Leaders in healthcare delivery need to come to terms with and fix their beliefs in their own, their organizations’, and their industry’s sense of cultural exceptionalism. Exceptionalism is a loaded term, so let’s define it.

Exceptionalism: The condition of being exceptional; uniqueness; a theory that a nation, region, or political system is exceptional and does not conform to the norm.g

Exceptionalism can imply either a) a sense of being different, like “an exception to the rule,” or b) something extraordinarily good, like an “exceptional athlete,” or c) both. (In 1840, Alexis de Tocqueville described America as “exceptional,” which eventually led to the use of the politically controversial term American exceptionalism.)

The study of economic exceptionalism in healthcare started in 1963, when Nobel Prize -winning economist Kenneth Arrow wrote paper in the American Economic Review, “Uncertainty and the Welfare Economics of Medical Care.” The paper gave birth to modern healthcare economics and many attempts to determine how different American healthcare is from other American industries. Explanations of economic differences in healthcare developed the name economic exceptionalism. Here’s an excerpt from a 2016 paper in the American Economic Review: “. . . ‘health care exceptionalism’ has a long tradition in health economics. It dates back at least to the seminal article of Arrow (1963), which started the modern field of health economics by emphasizing key features of the health care industry that distinguish it from most other sectors and therefore warrant tailored study . . .”

Economic exceptionalism in healthcare initially connoted the first sense of the definition of exceptionalism—different or unique, but not better. And it’s inarguable that the business of healthcare delivery is economically exceptional. The payers of medical care are often different from the customers, the government and third-party insurers are the primary payers, demand is inelastic, quality metrics are typically unavailable, and the industry consists largely of nonprofits that avoid taxes. But as healthcare delivery system leaders governed their economically exceptional (different) organizations, they came to believe that they, their teams, and their organizations, were culturally exceptional, and this cultural exceptionalism morphed into the “better than” sense of the word “exceptionalism.”

Evidence of the cultural exceptionalism, in terms of being different from other industries, can be found in organizational governance, leadership, design, infrastructure, and operations. Before we give our Rx for excising exceptionalism, we want to offer examples in each of those areas.

• Boards of directors (governance)

Hospital boards differ from boards of large organizations in other industries. Typically, a chair leads the board, which has on average ten additional members, who fill organizational gaps in skills and expertise. In healthcare delivery, however, boards of directors are different. Many institutions have large, unwieldy boards with members with impressive names but neither time nor experience to help the institution run more effectively. For example, the board of trustees of New York Presbyterian Hospital consists of 100 people―many prominent New Yorkers from investment banking and real estate. Presbyterian, and others like it, are large, complex organizations, but larger, more complex organizations in other industries make do with smaller boards. Alphabet, Amazon, and WalMart, have 8, 11, and 12 directors, respectively. Or, perhaps we should make complex non-profits our comparison points―the $3 billion Red Cross has 15 board members and the $4 billion United Way Worldwide has 12.

• Health system CEOs

CEOs of healthcare delivery organizations have different experience and tenure than CEOs at companies in other industries. The average tenure of an American CEO is 7-8 years; for a hospital system CEO, it is 3.5-5 years. A longer time in the top office lends itself to better performance and culture, so, this major reduction in leader tenure at non-healthcare versus healthcare organizations is important. Having to find a new CEO every 4.25 years is an inefficient human resources model that consumes significant capital, time, and other resources.

A shortage of supply of capable, experienced (in both healthcare and in management/leadership) healthcare delivery CEOs versus high demand for capable, experienced CEOs is a main cause of shorter tenure. Incoming hospital CEOs often lack the combined management and healthcare delivery industry experience to lead their organizations effectively; they thus depart earlier than CEOs in other industries. Here’s what was written about the problem in the Harvard Business Review. “Many physician leaders who are promoted to lead an entire enterprise or a business segment . . . lack the necessary experience for the job. They aren’t skilled in managing and blending functional and business strategies, portfolio assessment, factoring in short- and long-term tradeoffs, and taking a longer-term strategic approach to decisions. These shortfalls can render such leaders ineffective.”

The board of directors is an underlying cause of this problem. A key job of a board is to hire and fire a CEO. For years, healthcare delivery organization boards have not focused on the “elephant in the room” problem of building a pipeline of qualified CEO talent. Therefore, the shortage of qualified CEOs for healthcare delivery organizations exists. Richard Gunderman writes in The Atlantic about problems with hospital CEOs and concludes, “To turn the tide, we need to call for a higher degree of expertise, dedication, and accountability from the boards of our 4,000 U.S. nonprofit hospitals. Board members need to deepen their understanding of what quality and value in healthcare really mean, and then hire, fire, and reward their hospital CEOs accordingly.”

• Health system infrastructure

Hospital systems often have outdated and high-cost physical infrastructure, a “laissez faire” luxury that consumer-facing companies in other industries don’t enjoy. Consumer companies try to develop pleasing facilities, investing heavily and consistently to ensure consumer-friendly, modern point-of-sale systems, layouts, décor, parking, workflows, and experiences. Coffee companies mimic European cafes and American front porches. Tech companies offer light, airy architecture, modern signage, and customer flow that promotes a good experience.

