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My Favorite Slide: The Entrepreneurial Gap Applied to Health Care

Blog Post · March 8, 2017

Value-based health care increases providers’ accountability for patient outcomes. Many physicians have resisted taking on such increased accountability, claiming that patient outcomes are influenced by many forces outside their control, such as care provided by other clinicians, patient compliance with post-acute and rehabilitation care, and the quality of external rehab personnel and facilities. These skeptics are, in effect, invoking the well-known Controllability Principle, in which managers are held responsible only for resources and outcomes that they directly control.

Accountability for Patient Outcomes: The Controllability Principle - Set Responsibility and Accountability Equal to Authority

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Yet contemporary management practice advocates the benefits of holding individuals accountable for results well beyond what they can immediately control. The difference between accountability and control is called an “entrepreneurial gap,” evoking the Harvard Business School definition of entrepreneurs as those who pursue opportunities — internally and externally — without regard to the resources they currently control.

When physicians become accountable for patient outcomes, through publicly reported functional and patient-reported outcomes, and are also paid through bundled payments that cover all the costs incurred in a patient’s care cycle, they face a significant entrepreneurial gap. To constructively cope with these enhanced expectations, they now must find ways to integrate, coordinate, and influence care outside their direct control. With such an entrepreneurial mindset, they might attempt to discharge more patients to inexpensive home health rehab rather than expensive skilled nursing facilities. They might hire patient care specialists to monitor and manage patients, both in-patient and post-discharge, “nudging” them for shorter hospital stays and encouraging them to remain on rehab and recovery protocols after they leave. They might coordinate with suppliers to get drugs, implants, imaging, and devices better matched to patient needs.

The creative tension generated by an entrepreneurial gap, although perhaps uncomfortable to health care providers, promises more integrated patient care and, as a consequence, superior patient outcomes at lower total cost.

Accountability for Patient Outcomes: What Happens When Span of Accountability Exceeds Span of Control?

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