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The market mechanisms, contractual arrangements, governance structures, and information technologies that enable coordination elsewhere in the economy often function poorly in the healthcare setting. As a result, organizational fragmentation is a serious and persistent impediment to improving healthcare quality.246

It is often argued that our national health policy—or lack thereof—is driving the quality and efficiency problems that are plaguing the U.S. healthcare system. In this book I have shown that coordination is a major driver of quality and efficiency and that the underlying causes of the coordination challenge go to the very nature of the work. I have also shown the potential for healthcare organizations to respond to those challenges by developing a set of work practices that build strong networks of coordination among care providers internally and with care providers externally. These unique high performance work systems can go a long way toward increasing both the quality and the efficiency of patient care, while increasing job satisfaction for care providers themselves.

Still, the industry environment presents several powerful obstacles to achieving high performance healthcare, including fragmented payment systems, fragmented hospital-physician relationships, fragmented information systems, and adversarial labor law. Let us consider each of these obstacles to high performance healthcare as well as potential policy solutions.


Often we move too quickly to the argument that payment systems are to blame for the lack of well-coordinated care. There are clearly more fundamental drivers of the coordination challenge, and not all of them can be addressed through a well-designed payment system. Arguably, our payment systems did not create fragmentation; rather, they tend to reinforce that fragmentation because they were designed to accommodate the fragmentation that traditionally characterized the healthcare industry. As health policy analysts Gail Wilensky, Nicholas Wolter, and Michelle Fischer have argued, the challenge of care management and cost control is "magnified by reimbursement systems that reinforce silos of care rather than system approaches."247

Payment systems have also served as a force for improving the coordination of care. We have seen evidence in this book that managed care contracts have been pushing providers to coordinate care more intensively both internally within their own organizations and externally with their supply partners. Because payers are vigilant about ensuring that each patient is eligible for acute care and does not remain in an acute care facility any longer than is medically necessary, acute care providers have had to coordinate more closely with one another to ensure the timely discharge of patients. This payer vigilance also intensifies the pressure on acute care providers to coordinate with downstream facilities to move patients as quickly as possible to the next level of care. To achieve timely discharge, care providers have had to work with downstream facilities to ensure that they have availability to accept a patient at the time of discharge. Thus, pressure from managed care has ...

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