Healthcare systems operate differently, seemingly deprioritizing patient-friendly layouts and design. Hospitals often have labyrinthine designs, outdated decor, insufficient signage, and poor parking. Anyone who has been to Boston’s Longwood Medical Area, where multiple major medical institutions populate a few square blocks, experiences this. Ken Shine, former president of the Institute of Medicine, has said, “We operate our health care system like a cottage industry, big, big cottages with state-of-the-art technologies to care for patients, but infrastructure which is totally inadequate, systems which don’t talk to each other.”

Cyber infrastructure also differs in healthcare, and it is widely believed that healthcare is more vulnerable than other industries to cyberattacks. A 2018 HealthIT Security article states, “The healthcare industry is taking the lion’s share of ransomware attacks . . . Ransomware attacks grew three-fold last year, with healthcare being affected the most by this increase . . .” Hospital systems have been reluctant to invest adequate capital in establishing a suitable cybersecurity infrastructure to ensure their clinicians avoid catastrophe. Personal health information is 50 times more valuable on the black market than financial information, yet in healthcare 98 percent of “internet of things” devices are unencrypted and unsecured. A report found that “The health care industry significantly lags behind other industries in terms of cybersecurity and digital literacy.”

• Health system operations & execution

The operational and human resource model in healthcare delivery differs. Americans have tacitly accepted crummy workflow and operational understanding at hospitals in a way that they have not accepted in other industries. Indeed, healthcare delivery employees accept this as much as patients do. In most U.S. health care delivery systems, physicians do basic data entry for hours a day. In what other industry do the highest paid individuals do basic data entry? Imagine if airline CEOs required pilots to input passengers’ frequent flyer info and TSA numbers.

The Covid-19 pandemic lay bare how poorly hospitals are run. Healthcare executives’ insufficient management training compared to execs in other industries showed up in spades—too few had deep operations know-how, and too many displayed ignorance around best practices in negotiations, supply chain management, emergency preparedness (i.e., COVID-19 testing and administration of vaccines), and staffing. These are areas business leaders with extensive skills training and operations expertise, in other industries, have accumulated over years of education, work, mistakes, successes, and accountability.

Many people (Bill Gates is one) have for years stated that a pandemic could destroy the operationally weak American healthcare delivery system. In an article titled “How the Pandemic Defeated America,” in The Atlantic, Ed Yong wrote, “. . . the coronavirus created thousands of sickly hosts that it then rode into America’s hospitals. It should have found facilities armed with state-of-the-art medical technologies, detailed pandemic plans, and ample supplies of protective equipment and life-saving medicines. Instead, it found a brittle system in danger of collapse.” That’s not pockets of ill preparedness here and there; it’s a terrible operational model and structure.

(Note: we acknowledge vast income and wealth disparities characterize healthcare delivery, but we believe lack of systemic capital overall is not the core problem.)

So what?

Economic exceptionalism is a loaded term, but to deepen our discussion, we must raise another loaded term—medical narcissism. This topic has been studied at length by John Banja and covered in his book, Medical Errors and Medical Narcissism. He shows that MDs often have “fantasies of omnipotence” and feelings of “specialness” that have developed to help them cope with the high levels of pressure and stress of their jobs. We believe the MDs in leadership positions at healthcare delivery organizations in many cases personify a situation of factual economic exceptionalism plus medical narcissism. They often show through words and behavior that they believe that because they are economically exceptional in the first sense of the term (different), they are also generally exceptional in the second sense of the term (better).

For instance, in the face of generally poor industry and organizational performance, healthcare leaders carry on making relatively minor changes in their organizations and the industry. A colleague of ours attended a “fireside chat” with the CEO of a major healthcare delivery organization only to hear from the CEO that the main thing that can be done better for improved outcomes is . . . for citizens to take better care of themselves. He did not say clearly or strongly that healthcare delivery overall or his organization should change to serve citizens better. He spoke as if he and the healthcare delivery industry uniquely face the pesky difficulty of human beings wanting good service and results―if patients don’t receive it, that’s their fault. That’s an example of an attitude of exceptionalism in each sense of the word.

We believe that leadership’s ingrained culture of exceptionalism drives today’s profound problem whereby patient satisfaction is low, inefficiency is high, and patient outcomes are poor. In this article, we have focused on diagnosing the problem because diagnosing and framing a problem is the vital precursor to developing successful solutions. Thus, our suggested solution here will be brief. We believe the industry can only solve the problem through making a long-term, steady shift from recognizing that its economic exceptionalism, in terms of being different, does not make it or its professionals and practitioners culturally or organizationally exceptional, as in superior or better.  As such, healthcare leaders must urgently and importantly work on values and culture in their organizations. Effective large company leaders have been shown to be modest, self-effacing, quiet, and reserved, uncharismatic to the point of unremarkable, but with indomitable will. Thus, medical narcissism must be replaced with this Level-5 Leader type of humility. These modern Level-5 leaders need to obsess over hiring highly capable experienced managers, pay and empower them better, force changes to improve patient experience, and much more. We know this is an ambitious and challenging undertaking, but we’re convinced it is worthwhile, meaningful, and better than the alternative of industry leaders continuing as is and inadequately serving patients.