Thursday, 12 January 2012

Getting paid for performance - Buffet does, why not healthcare?

Top performers high achievers are amazing.
Marshall Goldsmith when he coaches senior executives does not get paid for his time; Marshall only gets paid if his clients are successful in a pre-defined and measurable way as defined by pre-selected stakeholders.
Warren Buffet when he was accepting money from his associates to invest did not get paid till he realised a minimum 6% profit on the clients money; only after Warren made more than 6% for his clients he asked clients to pay his charges/fees/profit-share.
Monish Pabrai who some say could be the Buffet of the future does the same; he does not charge his clients any fees unless he first makes 6% return for them. Above 6% he takes 1/4 of the profits – like Buffet does.
IHI – clearly states that if for any reason a participant is not fully satisfied with their course/meeting/conference/etc IHI will give a full refund of the fees paid. Check their website.
It looks like they don’t get paid (or prefer not to get paid) for their time or activity – they want to get paid for their successful performance.
There is surely something to learn from these people and institutions. On wondering how they do it it seems that they first develop their credentials, they are confident of the success of their methodology and they have the conviction to back it by putting the client’s returns ahead of their own.
It is interesting to note how they got there. They had discipline. They had the discipline to agree and write out what they wanted to do in the form of a checklist (not the tick box check list that many of us often use but the explicit work order/process type of checklist) and stick to it. They had the discipline to track their successes and failures of their checklist and change the things that did not work. They then again stuck to those checklists and tracked them again. Over a period of time their checklists have become amazingly superior. They give up opportunities which are not cleared by their checklists. They work by protocol, they have a protocol when the original protocol does not work, they have a protocol on when and how to change protocols.
Agreement on the methodology – explicitly writing it down step by step (checklist) – following the checklist – tracking the results of the checklist – changing/amending the checklist on the basis or measured performance. That seems to be their methodology. Atul Gawande has written about Monish Pabrai's method in his book, the 'Checklist Manifesto'. Enough has been written about Buffet's stock screening techniques (though no one exactly knows what they are).
An extended version of this is what they do at Intermountain Healthcare, Salt Lake City, Utah. Intermountain calls it clinical protocols (and not checklist). They are obviously a very successful healthcare organisation.

Pabrai says in an interview that if only investors quite simply followed Buffet's investment decisions even after it became completely public, the investment would clearly outperform the market, but people don't. In a similar manner, if only healthcare simply followed Intermountain (or Jonkoping) principles we could all be in a better place. Never mind reinventing the wheel, we in healthcare are possibly quite passionate about reinventing the flat tyre (to misquote Berwick).

Most of us in healthcare and I am specifically talking about clinicians and clinical health delivery, neither have the discipline nor the needed nerves of steely persistence to be able to replicate what is a very well described process/methodology that has seen sustained success for more than a decade. Actually, we may have both, it is likely we have not bothered to try it out.
Clinicians do not often have local agreement, they do not like to write out explicit protocols and then agree as a group to work to those protocols. We think it interferes with our 'clinical freedom'. That is why most of us get paid for our time and would hesitate to get paid for our performance.

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Blockit said...

Don't you think enough is known what can be done . I think the real challenge is how it can be done.

HEMADRI said...

You are absolutely right Reg. The 'how' will involve clinicians developing a profound belief in the 'what'. I hope they begin to believe in it genuinely before the government forces the methodology on us - in which case it would be yet another missed opportunity.

Anonymous said...

Interesting proposition...
But how would you pay for performance with patients who cannot be saved and "best performance" is just to let nature take it's course?