Thought leadership

Systemness: An essential CEO challenge in value-based care

Systemness: An essential CEO challenge in value-based care

A health system that truly operates as a system can attract and capture more demand while retaining its existing patients/consumers in a way that drives long-term stability, supports patient care goals, and provides valuable space to drive innovation in an industry sorely in need of it.[1]

Easy to say. Difficult to accomplish!

CEOs are finding that to walk-the-talk of “systemness” they must work with their board, physician and middle-management leaders to build an enthusiastic consensus answer to three key questions:

  1. What do we mean by “systemness”?
  2. What are the most common obstacles to systemness and how can we overcome them?
  3. How can we best understand and execute five essential strategies?


What do we mean by “systemness”?

There is a growing body of knowledge from the past decade that “systemness” is the optimal

alignment of several structural and behavioral characteristics of how the organization focuses the vision, time, talents and resources of all staff providers, care teams, units, departments, services and product lines of the organization.

The Advisory Board sees four levels of systemness—in increasing order of difficulty:

  • Level one: “We recognize, pursue and capture obviously beneficial economies of scale”
  • Level two: “We work together to identify best practices and reduce unwarranted variation with all patient-facing activity”
  • Level three: “We routinely make decisions that benefit the system as a whole—even when doing so disadvantages parts of the organization”
  • Level four: “We are willing to disrupt our whole system rather than wait to be disrupted by others”
  • Level four systemness is a journey that most boards will need a roadmap to navigate.[2]


What are the most common obstacles to systemness and how can we overcome them?

Too many boards, executives, providers, and consultants have reached the uncomfortable conclusion that most organizations that call themselves health systems are systems in name only. Most still act like a confederation of individual parts. This is in contrast to many other industries, like manufacturing, banking, or hospitality.[3]


How can we best understand and execute five essential strategies?

Alignment among internal stakeholders about the health system’s five Cs of: Care Model, Culture, Coordination, Competencies, and Consistency. It embodies an understanding of shared characteristics needed across organizational strategy, care management protocols, leadership design, administrative systems, and the alignment of provider and staff recognition and reward programming. 

1. Care Model:

A modern, integrated care system in an era of value for money contracting requires a care model that is increasingly seen as patient centered, provider led, and professionally managed. From bedside to boardroom, the people of the organization share a common vision and a passion for service excellence. The organization, however, does not just embrace an aspirational vision of being a resilient, high reliability and world-class care provider. They spell out specific actions and investments in processes, systems, tools, training and technologies that enable the aspiration to become a sustainable reality. Often referenced models can be seen at Mayo Health;[4] Virginia Mason,[5] Cleveland Clinic,[6] and Geisinger.[7]

With the explosion in concern over mental health issues, many countries and states are now exploring expanded models of systemness to integrate mental health and physical health aspects of the patient and community populations.[8]

The care model can also consider specific goals and behaviors defined within four levels:[9] the individual patient, the care team, the organizational infrastructure, and the organization’s environment and market context.


2. Culture:

Culture embraces a diverse set of characteristics about how things get done in the organization. Health systems now realize that a positive and integrated culture need not just evolve over time; but, can be designed and nurtured through careful leadership from the board, CEO and physician leaders. Some systems start the culture development process within a service line, like Dignity Health in surgery.[10]

Senior human resource leaders can accelerate meaningful progress when they receive support to step up with five key infrastructure elements:

  1. Implementing a common job architecture
  2. Effectively supporting mergers and acquisitions
  3. Aligning physicians
  4. Building new leadership capabilities
  5. Embracing pay for performance.[11]

We can also borrow useful insights from the hotel industry which identifies three strategies:

  1. Incentivize employee innovation
  2. Diverse employees bring diverse ideas.
  3. Communicate management buy-in and support.[12]


3. Coordination:

Deloitte describes three key leadership components to optimize coordination as a means to systemness: consider starting at the heart of the organization by redefining the operating model to operationalize the care model; followed by structuring the executive team to execute the strategy; and finally, defining the organization’s reporting structure and decision rights framework.[13]

The Commonwealth Fund authors concludes that coordination for high-risk patients must be comprehensive and embrace several initiatives:

 “Successful models have several common attributes: targeting patients likely to benefit from the intervention; comprehensively assessing patients’ risks and needs; relying on evidence-based care planning and patient monitoring; promoting patient and family engagement in self-care; coordinating care and communication among patients and providers; facilitating transitions from the hospital and referrals to community resources; and providing appropriate care in accordance with patients’ preferences.[14]


4. Competencies:

Board, executive and clinical leaders will need to cultivate new leadership competencies. The DNA of leaders who thrive in systemness is different from prior, more authoritarian styles. Leaders must be visionary design thinkers, team builders and leaders, process improvers, problem solvers, and results-oriented innovators. Our experience suggests that such leaders possess:

  • Bifocal Vision: They can see the big picture across the enterprise as well as the operational day-to-day detail. As a result, they can execute strategies as well as develop them.
  • Interpersonal Diplomacy: They can broker relationships to drive results and are skilled at bridging differences using their political savvy.
  • Thirst for Learning: In addition to being geared toward learning, they also possess the ability and desire to remove barriers so that others can learn and innovate.
  • Altruism: They are not concerned with turf; their focus is outward, rather than inward, based on strong egos.[15]


5. Consistency:

Achieving a consistently high level of quality, cost-effectiveness and patient delight is an essential component of systemness. At Spectrum Health, leaders see that high-reliability is central to consistency and means that the every unit and service line of the organization is focused on doing the right thing all the time and making sure that each team member can do that consistently for every single person served.[16] 

According to Tina Freese Decker, Executive Vice President and Chief Operating Officer at Spectrum Health:

We have a number of hospitals and facilities, and in previous times we operated differently. We had different standards for surgery, for rehab, for imaging. What we’re doing today is we’re bringing those together underneath the same leadership, with the same policies and procedures and processes, to make sure that as we are providing the care, we are doing it in a consistent and standard approach to promote quality, safety, and the best experience possible.[17]

What are you learning in your organization about factors that frustrate or facilitate greater systemness? How can you best use this article to stimulate your board, executives and clinical leaders to have conversations about these strategies to support your organization wellbeing?


[17] Tina Freese Decker, MHA, MS, ACHE, Executive Vice President and Chief Operating Officer for Spectrum

James A. Rice

Jim Rice, PhD, FACHE is the Managing Director & Practice Leader with the Governance & Leadership service line of Gallagher’s Human Resources & Compensation Consulting practice. He focuses his consulting work on strategic governance structures and systems for high performing, tax-exempt nonprofit, credit union and health sector organizations and integrated care systems; visioning for large and small not-for-profit organizations; and leadership development for Boards and C-Suite Senior Leaders. 

Dr. Rice holds masters and doctoral degrees in ...

Read Full Bio