never intrinsically helpful or harmful. They can only be judged by their impact on performance. This is certainly the case in healthcare, where many organizations are now burdened with simple rules that at one time served them well.

Finding fresh perspective to facilitate change
Often, it takes a new leader, with outside perspective, to achieve dramatic organizational change. A newcomer is often better able to see the organization’s rules, understand their impact, and declare new ones.

For example, at the beginning of his tenure, Jack Welch declared that General Electric would only compete in businesses where it could be number one or two in the world. This rule led to dramatic change in GE’s performance over the next twenty years, as it maintained, turned around, or divested its business units based on Welch’s criteria.

It can be a challenge to get that fresh perspective from within an organization. But successful change depends on having rules that support it—and that means understanding the existing ones and articulating new ones as needed.

To identify an organization’s simple rules, we begin by examining its basic systems—leadership, structures, operations, human resources, and information management—through what we think of as “artifacts”, such as vision and mission statements, strategy documents, and the weekly schedules for key organizational leaders.

For each set of artifacts, we ask three questions:

• What do these imply about what is required here?
• What do these imply about what is prohibited here?
• What do these imply about what is allowed here?

We then examine these findings as a group and ask:

• Are there requirements, prohibitions, or allowances common across all organizational systems?
• Looking across systems, do the requirements, prohibitions, and allowances reflect specific instances of more general simple rules?

Once we have identified a set of “candidate” simple rules, we test it in a structured inquiry with the organization’s leaders and employees. When we have the right list, people tend to respond, “Yes! That’s just the way things are around here!”

Three case histories
These three case histories come from our practice with academic medical centers and faculty practices; but the issues these institutions faced—improving business performance, safety and quality, and service and access—are typical of those facing most hospitals, health systems, and their physicians. In each case, the organization’s leadership identified between seven and 10 simple rules that accounted for the majority of their outcomes. We have selected two old and two new rules from each organization to demonstrate the barriers and the breakthroughs in performance.

1. Simple rules and improving access and service performance

An academic health system determined that it needed to focus on service and access to maintain its reputation and increase market share. Patients increasingly complained about the long wait for appointments in the system. The system’s leaders committed to improving access, a process that began with identifying the root causes of the problem.

The system and department leaders reviewed organizational history and identified a number of simple rules. Two old rules had the greatest impact on access performance:

• “Decisions are made locally, at the department, clinical workgroup, or individual level.”
• “Patients wait for ‘the best’—long waiting times are measures of quality and worth.”

The first rule vested the most power and authority in individual department chairs, limiting the system’s ability to respond to market needs with organization-wide service initiatives. The second rule made it acceptable to ignore patients’ discomfort and dissatisfaction.

The system and its faculty practice worked together to develop a plan that would improve access. They began by articulating new simple rules: 

• “Selected performance standards are established organization-wide.”
• “Quality and worth are measured by clinical, research, and academic performance.”

In choosing new rules, this organization made an explicit commitment to realigning departments along a single set of performance criteria, which provided the foundation for improving access through system-wide demand management and operational improvements. By adopting more consistent performance criteria, the system was able to present a more uniform image in the community—the basis of a “brand” that has increased its market share. In addition, by reassessing the characteristics that define quality, the organization sharpened its focus for planning clinical research and academic activities.

2. Simple rules and improving productivity and business performance

A nationally regarded, single-specialty healthcare organization was experiencing large financial losses in its clinical operations, placing its education and research missions at risk. The losses had worsened for several years despite board pressure and numerous efforts at improvement. The organization needed to understand what was undermining its current performance and its attempts to improve. As a first step, it investigated its own simple rules.

Two of their simple rules significantly impaired productivity and financial performance:

• “Have it your way.” Each faculty member had a different schedule template and followed his or her own approach to disease management.
• “If you want it done right, you have to do it yourself.” Physicians and nurses failed to delegate tasks even when others could do them more effectively and efficiently.

The first rule resulted in significant variation in process and operations and the lack of any standards or accountability. In addition, the administrative variation led to a failed effort to implement an electronic medical record, wasting precious time, effort, and capital. The second rule reduced the efficiency and productivity of the faculty in the clinics and eroded morale.

 As a result of this process, the leadership team declared a new set of rules that were more consistent with their business and productivity goals. The new rules were:

• “There is an organization-wide way.”
• “Teams rule.”

These new rules led to breakthroughs in standards for scheduling, practice systems, and teamwork, and have resulted in a 15 percent increase in productivity and more than a 20 percent improvement in the bottom line.

3. Simple rules and improving quality and safety performance

A health system responded to the Institute of Medicine’s call to action around safety and quality in To Err is Human³ and Crossing the Quality Chasm⁴ with a resolve to significantly reduce preventable hospital deaths.  Although the organization had made continuous incremental improvements over the previous decade, the leadership wanted a breakthrough in performance that would have national impact. As part of the initiative, the system chose to examine its simple rules.

The leadership group reviewed the past history of change efforts and cultural analyses and identified two simple rules that had contributed to their success in the past, but would prevent them from achieving future goals. These two rules were:

• “Compliance with organizational standards requires consensus.”
• “Results are achieved by working hard.”

The first rule had limited the ability of past leaders to make the bold decisions needed to achieve breakthrough performance. The second rule was deeply embedded in their regional culture, but it had lost its ability to produce change because physicians and staff were already working at the highest levels of standard benchmark performance. Working harder was increasingly difficult to envision let alone achieve, and this expectation invited cynicism and resistance to change despite traditionally high morale. Working differently and smarter was the next step, but getting there required new rules. The new rules that evolved were:

• “Commitment mandates compliance.”
• “Results are achieved through process redesign.”

As a result of declaring these new rules, the organization has developed performance expectations for physicians that now include meaningful consequences for substandard performance. They have dramatically redesigned core processes from access to care management and follow-through using innovative Six Sigma process mapping.

Producing breakthroughs in performance
In today’s environment, healthcare organizations cannot afford to fall short of producing the best outcomes. The stakes steadily increase and the margin for error diminishes. Although not every change will require analyzing or revising the organization’s simple rules, the rules may be a factor when:

• Innovations or change efforts fail to produce desired or sustained results
• Innovations or change efforts take much longer to implement than anticipated
• The organization is stuck in the status quo while performance continues to decline
• There has been a merger or acquisition
• There is a need for a significant turnaround
• There is new leadership in the departments, practice plan, hospital, or system

Redesign of one aspect of organization’s structure or processes without considering the role of organizational culture is far more likely to produce confusion and frustration than to improve results. Understanding the simple rules is a vital step toward engaging all the players in effective healthcare change—improving outcomes, business performance, and the satisfaction of all those who come in contact with the system, including patients, providers, and their families.

Notes
(Portions of this article appeared in substantially different form in Academic Clinical Practice, Summer, 2002.)